===== SIDA 1 ===== Consolidated Financial Statements 31 December 2025 ===== SIDA 2 ===== Consolidated Financial Statements 31 December 2025 Kvika banki hf.  Katrínartún 2  105 Reykjavík  Iceland  Reg. no. 540502-2930 ===== SIDA 3 ===== Kvika banki hf. Table of Contents Page 1 2 7 10 11 12 13 15 16 17 19 21 26 35 53 57 61 Appendix - unaudited 76 83 Independent Auditor's Report .......................................................................................................................................... Consolidated Income Statement ...................................................................................................................................... Endorsement and Statement by the Board of Directors and the CEO ............................................................................. Kvika highlights ................................................................................................................................................................. Consolidated Statement of Comprehensive Income ....................................................................................................... Consolidated Statement of Financial Position .................................................................................................................. Consolidated Statement of Changes in Equity ................................................................................................................. Notes to the Consolidated Financial Statements ............................................................................................................. EU Taxonomy Regulation .................................................................................................................................................. Statement on the Corporate Governance of Kvika banki hf. ........................................................................................... - General information ...................................................................................................................................................... Consolidated Statement of Cash Flows ............................................................................................................................ - Significant accounting policies ....................................................................................................................................... - Risk management .......................................................................................................................................................... - Financial assets and financial liabilities ......................................................................................................................... - Income statement .......................................................................................................................................................... - Statement of Financial Position ..................................................................................................................................... - Other information .......................................................................................................................................................... - Segment information ..................................................................................................................................................... Consolidated Financial Statements 31 December 2025 ===== SIDA 4 ===== Highlights 31.12.2025 Kvika in brief Kvika is a financial services company with operations in Iceland and the United Kingdom. Kvika does not operate traditional branches but delivers its services primarily online, offering a wide range of solutions in asset management, payments, and banking for individuals, businesses and investors. Kvika’s shares are publicly traded on the Nasdaq Iceland. Kvika operates in four business segments: Commercial Banking, Investment Banking, Asset Management and UK operations, the latter through subsidiaries Kvika Asset Management and Kvika Limited. Kvika’s operations are underpinned by a distinctive brand strategy. Retail financial services are delivered through specialized consumer brands such as Auður, Aur, Netgíró, and Lykill, each focused on a specific customer need, while corporate and institutional services are provided under the Kvika and Kvika Asset Management brands. In the UK, the bank operates under the Kvika and Ortus Secured Finance brands. Key figures ISK m. 12M 2025 12M 2024 Net operating income 19,411 17,184 Profit before tax, continuing operations 6,217 5,817 RoTE, continuing operations 14.5% 18.8% 31.12.2025 31.12.2024 Total assets 343,112 354,594 Loans to customers 207,560 150,203 Deposits 172,787 163,378 LCR 404% 360% NSFR 137% 144% Q4 24 Q1 25 Q2 25 Q3 25 Q4 25 4.7 4.4 5.1 4.9 5.0 Net operating income ISK bn. Loans to customers ISK bn. Total capital ratio (%) LCR ratio (%) 0 50 100 150 200 250 0 20 40 60 80 100 120 140 160 180 200 220 92.0% Q4 24 95.5% Q1 25 95.5% Q2 25 109.7% Q3 25 120.1% Q4 25 150 161 172 196 208 Loans to deposits 0 5 10 15 20 25 30 35 40 45 50 0 5 10 15 20 25 30 19.9% Q4 24 21.0% Q1 25 20.5% Q2 25 20.4% Q3 25 23.9% Q4 25 22.8% 23.9% 23.3% 23.0% 26.8% CET1 -500 0 500 1.000 1.500 2.000 2.500 3.000 0 100 200 300 400 500 600 700 800 900 1.000 144% Q4 24 159% Q1 25 160% Q2 25 148% Q3 25 137% Q4 25 360% 279% 910% 659% 404% NSFR 34.9% 23.1% 12.1% 19.8% 10.1% Commercial Banking Investment Banking Asset Management UK Treasury and supporting units Diversified operations Revenues by segment 12M 2025 ===== SIDA 5 ===== Kvika banki hf. Endorsement and Statement by the Board of Directors and the CEO About the Bank Operations during the year 2025 Financial position Merger discussions with Arion banki hf. Kvika’s foray into the mortgage market TM sale finalised In March 2025, Kvika completed the acquisition of the remaining management shares in Ortus Secured Finance ltd. ("OSF"). The transaction s upports refinancing and streamlining of Kvika’s UK operations. An expense of ISK 580 million was recognized in the income statement, reflecting the revaluat ion of the contingent consideration for the remaining purchase price of OSF. On 6 July 2025, the Board of Directors of Kvika approved a request from the Board of Arion banki hf. ("Arion") to initiate formal merger discussions between the two banks. Under the proposed terms, Kvika’s shareholders would receive new shares in Arion representing approximately 26% ownership in the combined entity. The objective of the proposed merger is to combine the strengths of both institutions to form a robust financial entity offerin g comprehensive services to customers. The parties have initiated preliminary discussions with the Icelandic Competition Authority, where the aims and anticipated benefits of the merger for customers and the Icelandic financial market will be presented. The parties anticipate that the preliminary discussions, finalization of contracts, and due diligence reviews will be completed in the coming months. Subject to a positive outcome of these discussions, the merger will be formally announced to regulators and submitted for approval at the shareholders’ meetings of both companies. Following the completion of the sale of TM in February 2025, the Group is no longer designated by the Financial Supervisory Authority of the Central Bank of Iceland as a financial conglomerate as defined in Article no. 3 of Act no. 61/2017 on Additional Supervision of Financi al Conglomerates. Kvika banki has achieved several significant funding milestones in 2025. In May the Bank successfully issued its inaugural euro-denominated bond with a €200 m illion 4-year Senior Preferred note issuance. This marked the Bank’s entry into the European bond market and a key step in diversifying its funding base. The transaction followed a multi-day investor process, gathering over €350 m illion in orders and pricing at a spread of 250bps over interbank rates, with strong demand from the UK, Continental Europe, the Middle East and others. Earlier in the year, in January, Kvika completed a dual-currency Nordic bond issuance for NOK/SEK 1,000 million priced at 200bps over STIBOR and NIBOR. In June, Kvika also strengthened its presence in the domestic market with an ISK 5 billion bond issuance priced at a 1.14% spread over 3-month REIBOR. At the end of May 2025, Kvika entered the mortgage market with a new housing loan offering through its A uður Heima brand. Auður emphasizes transparency, flexible terms, and helping homeowners build equity. The mortgage offering was well received and Kvika managed to grow its mortgage portfolio to ISK 23 billion at the end of the year. These are the Consolidated Financial Statements of Kvika banki hf. ("Kvika" or the "Bank") and its subsidiaries (together the "Group") for the year 2025. Kvika’s operations are underpinned by a distinctive brand strategy. Retail financial services are delivered through specialized consumer brands s uch as Auður, Aur, Netgíró, and Lykill, each focused on a specific customer need, while corporate and institutional services in Iceland are provided under t he Kvika and Kvika Asset Management brands. In the UK, the Group operates under the Kvika and Ortus Secured Finance brands. Kvika is a financial services company with operations in Iceland and the United Kingdom. Kvika does not operate traditional branches but delivers its services primarily online, offering a wide range of solutions in asset management, payments, and banking for individuals, businesses and investors . Kvika’s shares are publicly traded on the Nasdaq Iceland. Kvika operates in four business segments: Commercial Banking, Investment Banking, Asset Management and UK operations, the latter through subsidiaries Kvika Asset Management and Kvika Limited. Profit before taxes from continuing operations for the fourth quarter amounted to ISK 1,522 million (Q4 2024: ISK 1,601 m illion) and for the year it amounted to ISK 6,217 million ( 2024: ISK 5,817 m illion). Pre-tax annualised return on average tangible equity (RoTE) from continuing operations was 13.2% for the quarter (Q4 2024: 18.5%) and 14.5% for the year (2024: 18.8%) based on the average tangible equity position of Kvika net of TM during the year. Tangible equity is the equity of shareholders of Kvika net of deferred tax assets and intangible assets. Profit after taxes, including disco ntinued operations, for the fourth quarter amounted to ISK 1,266 million (Q4 2024: ISK 3,447 million) and for the year it amounted to ISK 6,264 million (2024: ISK 8,150 million). According to the Consolidated Statement of Financial Position, equity at year end 2025 amounted to ISK 68,935 m illion (31.12.2024: ISK 89,517 million), and total assets amounted to ISK 343,112 million (31.12.2024: ISK 354,594 million). The Group's statement of financial position decreased by ISK 11.5 billion or 3.2% during the year 2025, the reduction was mainly due to the sale of TM Tryggingar hf. in Q1 2025. Loans to customers grew by ISK 57.4 billion or 38.2% during the year. On 28 February 2025 Kvika and Landsbankinn hf. ("Landsbankinn") finalised the sale of 100% of TM tryggingar hf. ("TM") share capital to Landsbankinn. The handover of the insurance company took place simultaneously, with Landsbankinn paying Kvika the agreed purchase price upon completion. As previously communicated by Kvika on 30 May 2024, the final purchase price has been adjusted based on changes in TM’s tangible equity from the beginning of 2024 until the closing date, 28 February 2025. The initially agreed purchase price was ISK 28.6 b illion, but the final purchase price amounted to ISK 32.3 billion, reflecting the purchase price adjustment for 2024 and for the period 1 January to 28 February 2025. The Group's net operating income during the year was ISK 19,411 million ( 2024: ISK 17,184 million). Net interest income amounted to ISK 11,896 million (2024: ISK 9,681 m illion). Net fee income amounted to ISK 6,291 million ( 2024: ISK 6,137 m illion). Other net operating income amounted to ISK 1,223 million (2024: ISK 1,367 million). Administrative expenses during the year amounted to ISK 12,074 million ( 2024: ISK 10,608 million). During the year, the Group had a net impairment charge of ISK 515 million (2024: ISK 605 million). Consolidated Financial Statements 31 December 2025 2 ===== SIDA 6 ===== Kvika banki hf. Endorsement and Statement by the Board of Directors and the CEO Operational outlook Economic outlook Capital adequacy and dividends Despite these pressures, the economy has demonstrated remarkable resilience. Private consumption and capital formation have seen strong growth, NPL ratios remain near historical lows, and the króna has held steady. This resilience is thanks to concerted efforts to reduce internal and external imbalances over the last decade. Aggressive deleveraging following the Global Financial Crisis has equipped households and businesses with health y balance sheets, characterised by high accumulated savings and low leverage. Additionally, the external position of the economy remains benign, bot h in terms of the balance of payments and net international investment position. While there has been some apprehension regarding "stagflation" - with inflation hovering above the Central Bank’s 4% threshold during a period of low growth - we expect this to be transitory. In effect, we expect the economic slowdown to act as a self-correcting mechanism, leading inflationary pressures to unwind in the coming months. At the end of December 2025, the MREL requirements, including the combined buffer requirement, are set at 28.3% of RWEA and 6.0% of the total exposure measure ("TEM"). The Group comfortably exceeded both at the end of Q4 with ratios of 58.5% and 34.1% respectively. Finally, receding inflation and a cooling labour market are expected to alleviate wage and cost pressures. This provides the necessary headroom to maintain a lean cost base even as we continue to scale our balance sheet and strengthen our operations. Despite the transient challenges noted above, Iceland’s long-term economic outlook compares favourably among advanced economies. As Iceland weathers temporary export-driven headwinds, we expect continued resilience of households and businesses, progress on disinflati on, and further The Icelandic economy has faced significant headwinds over the past two years, with negligible GDP growth recorded since autumn 2023. This is largely attributable to persistent challenges in the export sector. The operational outlook for Kvika in 2026 remains positive, underpinned by diversified revenue streams across our core markets in Iceland and the United Kingdom. Our primary objective is to build upon the momentum of the previous year. We have systematically strengthened our revenue generation through targeted expansion into new markets and the broadening of our revenue base - most notably through our new re sidential mortgage offering under the Auður Heima brand and continued expansion of property backed lending in Iceland and the UK market. Overall, the Group’s objectives regarding loan book expansion have been realised. Net interest margin has improved due to favourable interest rate environment and improved funding costs. Furthermore, fee and commission income grew modestly between years mainly due to increased fee and commission income from Investment banking. Additionally Kvika has successfully leveraged its increasing economies of scale to contain cost growth . Kvika’s financial position remains strong, with robust liquidity and capital buffers well above regulatory minimums. The divestment of our insuran ce arm, TM, in February further fortified our balance sheet, supporting credit growth across the Group’s divisions and leading to more efficient utilis ation of internal infrastructure. Changes to capital position due to the implementation of CRR3 regulation resulted in a decrease of risk weighted assets b y 17% which lead to corresponding strengthening of Kvika’s capital ratios, and as a result the CAR ratio stood at 26.8% at year end 2025 compared to 22.8% at the end of 2024. Domestic economic activity has been subdued - a trend likely to persist through 2026 in the wake of export shocks experienced in late 2025. However, the testing economic backdrop is balanced by the expectation that inflation will subside as the year progresses, paving the way for further interest r ate reductions. Given our formidable capital position and modest market share, Kvika is well positioned to gain ground in the credit market, even as the external environment remains mixed. The Central Bank of Iceland has already lowered rates by 200 basis points since autumn 2024. Continued disinflation and a widening output gap should provide scope for further policy easing this year. A downward-sloping yield curve indicates that markets anticipate continued normalisation of the policy stance, with rates becoming less restrictive in the coming quarters. Lower interest rates will, ceteris paribus, support the Bank's operatio nal outlook across both lending and investment services. The outlook for asset markets is encouraging. We are already seeing an upturn in the equity markets, with Icelandic share prices rallying since the end of 2025. Continued recovery should s upport increased trading volumes and brokerage commissions as well as rebounding performance-related fees in asset management in the coming year. Kvika continues to maintain a strong capital position, significantly above regulatory requirements. At the end of December 2025, the Group’s capita l adequacy ratio was 26.8% and CET1 ratio was 23.9%. This compares to regulatory requirements of 17.9% and 12.9%, including capital buffers. In December, Iceland completed the implementation of Regulation (EU) No. 2024/1623 of the European Parliament and of the Council (CRR III). As of December 31 2025, CRR III has resulted in an approximate 17% decrease in the Bank's risk-weighted exposure amount. The BOD proposes that a dividend of 0.36 ISK per share for a total amount of ISK 1,566 million, taking into account treasury shares held by the Group, will be paid in the year 2026 on 2025 operations. The dividend payment amounts to 25% of Profit after tax for the year, which is in line with the Bank's dividend policy. Additionally, the BOD will consider distributing an extraordinary dividend or additional share buybacks later in the year or at the AGM. These further distributions will be considered provided that certain conditions are satisfied, including maintaining the Capital Adequacy Ratio ( CAR) within the Bank’s target range of 2–4% above regulatory requirements for the foreseeable future. In April 2025 the Bank paid a dividend amounting to ISK 23.1 billion, equivalent to ISK 5 per share. Consolidated Financial Statements 31 December 2025 3 ===== SIDA 7 ===== Kvika banki hf. Endorsement and Statement by the Board of Directors and the CEO Share capital and shareholders Shareholder 31.12.2025 31.12.2024 9.14% 9.17% 8.04% 7.93% 7.86% 5.64% 7.24% 5.58% 5.07% 7.09% 2.96% 2.55% 2.76% 2.59% 2.37% 2.33% 2.66% 2.32% 1.49% 1.71% 49.59% 46.92% Risk management Corporate governance The Bank's issued share capital amounted to ISK 4,631 million as at 31 December 2025 (31.12.2024: ISK 4,722 million). At the end of the year the Bank held ISK 214 million treasury shares (31.12.2024: ISK 62 million). The shares were acquired through a share buy-back programme. The net change in the Bank's issued share capital amounted to a reduction in nominal value of ISK 243 million during the year (ISK 59 million reduction during the year 2024). The Bank's 2025 A nnual General Meeting ("AGM") approved a motion from the Board of Directors ("BOD") to renew the BOD's authorisation from the Bank's 2024 AGM to purchase up to 10% of own shares subject to regulatory approvals. This authorisation applies until the next AGM in 2026. In February 2025, based on authorisation from the AGM and approval from the Financial Supervisory Authority of the Central Bank of Iceland, the BOD decided to establish a buy-back programme to carry out the purchase of shares for a total consideration amount of ISK 5 billion but for no higher nominal amount than 400,000,000 shares. Following the announcement of merger discussions with Arion banki hf. in July 2025, the BOD suspended further share buybacks, until announcing in December 2025 that the Bank intended to complete share buybacks under the existing authorisation in the amount of ISK 1,125,207,500, as well as requesting an additional authorisation from the Financial Supervisory Authority of the Central Bank of Icela nd for further buybacks in the amount of up to ISK 631,548,500. The buyback programme was formally resumed in January 2026. The 2025 AGM also approved a motion from the BOD, based on an approval from the Financial Supervisory Authority of the Central Bank of Iceland, to decrease the share capital of the Bank by 91,073,340 shares by cance lling treasury shares held by the Bank. The share capital reduction was carried out in April 2025. The Bank had 2,776 shareholders at year-end 2025 (2024: 2,741), none of which held more than 10% of shares in the Bank (2024: 0). The ten largest shareholders are as follows: Stapi lífeyrissjóður ......................................................................................................................................... Lífeyrissjóður starfsmanna ríkisins A-deild .................................................................................................... Gildi - lífeyrissjóður ........................................................................................................................................ Birta lífeyrissjóður .......................................................................................................................................... Lífeyrissjóður verzlunarmanna ...................................................................................................................... Stoðir hf. ......................................................................................................................................................... Lífsverk lífeyrissjóður ..................................................................................................................................... Almenni lífeyrissjóðurinn ............................................................................................................................... Frjálsi lífeyrissjóðurinn ................................................................................................................................... Lífeyrissjóður starfsmanna ríkisins B-deild .................................................................................................... Further information about the shareholders of the Bank is provided in note 67. The objective of risk management is to promote a good and efficient culture of risk awareness within the Group and to increase the understanding of employees and management on the Group's risk taking, in addition to an assessment process related to risk and capital position. An emphasis is placed on being up to speed on the latest developments and adoption of rules related to risk management, such as regarding capital- and liquidity management. The Group faces various risks associated with its operations as a financial institution that arise from its day-to-day operations. Acti ve risk management entails analysing risk, measuring it and taking actions to limit it, as well as monitoring risk factors across the Group. The Group's risk management and main operations are described in the notes accompanying the Consolidated Financial Statements. Refer to notes 42-58 on the analysis of exposure to various types of risk. Kvika is obliged to observe recognised corporate governance guidelines, pursuant to Par. 7 of Article 54 of Act No. 161/2002, on Financial Undertakin gs. The Bank complies with chapter VII of Act No. 161/2002 and with the Guidelines on Corporate Governance issued jointly in February 2021 by the Chamber of Commerce, Confederation of Icelandic Enterprise (SA) and Nasdaq Iceland. Kvika has three times been recognised 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, Confederation of Icelandic Enterprise (SA) and Nasdaq Iceland, first in 2018, in 2021 and in 2024. The recognition applies for three years at a time unless there have been significant changes to the BOD or the ownership of the Bank. The BOD intends to have such an assessment carried out on a regular basis and maintain the aforementioned recognition. Additionally, Kvika complies with Guidelines of the Europea n Banking Authority (EBA) on Internal Governance (EBA/GL/2021/05). In accordance with the Bank´s articles of association, five members and two alternate members are elected to the BOD each year at the annual general meeting. The eligibility of members of the BOD is subject to statutory law. It is the Bank´s policy concerning election of the BOD that the BOD collectively has sufficient knowledge, competency and experience to understand the Bank´s operations, including the main risk factors. The ratio o f each gender of members of the BOD and alternate members shall be at least 40%. The election of BOD members and their eligibility is furthermore governed by the provisions of the Act on Public Limited Liability Companies No. 2/ 1995 and the Act on Financial Undertakings No. 161/2002. The Bank has a Nomination Committee which acts in compliance with the Bank´s articles of association and the Procedural Rules of the Nomination Committee as approved by a shareholders' meeting. The Bank´s articles of association may be amended at lawfully convened shareholders´ meetings, provided that the notice of the meeting specifies tha t proposals for such amendments are scheduled and outlines the main substance of the amendments. An amendment takes effect only if approved by at least 2/3 of the votes cast and by shareholders controlling at least 2/3 of the shares represented at the meeting. However, the provisions of the articl es of association regarding the voting rights of shareholders and equality among them cannot be amended except with the consent of all the shareholders who are subject to the curtailment of rights, cf. paragraph 3 of Article 94 of the Act on Public Limited Liability Companies No. 2/1995. Consolidated Financial Statements 31 December 2025 4 ===== SIDA 8 ===== Kvika banki hf. Endorsement and Statement by the Board of Directors and the CEO The Board determines compensation for the CEO. The BOD emphasises good corporate governance and adherence to accepted guidelines on corporate governance. The Board has laid down comprehensive rules in which the authority of the Board is defined and its scope of work in conjunction with the CEO. They address e.g. the competence of Board members to participate in individual decisions, confidentiality and information disclosure between the CEO and the Board. All Board members are independent of the Bank and its major shareholders, and no executive directors are on the Board. The Bank aims to promote gender equality, and two out of five board members are women. The BOD has delegated certain tasks to three separate subcommittees , the Risk Committee, Audit Committee and Remuneration Committee. The appointment of committee members shall always comply with currently applicable law. It is not permitted to appoint employees of the Bank to any subcommittee. Members shall have the necessary ex perience and knowledge for each committee's tasks according to applicable laws and rules. Each committee has incorporated procedural rules which have been confirmed by the BOD. The sustainability strategy applies to the entire group based on Kvika’s ownership policy for material subsidiaries. The Board of Directors of Kvika is responsible for the strategy, while the Sustainability Committee is responsible for its implementation. The CEO, who chairs the Sustainability Committee, is accountable for sustainability matters to the Board. Sustainability issues are regularly discussed by the Board, Executive Manageme nt, and relevant committees. Kvika’s Sustainability Committee is composed of the CEO of Kvika, few of the executive managers of the Bank and of Kvika Asset Management, and the Director of Sustainability. The Committee is responsible for the implementation and execution of the Sustainability Strategy, the Sustainability Risk Policy, as well as all aspects of the Group Risk Policy regarding sustainability risk. The sustainability risk policy was revised during the year considering Kvika’s material sustainability factors. Before, the Policy was limited to c limate risks but now covers all material sustainability risks. The Board defines risk appetite for the sub-categories of sustainability risk, while releva nt committees regularly review matters related to sustainability risk. Sustainability risk is also incorporated into the remuneration policy and the performance criteria of the employee bonus scheme. The main aspects of internal and external control and the Bank's management in connection with the accounting process are described in detail in the Statement on the Corporate Governance of Kvika. The CEO reports to the Board and verifies the effectiveness of internal controls and risk management in the Consolidated Financial Statements. Inter nal controls and risk management applied in the preparation of the Consolidated Financial Statements are organised with a view to preventing any significant deficiencies in the accounting process. Kvika's BOD and control units regularly verify the effectiveness of internal controls and risk management. The Risk Committee has an advisory and supervisory role for the Bank's BOD, among other things, in determining its risk policy and risk appetite. The Audit Committee is intended to play an advisory and supervisory role for the Bank's BOD by, among other things, ensuring the quality of financial statements and other financial information from the Bank and the independence of its auditors. The Audit Committee supervises accounting procedures and the effectiveness of internal controls as well as internal and external auditing. The Remuneration Committee has an advisory and monitoring role for the BOD in relation to remuneration in the Group and that they support its goals and interests. Sustainability and non-financial disclosure Employee turnover among full-time employees of the Group was 7.4% in 2025. Women represent 38% of Kvika’s workforce and 33% of the executive management. The gender pay gap at Kvika was 0.1% in favour of men, and 0.4% in favour of men at Kvika Asset Management. Kvika conducted a double materiality assessment in the second half of 2024 in collaboration with a group of stakeholders to define Kvika’s material sustainability factors. The results were used to develop a new sustainability strategy, which was approved by the Board of Directors in September 202 5. Kvika’s sustainability strategy is built around four focus areas: good corporate governance, employee wellbeing and success, responsible and trus ted services, and sustainable finance and fintech. These focus areas are based on the Bank’s material sustainability factors and sub-factors. In parallel with the refinement of Kvika’s sustainability priorities the number of UN Sustainable Development Goals (SDGs) specifically targeted b yK v i k a was reduced from six to four, namely: Goal no. 5 on gender equality, Goal no. 9 on industry, innovation and infrastructure, Goal no. 13 on climate action, and Goal no. 17 on partnerships for the goals. Other sustainability objectives of Kvika are aligned with the focus areas of the sustainability strategy. Total greenhouse gas emissions from Kvika´s operations amounted to 333 tCO ₂e in 2025 representing an 18% increase compared to previous year. Scope 1 emissions decreased by 48% while Scope 2 emissions increased by 17% and Scope 3 emissions by 32%. The emission increase can partly be attributed to more employee air travel and changes in the energy mix compared to the previous year as the environmental reporting now for the first time also includes the UK operations. The total outstanding balance of green liabilities at year-end 2025 amounted to ISK 7,523 m illion, representing the total issuance of green bonds and deposits in Auður’s green future accounts. Green liabilities have been allocated to projects related to the energy transition in transportation and environmentally friendly buildings. Kvika’s green assets at year-end 2025 amounted to ISK 17,389 m illion. The Green Asset Ratio (GAR) in accordance with the EU Taxonomy Regulation is disclosed in an unaudited appendix to the annual financial statements. Kvika operates a comprehensive and harmonised group-wide framework to prevent financial crime and ensure sound corporate governance. This framework comprises various policies, rules and procedures. In addition, regular anti-money laundering risk assessments are conducted, along wit h ongoing monitoring of suspicious activity, including the use of the artificial intelligence and analytics system Lucinity. Further information about the Bank's corporate governance can be found in an appendix to these financial statements which contains a corporate governance statement. A copy of the statement is available on the Bank's website, www.kvika.is. The BOD is responsible for the Group's risk management framework. It approves the Kvika Banki Group risk policy, which provides an efficient and transparent framework for managing risk and risk appetite in relation to identified risk factors. Consolidated Financial Statements 31 December 2025 5 ===== SIDA 9 ===== Kvika banki hf. Endorsement and Statement by the Board of Directors and the CEO Statement by the Board of Directors and the CEO Sigurður Hannesson, Chairman Helga Kristín Auðunsdóttir, Deputy Chairman Ingunn Svala Leifsdóttir Guðjón Reynisson Páll Harðarson Chief Executive Officer Ármann Þorvaldsson The Consolidated Financial Statements of Kvika banki hf. for the year ended 31 December 2025 are electronically certificated by the Board of Director s and the CEO. Kvika is publishing its sustainability report for the second time, with disclosure partly aligned to the European Sustainability Reporting Standar ds (ESRS) and the EU Corporate Sustainability Reporting Directive (CSRD). The objective is to establish a solid foundation and progress towards full complian ce with ESRS and CSRD requirements. The Consolidated Financial Statements of Kvika banki hf. for the year 2025 have been prepared in accordance with International Financial Reporting Standards as adopted by the EU, and additional requirements, as applicable, in the Act on Annual Accounts no. 3/ 2006, the Act on Financial Undertakings no. 161/2002 and rules on accounting for credit institutions no. 834/2003. To the best of our knowledge these Consolidated Financial Statements give a true and fair view of the Group's assets, liabilities and financial positi on as at 31 December 2025 and the financial performance of the Group and changes of cash flows for the year 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. In our opinion, the Consolidated Financial Statements of Kvika banki hf. for the year 2025 identified as "254900WR3I1Z9NPC7D84-2025-12-31-en.xbr i" are prepared in all material respects, in compliance with the European Single Electronic Format Regulation (ESEF). The Board of Directors and the CEO of the Bank have today discussed the Consolidated Financial Statements for the year 2025 and confirmed them by the means of their signatures. Reykjavík, 11 February 2026. Board of Directors Deloitte provides limited assurance on selected data points in the Sustainability report and on the disclosures included in the impact and allocatio n report under Kvika’s Green Financing Framework. Further information on the Bank’s non-financial disclosures and sustainability matters can be found in Kvika’s Sustainability Report for 2025, which is available on the Bank’s website at www.kvika.is. Consolidated Financial Statements 31 December 2025 6 ===== SIDA 10 ===== Kvika banki hf. Independent Auditor's Report To the Board of Directors and Shareholders of Kvika banki hf. Opinion Basis for Opinion Key Audit Matters Key Audit Matters How the matter was addressed in our audit Impairment charges for loans • • • • • • • • Management has provided further information about expected credit losses and provisions for guarantees in notes 21, 46 and 82 to the Consolidated Financial Statements. Assumptions used in the expected credit loss models to incorporate macroeconomic uncertainties. Post-model adjustments for particular high-risk exposures, which are not appropriately captured in the expected credit loss model. The most significant judgements are: Timely identification of exposures with significant increase in credit risk and credit impaired exposures. Valuation of collateral and assumptions of future cash flows on manually assessed credit-impaired exposures. We have reviewed the disclosures to the Consolidated Financial statements to confirm compliance with IFRS. Testing the appropriateness of forwa rd looking information and how they have been applied in the expected credit loss models. We have audited the Consolidated Financial Statements of Kvika banki hf. for the year ended December 31, 2025 which comprise, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows for the year then ended and the notes to the consolidated financial statements, including a summaryo f significant accounting policies. In our opinion, the accompanying Consolidated Financial Statements give a true and fair view of the consolidated financial position of Kvika banki hf .a sa t December 31, 2025, and its consolidated financial per formance and its consolidated cash flows for th e year then ended in accordance with Internation al Financial Reporting Standards (IFRSs) as adopted by the EU and additional requirements, as applicable, in the Act on Annual Accounts, the Act on Finan cial Undertakings and rules on accounting for credit institutions. We conducted our audit in accordance with Internat ional Standards on Auditing (ISAs). Our responsi bilities under those standards are further descr ibed in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. 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. Book value of loans to customer s amounted to ISK 207,560 m illion at year end (2024: ISK 150,203 million) and the total expected credit loss for the group amounted to ISK 2, 345 million ( 2024: ISK 2, 345 million) against loans at amortized cost, unused credit facilities and guarantees at 31 December 2025. Based on our risk assessment and industry knowledge, we have examined the impairment charges for loans and provisions for undrawn loan commitments and evaluated the methodology applied as well as the assumptions made according to the description of the key audit matter. Our opinion in this report on the Consolidated Financial Statements is consi stent with the content of the additional report that has been submitted to the company´s audit committee in accordance with the EU Audit Regulation 537/2014 Article 11. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We are independent of Kvika banki 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 financial statements in Iceland, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA. 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. Our examination included the following elements: Testing of key controls over assumptions used in the expected credit loss models. Obtaining and substantively testing the evidence behind valuation of collateral with particular focus on post-model adjustments applied to collateral value. 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 highly subjective due to the level of judgement applied by Management. Substantively testing the PD models, related methodology and how they have been applied in the expected credit loss models. During our audit we have evaluated whether the Groups expected credit loss models are compliant to IFRS 9. Consolidated Financial Statements 31 December 2025 7 ===== SIDA 11 ===== Kvika banki hf. Independent Auditor's Report 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 • • • • • • Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon, except the confirmation regarding report of the board of directors as stated below. In accordance with Paragraph 2 article 104 of th e 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 re quired by the Icelandic Financial Statement Act that is not disclosed elsew here in the financial statements. The Board of Directors and the CEO are responsible for the preparation and fa ir presentation of the Consolidated Financial Statements in accordance w ith International Financial Reporting Standards (IFRSs) as adopted by the EU and additional requirements in the Icelandic Financial Statement Act, 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 aref r e e from material misstatement, whether due to fraud or error. The board of directors and the audit committee are responsible for overseeing the Kvika banki hf. financial reporting process. 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. I f we conclude that a material uncertainty exists, we are required to draw atte ntion 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. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the ot her information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. I f ,b a s e do nt h ew o r kw eh a v ep e r f o r m e d ,w ec o n c l u d et h a tt h e r ei sam a t e r i a lm isstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Our objectives are to obtain reasonable assurance about whether the Conso lidated Financial Statements as a whole are free from material misstatemen t, 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 fra ud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of us ers taken on the basis of these Consolidated Financial Statements. The Board of Directors and the CEO are responsible for the other information . Other information comprises the report of board of directors, Statement on the Corporate Governance and Non-Financial information. 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 expres sa n 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. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: 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 o f not detecting a material misstatement resulting from fraud is higher tha n 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 Kvika banki hf.'s internal control. In preparing the Consolidated Financial Statements, the Board of Directors and the CEO are responsible for assessing Kvika banki 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 Direc tors and the CEO either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. Consolidated Financial Statements 31 December 2025 8 ===== SIDA 12 ===== Kvika banki hf. Independent Auditor's Report Report on other legal and regulatory requirements Report on European single electronic format (ESEF Regulation) Deloitte ehf. The Consolidated Financial Statements of Kvika banki hf. for the year ended 31 December 2025 are electronically certificated by the auditor. Kópavogur, 11 February 2026. In addition to our work as the auditors of Kvika banki hf., Deloitte has provi ded the firm with permitted additional services such as review of interim financial statements, other assurance engagements and consultation on t ax matters. Deloitte has in place internal procedures in order to ensure its independence before acceptance of additional services. Deloitte has provi ded to the audit commitee written confirmation that Deloitte is independ ent of Kvika banki hf. Deloitte was appointed auditor of Kvika banki hf. by the general meeting of shareholders on March 26th 2025. Deloitte have been elected since the general meeting 2016. Guðmundur Ingólfsson As part of our audit of the Consolidated Financial Statements of Kvika bank i hf. we performed procedures to be able to issue an opinion on whether the Consolidated Financial Statements of Kvika banki hf. for the year 2025 with the file name „254900WR3I1Z9NPC7D84-2025-12-31-en.zip“is prepared, i na l l material respects, in compliance with laws no. 20/2021 disclosure obligation of issuers of securities and the obligation to flag relating to require ments regarding European single electronic format regulation EU 2019/815 which i nclude requirements related to the preparation of the Consolidated Fina ncial Statements in XHTML format and iXBRL markup. Management is responsible for preparing the Consolidated Financial Sta tements in compliance with laws no. 20/2021 disclosure obligation of issuer so f securities and the obligation to flag. This responsibility includes preparing the Consolidated Financial Statements in a XHTML format in accordanc et oE U 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 exte nt of procedures selected depend on the auditor's judgement, including the assessm ent of the risks of material departures from the requirement set out in t he ESEF regulation, whether due to fraud or error. In our opinion, the Consolidated Financial Statements of Kvika bank i hf. for the 2025 with the file name „254900WR3I1Z9NPC7D84-2025-12-31-en.xbri “i s prepared, in all material respects, in compliance with the ESEF Regulation. We communicate with the Board of Directors and the Audit Committee regardi ng, 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. State Authorized Public Accountant We also provide the Board of Directors and the Audit Committee with 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. From the matters communicated with the Board of Directors and the Audit Co mmittee, we determine those matters that were of most significance in the audit of the Consolidated Financial Statements of the current period and a re therefore the key audit matters. We describe these matters in our auditor ’s report unless law or regulation precludes public disclosure about the matte r or when, in extremely rare circumstances, we determine that a matter sho uld not be communicated in our report because the adverse consequences of doin g so would reasonably be expected to outweigh the public interest benefits of such communication. Consolidated Financial Statements 31 December 2025 9 ===== SIDA 13 ===== Kvika banki hf. Amounts are in ISK millions Consolidated Income Statement For the year 2025 Notes Q4 2025 Q4 2024 2025 2024 7,307 6,805 29,895 28,865 (4,242) (4,307) (17,999) (19,184) Net interest income 5 3,065 2,498 11,896 9,681 1,442 1,765 6,901 6,788 (177) (164) (610) (651) Net fee and commission income 6 1,265 1,601 6,291 6,137 7 481 507 926 1,054 27 15 16 37 41 146 44 261 271 Other net operating income 642 567 1,223 1,367 Net operating income 4,972 4,666 19,411 17,184 9-12 (3,263) (2,864) (12,074) (10,608) 13 (175) (91) (515) (605) 14 (12) (110) (604) (154) Profit before taxes from continuing operations 1,522 1,601 6,217 5,817 15 (209) (45) (1,423) (766) 16 20 18 (113) (109) 17 (67) (47) (319) (252) Profit for the year from continuing operations 1,266 1,528 4,363 4,690 Discontinued operations 3 - 1,919 1,901 3,460 Profit for the year 1,266 3,447 6,264 8,150 Notes Q4 2025 Q4 2024 2025 2024 1,269 3,447 6,267 8,143 26 (3) - (3) 7 Profit for the year 1,266 3,447 6,264 8,150 Earnings per share 18 0.29 0.74 1.39 1.73 0.29 0.74 1.39 1.73 Quarterly information is unaudited. The notes on pages 17 to 74 are an integral part of these Consolidated Financial Statements. Other operating income ............................................................................................. Administrative expenses ............................................................................................ Net impairment .......................................................................................................... Revaluation of contingent consideration ................................................................... Share in profit of associates, net of income tax ......................................................... Interest income .......................................................................................................... Interest expense ......................................................................................................... Fee and commission income ...................................................................................... Fee and commission expense .................................................................................... Net financial income .................................................................................................. Diluted earnings per share (ISK per share) ................................................................. Income tax .................................................................................................................. Attributable to the shareholders of Kvika banki hf. ................................................... Attributable to non-controlling interest .................................................................... Special tax on financial institutions ............................................................................ Special tax on financial activity .................................................................................. Basic earnings per share (ISK per share) .................................................................... Profit after tax from discontinued operations ........................................................... Consolidated Financial Statements 31 December 2025 10 ===== SIDA 14 ===== Kvika banki hf. Amounts are in ISK millions For the year 2025 Notes Q4 2025 Q4 2024 2025 2024 Profit for the year 1,266 3,447 6,264 8,150 99 241 197 347 (12) (14) 7 1 Changes to reserve for financial assets at fair value through OCI 88 227 203 347 73 (59) (39) (7) 161 168 164 340 Total comprehensive income for the year 1,427 3,615 6,428 8,490 Notes Q4 2025 Q4 2024 2025 2024 1,430 3,615 6,431 8,484 (3) - (3) 7 Total comprehensive income for the year 1,427 3,615 6,428 8,490 Quarterly information is unaudited. The notes on pages 17 to 74 are an integral part of these Consolidated Financial Statements. Consolidated Statement of Comprehensive Income Attributable to the shareholders of Kvika banki hf. .................................................. Attributable to non-controlling interest .................................................................... Exchange difference on translation of foreign operations ..................................... Changes in fair value of financial assets through OCI, net of tax ............................ Realized net loss transferred to the Income Statement, net of tax ........................ Other comprehensive income that is or may be reclassified subsequently to profit and loss Consolidated Financial Statements 31 December 2025 11 ===== SIDA 15 ===== Kvika banki hf. Amounts are in ISK millions Consolidated Statement of Financial Position As at 31 December 2025 Assets Notes 31.12.2025 31.12.2024* 19 20,145 18,593 20 8,154 11,530 21 207,560 150,203 22 44,522 64,795 23 20,663 5,432 24 6,695 12,601 25 3,250 1,197 27 117 113 28 21,130 21,693 29 361 215 402 543 15, 30 939 2,273 31 9,174 7,704 3 - 57,702 Total assets 343,112 354,594 Liabilities 50 172,787 163,378 32 6,806 14,390 33 73,249 37,123 34 5,841 5,629 35 433 153 36 432 42 25 773 2,932 30 257 466 37 13,599 13,635 3 - 27,329 Total liabilities 274,177 265,077 Equity 38 4,417 4,660 43,119 46,750 4,376 9,357 16,948 28,672 Total equity attributable to the shareholders of Kvika banki hf. 68,859 89,439 26 76 79 Total equity 68,935 89,517 Total liabilities and equity 343,112 354,594 * Comparative information has been restated, reference is made to note 2 for further information. The notes on pages 17 to 74 are an integral part of these Consolidated Financial Statements. Other reserves .................................................................................................................................... Retained earnings ............................................................................................................................... Loans to credit institutions ................................................................................................................. Issued bonds ....................................................................................................................................... Operating lease assets ........................................................................................................................ Cash and balances with Central Bank ................................................................................................ Other assets ........................................................................................................................................ Deferred tax assets ............................................................................................................................. Subordinated liabilities ...................................................................................................................... Derivatives .......................................................................................................................................... Fixed income securities ...................................................................................................................... Shares and other variable income securities ..................................................................................... Securities used for hedging ................................................................................................................ Loans to customers ............................................................................................................................ Investment in associates .................................................................................................................... Intangible assets ................................................................................................................................. Property and equipment .................................................................................................................... Assets classified as held for sale ........................................................................................................ Deposits ............................................................................................................................................. Borrowings ......................................................................................................................................... Non-controlling interest ..................................................................................................................... Short positions held for trading ......................................................................................................... Short positions used for hedging ....................................................................................................... Share capital ....................................................................................................................................... Share premium ................................................................................................................................... Other liabilities ................................................................................................................................... Liabilities associated with assets classified as held for sale .............................................................. Deferred tax liabilities ........................................................................................................................ Derivatives .......................................................................................................................................... Consolidated Financial Statements 31 December 2025 12 ===== SIDA 16 ===== Kvika banki hf. Amounts are in ISK millions Consolidated Statement of Changes in Equity For the year 2025 Deficit Trans- Restricted Total share- Non- Share Share Option reduction Fair value lation retained Retained holders' controlling Total 1 January 2025 to 31 December 2025 Notes capital premium reserve reserve reserve reserve earnings earnings equity interest equity 4,660 46,750 109 1,204 (583) 79 8,547 28,672 89,439 79 89,517 6,267 6,267 (3) 6,264 197 197 197 7 7 7 (39) (39) - (39) - - - - 203 (39) - 6,267 6,431 (3) 6,428 220 (5,306) 5,086 - - 44 (44) - - (243) (3,632) (3,875) (3,875) (23,135) (23,135) (23,135) 66 (102) 102 - - Equity as at 31 December 2025 4,417 43,119 7 1,204 (160) 40 3,285 16,948 68,859 76 68,935 The notes on pages 17 to 74 are an integral part of these Consolidated Financial Statements. (9,182,573) 43,118,541 7,080 1,163,480 (4,576,544) 40,217 3,278,162 15,743,966 75,512 Dividend paid to shareholders .................................................................. Transactions with owners of the Bank Stock options ............................................................................................. Other reserves Profit for the year ........................................................................................ Restricted due to subsidiaries and associates ............................................. Translation of foreign operations Exchange difference on translation of foreign operations ....................... Equity as at 1 January 2025 ......................................................................... Total comprehensive income for the year .................................................. Realized net loss transferred to the Income Statement .............................. Changes in fair value of financial assets through OCI ................................. Restricted due to development costs .......................................................... Treasury shares acquired as part of a buy-back programme ................... Consolidated Financial Statements 31 December 2025 13 ===== SIDA 17 ===== Kvika banki hf. Amounts are in ISK millions Consolidated Statement of Changes in Equity For the year 2024 Deficit Trans- Restricted Total share- Non- Share Share Option reduction Fair value lation retained Retained holders' controlling Total 1 January 2024 to 31 December 2024 Notes capital premium reserve reserve reserve reserve earnings earnings equity interest equity 4,722 47,662 174 1,204 (930) 86 3,797 25,172 81,886 72 81,958 8,143 8,143 7 8,150 347 347 347 1 1 1 Translation of foreign operations (7) (7) - (7) - - - - 347 (7) - 8,143 8,484 7 8,490 4,745 (4,745) - - 6 (6) - - (64) (936) (1,000) (1,000) 66 (60) 103 43 43 2 25 (5) - - - - 5 26 26 Equity as at 31 December 2024 4,660 46,750 109 1,204 (583) 79 8,547 28,672 89,439 79 89,517 The notes on pages 17 to 74 are an integral part of these Consolidated Financial Statements. Equity as at 1 January 2024 ......................................................................... Stock options exercised ............................................................................. Total comprehensive income for the year .................................................. Treasury shares acquired as part of a buy-back programme ................... Stock options ............................................................................................. Restricted due to subsidiaries and associates ............................................. Transactions with owners of the Bank Restricted due to development costs .......................................................... Other reserves Changes in fair value of financial assets through OCI ................................. Realized net loss transferred to the Income Statement .............................. Profit for the year ........................................................................................ Exchange difference on translation of foreign operations ....................... Consolidated Financial Statements 31 December 2025 14 ===== SIDA 18 ===== Kvika banki hf. Amounts are in ISK millions Consolidated Statement of Cash Flows For the year 2025 Cash flows from operating activities Notes 2025 2024* 6,264 8,150 40 6 (37) (41) 1,348 1,106 (11,896) (9,681) 515 605 1,854 1,128 (1,901) (3,488) - 43 (3,812) (2,173) Changes in: 1,752 (777) (59,289) (11,224) 17,497 750 (144) (5,246) 5,906 4,251 (2,053) 1,301 (199) 225 (1,430) (444) 9,019 20,413 368 2,361 670 59 (2,304) 713 (190) (2,690) (30,398) 9,693 28,978 27,993 (17,414) (18,851) (452) (614) Net cash (to) from operating activities (23,098) 16,048 Cash flows from investing activities 28 (329) (608) 72 (91) 36 20 31,825 1,238 Net cash from investing activities 31,605 558 Cash flows from financing activities (5,313) (2,072) 36,126 (8,592) - (300) (3,875) (1,000) - 26 (23,135) - (382) (408) Net cash from (to) financing activities 3,421 (12,346) 11,927 4,260 22,500 20,852 556 (539) Cash and balances with Central Bank at the end of the year, including asset held for sale 34,984 24,572 2,072 (2,072) Cash and cash equivalents at the end of the year 19 37,056 22,500 Cash and cash equivalents 19 20,145 18,593 19 (6,203) (5,819) 20 8,102 9,726 23 15,013 - Cash and cash equivalents at the end of the year 37,056 22,500 * Comparative information has been restated, reference is made to note 2 for further information. The notes on pages 17 to 74 are an integral part of these Consolidated Financial Statements. Interest received .......................................................................................................................................... Sale of own shares due to share options ..................................................................................................... Acquired own shares .................................................................................................................................... Additions of intangible assets ...................................................................................................................... Net acquisition and sale of property and equipment .................................................................................. Interest paid ................................................................................................................................................. Income tax paid ............................................................................................................................................ Dividend from associates ............................................................................................................................. Disposal of subsidiary and associates, net of cash ...................................................................................... Net change in cash and cash equivalents .................................................................................................... Repayment of lease liabilities ...................................................................................................................... Issued bonds ................................................................................................................................................ Dividend paid to shareholders ..................................................................................................................... Subordinated loans ...................................................................................................................................... Borrowings ................................................................................................................................................... Effects of exchange rate fluctuations on cash and cash equivalents .......................................................... Cash and cash equivalents at the beginning of the year ............................................................................. Cash and cash equivalents due to assets held for sale ................................................................................ Derivatives - assets .................................................................................................................................... Fixed income securities ............................................................................................................................. Shares and other variable income securities ............................................................................................ Securities used for hedging ....................................................................................................................... Loans to customers .................................................................................................................................... Loans to credit institutions ........................................................................................................................ Other adjustments ..................................................................................................................................... Profit for the year ......................................................................................................................................... Adjustments for: Indexation and exchange rate difference ................................................................................................. Share in profit of associates, net of income tax ........................................................................................ Depreciation and amortisation ................................................................................................................. Adjustment relating to assets held for sale ............................................................................................... Unit shares in cash equivalent liquidity funds ............................................................................................. Cash and balances with Central Bank .......................................................................................................... Loans to credit institutions - Bank accounts ................................................................................................ Restricted balances with Central Bank - fixed reserve requirement ........................................................... Net interest income ................................................................................................................................... Income tax and special tax on financial activity and institutions ............................................................. Net impairment ......................................................................................................................................... Other assets ............................................................................................................................................... Operating lease assets ............................................................................................................................... Derivatives - liabilities ............................................................................................................................... Deposits .................................................................................................................................................... Insurance contract liabilities ..................................................................................................................... Short positions ........................................................................................................................................... Other liabilities .......................................................................................................................................... Consolidated Financial Statements 31 December 2025 15 ===== SIDA 19 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 0 General information Page Risk management Page 1 Reporting entity ............................................................................ 17 42 Risk management framework ........................................................ 35 2 Basis of preparation ..................................................................... 17 43 Hedging ........................................................................................... 36 3 Discontinued operations .............................................................. 18 44 Credit risk - overview ...................................................................... 37 45 Maximum exposure to credit risk .................................................. 38 Segment information 46 Credit quality of financial assets .................................................... 38 4 Business segments ....................................................................... 19 47 Loan-to-value ................................................................................. 43 48 Collateral against exposures to derivatives ................................... 43 Income statement 49 Large exposures .............................................................................. 43 5 Net interest income ...................................................................... 21 50 Liquidity risk ................................................................................... 44 6 Net fee and commission income .................................................. 21 51 Market risk ...................................................................................... 48 7 Net financial income .................................................................... 22 52 Interest rate risk ............................................................................. 48 8 Foreign currency exchange difference ......................................... 22 53 Interest rate risk associated with trading portfolios ...................... 48 9 Administrative expenses .............................................................. 22 54 Interest rate risk associated with non-trading portfolios .............. 49 10 Salaries and related expenses ...................................................... 22 55 Exposure towards changes in the CPI ............................................ 50 11 Employment terms of the Board of Directors and management 23 56 Currency risk ................................................................................... 50 12 Auditor's fees ................................................................................ 23 57 Equity risk ....................................................................................... 52 13 Net impairment ............................................................................ 24 58 Operational risk .............................................................................. 52 14 Revaluation of contingent consideration ..................................... 24 15 Income tax .................................................................................... 24 Financial assets and liabilities 16 Special tax on financial activity .................................................... 24 59 Accounting classif. of financial assets and financial liabilities ....... 53 17 Special tax on financial institutions .............................................. 24 60 Financial assets and financial liabilities measured at fair value .... 54 18 Earnings per share ........................................................................ 25 61 Financial assets and financial liabilities not measured at fair value ............................................................. 56 Statement of Financial Position 19 Cash and balances with Central Bank .......................................... 26 20 Loans to credit institutions ........................................................... 26 21 Loans to customers ...................................................................... 26 Other information 22 Fixed income securities ................................................................ 26 62 Pledged assets ................................................................................ 57 23 Shares and other variable income securities ............................... 27 63 Related parties ............................................................................... 57 24 Securities used for hedging .......................................................... 27 64 Remuneration policy ...................................................................... 58 25 Derivatives .................................................................................... 27 65 Incentive scheme ............................................................................ 58 26 Group entities ............................................................................... 28 66 Share-based payments ................................................................... 59 27 Investment in associates .............................................................. 28 67 Shareholders of the Bank ............................................................... 60 28 Intangible assets ........................................................................... 28 68 Others matters ............................................................................... 60 29 Operating lease assets .................................................................. 29 69 Events after the reporting date ...................................................... 60 30 Deferred tax assets and liabilities ................................................ 30 31 Other assets .................................................................................. 30 Significant accounting policies 61 32 Borrowings ................................................................................... 30 33 Issued bonds ................................................................................. 31 34 Subordinated liabilities ................................................................ 31 35 Short positions held for trading ................................................... 31 36 Short positions used for hedging ................................................. 32 37 Other liabilities ............................................................................. 32 38 Share capital ................................................................................. 32 39 Capital adequacy ratio (CAR) ........................................................ 33 40 Leverage ratio ............................................................................... 34 41 Minimum requirements for own funds and eligible liabilities (MREL) ....................................................... 34 Consolidated Financial Statements 31 December 2025 16 ===== SIDA 20 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 0 General information 1. Reporting entity 2. Basis of preparation a. Statement of compliance b. Basis of measurement - - - - - - -s h a r e-based payment is accounted for in accordance with IFRS 2; - - c. Functional and presentation currency d. Going concern e. Estimates and judgements f. Relevance and importance of notes to the reader derivatives are measured at fair value; short positions are measured at fair value. investment properties are measured at fair value; certain loans to customers which are measured at fair value; contingent consideration is measured at fair value; and Information about areas of estimation uncertainty and critical judgements made by management in applying accounting policies that can have a significant effect on the amounts recognised in the Consolidated Financial Statements is provided in note 109. In order to enhance the informational value of the Consolidated Financial Statements, the notes are evaluated based on relevance and importance for the reader. This can result in information, that has been evaluated as neither important nor relevant for the reader, not being presented in the notes. The estimates and underlying assumptions are based on historical results and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period and future periods if the revision affects both current and future periods. Kvika banki hf. ("Kvika" or the "Bank") is a limited liability company incorporated and domiciled in Iceland, with its registered office at Katrínart ún 2, Reykjavík. The Bank operates as a bank based on Act No. 161/2002, on Financial Undertakings, and is supervised by the Financial Supervisory Authority of the Central Bank of Iceland ("FME"). Following the completion of the sale of TM in February 2025, the Group is no longer designated by the FME as a financial conglomerate as defined in Article no. 3 of Act no. 61/2017 on Additional Supervision of Financial Congl omerates. The Consolidated Financial Statements were approved and authorised for issue by the Board of Directors and the CEO on 11 February 2026. The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union and additional requirements, as applicable, in the Act on Annual Accounts no. 3/ 2006, the Act on Financial Undertakings no. 161/2002 and rules on accounting for credit institutions no. 834/2003. The Consolidated Financial Statements have been prepared using the historical cost basis except for the following: The Consolidated Financial Statements for the year ended 31 December 2025 comprise Kvika banki hf. and its subsidiaries (together referred to as the Group). The Group operates four business segments, Asset Management, Commercial Banking, Investment Banking and UK operations. Kvika is a financial services company with operations in Iceland and the United Kingdom. Kvika does not operate traditional branches but delivers its services primarily online, offering a wide range of solutions in asset management, payments, and banking for individuals, busin esses and investors. fixed income securities are measured at fair value; shares and other variable income securities are measured at fair value; The Bank's management has assessed the Group's ability to continue as a going concern and is satisfied that the Group has the resources to continue its operations. The preparation of financial statements in accordance with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The Consolidated Financial Statements are prepared in Icelandic krona (ISK), which is the Group's functional currency. All financial information h as been rounded to the nearest million, unless otherwise stated. securities used for hedging are measured at fair value; The Group's assets and liabilities which are denominated in other currency than ISK are translated to ISK using the exchange rate as at the end of day 31 December 2025. Consolidated Financial Statements 31 December 2025 17 ===== SIDA 21 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 0 2. Basis of preparation (cont.) g. Change in presentation Restated 31.12.2024 Reclassified 31.12.2024 Assets: 28,319 (9,726) 18,593 - 11,530 11,530 9,507 (1,804) 7,704 316,768 - 316,768 354,594 - 354,594 Liabilities and Equity: 265,077 - 265,077 89,517 - 89,517 354,594 - 354,594 Restated 12m 2024 Reclassified 12m 2024 Lines in the Consolidated Statement of Cash Flows - (777) (777) 773 (1,216) (444) 24,677 (3,825) 20,852 28,319 (5,819) 22,500 3. Discontinued operations Assets 28.2.2025 31.12.2024 391 2,072 25,551 21,065 18,567 20,608 12,350 12,350 1,796 1,608 58,655 57,702 Liabilities 26,477 25,302 561 605 1,367 1,422 28,405 27,329 - (55) 30,250 30,318 Intangible assets ...................................................................................................................................................................... All other assets .................................................................................................................................................. Loans to credit institutions ............................................................................................................................... Other assets ....................................................................................................................................................... Cash and cash equivalents at the end of the year ............................................................................................ Loans to credit institutions ............................................................................................................................... In 2025 the Group changed the way it presents cash and balances with central bank. The Group now presents loans to credit institutions as a separate line item in the statement of financial position. That line item includes balances with other credit institutions, which were previously included as part of cash and balances with central bank and other assets. The comparative figures for 31 December 2024 in the statement of financial position, 12m 2024 in the Consolidated Statement of Cash Flows and in the notes have been restated, as applicable. Cash and balance with Central bank ................................................................................................................. Equity ................................................................................................................................................................. Total liabilities and equity The table below shows the effect of the reclassification on the Consolidated Statement of Financial Position at 31 December 2024: On 28 February 2025 Kvika and Landsbankinn hf. finalised the sale of 100% of TM tryggingar hf. share capital to Landsbankinn hf. as specified in note 68. Other assets ....................................................................................................................................................... Cash and balances with Central Bank at the beginning of the year ................................................................. Other liabilities ........................................................................................................................................................................ The major classes of assets and liabilities of the discontinued operations are as follows: Other assets ............................................................................................................................................................................. Assets classified as held for sale Insurance contract liabilities .................................................................................................................................................... Deferred tax liabilities ............................................................................................................................................................. Liabilities associated with assets classified as held for sale Net assets directly associated with disposal group Eliminations with the Group .................................................................................................................................................... Total assets Cash and balances with Central Bank ...................................................................................................................................... Fixed income securities ........................................................................................................................................................... Shares and other variable income securities .......................................................................................................................... Liabilities ........................................................................................................................................................... Consolidated Financial Statements 31 December 2025 18 ===== SIDA 22 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 0 3. Discontinued operations (cont.) 31.12.2025 31.12.2024 30,318 26,830 1,901 3,460 (32,217) - (2) 28 0 30,318 2025 2024 1.1.-28.2 1.1.-31.12 1,058 5,161 (2,739) (4,077) 0 (1) (1,681) 1,083 391 0 Segment information 4. Business segments - - - - - Cash and cash equivalents of the subsidiary that left the Group at disposal ......................................................................... The loss after tax of the disposed entity for the period 1 January to 28 February 2025 amounted to ISK 138 m illion and is included in profit after tax from discontinued operations. Treasury Commercial Banking offers various forms of banking services and related advisory services. Included in this operating segment is Lykill, the leasing operations of the Group, and the Group's fintech operations, such as Auður, Netgíró and Aur, as well as the payment facilitation operations of Straumur greiðslumiðlun hf. Investment Banking Investment Banking provide a range of professional services in the fields of specialised financing, securities and foreign exchange transactions and corporate finance services. UK operations The UK operations consist of asset management and corporate finance services through Kvika Limited and specialised lending services through Ortus Secured Finance Ltd, as well as the Bank's lending to customers in the UK. UK operations is the only geographic area outside of Iceland where the Group operates and for the year 2025 it accounted for 19.8% (2024: 17.4%) of net operating income. Net cash inflow/(outflow) Segment reporting is based on the same principles and structure as internal reporting to the CEO and the Board of Directors. Segment performance is evaluated on profit before tax and excludes income from discontinued operations. Reportable segments Asset Management Products and services offered include asset management involving both domestic and foreign assets, private banking and private pension plans. The management of a broad range of mutual funds, investment funds and institutional investor funds is included in this segment through the operations of Kvika eignastýring hf. Commercial Banking Treasury is responsible for the Bank's funding, liquidity and asset-and-liability management. Treasury oversees the internal fund‘s transfer pricing and manages the relationship with investors, credit rating agencies and financial institutions. Market making activities in domestic securities sit within Treasury. Other adjustments ................................................................................................................................................................... Balance at the beginning of the year ....................................................................................................................................... Purchase price ......................................................................................................................................................................... Net assets directly associated with disposal group Profit after tax from discontinued operations ........................................................................................................................ During the year 2025, the Group defined the following reportable operating segments; Asset Management, Commercial Banking, Investment Banking, UK operations and Treasury. Treasury, which was previously r eported as part of Investment Banking, is now presented separately. Operating segments pay and receive interest to and from Treasury on an arm's length basis to reflect the allocation of capital and funding cost. During the year 2025, the Group implemented the change that operating segments would receive interest from Treasury to reflect the allocation of capital. Comparative figures have been restated, as applicable. Operating ................................................................................................................................................................................. Investing ................................................................................................................................................................................... Financing .................................................................................................................................................................................. The net cash flows incurred by the discontinued operations are as follows: Set out below is the reconciliation of Net assets directly associated with disposal group: Supporting units consist of the functions carried out by the Bank's support divisions, such as Risk Management, Finance, IT and Operations, etc. The information presented relating to the supporting units does not represent an operating segment. Consolidated Financial Statements 31 December 2025 19 ===== SIDA 23 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 0 4. Business segments (cont.) Asset Commercial Investment UK Supporting 2025 Management Banking Banking operations Treasury units Total (6) 5,084 2,777 2,376 1,691 (27) 11,896 2,206 1,549 1,807 648 93 (11) 6,291 98 2 (117) 813 131 (0) 926 - - - - - 37 37 53 138 9 8 43 9 261 Net operating income 2,351 6,772 4,476 3,846 1,958 7 19,411 (1,132) (1,014) (925) (877) (296) (2,720) (6,965) (122) (1,939) (211) (416) (167) (2,254) (5,109) Administrative expenses (1,254) (2,953) (1,137) (1,293) (463) (4,974) (12,074) 0 (282) (155) (79) 1 - (515) (24) - - (580) - - (604) (682) (1,481) (882) (214) (334) 3,592 - Profit (loss) before tax from continuing operations 392 2,057 2,302 1,680 1,162 (1,375) 6,217 Net segment revenue from external 2,336 1,338 8,709 5,420 1,322 285 19,411 Net segment revenue from other 15 5,434 (4,233) (1,575) 636 (278) - Asset Commercial Investment UK Supporting 2024 Management Banking Banking operations Treasury units Total (18) 4,844 1,954 1,792 1,147 (38) 9,681 2,457 1,536 1,399 623 120 0 6,137 96 (6) 292 554 122 (4) 1,054 - 41 - - - - 41 33 218 - 13 - 7 271 Net operating income 2,568 6,634 3,645 2,982 1,389 (34) 17,185 (1,030) (979) (855) (748) (245) (2,588) (6,445) (78) (1,695) (185) (413) (102) (1,688) (4,162) Administrative expenses (1,108) (2,674) (1,040) (1,161) (348) (4,276) (10,608) (3) (343) (90) (169) (1) - (605) (5) - - (149) - - (154) (730) (1,548) (832) (162) (297) 3,570 - Profit (loss) before tax from continuing operations 723 2,069 1,682 1,341 743 (740) 5,818 Net segment revenue from external 2,610 159 7,583 4,534 2,314 (15) 17,185 Net segment revenue from other (41) 6,475 (3,938) (1,552) (925) (19) - Share in profit of associates .................................... Other operating income ......................................... Salaries and related expenses ................................ Other operating expenses ...................................... Net impairment ....................................................... customers ............................................................. segments .............................................................. Share in profit of associates .................................... Other operating income ......................................... Salaries and related expenses ................................ Other operating expenses ...................................... Net impairment ....................................................... Revaluation of contingent consideration ............... Cost allocation ........................................................ customers ............................................................. segments .............................................................. Cost allocation ........................................................ Net interest income ................................................ Net fee and commission income ............................ Net financial income ............................................... Net interest income ................................................ Net fee and commission income ............................ Net financial income ............................................... Revaluation of contingent consideration ............... Consolidated Financial Statements 31 December 2025 20 ===== SIDA 24 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 4 Income statement 5. Net interest income Interest income is specified as follows: Q4 2025 Q4 2024 2025 2024 473 382 2,002 2,198 10 43 481 154 5,792 4,692 21,707 19,538 141 392 1,703 2,779 765 1,288 3,724 4,186 125 8 280 9 Total 7,307 6,805 29,895 28,865 Interest expense is specified as follows: Q4 2025 Q4 2024 2025 2024 2,368 2,690 10,083 11,059 589 678 2,371 2,744 985 696 3,782 3,332 98 88 560 597 132 142 1,094 1,396 71 13 109 57 Total 4,242 4,307 17,999 19,184 Net interest income 3,065 2,498 11,896 9,681 6. Net fee and commission income Q4 2025 Q4 2024 2025 2024 434 659 2,157 2,401 267 394 1,566 1,419 194 159 748 602 510 464 2,063 2,084 36 89 366 281 Total fee and commission income 1,442 1,765 6,901 6,788 (177) (164) (610) (651) Net fee and commission income 1,265 1,601 6,291 6,137 In the fourth quarter, the Group reclassified retrospectively a port ion of the fees that had been recorded as other fee and commission income during the first three quarters of 2025. The reclassification primarily resulted in a decrease in other fee and commission income and an increase in fee income related to loans and guarantees. Total interest income recognised in respect of financial assets not carried at fair value through profit or loss amounts to ISK 24,437 million ( 2024: ISK 21,772 million). Total interest expense recognised in respect of financial liabilities not carried at fair value through profit or loss amounts t oI S K 16,905 million (2024: ISK 17,788 million). Fee and commission income from cards and payment solutions relate to the Group's payment facilitations services as well as the issuance of debit and credit cards. Fee and commission income from loans and guarantees include the Group's lending operations, notification and collection fees, as well as fees from issuing guarantees. Asset Management ..................................................................................................................... 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 from capital markets and corporate finance include fees and commissions generated by miscellaneous corporate finance service, securities, derivatives and FX brokerage as well as market making. Cards and payment solutions ..................................................................................................... Loans and guarantees ................................................................................................................. Other interest expense* ............................................................................................................. Issued bonds ............................................................................................................................... Derivatives .................................................................................................................................. Deposits ..................................................................................................................................... Cash and balances with Central Bank ......................................................................................... Derivatives .................................................................................................................................. Loans to customers ..................................................................................................................... Other interest income ................................................................................................................ Fixed income securities (FVOCI) ................................................................................................. Loans to credit institutions ......................................................................................................... Other fee and commission income ............................................................................................ Fee and commission expense ..................................................................................................... Fee and commission income is disclosed based on the nature and type of income generated across business segments. Information on net fee and commission income by segment is disclosed in note 4. Borrowings .................................................................................................................... .............. Subordinated liabilities ............................................................................................................... * Thereof are lease liabilities' interest expense amounting to ISK 37 million (2024: ISK 54 million). Consolidated Financial Statements 31 December 2025 21 ===== SIDA 25 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 4 7. Net financial income Net financial income is specified as follows: Q4 2025 Q4 2024 2025 2024 Net (loss) gain on financial assets and financial liabilities mandatorily measured at fair value through profit or loss 133 87 420 310 15 17 (8) (1) 395 356 848 354 1 7 41 460 19 5 (62) (62) (190) - (273) - 108 34 (40) (6) Total 481 507 926 1,054 8. Foreign currency exchange difference Foreign currency exchange difference is specified as follows: Q4 2025 Q4 2024 2025 2024 674 (13) 2,003 (1,326) (566) 47 (2,044) 1,319 Total 108 34 (40) (6) 9. Administrative expenses Administrative expenses are specified as follows: Q4 2025 Q4 2024 2025 2024 1,939 1,705 6,965 6,445 1,040 871 3,761 3,056 241 231 1,140 872 42 57 208 234 Total 3,263 2,864 12,074 10,608 10. Salaries and related expenses Salaries and related expenses are specified as follows: Q4 2025 Q4 2024 2025 2024 1,314 1,170 4,848 4,574 194 170 627 478 - 7 - 33 218 186 709 642 90 79 290 273 124 93 491 447 Total 1,939 1,705 6,965 6,445 250 251 249 247 250 253 250 253 (Loss) gain on other financial instruments ................................................................................. Other salary related expenses .................................................................................................... Tax on financial activity .............................................................................................................. Salaries ........................................................................................................................................ Performance based payments excluding share-based payments ............................................. Fixed income securities ............................................................................................................ Financial assets at fair value through OCI ................................................................................ Derivatives ................................................................................................................................ Loans to customers .................................................................................................................. Gain (loss) on financial instruments at fair value through profit and loss ................................. Total number of full time employees at year-end ..................................................................... Share-based payment expenses ................................................................................................. Loss on prepayments of borrowings .......................................................................................... Foreign currency exchange difference ....................................................................................... Shares and other variable income securities ........................................................................... Salaries and related expenses .................................................................................................... Other operating expenses .......................................................................................................... Depreciation and amortisation .................................................................................................. Depreciation of right of use asset .............................................................................................. According to Act No. 165/2011, passed in 2011, banks and other financial institutions providing VAT exempt services, must pay a tax based on salary payments, called tax on financial activity. The current tax rate is 5.50% (2024: 5.50%). During the first quarter of 2025, ISK 225 m illion in irregular and one-off costs were incurred by the Group, among other due to the finalisation of the sale of TM. The expenses are included in all the line items in the table above except salaries and related expenses. Average number of full time employees during the year .......................................................... Pension fund contributions ........................................................................................................ Consolidated Financial Statements 31 December 2025 22 ===== SIDA 26 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 4 11. Employment terms of the Board of Directors and management Board and Pension Board and Pension committee contribut- committee contribut- remunerat. ion Total remunerat. ion Total 20 3 23 21 3 24 16 2 19 21 3 24 11 2 13 13 2 15 14 2 16 16 2 18 8 1 9 - - - 3 0 4 4 0 4 1 0 1 1 0 1 - - - 13 2 15 Total 73 11 84 88 13 101 Performance Pension Performance Pension Salaries and based contribut- Salaries and based contribut- benefits payments ion Total benefits payments ion Total 60 12 11 83 60 9 10 80 318 48 51 416 259 33 40 331 - - - - 25 - 4 29 54 - 8 62 49 - 7 56 - - - - 60 - 9 69 Total 431 60 70 560 452 42 70 565 12. Auditor's fees Remuneration to the Group's auditors is specified as follows: 2025 2024 139 189 27 31 11 25 Total 178 244 154 180 Sigurgeir Guðlaugsson, former Board member and former The members of the BOD owned, or controlled, 21,440 thousand shares at year-end 2025. The CEO owned, or controlled, 4,842 thousand shares in the Bank at year-end 2025. The members of the executive committee owned, or controlled, 67,467 thousand shares and options for 1,366 thousand shares at year-end 2025. the Risk and Remuneration committees ............................................ (on average 0), 2024: 1 (on average: 0.5)) .... Guðjón Karl Reynisson, Board member and chairperson Helga Kristín Auðunsdóttir, Deputy Chairman of the Board, member Ingunn Svala Leifsdóttir, Board member, chairperson of the Audit and the Remuneration committees ............................... of the Audit committee and member of the Risk committee ............ Helga Jóhanna Oddsdóttir, former alternate Board member ............. of the Remuneration committee ........................................................ Sigurður Hannesson, Chairman of the Board and member of Páll Harðarson, Board member and chairperson of the Risk committee ......................................................................... Ármann Þorvaldsson, CEO ............................ 2024: 8 (on average: 7.6)) ............................. Other audit related services ................................................................................................................................................ Thereof to the auditors of the Bank .................................................................................................................................... 2024 2025 Remuneration to the Board of Directors Salaries and benefits paid to the Board of Directors, the CEO, Managing Directors, including the Deputy CEO, and other key employees of the Bank for their work for companies within the Group are specified as follows: Expensed notice payments ........................... member of the Risk committee .......................................................... Review of interim accounts ................................................................................................................................................. Audit of annual accounts .................................................................................................................................................... The table above shows fees paid to Deloitte and other component auditors. Total fee paid to other component auditors for the year 2025 amounts to ISK 23 million (2024: ISK 65 million). chairperson of the Risk committee .................................................... The Bank has adopted a remuneration policy which covers three remuneration components, base pay, performance based incentive scheme and other benefits, including pension fund contributions. Further info rmation about the remuneration policy is provided in notes 64-66. Besides the CEO, the following were a part of the Bank's executive committee during 2025: i) Anna Rut Ágústsdóttir, Deputy CEO (from January 2026) and MD Operations and Development, ii) Eiríkur Magnús Jensson, CFO, iii) Halldór Snæland, MD of Commercial Banking, iv) Bjarni Eyvinds, MD Investment Banking, v) Lilja Jensen, General Counsel, vi) Elísabet G. Björnsdóttir, MD Risk Management and vii) Guðmundur Þórðarson, MD Business Development. Expensed notice payments include payments during notice period for the members of executive committee and other key employees, as applicable, which left the Group during the respective year. Guðmundur Þórðarson, former Board member and former 2025 2024 Managing Directors (2025: 7 (on average 7), Former Managing Directors (2025: 0 Other key employees (2025:2, 2024:2) ......... Remuneration to the CEO, executive committee and other key employees Consolidated Financial Statements 31 December 2025 23 ===== SIDA 27 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 4 13. Q4 2025 Q4 2024 2025 2024 (179) (91) (511) (599) (0) (1) (7) (4) 4 1 2 (2) Total (175) (91) (515) (605) 14. Revaluation of contingent consideration 15. Income tax Reconciliation of effective tax rate: 2025 2024 6,217 5,817 20.0% (1,243) 21.0% (1,222) (0.1%) 5 (0.9%) 53 1.0% (63) 0.0% 0 0.3% (16) 0.4% (21) 3.3% (205) (4.5%) 260 (1.6%) 100 (2.8%) 163 Effective income tax rate 22.9% (1,423) 13.2% (766) 1.8% (113) 1.9% (109) Effective tax rate 24.7% (1,536) 15.0% (876) 16. Special tax on financial activity 17. Special tax on financial institutions Special tax on financial activity .................................................................................................. In March 2025, the Group completed the expedited acquisition of the remaining management shares in Ortus Secured Finance ltd. (OSF), originally scheduled to be acquired over a five-year period (2024–2028) with pricing linked to OSF’s a nnual performance . An expense of ISK 580 million was incurred in the first quarter of 2025 related to the expedited acquisition of the OSF shares. Net change in impairment of loans ............................................................................................ Income tax using the domestic corporation tax rate ................................................................. Profit before tax .......................................................................................................................... The Bank and some of its subsidiaries will not pay income tax on its profit for 2025 due to the fact that Group has a tax loss carry forward that offsets the calculated income tax. At year-end 2025, the tax loss carry forward of the Group amounted to ISK 6.6 b illion. A substantial part of the tax loss carry forward is utilisable until end of year 2028. Management is of the opinion that the Group's operations in the years to come will result in taxable results which will be offset with the tax loss carry forward. The Group has therefore recognised the tax loss carry forward as a deferred tax asset in the Consolidated Statement of Financial Position. The contingent consideration related to the acquisition of Gamma Capital Management ehf. was revalued during the year 2025. The revaluation led to an expense of ISK 24 million. Other changes ............................................................................................................................. Net impairment According to Act No. 155/2010 on Special Tax on Financial Institutions, certain types of financial institutions, including banks, must pay a nnually a tax based on the carrying amount of their liabilities as determined for tax purposes in excess of ISK 50 billion at year-end. The tax rate is set at 0.145% (2024: 0.145%) and the tax is not a deductible expense for income tax purposes. The tax is presented separately in the Consolidated Income Statement. Effect of tax rates in foreign jurisdictions ................................................................................... The special tax on financial activity is an additional income tax which becomes effective when the income tax base exceeds ISK 1,000 million. It is levied on the same entities as the tax on financial activity according to Act No. 90/2003. The tax rate is set at 6.0% (2024: 6.0%) and the tax is not a deductible expense for income tax purposes. The tax is presented separately in the Consolidated Income Statement. Profit before tax amounts to ISK 6,217 million. Income tax amounts to ISK 1,423 million, resulting in an effective income tax rate of 22.9%. This is substantially different from the Icelandic corporate tax rate of 20%, mainly due to non-taxable income from shares. Special tax on financial activity amounts to ISK 113 million, resulting in an effective tax rate of 24.7%. Tax exempt revenues / loss ........................................................................................................ Non-deductible expenses ........................................................................................................... Income tax is recognised based on the tax rates and tax laws enacted during the current year, according to which the domestic corporate income tax rate was 20.0% (2024: 21.0%). Companies within the Group, which operate outside of Iceland, recognise income tax in accordance with the applicable tax laws in the country they reside. Net change in impairment of other assets ................................................................................. Net change in impairment of loan commitments, guarantees and unused credit facilities ..... Different tax rates ....................................................................................................................... Consolidated Financial Statements 31 December 2025 24 ===== SIDA 28 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 4 18. Earnings per share 2025 2024 2025 2024 2025 2024 Net earnings attributable to equity holders of the Bank 4,366 4,683 1,901 3,460 6,267 8,143 4,496 4,698 4,496 4,698 4,496 4,698 1 - 1 - 1 - Total 4,497 4,698 4,497 4,698 4,497 4,698 0.97 1.00 0.42 0.74 1.39 1.73 0.97 1.00 0.42 0.74 1.39 1.73 Q4 2025 Q4 2024 Q4 2025 Q4 2024 Q4 2025 Q4 2024 Net earnings attributable to equity holders of the Bank 1,269 1,528 - 1,919 1,269 3,447 4,417 4,658 4,417 4,658 4,417 4,658 1 - 1 - 1 - Total 4,418 4,658 4,418 4,658 4,418 4,658 0.29 0.33 - 0.41 0.29 0.74 0.29 0.33 - 0.41 0.29 0.74 Weighted average number of outstanding shares ............................. Adjustments for stock options ............................................................ Basic earnings per share (ISK) .............................................................. Diluted earnings per share (ISK) .......................................................... Continuing operations Continuing and discontinued operations Weighted average number of outstanding shares ............................. Adjustments for stock options ............................................................ Basic earnings per share (ISK) .............................................................. Diluted earnings per share (ISK) .......................................................... The calculation of basic earnings per share is based on earnings attributable to shareholders and a weighted average number of shares outstanding during the period. The diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Bank has issued stock options that have a dilut ive effect. Discontinued operations Consolidated Financial Statements 31 December 2025 25 ===== SIDA 29 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 18 Statement of Financial Position 19. Cash and balances with Central Bank Cash and balances with Central Bank are specified as follows: 31.12.2025 31.12.2024 13,929 12,759 12 16 Included in cash and cash equivalents 13,941 12,774 6,203 5,819 Total 20,145 18,593 20. Loans to credit institutions Loans to credit institutions are specified as follows: 31.12.2025 31.12.2024 8,102 9,726 52 1,804 Total 8,154 11,530 21. Loans to customers Gross Gross Gross carrying Book carrying Book carrying Book 31.12.2025 amount value amount value amount value 64,981 64,090 141,030 139,593 206,012 203,683 - - 3,877 3,877 3,877 3,877 Total 64,981 64,090 144,907 143,470 209,889 207,560 Gross Gross Gross carrying Book carrying Book carrying Book 31.12.2024 amount value amount value amount value 40,609 39,736 111,047 109,593 151,656 149,329 - - 874 874 874 874 Total 40,609 39,736 111,921 110,466 152,530 150,203 22. Fixed income securities Fixed income securities are specified as follows: Mandatorily measured at fair value through profit or loss 31.12.2025 31.12.2024 1,793 2,714 2,425 2,189 1,436 722 Measured at fair value through other comprehensive income 37,473 54,256 - 3,453 1,394 1,459 Total 44,522 64,795 The Group presents finance lease receivables as part of loans to customers at amortised cost. As at 31 December 2025, the book value of finance lease receivables amounted to ISK 23,175 million (31.12.2024: ISK 22,866 million). Loans to customers at FV through profit or loss Deposits with Central Bank ............................................................................................................................................ Cash on hand .................................................................................................................................................................. Loans to customers at FV through profit or loss Restricted balances with Central Bank - fixed reserve requirement ............................................................................. Listed government bonds and bonds with government guarantees .......................................................................... Listed bonds ................................................................................................................................................................. Unlisted bonds ............................................................................................................................................................. CorporatesIndividuals Loans to customers at amortised cost ............... Bank accounts ................................................................................................................................................................. Other loans ..................................................................................................................................................................... The breakdown of the loan portfolio by individuals and corporates is specified as follows: Listed government bonds and bonds with government guarantees .......................................................................... Listed treasury bills ...................................................................................................................................................... TotalIndividuals Loans to customers at amortised cost ............... Listed bonds ................................................................................................................................................................. Total Corporates Consolidated Financial Statements 31 December 2025 26 ===== SIDA 30 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 18 23. Shares and other variable income securities Shares and other variable income securities are specified as follows: Mandatorily measured at fair value through profit or loss 31.12.2025 31.12.2024 996 1,101 3,097 3,069 15,013 - 1,558 1,262 Total 20,663 5,432 24. Securities used for hedging Securities used for hedging are specified as follows: 31.12.2025 31.12.2024 938 1,905 320 584 5,353 9,669 84 442 Total 6,695 12,601 25. Derivatives 31.12.2025 Assets Liabilities Assets Liabilities 29,496 29,476 685 - 65,265 55,477 1,037 6 4,890 4,868 29 15 - 8,745 156 - 8,100 7,510 1,020 429 2,034 2,034 323 323 Total 109,785 108,109 3,250 773 31.12.2024 Assets Liabilities Assets Liabilities 159 107 56 - 34,755 35,672 455 1,321 13,022 13,000 40 18 - 7,386 - 283 13,586 14,534 645 1,310 Total 61,522 70,699 1,197 2,932 31.12.2025 31.12.2024 (21) (53) 182 39 (36) (8) Total 124 (21) Currency forwards ................................................................................................ Interest rate derivatives ....................................................................................... Notional Equity options ...................................................................................................... Carrying amount Foreign currency revaluation of the net foreign operations ......................................................................................... Tax effect ........................................................................................................................................................................ Listed government bonds and bonds with government guarantees ............................................................................. Listed bonds .................................................................................................................................................................... Unlisted shares ............................................................................................................................................................. Unlisted unit shares ..................................................................................................................................................... Listed shares ................................................................................................................................................................... Bond and equity total return swaps .................................................................... Notional Derivatives are specified as follows: Currency forwards ................................................................................................ Interest rate derivatives ....................................................................................... Listed shares ................................................................................................................................................................. Unit shares in cash equivalent liquidity funds ............................................................................................................. Unlisted unit shares ........................................................................................................................................................ Carrying amount Currency forwards used for hedge accounting ................................................... Cross - currency interest rate swaps .................................................................... Currency forwards used for hedge accounting ................................................... Cross - currency interest rate swaps .................................................................... Bond and equity total return swaps .................................................................... The hedging gain recognised in OCI before tax is equal to the change in fair value used for measuring effectiveness. There is no ineffectiveness recognised in profit or loss. Set out below is the reconciliation of foreign currency translation reserve component of equity due to hedge accounting and the analysis of other comprehensive income: Balance at the beginning of the year ............................................................................................................................. Consolidated Financial Statements 31 December 2025 27 ===== SIDA 31 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 18 26. Group entities Share Share Entity Nature of operations Domicile 31.12.2025 31.12.2024 Holding company Iceland 100% 100% Asset management Iceland 100% 100% Debt Collection Iceland 100% 100% Iceland 100% 100% Insurance company Iceland - 100% Insurance company Iceland - 100% Iceland 85% 85% UK 100% 100% UK 100% 80% 27. Investment in associates a. Investment in associates is accounted for using the equity method and is specified as follows: Share Share Entity Nature of operations Domicile 31.12.2025 31.12.2024 Iceland 24% 24% Croatia 40% 40% b. Changes in investments in associates are specified as follows: 31.12.2025 31.12.2024 113 96 (36) (20) 37 41 3 (5) Total 117 113 28. Intangible assets Intangible assets are specified as follows: a. Customer Software 31.12.2025 Goodw ill relationships Brands and other Total 17,784 1,567 219 2,123 21,693 - - - 306 306 - - - (27) (27) - (163) (45) (573) (781) (45) (15) (1) - (61) Balance as at 31 December 2025 17,738 1,388 174 1,829 21,130 17,738 2,082 369 4,281 24,471 - (694) (195) (2,452) (3,341) Balance as at 31 December 2025 17,738 1,388 174 1,829 21,130 Customer Software 31.12.2024 Goodw ill relationships Brands and other Total 17,783 1,732 264 2,127 21,906 - - - 476 476 - - - (4) (4) - (167) (46) (476) (689) 1 2 0 0 4 Balance as at 31 December 2024 17,784 1,567 219 2,123 21,693 17,784 2,098 370 4,022 24,273 - (531) (151) (1,898) (2,580) Balance as at 31 December 2024 17,784 1,567 219 2,123 21,693 Holding company Balance at the beginning of the year ............................................................................................................................. Dividend received ........................................................................................................................................................... Share in profit of associates, net of income tax ............................................................................................................. Currency adjustments ............................................................... Accumulated amortisation and impairment losses ................. Digital solutions provider Amortisation ............................................................................. Balance as at 1 January 2025 .................................................... Discontinued ............................................................................. Amortisation ............................................................................. Discontinued ............................................................................. Balance as at 1 January 2024 .................................................... Currency adjustments ............................................................... Gross carrying amount ............................................................. Skilum ehf. ......................................................... The Group does not consider its associates material, neither individually nor as a group. Gláma fjárfestingar slhf. .................................... Kvika eignastýring hf. ......................................... GAMMA Capital Management ehf. ................... Moberg d. o. o. .................................................. TM tryggingar hf. ............................................... Gross carrying amount ............................................................. Accumulated amortisation and impairment losses ................. Additions during the year ......................................................... Ortus Secured Finance ltd. ................................ Fund management The sale of TM tryggingar hf. and TM líftryggingar hf. was concluded during the first quarter of 2025. Furthermore, during the same period the Group acquired the remaining shares in Ortus Secured Finance ltd. Additionally, during the same period, one of the Group's subsidiary was renamed from Kvika Securities ltd., to Kvika Limited. Straumur greiðslumiðlun hf. ............................. Kvika Limited ..................................................... Lending operations Exchange rate difference ................................................................................................................................................ AC GP 3 ehf. ....................................................... Additions during the year ......................................................... Payment facilitator Business consultancy services TM líftryggingar hf. ............................................ The main subsidiaries held directly or indirectly by the Group are listed in the table below. Consolidated Financial Statements 31 December 2025 28 ===== SIDA 32 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 18 28. Intangible assets (cont.) b. Impairment testing Future Discount 31.12.2025 growth rate rate Book value 3.8% 12.0% 2,944 3.8% 10.1% 11,827 3.8% 10.3% 921 3.0% 10.2% 1,768 3.8% 10.3% 278 Total 17,738 Future Discount 31.12.2024 growth rate rate Book value 3.5% 11.2% 2,944 3.9% 11.3% 11,827 3.5% 11.2% 1,200 3.5% 9.2% 1,814 Total 17,784 29. Operating lease assets Operating lease assets are specified as follows: 31.12.2025 31.12.2024 215 530 285 36 (86) (261) (53) (90) Total 361 215 494 465 (132) (250) Total 361 215 The cash flow projections for 2025 are derived from the Group's three year business plan which has been approved by the Board of Directors. In some instances, the Group's subsidiaries have prepared a three year business plan which has been approved by the Board of Directors of those companies. Management prepares a five year cash flow projection for each CGU, which is derived from the three year business plan and is also based on management assumptions. The following table shows the key assumptions used in the estimation of the recoverable amount. The recoverable amounts are calculated by discounting the estimated future cash flow of the CGUs. The time value of money and price of uncertainty are based on external market information about market risk, interest rates and CGU specific elements like country risk. UK operations ....................................................................................................................................... Additions ......................................................................................................................................................................... Disposals ......................................................................................................................................................................... Depreciation ................................................................................................................................................................... Accumulated depreciation ............................................................................................................................................. Assets with indefinite useful life, such as goodwill, are not amortised but are subject to annual impairment testing as described in note 91. Goodwill is allocated to cash generating units ("CGUs") for the purpose of impairment testing. The allocation is made to those CGUs or groups of CGUs that are expected to benefit from the business combinations in which the goodwill arose. As described in note 4, at the beginning of the year 2025 the operations of Treasury were separated from Investment Banking and presented as a distinct segment. In accordance with the relative value approach, the allocated goodwill was split between the two segments, with 77% (ISK 921 million) assigned to Investment Banking and 23% (ISK 278 million) to Treasury. Goodwill was therefore allocated to five CGUs during 2025 but four CGUs during 2024. Investment Banking ............................................................................................................................. The goodwill impairment tests were performed at the end of 2025. Their results show that the recoverable values exceed the carrying values of goodwill. In addition to the base case testing, additional scenarios were tested where some key inputs had been stressed. In all scenarios tested the results show that there is sufficient headroom and that there are no triggers indicating that impairment is necessary. Commercial Banking ............................................................................................................................ Asset Management .............................................................................................................................. Commercial Banking ............................................................................................................................ Treasury ................................................................................................................................................ Asset Management .............................................................................................................................. Investment Banking ............................................................................................................................. UK operations ....................................................................................................................................... Gross carrying amount ................................................................................................................................................... Balance as at 1 January ................................................................................................................................................... Consolidated Financial Statements 31 December 2025 29 ===== SIDA 33 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 18 30. Deferred tax assets and liabilities 31.12.2025 31.12.2024 939 2,273 (257) (466) Net 682 1,807 31.12.2025 31.12.2024 38 41 (68) (79) (495) 159 (114) (246) 1,322 1,931 Total 682 1,807 5,474 2 909 1 14 8 14 187 Total 6,608 31. Other assets Other assets are specified as follows: 31.12.2025 31.12.2024 4,096 2,861 3,686 3,207 569 1,024 93 - 731 612 Total 9,174 7,704 Right of use asset and lease receivables are specified as follows: 31.12.2025 31.12.2024 1,024 1,321 - 13 - (15) 30 56 (3) 1 (201) - (282) (352) Total 569 1,024 32. Borrowings Borrowings are specified as follows: 31.12.2025 31.12.2024 5,228 13,809 1,579 580 Total 6,806 14,390 The Group has not had any defaults of principal, interest or other breaches with respect to its debt issued and other borrowed funds. Secured borrowings ........................................................................................................................................................ Other borrowings ........................................................................................................................................................... Derivatives ...................................................................................................................................................................... Tax losses 2022, expiring in 2032 ................................................................................................................................................................ Tax losses 2023, expiring in 2033 ................................................................................................................................................................ Tax losses 2024, expiring in 2034 ................................................................................................................................................................ Tax losses 2019, expiring in 2029 ................................................................................................................................................................ Tax losses carried forward .............................................................................................................................................. Termination of lease agreements .................................................................................................................................. Tax losses 2018, expiring in 2028 ................................................................................................................................................................ Other items ..................................................................................................................................................................... Accounts receivable ........................................................................................................................................................ Tax losses 2020, expiring in 2030 ................................................................................................................................................................ Tax losses 2021, expiring in 2031 ................................................................................................................................................................ Tax losses 2025, expiring in 2035 ................................................................................................................................................................ At year end 2025, tax losses carried forward amount to ISK 6.6 billion, and are set to expire as follows: Right of use asset and lease receivables ........................................................................................................................ Unsettled transactions ................................................................................................................................................... Tax losses The Group's deferred tax assets (liabilities) are attributable to the following items: Property and equipment ................................................................................................................................................ Intangible assets ............................................................................................................................................................. Deferred tax assets ......................................................................................................................................................... Deferred tax liabilities .................................................................................................................................................... Indexation ....................................................................................................................................................................... Depreciation and lease receivable instalment ............................................................................................................... Right of use asset and lease receivables mostly consist of real estates for the Group's own use. The Group has entered into sublease contracts for parts of the real estates which it does not use for its operations. The lease receivables are immaterial at year end. Lease liability is specified in not e 37. Impairment ..................................................................................................................................................................... Currency adjustments ..................................................................................................................................................... Right of use asset and lease receivables as at 1 January ............................................................................................... Additions during the year ............................................................................................................................................... Sundry assets .................................................................................................................................................................. Investment properties .................................................................................................................................................... Consolidated Financial Statements 31 December 2025 30 ===== SIDA 34 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 18 33. Issued bonds Issued bonds are specified as follows: First Maturity Currency, nominal value issued Maturity type Terms of interest 31.12.2025 31.12.2024 Unsecured bonds: 2022 2025 At maturity Floating, 3 month REIBOR + 1.25% - 1,674 2023 2026 At maturity Floating, 3 month STIBOR + 4.10% 3,115 9,832 2023 2026 At maturity Floating, 3 month NIBOR + 4.10% 4,193 9,891 2023 2026 At maturity Floating, 3 month STIBOR + 4.0% 6,845 6,325 2021 2027 At maturity CPI-indexed, fixed 1.0% 7,172 6,915 2025 2028 At maturity Floating, 3 month NIBOR + 2.0% 5,039 - 2025 2028 At maturity Floating, 3 month STIBOR + 2.0% 8,228 - 2025 2028 At maturity Floating, 3 month REIBOR + 1.14% 5,109 - 2025 2029 At maturity Fixed 4.50% 30,209 - 2022 2032 At maturity CPI-indexed, fixed 1.40% 2,579 2,486 Total 72,490 37,123 759 - Total 73,249 37,123 34. Subordinated liabilities a. Subordinated liabilities: First Maturity Currency, nominal value issued Maturity type Terms of interest 31.12.2025 31.12.2024 2023 2034 At maturity CPI-Indexed, fixed 6.25% 2,733 2,634 2015 2045 At maturity CPI-Indexed, fixed 6.25% 3,109 2,994 Total 5,841 5,629 b. Subordinated liabilities are specified as follows: 31.12.2025 31.12.2024 5,629 5,993 - (800) - 500 (272) (113) (76) (346) 560 394 Total 5,841 5,629 35. Short positions held for trading Short positions held for trading are specified as follows: 31.12.2025 31.12.2024 108 128 253 25 72 - Total 433 153 EMTN 28 0421, NOK 400 million ..... TM 15 1, ISK 2,000 million ............... KVIKA 32 0112, ISK 2,000 million ..... KVIKA 28 0703, ISK 5,000 million ..... EMTN 26 0511, SEK 566 million * .... EMTN 26 0511, NOK 750 million * ... Additions ........................................................................................................................................................................... Listed shares ...................................................................................................................................................................... KVIKA 25 1201 GB ISK 1,660 million EMTN 28 0421, SEK 600 million ....... Unlisted senior unsecured bonds, total ............................................................................................................................ KVIKA 34 1211 T2i, ISK 2,500 m. ...... * Bond issued in two tranches, first tranche SEK 275 million was issued in May 2023 at a spread of STIBOR + 410 bps, the second tranche amounting to SEK 500 million was issued in May 2024 at a price corresponding to a spread of STIBOR + 240 bps. In January 2025, concurrent with an offering of new bonds in SEK/NOK, Kvika offered to buy back bonds issued by the Bank in SEK with a maturity date 11 May 2026 and in NOK with a maturity date of 11 May 2026. The Bank received valid tenders of SEK 209 m illion and NOK 50 million which were all accepted. The Bank further tendered the Bonds in October 2025, accepting offers for a total aggregate nominal amount of SEK 339 m illion and NOK 417 million. Following both tenders, the remaining outstanding nominal amount of SEK Notes and NOK Notes are SEK 227 million and NOK 333 million respectively. Listed bonds ...................................................................................................................................................................... Paid interests due to indexation ....................................................................................................................................... Accrued interests and indexation ..................................................................................................................................... Listed government bonds and bonds with government guarantees ............................................................................... Balance at the beginning of the year ................................................................................................................................ S ubordinated liabilities are financial liabilities in the form of subordinated capital which, in case of the Group's voluntary or compulsory windin g-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 Tier 2 an d are a part of the equity base. The amount eligible for Tier 2 capital treatment is amortised on a straight-line basis over the final 5 years to maturity or up to 20% a year. The Group may only retire subordinated liabilities with the permission of the FME. At the interest payment date in May 2025 for TM 15 01, the a nnual interest rate increased from 5.25% p.a. to 6.25% p.a. Furthermore, as of that interest payment date, the Group had the right to repay the TM 15 01 subordinated bond and on any subsequent interest payment dates until maturity. Additionally, at the interest payment date in the year 2029 for KVIKA 34 1211 T2i, the Group has the right to repay the subordinated bond and on any subsequent interest payment dates until maturity. EMTN 26 1123 GB, SEK 500 million . Redemption of KVB 18 02 ................................................................................................................................................. Paid interest ...................................................................................................................................................................... KVB 21 02, ISK 5,400 million ............ EMTN 29 0602, EUR 200 million ...... Consolidated Financial Statements 31 December 2025 31 ===== SIDA 35 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 18 36. Short positions used for hedging Short positions used for hedging are specified as follows: 31.12.2025 31.12.2024 432 - - 42 Total 432 42 37. Other liabilities Other liabilities are specified as follows: 31.12.2025 31.12.2024 5,268 7,531 3,252 1,565 1,688 1,259 1,055 1,111 802 1,158 641 320 433 377 16 18 444 296 Total 13,599 13,635 Lease liability is specified as follows: 31.12.2025 31.12.2024 1,158 1,510 - 13 - (15) (5) 2 (382) (408) 30 56 Total 802 1,158 38. Share capital a. Share capital 31.12.2025 31.12.2024 4,631 4,722 214 62 240 310 b. Changes made to the nominal amount of share capital c. Share capital increase authorisations Contingent consideration ............................................................................................................................................... Special taxes on financial institutions and financial activities ....................................................................................... Listed government bonds and bonds with government guarantees ............................................................................. Lease liability as at 1 January ......................................................................................................................................... Other liabilities ............................................................................................................................................................... A copy of the Bank's Articles of Association, including the temporary prov isions, is available on the Bank's website, www.kvika.is, reference is mad e to them for more information. Additions during the year ............................................................................................................................................... Instalment ....................................................................................................................................................................... The lease liability mostly consists of real estate for the Group's own use. The end date of the lease agreement of the Group's head office is in November 2031 but with an exit clause in September 2027. The lease is linked to the Icelandic consumer price index. Right of use asset and lease receivables are specified in note 31. During the year 2025 the Bank's share capital was decreased by ISK 91 m illion in nominal value following a resolution by the AGM to cancel treasury shares. Furthermore, during the year 2025 the Bank acquired treasury shares amounting to ISK 243 million in nominal value as a result of a share buy - back plan. Accounts payable and accrued expenses ....................................................................................................................... Lease liability .................................................................................................................................................................. Salaries and salary related expenses .............................................................................................................................. Share capital according to the Bank's Articles of Association ........................................................................................ Indexation ....................................................................................................................................................................... Expected credit loss allowance for loan commitments, guarantees and unused credit facilities ................................. Unsettled transactions ................................................................................................................................................... Withholding taxes ........................................................................................................................................................... Listed bonds .................................................................................................................................................................... According to the Bank's Articles of Association dated 26 March 2025, cf. temporary provision I, the Board of Directors is authorised to issue options or warrants for up to ISK 240 million in nominal value. To serve such instruments the Board of Directors is authorised to either increase the share capital accordingly or purchase own shares, as permitted by law. This authorisation is valid until 31 March 2027. Termination of lease agreements .................................................................................................................................. Authorised but not issued shares ................................................................................................................................... Nominal amount of treasury shares ............................................................................................................................... The nominal value of shares issued by the Bank is ISK 1 per share. All currently issued shares are fully paid. The holders of shares are entitled to receive dividends as approved by the general meeting and are entitled to one vote per nominal value of ISK 1 at shareholders' meetings. Reference is made to the Bank's Articles of Association for more information about the share capital. Currency adjustments ..................................................................................................................................................... Consolidated Financial Statements 31 December 2025 32 ===== SIDA 36 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 18 39. Capital adequacy ratio (CAR) Own funds 31.12.2025 31.12.2024 68,935 89,517 (3,323) (2,050) (20,925) (28,828) (217) (23,500) (939) (2,273) 1,156 5,801 Common equity Tier 1 capital (CET 1) 44,687 38,667 5,416 5,601 Total own funds 50,103 44,268 Risk-weighted exposure amount (RWEA) 157,968 158,178 8,296 7,586 20,503 28,080 Total risk-weighted exposure amount 186,767 193,844 Capital ratios 23.9% 19.9% 23.9% 19.9% 26.8% 22.8% Capital buffer requirement, % of RWEA 1.6% 1.5% 2.4% 2.4% 2.5% 2.5% Combined buffer requirement 6.4% 6.4% Capital requirement, % of RWEA 31.12.2025 CET1 Tier 1 Total 4.5% 6.0% 8.0% 2.0% 2.6% 3.5% Minimum requirement under Pillar I and Pillar II-R 6.5% 8.6% 11.5% 6.4% 6.4% 6.4% Total capital requirement 12.9% 15.0% 17.9% Capital conservation buffer (CCB) .................................................................................................................................. Operational risk .............................................................................................................................................................. Total equity ..................................................................................................................................................................... Market risk ...................................................................................................................................................................... Tier 2 capital ................................................................................................................................................................... Amounts below the threshold for deduction * .............................................................................................................. Deferred tax asset * ........................................................................................................................................................ Capital adequacy ratio (CAR) .......................................................................................................................................... Pillar II-R capital requirement .............................................................................................................. Combined buffer requirement ............................................................................................................ T1 ratio ............................................................................................................................................................................ Systemic risk buffer (SRB) ............................................................................................................................................... Countercyclical capital buffer (CCyB) ............................................................................................................................. Goodwill and intangibles ................................................................................................................................................ The capital adequacy ratio of the Group is calculated in accordance with capital requirements regulation no. 575/2013 as implemented through the Act on Financial Undertakings No. 161/2002. The Bank's regulatory capital calculations for credit risk and market risk are based on the standardised approach and the capital calculations for operational risk are based on the basic indicator approach. Proposed dividends and buybacks ................................................................................................................................. Shares in other financial institutions * ........................................................................................................................... CET1 ratio ........................................................................................................................................................................ Credit risk ........................................................................................................................................................................ The Group has updated its disclosure of the capital adequacy ratio and the key components in order to provide more information. As a part of this some comparative figures for 31 December 2024 have been restated, although the total figure for common equity Tier 1 capital (CET 1) remains the same. Those line items are marked with an asterisk (*). Pillar I capital requirement .................................................................................................................. Consolidated Financial Statements 31 December 2025 33 ===== SIDA 37 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 18 40. Leverage ratio 31.12.2025 31.12.2024 315,613 253,117 3,331 2,533 1,093 800 Total exposure measure 320,037 256,450 44,687 38,667 14.0% 15.1% 41. Minimum requirements for own funds and eligible liabilities (MREL) Own funds and eligible liabilities 31.12.2025 31.12.2024 44,687 38,667 5,416 5,601 59,096 35,449 Total own funds and eligible liabilities 109,199 79,718 MREL-RWEA and CBR 186,767 193,844 58.5% 41.1% 21.9% 22.0% 6.4% 6.4% MREL-RWEA requirement including CBR* 28.3% 28.4% MREL-TE M 320,037 256,450 34.1% 31.1% 6.0% 6.0% Own funds and eligible liabilities as % of TEM ............................................................................................................... Common equity Tier 1 capital (CET 1) ............................................................................................................................ Tier 2 capital ................................................................................................................................................................... Minimum requirements for own funds (MREL)* ........................................................................................................... Combined buffer requirement (CBR) ............................................................................................................................. Own funds and eligible liabilities as % of RWEA ............................................................................................................ Eligible liabilities ............................................................................................................................................................. Risk-weighted exposure amount (RWEA) ...................................................................................................................... *Requirements were first set in January 2025 On-balance sheet exposures .......................................................................................................................................... Derivative exposures ...................................................................................................................................................... Off - balance sheet exposures ........................................................................................................................................ The leverage ratio is calculated on the basis of the Group's consolidated numbers as per regulation no. 575/2013 of the EU. According to Act no. 161/2002 on Financial Undertakings the minimum leverage ratio requirement is 3%. MREL-TEM requirement* ............................................................................................................................................... According to Act No. 70/2020 on Resolution of Credit Institutions and Investment Firms, the Bank shall at all times meet the minimum requirement for own funds and eligible liabilities (MREL) as a percentage to the Group's total risk-weighted exposure amount (MREL-RWEA). The MREL-RWEA requirement must be met parallel to the combined buffer requirement (CBR). The Group must also meet a requirement of MREL funds as a percentage of the Group's total exposure measure (MREL-TEM). The MREL requirements as of 31 December are 21.9% of MREL-RWEA and 6% of MREL-TEM. Leverage ratio ................................................................................................................................................................. Tier 1 capital ................................................................................................................................................................... Total exposure measure ................................................................................................................................................. Consolidated Financial Statements 31 December 2025 34 ===== SIDA 38 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 41 Risk management 42. Risk management framework a. Board of Directors b. Board of Directors sub-committees c. CEO and the Executive Committee The Executive Committee manages and supervises, as decided by the CEO, the day-to-day operations of the Bank in accordance with the policy formulated by the Bank's Board of Directors in collaboration with the CEO. The managing directors of subsidiaries and the managing directors/directors of individual units of the Bank are each responsible to their CEO/managing director and the boards of each company for risk- taking and risk management in the daily operations of their units. Furthermore, the CEO has established five committees within the Bank which are responsible to the CEO for, among other things, risk management of different risk factors and that the implementation of risk management is in accordance with the Board of Directors’ risk appetite. These committees are composed of the Bank’s employees. The Board of Directors is responsible for the governance of the Bank's Group, including determining the risk management framework. In this regard, the Board of Directors has, among other things, set a Group Governance Policy and approved a Group Risk Policy, which describes the framework that the Board of Directors has set for risk management and the Group's risk appetite. The Board of Directors is responsible for the framework for identifying, assessing, monitoring, managing and disclosing the Group's identified risk factors. The Board of Directors is also responsible for ensuring that the policy is implemented and instructs the CEO to implement and elaborate on its implementation in more detail. The Board of Directors defines the risk appetite, including in the form of the Group's key risk indicators, and defines risk tolerance and risk capacity. The Board of Directors also sets policies for the Bank's main risk factors. In order to ensure consistent and good governance on a consolidated basis, the Board of Directors has also set out ownership po licies for those subsidiaries that are considered an important part of the Group's operations. According to the ownership policies, the boards of the relevant subsidiaries shall always provide the Bank with all necessary information to enable it to perform its supervisory role and the services provided by the Bank to the companies. As it is necessary to coordinate risk management on a consolidated basis, the relevant companies shall provide the Bank’s risk management with all necessary information to enable the Bank to fulfil its obligations as a parent company in a group. The Bank’s Chief Risk Officer and the Compliance Officer may request a direct audience of the boards of the relevant subsidiaries. The risk policy and the entire risk management framework are reviewed regularly with a view to adapting the framework to changes in market conditions and the Group’s operations. The Group, through training and management standards and procedures, continuously aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The Bank's Board of Directors has established three sub-committees, the Risk Committee, the Audit Committee and the Remuneration Committee. In accordance with the Bank´s articles of association, members of the committees are appointed in accordance with applicable law, and each committee currently has three members. It is not permitted to appoint employees of the Bank to any committee. Members shall have the necessary experience and knowledge for each committee´s tasks according to applicable laws and rules. Each committee has incorporated procedural rules which have been confirmed by the Board of Directors. The Remuneration Committee has an advisory and supervisory role for the Bank´s Board of Directors in relation to remuneration and shall advise the Board on the Company's remuneration policy and independently assess the policy and its implementation. This includes, among other things, ensuring that bonuses support sound risk management and do not encourage excessive risk-taking. The Committee also makes proposals for the remuneration of the Executive Committee and the Internal Auditor and oversees the remuneration of the Chief Risk Officer and the Compliance Officer. The CEO is responsible for the effective implementation of risk management through the corporate governance structure and committees. The CEO appoints Managing Directors which, together with the CEO, form the Bank’s Executive Committee. Each Managing Director heads individual divisions within the Bank at any given time. The Bank’s Executive Committee together with the CEO of Kvika eignastýring hf. form the Group Executive Committee. The Risk Committee has an advisory and supervisory role for the Bank´s Board of Directors, including in formulating the Group's risk policy and risk appetite, and acts on behalf of the Bank's Board of Directors in supervising the implementation of the Group's Risk Policy. The Committee supervises the management of the Group's risk factors and the arrangement and effectiveness of risk management. The Committee shall discuss the Bank's risk culture and risk appetite. The Audit Committee has an advisory and supervisory role for the Bank's Board of Directors, including in ensuring the quality of the Bank's annual accounts and other financial information and the independence of the Bank's auditor. The Committee oversees the work process for preparing financial statements, the effectiveness of internal controls, and internal and external audits. Consolidated Financial Statements 31 December 2025 35 ===== SIDA 39 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 42 Risk management 42. Risk management framework (cont.) d. Committees e. Risk management f. g. 43. Hedging The Sustainability Committee, as a professional committee on sustainability and sustainability risk, is responsible for the implementation and execution of the part of the Group's risk policy that relates to sustainability risk. The Sustainability Committee informs the Group Risk Committee on the status of sustainability risk on a regular basis. The Risk Management department is an independent unit reporting to the CEO. It simultaneously fulfils the risk management functions of both the Bank and the entire Group. It monitors the identified risk factors across the Group and develops methods for systematically identifying, assessing, monitoring, and managing them. Risk Management supports other units in identifying and managing risks, ensuring compliance with internal and external regulations. The Risk Management department prepares reports for relevant professional committees and supervisory bodies, including compliance with the defined risk appetite. It provides direct information to the Group's Board and participates in shaping the Group Risk Policy. The Bank operates five committees that deal with the Bank’s risk management: the Group Risk Committee, the Asset and Liability Committee (ALCO), the Credit Committee, the Operations Committee and the Sustainability Committee. The Group Risk Committee oversees the implementation of and compliance with the Group’s risk policy and risk management framework. The Committee has a comprehensive overview of the main risks faced by the Group and monitors that risk-taking is in accordance with the Board of Directors’ risk appetite. The Committee reviews the rules of procedure of other committees and ensures that procedures are coordinated between different committees and companies. ALCO, as a professional committee for the management of the balance sheet as well as capital-, liquidity-, funding- and market risks, is responsible for the implementation and execution of the part of the Group's risk policy that relates to capital-, liquidity-, funding- and market risks. ALCO informs the Group's Risk Committee on the status of these risk factors on a regular basis. The Credit Committee, as a professional committee for the Bank's lending and credit risk, is responsible for the implementation and execution of that part of the Group's risk policy that relates to credit risk. The Credit Committee informs the Group's Risk Committee on the status of credit risk on a regular basis. The Operations Committee, as a professional committee for operations and operational risk, is responsible for the implementation and execution of the part of the Group's risk policy that relates to operational risk. The Operations Committee informs the Group's Risk Committee on the status of operational risk on a regular basis. Internal Audit The compliance function is an independent function that operates under the CEO, and the appointment of the Compliance Officer and his deputy is confirmed by the Board. The compliance function monitors the Bank's compliance risk on a permanent basis and that the measures, policies and procedures that have been put in place so that the Bank complies with its obligations are adequate and effective. The Compliance Officer is also responsible for coordinating and monitoring the Bank's compliance with applicable anti-money laundering and terrorist financing laws and regulations. The Compliance officer, further, manages provisions of applicable market abuse laws and regulations, regarding the handling of inside information and PDMR transactions, and oversees the complaints managements process. Compliance is operated on a consolidated basis and the employees responsible for compliance in the Bank’s subsidiaries report to and receive support from the Compliance Officer and the parent entity’s compliance function. Compliance Officer The internal audit (IA) activity of Kvika bank hf. operates according to Article 16 on the Act on financial companies no. 161/2002 and guiding recommendations of the Financial Supervisory Authority of the Central Bank of Iceland regarding the work of the audit activity of financial companies no. 3/2008. The IA department operates in accordance with the International Professional Practices Framework (IPPF framework). The position of IA in the organizational chart demonstrates the independence of the department. In accordance with the Internal Auditor's charter, the internal auditor has direct and unrestricted access to the Board and managers of the Bank and its subsidiaries. Kvika´s Internal Audit Department provides independent and objective assurance and advisory services regarding the operations of the Bank on a consolidated basis, with the aim of enhancing its overall value. The department’s activities assess and improve the effectiveness of risk management, control processes, and governance practices through systematic and disciplined work, thereby contributing to the Group’s achievement of its key objectives. The Internal Auditor is responsible for effectively managing the IA activity in accordance with the IA´s charter and the IPPF framework. Securities held as a hedge against derivative positions of customers make up a part of the Group's portfolio of assets. The Group hedges currency exposure between the Group's asset portfolio and its liabilities to the extent possible as part of managing its balance and keeping it within approved limits. The Group applies hedge accounting according to IAS 39 against translation of foreign operations. Currency swap agreements are used as a hedge instrument against translation difference arising from foreign operations. Consolidated Financial Statements 31 December 2025 36 ===== SIDA 40 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 42 44. Credit risk - overview a. Definition b. Management c. Credit approval process d. Collateral e. Credit rating f. Loan portfolio management g. Impairment h. Derivatives i. Securities used for hedging The Group offers derivative contracts in the form of swap contracts on highly liquid securities or currencies. On the day when the contract is entered into, the Group purchases the underlying asset and hedges its exposure to price changes. Collateral is primarily in the form of cash or listed, highly liquid securities. The risk management unit and ALCO set rules about the level of collateralisation and the risk management unit monitors the compliance to these rules. Contracts are closed if required levels of collateralisation are not met. The Group hedges itself for market risk of derivative contracts by purchasing the underlying securities at the commencement of the contract. Since the contracts require delivery of the underlying securities to the customer on the settlement day, the credit risk towards the issuer is immaterial. To ensure effective diversification of the loan portfolio, the board has established a limit framework defining maximum exposure as a proportion of the Group’s capital or the total size of the loan portfolio. These framework includes limits on exposures to connected clients, industries, regions and countries etc. Risk management is responsible for monitoring compliance with these limits and reporting any breaches to the credit committee. One of the Group's primary sources of risk is credit risk. Credit risk is the risk of financial loss arising from a customer’s failure to meet its contractual obligations. Credit risk primarily relates to default risk but also includes other risk components where applicable. Credit risk comprises, among other things, default risk, which is the risk that a borrower fails to meet its loan obligations and is mitigated through collateral where available; concentration risk, arising from insufficient diversification of the loan portfolio across borrowers, industries, or geographi cal areas; settlement risk, which may arise in transactions involving securities, foreign exchange, or derivatives if a counterparty fails to fulfil it s obligations on the settlement date; counterparty risk related to deriva tives, resulting from a counterparty’s failure to meet its contractual obligations; and equity risk in the investment portfolio, which reflects the risk of a decline in the value of unlisted equity investments. The risk management unit monitors credit risk and is responsible for developing methodologies to systematically identify, assess, monitor, and manage it. The Group uses a variety of tools and processes to manage credit risk, including collaterals, hedges and loan portfo lio management. A substantial proportion of the Group's loan portfolio consists of senior loans, most of which are secured with collateral. The Group monitors the value of collateral by listed securities on a real time basis and takes prompt action when necessary. Securing loans with collateral is a traditional and effective method of mitigating credit risk. The Group employs various risk-mitigation techniqu es, including obtaining collateral from customers where appropriate. Such collateral grants the Group the right to enforce against the collateralised assets for both current and future obligations of the customer. The Group applies appropriate haircuts to all collateral to ensure that the mitigating effect is prudent and robust. For collateral consisting of listed securities, the Group retains the right to liquidate the assets if their market value falls below a predefined threshold . Risk management ensures that loans have a credit rating and is responsible for reviewing the loan portfolio. The originating department prepares a proposal for each larger loan or credit line which is presented to the credit committee for approval. The proposal consists of a basic description of the client, the purpose of the loan, a simple credit assessment and arguments for or against granting the loan. The committee decides whether there is need for further cred it assessment and on what terms the loan may be granted. For smaller loans the originating department obtains a general credit approval from the credit committee with respect to the process, terms, credit limits and total amount of the specific lending type. A more thorough credit assessment may be conducted if considered appropriate and can include an assessment of a borrower's fundamental credit strength as well as the value of any collateral. To assess the borrower's ability to meet its obligations, the committee may request stress testing of the borrower's cash flows or obtain assessments from third parties. Provisioning for loan impairments is estimated based on expected credit loss models assessing the portfolio as well as individual lending. Risk management suggests a level of provisioning for the portfolio, based on the expected credit loss assessment. Provisions require approval from the credit committee. Refer to note 82 in the Consolidated Financial Statements for more information on the Group's impairment policy. Consolidated Financial Statements 31 December 2025 37 ===== SIDA 41 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 44 45. Maximum exposure to credit risk Public Financial Corporate On-balance sheet exposure entities institutions customers Individuals 31.12.2025 20,145 - - - 20,145 - 8,154 - - 8,154 6 2 143,462 64,090 207,560 41,326 3,008 188 - 44,522 - 2,493 650 107 3,250 1 1,417 5,944 1,151 8,513 61,477 15,074 150,244 65,348 292,143 Off-balance sheet exposure 10 6 8,647 1,050 9,713 - - 1,097 - 1,097 Maximum exposure to credit risk 61,487 15,080 159,988 66,398 302,953 Public Financial Corporate On-balance sheet exposure entities institutions customers Individuals 31.12.2024 18,593 - - - 18,593 - 11,530 - - 11,530 7 2 110,458 39,736 150,203 62,660 1,889 245 - 64,795 - 1,001 144 52 1,197 1 1,115 5,423 142 6,680 81,261 15,536 116,270 39,930 252,997 Off-balance sheet exposure 7 2 5,038 1,013 6,060 - - 801 - 801 Maximum exposure to credit risk 81,268 15,538 122,109 40,943 259,858 46. Credit quality of financial assets Model parameters for Icelandic portfolio Scenarios Base case Upside Downside Base case Upside Downside Unemployment rate 5.0% 4.0% 6.4% 4.2% 3.7% 4.9% Inflation CPI index 3.4% 3.0% 5.8% 3.7% 3.4% 5.5% Assigned weight 55.0% 10.0% 35.0% 50.0% 15.0% 35.0% Model parameters for UK portfolio Scenarios Base case Upside Downside Severe Base case Upside Downside Severe Unemployment rate 4.9% 2.3% 3.6% 5.9% 4.1% 3.9% 5.8% 7.5% Inflation CPI index 2.5% 4.4% 5.9% 7.5% 5.0% 4.7% 8.3% 16.4% Assigned weight 50.0% 15.0% 25.0% 10.0% 50.0% 20.0% 25.0% 5.0% The Group utilises an economic forecast which is aligned with requirements for the calculation of expected credit loss. The Group owns loan portfolios in two geographical segments, i.e. Iceland and the United Kingdom ("UK"). In general, the Group utilises the same ECL methodology for the portfolios in both segments, although in the UK it is to a larger extent based on an individual assessment by credit specialists and a separate macroeconomic forecast is used to reflect the UK economy. The following tables shows the first 12 month macro economic values for the variables used in the expected credit loss model. Reference is made to note 82 in the Consolidated Financial Statements for further information about the Group‘s impairment methodology. Loans to customers ........................................................................................ Derivatives ..................................................................................................... Other assets ................................................................................................... Cash and balances with Central Bank ........................................................... The maximum exposure to credit risk for on-balance sheet and off-balance sheet items, before taking into account any collateral held or other credit enhancements, is specified as follows: Cash and balances with Central Bank ........................................................... Loans to credit institutions ............................................................................ Fixed income securities ................................................................................. Loans to credit institutions ............................................................................ Fixed income securities ................................................................................. Loans to customers ........................................................................................ Derivatives ..................................................................................................... Other assets ................................................................................................... Loan commitments ........................................................................................ Financial guarantee contracts ....................................................................... 31.12.2024 Loan commitments ........................................................................................ Financial guarantee contracts ....................................................................... The book value of financial assets which fall under the impairment requirements of IFRS 9 are presented as net of expected credit losses ("ECL") in the statement of financial position. The ECL are recalculated for each asset on at least a quarterly basis. The assessment of ECL is based on calculations from PD, LGD and EAD models. Furthermore, the assessment is based upon management's assumptions regarding the development of macroeconomic factors over the coming twelve months. The assumption s for macroeconomic development are decided for three scenarios: a base case, an upside scenario, a downside scenario and for the UK portfolio there is a fourth scenario, severe downturn. Each scenario includes a probability weight, and the ECL is derived as a weighted average. The amount of ECL to be recognized is dependent on the Group's definition of significant increase in credit risk, which controls the impairment stage each asset is allocated to. The factors that are used to measure significant increase in credit risk include comparison of changes in credit rating, lifetime PD values, days past due and registration on Creditinfo’s delinquency register. 31.12.2025 31.12.2025 31.12.2024 Consolidated Financial Statements 31 December 2025 38 ===== SIDA 42 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 46 46. Credit quality of financial assets (cont. ) a. Impairment Listed Unlisted Claim due to expected Carrying Total securities and securities and Residential Commercial Industrial Unsecured 31.12.2025 value credit loss amount % collateral Deposits liquid funds other funds real estate real estate Automobiles equipment Guarante es Other claim value 6 (0) 6 0.0% 9 - - - - - 9 - - - 1 2 (0) 2 0.0% - - - - - - - - - - 2 Corporate Real estate activities .................................. 51,219 (308) 50,911 24.5% 89,260 63 400 2,983 36,289 47,916 956 322 100 231 1,249 Construction .............................................. 22,161 (104) 22,057 10.6% 42,192 9 - - 21,576 7,534 6,344 5,140 - 1,58 9 411 Activities of Holding Companies ................. 16,541 (48) 16,493 7.9% 60,434 4 40 10,588 10,152 17,785 1,513 147 706 19,500 1, 322 Service Activities ........................................ 15,859 (527) 15,333 7.4% 29,280 38 67 711 1,596 6,655 16,724 3,004 0 4 85 522 Accommodat. and Food Service Activit. ..... 11,299 (75) 11,224 5.4% 22,120 144 - - 3,905 17,419 542 60 0 50 271 Act. of Hold. Comp. - Securities Financing .. 7,698 (282) 7,417 3.6% 14,583 364 13,891 276 52 - - - 0 - 664 Other ......................................................... 20,122 (94) 20,028 9.6% 40,580 378 4,968 3,645 3,674 10,998 7,795 4,887 115 4,120 2,029 64,981 (891) 64,090 30.9% 121,954 35 446 665 73,022 2,314 42,932 1,178 0 1,362 8,982 Total 209,889 (2,329) 207,560 100.0% 420,411 1,034 19,812 18,868 150,266 110,621 76,814 14,737 921 27,338 15,452 Impairment Listed Unlisted Claim due to expected Carrying Total securities and securities and Residential Commercial Industrial Unsecured 31.12.2024 value credit loss amount % collateral Deposits liquid fund s other funds real estate real estate Automobile s equipment Guarantees Other claim value 7 (0) 7 0.0% 10 - - - - - 10 - - 0 0 2 (0) 2 0.0% - - - - - - - - - - 2 Corporate Real estate activities .................................. 45,564 (339) 45,225 30.1% 84,189 31 50 31 41,523 41,134 974 240 0 206 49 1 Construction .............................................. 16,412 (92) 16,320 10.9% 32,487 0 0 - 12,426 9,668 5,260 4,426 0 707 2 56 Service Activities ........................................ 16,068 (162) 15,906 10.6% 29,302 26 122 577 1,020 2,523 19,253 3,815 0 1,966 317 Accommodat. and Food Service Activit. ..... 11,492 (86) 11,406 7.6% 22,151 105 - - 1,367 20,069 528 47 - 36 8 Activities of Holding Companies ................. 7,143 (654) 6,489 4.3% 20,066 13 201 9,762 4,864 3,344 217 183 1,468 15 1,434 Wholesale and Retail Trade ....................... 4,930 (56) 4,875 3.2% 7,474 24 - - 247 913 3,601 1,952 100 636 384 Other ......................................................... 10,303 (66) 10,237 6.8% 29,559 342 7,208 163 3,390 11,277 2,176 2, 190 22 2,791 415 40,609 (872) 39,736 26.5% 57,599 33 793 655 11,886 1,815 40,060 1,032 - 1,325 8,312 Total 152,530 (2,327) 150,203 100.0% 282,838 575 8,374 11,187 76,723 90,743 72,080 13,884 1,589 7,683 11,619 Public entities ................................................. Financial institutions ....................................... Individuals ....................................................... Collateral value is shown as the market- or accounting value of collateral allocated to exposures. Other collateral includes financial claims, inventories and receivables. Allocated collateral Breakdown of loans to customers by industry and information on collateral and other credit enhancements The Group applies the same valuation methods to collateral held as other comparable assets held by the Group. For other types of assets the Group uses third party valuation where possible. Public entities ................................................. Individuals ....................................................... Financial institutions ....................................... Allocated collateral Consolidated Financial Statements 31 December 2025 39 ===== SIDA 43 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 46 46. Credit quality of financial assets (cont.) b. 31.12.2025 Loans to customers: Stage 1 Stage 2 Stage 3 FVTPL Total 139,620 5,455 - 3,658 148,733 33,264 2,123 - 94 35,480 11,787 4,113 - - 15,901 374 518 - - 892 4 1 7,706 - 7,710 730 318 - 125 1,173 Gross carrying amount 185,778 12,527 7,706 3,877 209,889 (379) (203) (1,747) - (2,329) Book value 185,400 12,324 5,959 3,877 207,560 Loan commitments, guarantees and unused credit facilities: Stage 1 Stage 2 Stage 3 FVTPL Total 6,722 0 - 61 6,783 2,945 0 - - 2,945 236 14 - - 249 2 77 - - 80 - - 12 - 12 741 - - - 741 Total off-balance sheet amount 10,646 91 12 61 10,810 (13) (0) (3) - (16) Net off-balance sheet amount 10,633 91 9 61 10,794 31.12.2024 Loans to customers: Stage 1 Stage 2 Stage 3 FVTPL Total 89,427 1,266 - 17 90,710 40,153 3,159 - - 43,313 6,609 2,004 - - 8,613 227 381 - - 608 1 - 7,940 114 8,055 287 203 - 743 1,232 Gross carrying amount 136,704 7,012 7,940 874 152,530 (367) (189) (1,771) - (2,327) Book value 136,337 6,823 6,169 874 150,203 Loan commitments, guarantees and unused credit facilities: Stage 1 Stage 2 Stage 3 FVTPL Total 4,675 3 - - 4,678 1,568 0 - - 1,568 563 6 - - 569 2 1 - - 2 - - 34 10 44 - 0 - - 0 Total off-balance sheet amount 6,808 10 34 10 6,861 (11) (0) (7) - (18) Net off-balance sheet amount 6,797 9 27 10 6,843 Non-rated ............................................................................................. Expected credit loss ............................................................................. Expected credit loss ............................................................................. Credit quality band I ............................................................................. Credit quality band II ............................................................................ Credit quality band III ........................................................................... Credit quality band IV .......................................................................... In default .............................................................................................. Credit quality band II ............................................................................ Credit quality band III ........................................................................... Credit quality band IV .......................................................................... In default .............................................................................................. Non-rated ............................................................................................. The following tables show financial assets subject to the impairment requirements of IFRS 9 broken down by credit quality bands where band i denotes the lowest credit risk and band iv the highest credit risk. Assets measured at fair value through profit or loss are not subject to the stage classification requirements of IFRS 9 but are nevertheless included in the tables in order to give a more complete picture of the credit quality of loans to customers and reconcile the tables to the carrying amount on the balance sheet. The Bank has primarily used calibrated external credit ratings to assess the default probability of its customers. Some of the larger borrowers are furthermore individually assessed by credit specialist s. The Bank has implemented internal credit rating models for part of the loan portfolio and intends to continue this development. Credit quality band I ............................................................................. Credit quality band II ............................................................................ Credit quality band III ........................................................................... Credit quality band IV .......................................................................... Credit quality of financial assets by credit quality band Credit quality band III ........................................................................... Credit quality band IV .......................................................................... In default .............................................................................................. Non-rated ............................................................................................. Expected credit loss ............................................................................. Credit quality band I ............................................................................. In default .............................................................................................. Non-rated ............................................................................................. Expected credit loss ............................................................................. Credit quality band I ............................................................................. Credit quality band II ............................................................................ Consolidated Financial Statements 31 December 2025 40 ===== SIDA 44 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 46 46. Credit quality of financial assets (cont.) c. Breakdown of loans to customers into not past due and past due Claim Expected Carrying 31.12.2025 value credit loss amount 193,748 (620) 193,129 5,802 (510) 5,292 2,633 (62) 2,572 3,145 (10) 3,135 1,963 (144) 1,819 1,049 (192) 857 1,549 (792) 757 Total 209,889 (2,329) 207,560 Claim Expected Carrying 31.12.2024 value credit loss amount 137,349 (625) 136,724 7,724 (104) 7,619 2,321 (73) 2,249 698 (16) 682 2,180 (820) 1,359 809 (248) 561 1,448 (441) 1,008 Total 152,530 (2,327) 150,203 d. Allowance for expected credit loss on loans to customers and loan commitments, guarantees and unused credit facilities 31.12.2025 Expected credit loss allowance total Sta ge 1 Sta ge 2 Sta ge 3 Total Transfers of financial assets: Balance as at 1 January 2025 377 189 1,778 2,345 80 (33) (47) - (18) 42 (24) - (17) (28) 45 - (139) 5 99 (35) 303 107 633 1,043 (194) (79) (405) (679) (0) (0) (329) (330) Balance as at 31 December 2025 392 204 1,749 2,345 Expected credit loss allowance for loans to customers S t a g e 1S t a g e 2S t a g e 3 T o t a l Transfers of financial assets: Balance as at 1 January 2025 367 189 1,771 2,327 74 (33) (41) - (18) 42 (24) - (17) (28) 45 - (134) 5 98 (31) 297 107 633 1,038 (191) (79) (405) (675) (0) (0) (329) (330) Balance as at 31 December 2025 379 203 1,747 2,329 New financial assets, originated or purchased .............................................................. Derecognitions and maturities ...................................................................................... Write-offs ....................................................................................................................... Derecognitions and maturities ...................................................................................... Write-offs ....................................................................................................................... Transfer to Stage 1 - (Initial recognition) .................................................................. Transfer to Stage 2 - (significantly increased credit risk) ......................................... Transfer to Stage 3 - (credit impaired) ..................................................................... Net remeasurement of loss allowance .......................................................................... The following tables show changes in the expected credit loss allowance of loans to customers and for loan commitments, guarantees and unused credit facilities during the year. Transfer to Stage 1 - (Initial recognition) .................................................................. Transfer to Stage 2 - (significantly increased credit risk) ......................................... Transfer to Stage 3 - (credit impaired) ..................................................................... Net remeasurement of loss allowance .......................................................................... New financial assets, originated or purchased .............................................................. Past due 61-90 days .................................................................................................................................. Past due 91-180 days ................................................................................................................................ Past due 181-360 days .............................................................................................................................. Past due more than 360 days ................................................................................................................... Past due 91-180 days ................................................................................................................................ Past due 181-360 days .............................................................................................................................. Past due more than 360 days ................................................................................................................... Not past due ............................................................................................................................................. Past due 1-30 days .................................................................................................................................... Past due 31-60 days .................................................................................................................................. Not past due ............................................................................................................................................. Past due 1-30 days .................................................................................................................................... Past due 31-60 days .................................................................................................................................. Past due 61-90 days .................................................................................................................................. Consolidated Financial Statements 31 December 2025 41 ===== SIDA 45 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 46 46. Credit quality of financial assets (cont.) Expected credit loss allowance for loan commitments, guarantees and unused credit facilities S t a g e 1S t a g e 2S t a g e 3 T o t a l Transfers of financial assets: Balance as at 1 January 2025 11 0 7 18 6 (0) (6) - (0) 0 (0) - (0) (0) 0 - (5) 0 2 (4) 5 - - 5 (3) (0) (0) (4) Balance as at 31 December 2025 13 0 3 16 31.12.2024 Expected credit loss allowance total S t a g e 1S t a g e 2S t a g e 3 T o t a l Transfers of financial assets: Balance as at 1 January 2024 382 128 1,724 2,234 104 (22) (82) - (17) 30 (13) - (32) (35) 68 - (175) 16 845 686 271 120 224 615 (155) (47) (581) (783) (0) (1) (406) (407) Balance as at 31 December 2024 377 189 1,778 2,345 Expected credit loss allowance for loans to customers S t a g e 1S t a g e 2S t a g e 3 T o t a l Transfers of financial assets: Balance as at 1 January 2024 368 128 1,723 2,219 103 (21) (82) - (17) 30 (13) - (32) (35) 68 - (174) 16 843 685 268 120 219 608 (149) (47) (581) (778) (0) (1) (406) (407) Balance as at 31 December 2024 367 189 1,771 2,327 Expected credit loss allowance for loan commitments, guarantees and unused credit facilities S t a g e 1S t a g e 2S t a g e 3 T o t a l Transfers of financial assets: Balance as at 1 January 2024 14 1 1 16 1 (0) (0) - (0) 0 (0) - (0) (0) 0 - (1) (0) 1 0 3 0 4 7 (6) (0) (0) (6) Balance as at 31 December 2024 11 0 7 18 Transfer to Stage 2 - (significantly increased credit risk) ......................................... Transfer to Stage 3 - (credit impaired) ..................................................................... Net remeasurement of loss allowance .......................................................................... New financial assets, originated or purchased .............................................................. Derecognitions and maturities ...................................................................................... Write-offs ....................................................................................................................... Transfer to Stage 1 - (Initial recognition) .................................................................. Transfer to Stage 2 - (significantly increased credit risk) ......................................... Transfer to Stage 3 - (credit impaired) ..................................................................... Net remeasurement of loss allowance .......................................................................... New financial assets, originated or purchased .............................................................. Derecognitions and maturities ...................................................................................... Transfer to Stage 3 - (credit impaired) ..................................................................... Net remeasurement of loss allowance .......................................................................... New financial assets, originated or purchased .............................................................. Derecognitions and maturities ...................................................................................... Write-offs ....................................................................................................................... Transfer to Stage 1 - (Initial recognition) .................................................................. Net remeasurement of loss allowance .......................................................................... New financial assets, originated or purchased .............................................................. Derecognitions and maturities ...................................................................................... Transfer to Stage 1 - (Initial recognition) .................................................................. Transfer to Stage 2 - (significantly increased credit risk) ......................................... Transfer to Stage 1 - (Initial recognition) .................................................................. Transfer to Stage 2 - (significantly increased credit risk) ......................................... Transfer to Stage 3 - (credit impaired) ..................................................................... Consolidated Financial Statements 31 December 2025 42 ===== SIDA 46 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 46 47. Loan-to-value a. General b. Breakdown 31.12.2025 % 31.12.2024 % 66,278 31.9% 41,225 27.4% 70,430 33.9% 57,209 38.1% 44,615 21.5% 33,497 22.3% 6,707 3.2% 2,958 2.0% 3,814 1.8% 3,461 2.3% 2,371 1.1% 1,505 1.0% 2,231 1.1% 1,378 0.9% No or negligible collateral: 11,112 5.4% 8,968 6.0% Total 207,560 100.0% 150,203 100.0% 48. Collateral against exposures to derivatives Fixed Variable Other income income Real fixed Deposits securities securities estate assets Other 31.12.2025 1,533 86 298 - - - 1,916 618 13 1,151 - - - 1,783 44 9 104 - - - 156 Total 2,195 107 1,553 - - - 3,855 Fixed Variable Other income income Real fixed Deposits securities securities estate assets Other 31.12.2024 548 114 161 - - - 824 709 28 1,401 - - - 2,138 62 16 80 - - - 158 Total 1,319 158 1,643 - - - 3,120 49. Large exposures 31.12.2025 31.12.2024 Large exposures before risk adjusted mitigation Number Amount Number Amount 2 9,610 2 11,133 0 - 0 - 0 - 0 - Total 2 9,610 2 11,133 0 - 1 6,522 1 4,662 1 6,702 10-20% of capital base ................................................................................................... 20-25% of capital base ................................................................................................... Exceeding 25% of capital base ....................................................................................... Thereof loans to credit institutions which are part of Large exposures net of risk adjusted mitigation ............................................................ Kvika's liquidity management ..................................................................................... Financial institutions .............................. Corporate customers .............................. Financial institutions .............................. Corporate customers .............................. Individuals .............................................. Greater than 200% ......................................................................................................... In accordance with regulation no. 575/2013 of the European Union on prudential requirements for credit institutions, which was incorporated into Icelandic law with Act No. 38/2022, total exposure towards a customer is classified as a large exposure if it exceeds 10% of the financial institution's Tier 1 capital (see note 39). According to the regulation a single exposure, net of risk adjusted mitigation, cannot exceed 25% of the eligible Tier 1 capital. Based on Icelandic rules no. 789/2022 on the Application of Optional Provisions and Authorisations Pursuant to the Act on Financial Undertakings, the value of exposures towards financial institutions shall not exceed 25% of the eligible Tier 1 capital or 15 bn. ISK, whichever is higher. Single large exposure s net of risk adjusted mitigation take into account the effects of collateral and other credit enhancements held by the financial institution, and other credit enhancements, in accordance with regulation no. 575/2013. The loan-to-value ratio (LTV) is the ratio of the gross amount of the loan to the value of the collateral, if any. The general creditworthiness of a customer is viewed as the most reliable indicator of credit quality of a loan. Besides collateral included in the LTV ratios the Group uses other risk mitigation measures, such as guarantees, negative pledge, cross-collateral and collateralization of non-quantifiable assets. The breakdown of loans to customers by LTV is specified as follows: Less than 50% ................................................................................................................. 50-70% ............................................................................................................................ 70-90% ............................................................................................................................ 90-100% .......................................................................................................................... Individuals .............................................. Amounts have been adjusted to exclude collateral posted in excess of the contractual collateral limit (overcollateralisation). 100-125% ........................................................................................................................ 125-200% ........................................................................................................................ Other loans with no collateral .................................................................................. The Group applies the same valuation methods to collateral held as other comparable assets held by the Group. Haircuts are applied to account for liquidity and other factors which may affect the collateral value of the asset. Consolidated Financial Statements 31 December 2025 43 ===== SIDA 47 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 49 50. Liquidity risk a. Definition b. Management 31.12.2025 Unweighted Weighted Unweighted Weighted Unweighted Weighted 53,860 53,860 957 909 55,809 55,712 2,559 2,175 758 606 4,970 4,104 - - 3,442 1,549 6,109 2,749 - - - (1,549) - - Total high quality liquid assets (HQLA) 56,419 56,035 5,157 1,516 66,888 62,565 129,272 24,320 3,703 1,647 136,160 27,418 131 131 - - 292 292 8,515 4,238 1,651 222 15,898 4,887 Total outflows (0-30 days) 137,918 28,688 5,354 1,869 152,350 32,597 284 284 2,870 2,870 8,075 8,075 7,335 5,778 490 489 11,194 9,030 - - - (1,957) - - Total inflows (0-30 days) 7,620 6,062 3,359 1,402 19,268 17,104 248% 324% 404% 31.12.2024 Unweighted Weighted Unweighted Weighted Unweighted Weighted 68,950 68,950 - - 72,409 72,409 823 700 - - 823 700 - - - - - - - - - - - - Total high quality liquid assets (HQLA) 69,773 69,650 - - 73,232 73,109 122,660 23,181 - - 131,228 27,435 17 17 - - 17 17 13,201 8,730 - - 15,672 9,141 Total outflows (0-30 days) 135,878 31,928 - - 146,918 36,594 692 692 - - 10,559 10,559 16,441 4,838 - - 17,763 5,718 - - - - - - Total inflows (0-30 days) 17,133 5,530 - - 28,321 16,276 264% 0% 360% 31.12.2025 31.12.2024 137% 144% *Requirement first applies from June 2025 Liquidity risk is the risk that the Group will encounter difficulty in meeting contractual payment obligations associated with its financial liabil ities that are settled by delivering cash or another financial asset. This risk mainly arises from mismatches in the timing of cash flows. The Group has internal rules that require certain matching of the maturities of assets and liabilities. Furthermore, to ensure the ability to meet liquidity needs ,t h e Group maintains a stock of highly liquid unencumbered assets, e.g. cash, treasury bills and treasury bonds. Liquidity is managed by treasury and monitored by risk management. Liquidity position is reported to the ALCO committee. The Central Bank of Iceland sets minimum requirements for the liquidity coverage ratio (LCR) and the net stable funding ratio (NSFR). The minimum 30 day LCR regulatory requirement is 100% for LCR total, 50% minimum requirement for LCR in ISK and 80% minimum requirement for LCR in EUR. The minimum requirement for LCR EUR only applies when the Group‘s commitments in EUR represent 10% or more of the Group´s total commitments. The minimum regulatory requirement for NSFR total is 100%. NSFR total ........................................................................................................................................................................... Other inflows .......................................................................... Restrictions on inflows ........................................................... Liquidity coverage ratio .......................................................... Deposits .................................................................................. Other borrowings ................................................................... Other outflows ....................................................................... Restrictions on inflows ........................................................... Liquidity coverage ratio .......................................................... Deposits .................................................................................. Other borrowings ................................................................... Other outflows ....................................................................... Excess liquid asset amount .................................................... Excess liquid asset amount .................................................... Liquid assets level 2B .............................................................. Liquid assets level 2B .............................................................. Short-term deposits with other banks ................................... Other inflows .......................................................................... ISK EUR* Total all currencies Liquid assets level 1 ................................................................ Liquid assets level 2A ............................................................. ISK EUR* Total all currencies Liquid assets level 1 ................................................................ Liquid assets level 2A ............................................................. Short-term deposits with other banks ................................... Consolidated Financial Statements 31 December 2025 44 ===== SIDA 48 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 49 50. Liquidity risk (cont.) c. LCR deposit categories 31.12.2025 Run off date 0-30 days Over 30 days Total 5%-100% 106,607 16,120 122,727 5%-100% 8,905 118 9,023 20%-40% 9,005 6 9,011 40% 98 1 98 100% 11,545 18,130 29,676 2,247 5 2,252 Total 138,407 34,380 172,787 31.12.2024 Run off date 0-30 days Over 30 days Total 5%-100% 103,372 15,899 119,271 5%-100% 5,807 200 6,007 20%-40% 11,124 48 11,172 40% 81 83 164 100% 10,843 12,439 23,282 3,440 41 3,481 Total 134,668 28,710 163,378 Financial entities ................................................................................................................. Other * ................................................................................................................................. Individuals ........................................................................................................................... Small and medium sized corporates ................................................................................... Large corporates ................................................................................................................. Public entities ...................................................................................................................... Public entities ...................................................................................................................... The Group's deposit base is divided into different categories depending on customer type according to the LCR methodology. Different run off rates are applied on each category representing their level of stickiness, which measures the stability of the deposit. Deposits with maturity over 30 days are defined as term deposits within the LCR calculations, other as demand deposits. Run off rates are applied on each category of demand deposits and the expected cash outflow over the next 30 days under stressed conditions calculated. The higher the run off rate, the more high quality liquid assets the Group must hold to ensure it can meet its obligations and maintain stability during a crisis. The table below shows the Group's deposit base divided into different categories depending on customer type and run off rates according to the LCR methodology. Individuals ........................................................................................................................... Small and medium sized corporates ................................................................................... *Pledged deposits do not have any run off rate according to liquidity rules. Financial entities ................................................................................................................. Other * ................................................................................................................................. Large corporates ................................................................................................................. Consolidated Financial Statements 31 December 2025 45 ===== SIDA 49 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 49 50. Liquidity risk (cont.) d. Maturity analysis of financial assets and financial liabilities 31.12.2025 Up to 1 1-3 3-12 1-5 Over 5 Gross inflow/ Carrying Financial assets by type month months months years years (outflow) amount Non-derivative assets 20,146 - - - - 20,146 20,145 8,149 - 5 0 - 8,154 8,154 21,090 15,270 71,415 112,754 63,673 284,203 207,560 10,847 985 18,015 12,450 2,224 44,522 44,522 16,966 - 3,697 - - 20,663 20,663 6,695 - - - - 6,695 6,695 5,321 2,103 856 232 - 8,513 8,513 89,214 18,358 93,989 125,437 65,898 392,895 316,251 Derivative assets Inflow ....................................................... 5,634 569 17,818 28,615 - 52,636 Outflow .................................................... (4, 599) (550) (16,866) (27,004) - (49,019) 1,035 18 952 1,611 - 3,617 3,250 Up to 1 1-3 3-12 1-5 Over 5 Gross inflow/ Carrying Financial liabilities by type month months months years years (outflow) amount Non-derivative liabilities (138,421) (18,034) (15,538) (1,386) (685) (174,063) 172,787 - (87) (528) (6,989) - (7,604) 6,806 (292) (238) (16,687) (61,576) (2,616) (81,409) 73,249 - - (362) (1,452) (9,285) (11,099) 5,841 (433) - - - - (433) 433 (432) - - - - (432) 432 (3,003) (7,188) (1,286) (2,156) - (13,633) 13,599 (142,580) (25,547) (34,401) (73,558) (12,585) (288,672) 273,147 Derivative liabilities Inflow ....................................................... 12,126 - 10,687 3,149 - 25,963 Outflow .................................................... (12,653) - (10,926) (3,523) - (27,103) (527) - (239) (374) - (1,140) 773 Unrecognised financial items Inflow ....................................................... 489 673 3,371 6,302 94 10,930 Outflow .................................................... (9,713) - - - - (9,713) Inflow ....................................................... - 1 298 792 7 1,097 Outflow .................................................... (1,097) - - - - (1,097) (10,321) 674 3,669 7,094 101 1,217 Summary 89,214 18,358 93,989 125,437 65,898 392,895 1,035 18 952 1,611 - 3,617 (142,580) (25,547) (34,401) (73,558) (12,585) (288,672) (527) - (239) (374) - (1,140) unrecognised items (52,858) (7,171) 60,301 53,115 53,312 106,700 (10,321) 674 3,669 7,094 101 1,217 Net assets (liabilities) (63,179) (6,497) 63,970 60,209 53,414 107,917 Derivative assets ............................................ Derivative liabilities ....................................... Non-derivative assets .................................... Non-derivative liabilities ............................... Other liabilities .............................................. Loan commitments Financial guarantee contracts Net unrecognised items ................................ Net assets (liabilities) excluding Issued bonds .................................................. Subordinated liabilities .................................. Short positions used for hedging .................. Short positions held for trading .................... Cash and balances with Central Bank ........... Shares and other variable income securities Fixed income securities ................................. Securities used for hedging ........................... Loans to customers ........................................ Other assets ................................................... Loans to credit institutions ............................ Deposits ........................................................ Borrowings ..................................................... Consolidated Financial Statements 31 December 2025 46 ===== SIDA 50 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 49 50. Liquidity risk (cont.) 31.12.2024 Up to 1 1-3 3-12 1-5 Over 5 Gross inflow/ Carrying Financial assets by type month months months years years (outflow) amount Non-derivative assets 18,595 - - - - 18,595 18,593 9,726 - - 1,804 - 11,530 11,530 10,753 13,421 52,863 98,218 4,718 179,974 150,203 17,597 10,341 7,442 25,482 3,932 64,795 64,795 1,681 - 3,751 - - 5,432 5,432 12,601 - - - - 12,601 12,601 2,736 2,397 1,543 3 - 6,680 7,704 73,689 26,160 65,600 125,507 8,650 299,606 270,857 Derivative assets Inflow ....................................................... 13,279 143 2,346 920 1,036 17,724 Outflow .................................................... (12,289) (98) (2,329) (796) (940) (16,453) 989 45 17 124 95 1,271 1,197 Up to 1 1-3 3-12 1-5 Over 5 Gross inflow/ Carrying Financial liabilities by type month months months years years (outflow) amount Non-derivative liabilities (134,688) (15,130) (10,447) (3,739) (547) (164,551) 163,378 (1) (301) (1,132) (17,271) - (18,705) 14,390 (17) (535) (3,319) (34,010) (2,557) (40,439) 37,123 - - (336) (1,399) (9,304) (11,039) 5,629 (153) - - - - (153) 153 (42) - - - - (42) 42 (1,418) (9,219) (1,122) (1,927) - (13,686) 13,635 (136,320) (25,185) (16,355) (58,347) (12,407) (248,615) 234,350 Derivative liabilities Inflow ....................................................... 12,104 142 6,321 24,413 - 42,981 Outflow .................................................... (12,968) (145) (6,240) (26,506) - (45,858) (864) (2) 81 (2,092) - (2,877) 2,932 Unrecognised financial items by type Loan commitments Inflow ....................................................... 147 49 2,796 3,722 - 6,714 Outflow .................................................... (6,060) - - - - (6,060) Inflow ....................................................... - 1 756 37 7 801 Outflow .................................................... (801) - - - - (801) (6,714) 50 3,552 3,759 7 654 Summary 73,689 26,160 65,600 125,507 8,650 299,606 989 45 17 124 95 1,271 (136,320) (25,185) (16,355) (58,347) (12,407) (248,615) (864) (2) 81 (2,092) - (2,877) unrecognised items (62,506) 1,018 49,343 65,191 (3,662) 49,385 (6,714) 50 3,552 3,759 7 654 Net assets (liabilities) (69,220) 1,068 52,896 68,950 (3,655) 50,039 Non-derivative liabilities ............................... Deposits ........................................................ Borrowings ..................................................... Subordinated liabilities .................................. Short positions held for trading .................... Short positions used for hedging .................. Other liabilities .............................................. Derivative assets ............................................ Issued bonds .................................................. Financial guarantee contracts Non-derivative assets .................................... Other assets ................................................... Cash and balances with Central Bank ........... Shares and other variable income securities Securities used for hedging ........................... It should be noted that the Group's expected cash flows sometimes vary considerably from the contractual cash flows, most significantly in that demand deposits from customers are expected to remain stable or increase in the long term. In this case the presentation used reflects the worst case scenario from the Group's perspective. Furthermore, the analysis does not consider any measures that could be taken to convert long-term assets to cash through sale. Cash flows relating to unrecognised balance sheet items (unused loan commitments and financial guarantee contracts) are presented separately from financial assets and financial liabilities. Both contractual outflows and inflows are shown, to fully reflect the nature o f these items. Derivative liabilities ....................................... Net unrecognised items ................................ Net assets (liabilities) excluding Maturity analysis of financial assets and financial liabilities is based on contractual cash flows or, in the case of held for trading securities, exp ected cash flows. If an amount receivable or payable is not fixed, e.g. for inflation indexed assets and liabilities, the maturity analysis uses estimates based on current conditions. Loans to customers ........................................ Fixed income securities ................................. Loans to credit institutions ............................ Consolidated Financial Statements 31 December 2025 47 ===== SIDA 51 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 50 51. Market risk a. Definition b. Management 52. Interest rate risk a. Definition b. Management 53. Interest rate risk associated with trading portfolios a. Breakdown Up to 1 1-3 3-12 1-5 Over 5 month months months years years 31.12.2025 33 58 364 2,438 1,320 4,213 (1) (8) (7) (135) (210) (361) Net imbalance 32 50 357 2,303 1,110 3,853 Up to 1 1-3 3-12 1-5 Over 5 month months months years years 31.12.2024 22 54 548 3,181 1,538 5,343 (1) (7) (1) (29) (116) (153) Net imbalance 21 48 547 3,152 1,422 5,190 b. Sensitivity analysis Shift in 31.12.2025 31.12.2024 basis points Downward Upward Downward Upward 50 43 (40) 53 (51) 100 59 (58) 67 (64) Total 102 (97) 120 (115) The Group performs monthly sensitivity analysis on financial assets and liabilities in trading portfolios that are subject to interest rate risk. Th e sensitivity analysis assumes a shift in the yield curves for all currencies. A parallel shift in yield curves would have the following impact on the Group's pre-tax profit and equity, assuming all other risk factors remain constant: Indexed ..................................................................................................... Non-indexed ............................................................................................. Market risk constitutes risk due to changes in the market prices of financial instruments and comprises interest rate risk, currency risk and other price risk. Notes 52-57 relate to market risk exposure. The Group has a strict policy on controlling market risk and to keep the exposure within set limits. The risk management unit monitors market risk limits on a daily basis and reports regularly to the ALCO committee and to the CEO. The Group's exposure to interest rate risk is twofold. On the one hand, the Group has a proprietary portfolio of bonds, where market rates affect prices and any fluctuations are recognised in the income statement. On the other hand, the Group has mismatch in assets and liabilities with fixed interest terms. These include loans and swap contracts for securities on the asset side and borrowings and deposits on the liability side. This mismatch does not create an immediate effect on the income statement but nevertheless affects the Group's economic value. The Group takes measures to minimise interest rate risk by matching the interest rate profile and duration of assets with the Group's liabilities as well as using derivative and non-derivative financial instruments to manage effectively the risk of an adverse impact on the Gr oup's earnings. Proprietary positions which are subject to interest rate risk fall under the scope of the Group's market risk management. Fixed income securities .................................................... Short positions - fixed income securities ......................... Fixed income securities .................................................... Short positions - fixed income securities ......................... The breakdown of financial assets and liabilities in trading portfolios by the earlier of interest repricing time or maturity i s specified as follows: Consolidated Financial Statements 31 December 2025 48 ===== SIDA 52 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 50 54. Interest rate risk associated with non-trading portfolios a. Breakdown 31.12.2025 Financial assets Up to 1 1-3 3-12 1-5 Over 5 month months months years years Total 20,145 - - - - 20,145 8,154 - - - - 8,154 192,654 3,693 5,590 5,353 270 207,560 3,984 1,049 18,974 12,893 3,408 40,309 15,013 15,013 Financial assets excluding derivatives 239,950 4,741 24,565 18,247 3,677 291,180 22,616 48,125 6,256 30,818 - 107,815 Total 262,566 52,867 30,820 49,065 3,677 398,995 Financial liabilities Up to 1 1-3 3-12 1-5 Over 5 month months months years years Total 144,844 13,644 14,259 40 0 172,787 6,806 - - - - 6,806 18,358 14,035 1,389 37,061 2,406 73,249 - - 3,272 2,570 - 5,841 - - 84 166 - 250 Financial liabilities excluding derivatives 170,008 27,679 19,004 39,836 2,406 258,933 22,744 69,396 6,674 - - 98,814 Total 192,752 97,075 25,678 39,836 2,406 357,746 Total interest repricing gap 69,814 (44,208) 5,142 9,229 1,272 41,248 31.12.2024 Financial assets Up to 1 1-3 3-12 1-5 Over 5 month months months years years Total 18,593 - - - - 18,593 11,530 - - - - 11,530 136,380 3,761 3,955 5,748 358 150,203 11,158 10,434 9,184 25,308 3,368 59,451 Financial assets excluding derivatives 177,661 14,195 13,138 31,056 3,726 239,777 23,021 23,306 8,408 928 890 56,553 Total 200,682 37,501 21,546 31,984 4,616 296,330 Financial liabilities Up to 1 1-3 3-12 1-5 Over 5 month months months years years Total 135,370 14,930 9,594 3,259 225 163,378 14,390 - - - - 14,390 17 28,435 84 6,501 2,085 37,123 - - 2,963 2,666 - 5,629 Financial liabilities excluding derivatives 149,777 43,366 12,642 12,425 2,310 220,520 20,828 17,231 10,151 - - 48,210 Total 170,605 60,597 22,793 12,425 2,310 268,730 Total interest repricing gap 30,077 (23,096) (1,246) 19,558 2,306 27,600 b. Sensitivity analysis Shift in 31.12.2025 31.12.2024 Currency basis points Downward Upward Downward Upward 50 53 (49) (25) 26 100 201 (197) 450 (439) 20 (6) 6 (4) 4 Total 248 (240) 422 (410) Issued bonds ..................................................................... Other liabilities ................................................................. Subordinated liabilities .................................................... Loans to customers .......................................................... Fixed income securities .................................................... Issued bonds ..................................................................... Effect of derivatives .......................................................... Borrowings ....................................................................... Loans to credit institutions ............................................... Cash and balances with Central Bank .............................. Fixed income securities .................................................... Loans to customers .......................................................... Loans to credit institutions ............................................... ISK, non-indexed ...................................................................................... Other currencies ....................................................................................... The Group performs monthly sensitivity analysis on financial assets and liabilities in non-trading portfolios subject to interest rate risk. The sensitivity analysis assumes a shift in the yield curves for all currencies. A parallel shift in yield curves would have the following impact on the Group's pre-tax profit and equity, assuming all other risk factors remain constant: ISK, indexed .............................................................................................. The breakdown of financial assets and liabilities in non-trading portfolios by the earlier of interest repricing time or maturity is specified as follows: Cash and balances with Central Bank .............................. Deposits ........................................................................... Effect of derivatives .......................................................... Subordinated liabilities .................................................... Effect of derivatives .......................................................... Unit shares in cash equivalent liquidity funds ................. Effect of derivatives .......................................................... Deposits ........................................................................... Borrowings ....................................................................... Consolidated Financial Statements 31 December 2025 49 ===== SIDA 53 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 50 55. Exposure towards changes in the CPI a. Definition b. Management c. Balance of CPI linked assets and liabilities 31.12.2025 31.12.2024 31,407 38,426 (24,971) (23,653) Total 6,436 14,773 d. Sensitivity to changes in CPI 31.12.2025 31.12.2024 -1% 1% -1% 1% (25) 25 (55) 55 (35) 35 (31) 31 (233) 233 (278) 278 (20) 20 (21) 21 91 (91) 86 (86) 98 (98) 94 (94) 58 (58) 56 (56) (64) 64 (148) 148 The effect on equity would be the same. 56. Currency risk a. Definition b. Management c. Hedge accounting d. Exchange rates The following exchange rates have been used by the Group in the preparation of these financial statements: Closing Average Closing Average 31.12.2025 2025 31.12.2024 2024 147.2 144.7 143.9 149.3 125.2 128.4 138.2 138.0 169.0 169.0 173.3 176.4 Issued bonds .................................................................................................................. Liabilities ....................................................................................................................................................................... Assets ............................................................................................................................................................................ Currency risk arises when financial instruments are not denominated in the functional currency of the respective Group entity and can affect both the Group's income statement and statement of financial position. A part of the Group's assets and liabilities is denominated in foreign currencies. Currency positions are monitored by risk management and reported to the ALCO committee. Any mismatch between assets and liabilities in each currency is monitored closely and managed within limits. The Group is subject to limits set by the Central Bank of Iceland regarding the maximum open currency position. At 31 December 2025 and 31 December 2024 the Group's position in foreign currencies was within those limits. EUR/ISK ........................................................................................................................... USD/ISK .......................................................................................................................... GBP/ISK ........................................................................................................................... The Group applies hedge accounting according to IAS 39 against translation of foreign operations. Currency swap agreements are used as a hedge instrument against translation difference arising from foreign operations. Deposits .......................................................................................................................... Subordinated liabilities .................................................................................................. Given the net balance of CPI linked assets and liabilities, a 1% change in the CPI would, with other things constant, result in the following changes to the Group's pre-tax profit. Government bonds ........................................................................................................ Other fixed income securities ........................................................................................ Loans to customers ........................................................................................................ Derivatives ...................................................................................................................... Exposure towards changes in CPI is the risk that fluctuations in the Icelandic Consumer Price Index (CPI) will affect the balance and cash flow of indexed financial instruments. The Group is exposed to inflation indexation of assets and liabilities den ominated in ISK. All indexed assets and liabilities are valued according to the CPI measure at any given time and changes in CPI are recognised in the income statement. The Group controls its indexation risk through derivatives contracts and sales and purchases of indexed bonds, mostly government bonds, and thus keeps its exposure to the CPI within the limits set by the ALCO committee. Consolidated Financial Statements 31 December 2025 50 ===== SIDA 54 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 56 56. Currency risk (cont.) e. Breakdown of assets and liabilities denominated in foreign currencies 31.12.2025 Assets Other EUR USD GBP SEK currencies Total 1 1 2 - - 4 2,872 813 3,657 143 307 7,793 3,121 578 41,146 251 - 45,096 - 81 - - - 81 5,727 390 11,629 0 16 17,762 59 705 10 626 116 1,517 - - 2,293 - - 2,293 777 16 804 16 13 1,626 Assets excluding derivatives 12,558 2,585 59,540 1,037 452 76,171 62,372 1,679 - 17,261 14,434 95,746 Total 74,930 4,264 59,540 18,297 14,886 171,917 Liabilities Other EUR USD GBP SEK currencies Total 4,104 2,918 666 51 182 7,920 - - 5,228 - - 5,228 30,209 - - 18,188 9,232 57,629 2,225 146 1,661 19 - 4,051 Liabilities excluding derivatives 36, 538 3,064 7,554 18,257 9,415 74,828 38,448 1,124 51,389 19 5,226 96,207 Total 74,987 4,188 58,944 18,276 14,641 171,035 Other Net currency position EUR USD GBP SEK currencies Total 74,930 4,264 59,540 18,297 14,886 171,917 (74,987) (4,188) (58,944) (18,276) (14,641) (171,035) 862 - - - - 862 Total 805 76 596 21 245 1,744 31.12.2024 Assets Other EUR USD GBP NOK currencies Total 2 1 2 - - 6 6,669 1,380 1,216 110 340 9,715 4,058 - 37,222 - 20 41,300 - 3,593 - - - 3,593 113 936 2,753 14 2 3,817 36 2,187 2 3 79 2,306 - - 2,451 - - 2,451 713 1,602 589 - - 2,903 Assets excluding derivatives 11,590 9,699 44,233 127 441 66,091 4,967 908 1,636 9,959 16,156 33,626 Total 16,558 10,607 45,869 10,086 16,597 99,717 Liabilities Other EUR USD GBP NOK currencies Total 5,162 3,581 599 65 200 9,607 - - 13,700 - - 13,700 - - - 9,891 16,157 26,048 201 634 467 5 110 1,417 Liabilities excluding derivatives 5, 363 4,215 14,766 9,960 16,467 50,772 10,333 6,485 30,322 58 17 47,215 Total 15,696 10,700 45,088 10,019 16,485 97,987 Other Net currency position EUR USD GBP NOK currencies Total 16,558 10,607 45,869 10,086 16,597 99,717 (15,696) (10,700) (45,088) (10,019) (16,485) (97,987) 704 - - - - 704 Total 1,565 (92) 781 67 112 2,434 Total assets ............................................................................ Financial guarantee contracts ............................................... Fixed income securities ......................................................... Shares and other variable income securities ........................ Loans to customers ................................................................ Total liabilities ........................................................................ Financial guarantee contracts ............................................... Total assets ............................................................................ Derivatives ............................................................................. Other liabilities ....................................................................... Securities used for hedging ................................................... Borrowings ............................................................................. Issued bonds .......................................................................... Cash and balances with Central Bank .................................... Shares and other variable income securities ........................ Securities used for hedging ................................................... Loans to customers ................................................................ Cash and balances with Central Bank .................................... Other assets ........................................................................... Derivatives ............................................................................. Deposits ................................................................................ Deposits ................................................................................ Fixed income securities ......................................................... Other assets ........................................................................... Derivatives ............................................................................. Intangible assets .................................................................... Intangible assets .................................................................... Borrowings ............................................................................. Loans to credit institutions .................................................... Loans to credit institutions .................................................... Issued bonds .......................................................................... Total liabilities ........................................................................ Other liabilities ....................................................................... Derivatives ............................................................................. Consolidated Financial Statements 31 December 2025 51 ===== SIDA 55 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 56 56. Currency risk (cont.) f. Sensitivity to currency risk 31.12.2025 31.12.2024 Assets and liabilities denominated in foreign currencies -10% +10% -10% +10% 81 (81) 156 (156) 8 (8) (9) 9 60 (60) 78 (78) 2 (2) 4 (4) 5 (5) 7 (7) 19 (19) 8 (8) Total 174 (174) 243 (243) 57. Equity risk a. Definition b. Sensitivity analysis of equity risk 31.12.2024 -10% +10% -10% +10% (100) 100 (110) 110 (310) 310 (307) 307 (156) 156 (126) 126 Total (565) 565 (543) 543 58. Operational risk a. Definition b. Management Given the net currency position, a 10% change in the value of the ISK would, with other things constant, result in the following changes to the Group's Consolidated Income Statement or equity. GBP ...................................................................................................................................... The analysis below calculates the effect of possible movements in equity prices that affect the Consolidated Financial Statements. A negative amount in the table reflects a potential net reduction in the Consolidated Income Statement or equity, while a positive amount reflects a potential net increase. Investments in unit shares in cash equivalent liquidity funds are excluded. 31.12.2025 Listed shares ........................................................................................................................ Unlisted shares .................................................................................................................... Unlisted unit shares in funds ............................................................................................... SEK ....................................................................................................................................... NOK ...................................................................................................................................... The individual business units within the Group are primarily responsible for managing their respective operational risk. The risk management unit is furthermore responsible for identifying, monitoring and reporting the Group's operational risk. Operational risk can be reduced through staff training, process re-design and enhancement of the control environment. The risk management unit monitors operational risk by tracking loss events, quality deficiencies, potential risk indicators and other early-warning signals. The unit takes an active role in internal control and qual ity management. Operational risk is the risk of direct or indirect loss from inadequate or failed internal processes or systems, from human error or external events that affect the Group's reputation and operational earnings. EUR ...................................................................................................................................... USD ...................................................................................................................................... Other currencies .................................................................................................................. Equity risk is the risk that the fair value of equites decreases as the result of changes in the value of shares and other variable income securities in the Group’s portfolio. Consolidated Financial Statements 31 December 2025 52 ===== SIDA 56 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 58 Financial assets and financial liabilities 59. Accounting classification of financial assets and financial liabilities Manda- 31.12.2025 Fair value torily at Total Financial assets Amortised through fair value carrying cost OCI through P/L amount 20,145 - - 20,145 8,154 - - 8,154 203,683 - 3,877 207,560 - 38,867 5,655 44,522 - - 20,663 20,663 - - 6,695 6,695 - - 3,094 3,094 - 156 - 156 8,513 - - 8,513 Total 240,494 39,023 39,984 319,501 Manda- Fair value torily at Total Financial liabilities Amortised through fair value carrying cost OCI through P/L amount 172,787 - - 172,787 6,806 - - 6,806 73,249 - - 73,249 5,841 - - 5,841 - - 433 433 - - 432 432 - - 773 773 12,958 - 641 13,599 Total 271,642 - 2,278 273,920 Manda- 31.12.2024 Fair value torily at Total Financial assets Amortised through fair value carrying cost OCI through P/L amount 18,593 - - 18,593 11,530 - - 11,530 149,329 - 874 150,203 - 59,169 5,625 64,795 - - 5,432 5,432 - - 12,601 12,601 - - 1,197 1,197 7,704 - - 7,704 Total 187,156 59,169 25,729 272,054 Manda- Fair value torily at Total Financial liabilities Amortised through fair value carrying cost OCI through P/L amount 163,378 - - 163,378 14,390 - - 14,390 37,123 - - 37,123 5,629 - - 5,629 - - 153 153 - - 42 42 - - 2,649 2,649 - 283 - 283 13,315 - 320 13,635 Total 233,835 283 3,164 237,282 Derivatives .................................................................................................................. Other liabilities ............................................................................................................ Derivatives used for hedge accounting ...................................................................... The accounting classification of financial assets and financial liabilities is specified as follows: Fixed income securities ............................................................................................... Shares and other variable income securities .............................................................. Securities used for hedging ......................................................................................... Loans to customers ..................................................................................................... Derivatives .................................................................................................................. Other assets ................................................................................................................ Loans to credit institutions ......................................................................................... Cash and balances with Central Bank ......................................................................... Fixed income securities ............................................................................................... Shares and other variable income securities .............................................................. Securities used for hedging ......................................................................................... Loans to customers ..................................................................................................... Derivatives .................................................................................................................. Other assets ................................................................................................................ Deposits ...................................................................................................................... Borrowings .................................................................................................................. Derivatives used for hedge accounting ...................................................................... Issued bonds ............................................................................................................... Subordinated liabilities ............................................................................................... Short positions used for hedging ................................................................................ Short positions used for hedging ................................................................................ Short positions held for trading .................................................................................. Loans to credit institutions ......................................................................................... Derivatives .................................................................................................................. Other liabilities ............................................................................................................ Cash and balances with Central Bank ......................................................................... Deposits ...................................................................................................................... Borrowings .................................................................................................................. Issued bonds ............................................................................................................... Subordinated liabilities ............................................................................................... Short positions held for trading .................................................................................. Consolidated Financial Statements 31 December 2025 53 ===== SIDA 57 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 58 60. Financial assets and financial liabilities measured at fair value a. - - - b. c. d. 31.12.2025 Financial assets Carrying Level 1 Level 2 Level 3 amount Mandatorily measured at fair value through profit and loss 4,781 107 767 5,655 17,068 2 3,594 20,663 6,695 - - 6,695 - - 3,877 3,877 - 3,094 - 3,094 Measured at fair value through other comprehensive income 38,867 - - 38,867 - 156 - 156 Total 67,411 3,358 8,237 79,007 Inputs are quoted market prices (unadjusted) in active markets for identical instruments. Level 1 Level 2 Fixed income securities ............................................................................................ Inputs are not observable or unobservable inputs have a significant effect on the valuation. This category includes instruments that are valued based on quoted prices for similar instruments for which significant unobservable adjustments are required to reflect th e differences between the instruments. Inputs are not quoted market prices but are observable either directly, i.e. as prices, or indirectly, i.e. derived from prices. This category includes financial instruments valued using quoted prices in active markets for similar instruments, quoted prices for similar or identical instruments in markets that are considered less than active and other instruments which are valued using techniques which rely primarily on inputs that are directly or indirectly observable from market data. Level 3 The fair value of financial assets and liabilities that are traded in active markets are based on quoted market prices. For other financial instruments the Group determines fair value using various valuation techniques. IFRS 13 specifies a fair value hierarchy based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources whereas unobservable inputs reflect the Group's market assumptions. These two types of inputs result in the following fair valu e hierarchy: The Group uses widely recognised valuation techniques, including net present value and discounted cash flow models, comparison with similar instruments for which market observable prices exist, Black-Scholes and other valuation models. Fixed income securities ............................................................................................ Shares and other variable income securities ........................................................... Fair value hierarchy Fair value hierarchy classification The fair value of financial assets and financial liabilities measured at fair value in the statement of financial position is classified into the fair value hierarchy as follows: Valuation process The Bank's Credit committee is responsible for fair value measurements of financial assets and financial liabilities classified as level 2 or level 3 instruments. The valuation is carried out by personnel from respective departments under supervision from Risk. The valuations are revised at least quarterly, or when there are indications of significant changes in the underlying inputs. Valuation techniques For more complex instruments, the Group uses proprietary models, whic h usually are developed from recogn ised valuation models. Some or all of the inputs into these models may not be market observable and are derived from market prices or rates or are estimated based on assumptions. When entering into a transaction, the financial instrument is recognised initially at the transaction price, which is the best indicator of fair value, although the value obtained from the valuation model may differ from the transaction price. This initial difference, usually an increase in fair value, indicated by valuation techniques is recognised in income depending upon the individual facts and circumstances of each transaction and no later than when the market data becomes observable. The value produced by a model or other valuation technique is adjusted to allow for a number of factors as appropriate, because valuation techniques cannot appropriately reflect all factors market participants take into account when entering into a transaction. Valuation adjustments are recorded to allow for model risks, bid-ask spreads, liquidity risks, as well as other factors. Management believes that these valuation adjustments are necessary and appropriate to fairly state financial instruments carried at fair value in the statement of financial position. Valuation techniques include recent arm's length transactions between knowledgeable, willing parties, if available, reference to the current fai r value of other instruments that are substantially the same, the discounted cash flow analysis and option pricing models. Valuation techniques incorporate all factors that market participants would consider in setting a price and are consistent with accepted methodologies for pricing financial instruments. Periodically, the Group calibrates the valuation technique and tests it for validity using prices from any observable curre nt market transactions in the same instrument, without modification or repackaging, or based on any available observable market da ta. Derivatives ................................................................................................................ Loans to customers .................................................................................................. Securities used for hedging ...................................................................................... Derivatives used for hedge accounting .................................................................... Consolidated Financial Statements 31 December 2025 54 ===== SIDA 58 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 58 60. Financial assets and financial liabilities measured at fair value (cont.) 31.12.2025 Financial liabilities Carrying Level 1 Level 2 Level 3 amount Mandatorily measured at fair value through profit and loss 433 - - 433 432 - - 432 - 773 - 773 - - 641 641 Measured at fair value through other comprehensive income - - - - Total 865 773 641 2,278 31.12.2024 Financial assets Carrying Level 1 Level 2 Level 3 amount Mandatorily measured at fair value through profit and loss 4,908 106 611 5,625 1,922 55 3,456 5,432 12,601 - - 12,601 - - 874 874 - 1,197 - 1,197 Measured at fair value through other comprehensive income 59,169 - - 59,169 Total 78,600 1,358 4,940 84,898 Financial liabilities Carrying Level 1 Level 2 Level 3 amount Mandatorily measured at fair value through profit and loss 153 - - 153 42 - - 42 - 1,710 939 2,649 - - 320 320 Measured at fair value through other comprehensive income - 283 - 283 Total 195 1,993 1,259 3,447 e. Shares and Fixed other var. income income Loans to Other 31.12.2025 securities securities customers Derivatives liab ilities Total Balance as at 1 January 2025 611 3,456 874 (939) (320) 3,682 (69) 589 224 17 (18) 742 778 1,937 1,325 (580) (6) 3,454 - - (922) 990 216 283 - (2,388) - - - (2,388) (553) - 2,376 513 (513) 1,823 Balance as at 31 December 2025 767 3,594 3,877 - (641) 7,596 Shares and Fixed other var. income income Loans to Other 31.12.2024 securities securities customers Derivatives liab ilities Total Balance as at 1 January 2024 114 2,517 682 (860) (405) 2,049 7 362 69 (168) (5) 265 604 612 - - - 1,217 - - (621) 89 90 (442) - (36) - - - (36) (114) - 743 - - 629 Balance as at 31 December 2024 611 3,456 874 (939) (320) 3,682 Fixed income securities ............................................................................................ Derivatives used for hedge accounting .................................................................... Additions .......................................................................... Repayments ...................................................................... Disposals ........................................................................... Derivatives ................................................................................................................ Derivatives ................................................................................................................ Other liabilities ......................................................................................................... Other liabilities ......................................................................................................... Short positions held for trading ............................................................................... Reconciliation of changes in Level 3 fair value measurements Short positions used for hedging ............................................................................. Derivatives ................................................................................................................ Short positions held for trading ............................................................................... Short positions used for hedging ............................................................................. Fixed income securities ............................................................................................ Shares and other variable income securities ........................................................... Loans to customers .................................................................................................. Securities used for hedging ...................................................................................... Derivatives used for hedge accounting .................................................................... Reclassification ................................................................. Total gains and losses in profit or loss ............................. Additions .......................................................................... Repayments ...................................................................... Disposals ........................................................................... Reclassification ................................................................. Total gains and losses in profit or loss ............................. Consolidated Financial Statements 31 December 2025 55 ===== SIDA 59 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 58 60. Financial assets and financial liabilities measured at fair value (cont.) f. Book value Range 31.12.2025 0-95% 767 - 3,594 - 3,877 Total 8,237 Book value Range 31.12.2024 0-95% 611 - 3,456 - 874 Total 4,940 g. +10% -10% 77 (77) 359 (359) 388 (388) Total 824 (824) 61. Financial assets and financial liabilities not measured at fair value Value of assets Significant unobservable input Unlisted bonds Fair value measurements for Level 3 financial assets Level 3 assets consist primarily of unlisted bonds, shares and share certificates and loans measured at fair value. Each asset is evaluated separately but assets within an asset group share a valuation method. The following valuation methods are in use: Expert modelLoans to customers Deposits and other borrowings are typically either short-term or have variable interest rates. Other liabilities consist primarily of accounts payables, unsettled transactions, withholding taxes and other short-term payables. The carrying amount of these liabilities is therefore considered a reasonable approximation of their fair value. The Group holds financial instruments which are not measured at fair value. Except for loans to customers, the Group believes that the best estimate of the fair value of these financial instruments is equal to the carrying amount at the reporting date and does therefore not report a fair value for these financial instruments. Loans to customers measured at amortised cost are classified as level 3, in the fair value hierarchy, and have a book value of ISK 203,683 m illion at end of December 2025 (31.12.2024: ISK 149,329 m illion). The estimated fair value of loans to customers measured at amortised cost at end of December 2025 is ISK 203,606 million (31.12.2024: ISK 149,121 million). Cash and balances with Central Bank includes several components as detailed in note 19. These assets are either balances available on-demand or on very short notice, or other assets easily converted to cash. Other financial assets consist primarily of short-term receivables. The carrying amount of these assets is therefore a reasonable approximation of their fair value. Asset class Method Significant unobservable input Unlisted bonds Expected recovery Value of assets Unlisted variable income securities Market price Recent trades The Group believes its estimates represent appropriate approximations of fair value and that the use of different valuation methodologies and reasonable changes in assumptions or unobservable inputs would not significantly change the estimates. A 10% change in the estimates would have the following effect on profit before taxes: Shares and other variable income securities ................................................................................................................ Loans to customers ........................................................................................................................................................ Given the methods used, the possible range of the significant unobservable inputs is wide. When determining the values used the Group considers the financial strength of the entity in question, recent trades if any and multipliers for comparable instruments. The effect of unobservable inputs in Level 3 fair value measurements Loan to customers Expert model Value of assets and collateral Fixed income securities ................................................................................................................................................. Market price Recent trades Value of assets and collateral Asset class Method Expected recovery Unlisted variable income securities Consolidated Financial Statements 31 December 2025 56 ===== SIDA 60 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 61 Other information 62. Pledged assets Settlement and Securities 31.12.2025 committed facilities borrowing Total - 0 0 9,045 - 9,045 13,659 324 13,984 - 47 47 Total 22,704 372 23,076 Settlement and Securities 31.12.2024 committed facilities borrowing Total - 1,774 1,774 21,053 - 21,053 10,263 94 10,357 - 30 30 Total 31,316 1,897 33,214 63. Related parties a. Definition of related parties b. Arm's length c. Balances with related parties 31.12.2025 Assets Liabilities 130 243 - 39 Total 130 283 31.12.2024 Assets Liabilities 2 124 - 41 Total 2 165 d. Transactions with related parties Interest Interest Other Other 2025 income expense income expense 6 13 1 2 - - - 322 Total 6 13 1 323 Interest Interest Other Other 2024 income expense income expense - 6 1 1 - - - 341 Total - 6 1 342 Associates .......................................................................................................................................................................... Associates ......................................................................................................................... Management ...................................................................................................................................................................... Management .................................................................................................................... Associates ......................................................................................................................... The Group has a related party relationship with the board members of the Bank, the CEO of the Bank and key employees (together referred to as management), associates as disclosed in note 27, shareholders with significant influence over the Bank, close family members of individuals identified as related parties and entities under the control or joint control of related parties. Management ...................................................................................................................................................................... Associates .......................................................................................................................................................................... Loans to credit institutions ........................................................................................................................ Loans to customers ................................................................................................................................... Fixed income securities ............................................................................................................................. Loans to credit institutions ........................................................................................................................ Loans to customers ................................................................................................................................... Fixed income securities ............................................................................................................................. Other assets ............................................................................................................................................... Transactions with related parties are carried out at arm's length and subject to an annual review by the Bank's internal auditor. Other assets ...................................................................................................................... The Group has pledged assets, in the ordinary course of banking business, to the Central Bank of Iceland to secure general settlement in the Icelandic clearing system. Cash pledged to secure the borrowing of securities from other counterparties than the Central Bank of Iceland is classified as loans to credit institutions. Further information about salaries and benefits paid to the Board of Directors, the CEO and Managing Directors is provided in n ote 11. Management .................................................................................................................... Consolidated Financial Statements 31 December 2025 57 ===== SIDA 61 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 61 64. Remuneration policy 65. Incentive scheme a. Description b. Performance based payments through profit and loss 2025 2024 Cash Cash 428 399 199 79 143 69 (1) - Total 770 547 c. On-balance sheet deferred performance based payments 31.12.2025 31.12.2024 362 130 Total 362 130 Salary related expenses ..................................................................................................................................................... Cancelled deferred performance based payments ........................................................................................................... The remuneration policy conforms to Articles 57 a and 57 b of Act No. 161/2002 on Financial Undertakings, Act No. 2/1995 on Public Limited Companies and other applicable rules and guidelines, as well as Act No. 25/2023 on Sustainable Finance Disclosure. A more detailed description of the policy can be found on the Bank's website, www.kvika.is. Non-deferred ..................................................................................................................................................................... The Board of Directors has adopted a remuneration policy at the proposal of the Remuneration Committee. The Bank's Annual General Meeting approved the Bank's current remuneration policy in March 2025. The Board of Directors will submit an updated remuneration policy for approval at the Bank's Annual General Meeting in 2026. The remuneration policy applies on a consolidated basis. However, it does not apply to the Bank's subsidiaries that, based on the activities carried out by the subsidiaries, are subject to independent legal requirements regarding remuneration policies and/or the granting of bonuses, except to the extent required by law. Kvika shall strive to ensure that the remuneration policies of subsidiaries take into account the Bank's remuneration policy as possible. The Bank's subsidiaries subject to independent legal requirements have, thus, each implemented own remuneration policies. The Board of Directors has approved a performance based incentive scheme at the proposal of the Remuneration Committee. The scheme forms a part of the remuneration policy adopted by the Bank. As described above it does not apply to the Bank's subsidiaries that are subject to independent legal requirements regarding remuneration policies and/ or granting of bonuses. The Bank's subsidiaries subject to independent legal requirements have, thus, each implemented own incentive schemes. Deferred cash payments .................................................................................................................................................... The Bank's incentive scheme is set forth in accordance with Article 57 b of Act No. 161/2002 on Financial Undertakings. Performance based payments may consist, in part or in full, of shares or share-linked instruments, such as warrants or stock options for shares in the Bank. Payments according to the scheme are based on key performance indicators (KPIs) that reflect the goals of the Bank, the division and the employee. The basis for performance based pay reflects sound risk management and does not induce excessive risk taking. Performance based pay to individual employees shall not exceed 25% of their annual salary and at least 40% of the performance based pay shall be deferred for three years. Performance based pay that does not exceed 10% of annual salary is not subject to deferral. A more detailed description of the scheme can be found in the Bank's remuneration policy on it's website, www.kvika.is. Incentive schemes of the Icelandic subsidiaries are similar to the Bank's due to specific Icelandic legal requirements that are similar for the operations of the Bank and these subsidiaries. UK law has not implemented similar restrictions for incentive schemes and, therefore, the incentive schemes of the UK subsidiaries differ from the Bank and the Icelandic subsidiaries. Deferred ............................................................................................................................................................................. Consolidated Financial Statements 31 December 2025 58 ===== SIDA 62 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 61 66. Share-based payments a. Description - - - - - - - b. The following share options are in existence at year end Number of Exercise Exercise Share options shares year price 2,441 2026 20.17 2,441 c. Movements in the number of share options outstanding and their related weighted average exercise prices 22.24 69,478 15.27 (1,730) 23.93 (25,397) 21.51 42,350 21.59 (39,909) 20.17 2,441 0 Forfeited in 2025 ................................................................................................................................................................ At 31 December 2025 The Bank has issued share options in accordance with authorisations of its annual general meeting, the Group's remuneration policy and incentive scheme. The share options were granted in September of 2023, based on an authorisation by the A nnual General Meeting of Kvika banki hf. in 2022, and were assigned as a deferred part of recruitment bonuses of certain employees. The stock options were granted in order to align the long-term interests of the company and said employees. The cost of these share option agreements was calculated ISK 14.7 million based on the Black-Scholes calculation model. Exercised in 2024 ............................................................................................................................................................... In certain instances, the Group is entitled to revoke the share options in part or in whole in line with applicable rules. The options do not provide for cash settlement. Executive managers within the Group commit to retain, until the end of their employment, shares which market value correspond to profit after taxes of utilised share options until the value of the shares owned by those individuals is equivalent to six months’ salary. The value of the share options was determined by an independent specialist and the value is in line with the laws and rules applicable to bonus payments of financial undertakings. Issued in 2023 - Other share options, cf. the Bank´s incentive scheme .................................................. Average exercise price per share Share options (thousands) At 1 January 2024 ............................................................................................................................................................... At 31 December 2024 The main terms of the share options are as follows: The exercise price of the share options is ISK 20.107 per share, which is equivalent to the weighted average price in transactions with shares of the company on Nasdaq OMX Iceland for ten business days prior to the contract date, with 7.5% annual interest over the period, and the exercise price shall be adjusted for dividends that may be decided during the vesting period. Exercisable share options at 31 December 2025 ............................................................................................................... The vesting period of the share options is 36 months from grant date of the share options. Following that the share options may be exercised for a period of three months where in that period the strike continues to accrue with 7.5% annual interest until the option is exercised. However, in the event of a merger involving a dissolution of the company or if there is a change in the company's control, the share options will become fully vested. In general, share options shall lapse if the share option holder's employment relationship with the company is terminated before the end of the vesting period. Forfeited in 2024 ................................................................................................................................................................ Consolidated Financial Statements 31 December 2025 59 ===== SIDA 63 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Consolidated Financial Statements 61 67. Shareholders of the Bank 31.12.2025 31.12.2024 Shareholder Country % % Iceland 9.14% 9.17% Iceland 8.04% 7.93% Iceland 7.86% 5.64% Iceland 7.24% 5.58% Iceland 5.07% 7.09% Iceland 2.96% 2.55% Iceland 2.76% 2.59% Iceland 2.37% 2.33% Iceland 2.66% 2.32% Iceland 1.49% 1.71% Iceland 1.37% 2.39% USA 1.39% 1.36% USA 1.23% 1.30% Iceland 1.21% 0.70% Iceland 1.17% 1.96% 39.42% 44.06% 2025: 2761, 2024: 2726 95.37% 98.69% 4.63% 1.31% Total 100% 100% 68. Other matters Sale of TM finalised Tax treatment of warrants sold by the Bank 69. Events after the reporting date There are no material events after the reporting date. Beneficial owners are defined as owners holding a share of 10% or greater, directly or indirectly. The information presented is, among other things, based on publicly available information. Others, each less than 1% .............................. Treasury shares .............................................. Investment fund managed by The Vanguard Group, Inc. Landsbankinn hf. ............................................ Investment fund managed by Landsbréf hf. Investment fund managed by The Vanguard Group, Inc. Almenni lífeyrissjóðurinn ............................... Arion banki hf. ................................................ Landsbréf - Úrvalsbréf hs. .............................. Vanguard Emerging Markets Stock ................ Stapi lífeyrissjóður .......................................... Vanguard Total International S ...................... Frjálsi lífeyrissjóðurinn ................................... Lífsverk lífeyrissjóður ...................................... Lífeyrissjóður starfsmanna ríkisins B-deild .... Lífeyrissjóður verzlunarmanna ....................... Birta lífeyrissjóður .......................................... Gildi - lífeyrissjóður ........................................ Beneficial owners As the Iceland revenue and customs has not yet concluded its review, the Bank has not charged any amount to its income statement nor made any changes to the tax returns for the respective years. The Bank is aware of that the Iceland revenue and customs ("Skatturinn") is currently reviewing the tax treatment of warrants that the Bank sold during the years 2017 to 2019. The Iceland revenue and customs is looking into whether the warrants should be taxed as perquisites instead of as a financial instruments. Should that be the case, then the Bank would be required to pay the respective social security tax and tax on financial activity. The Bank would however be able to deduct the amount of salary related expenses, as well as the amount of the perquisites, from its tax base for the respective years in question, and thereby increase its deferred tax losses. On 28 February 2025 Kvika and Landsbankinn hf. ("Landsbankinn") finalised the sale of 100% of TM tryggingar hf. ("TM") share capital to Landsbankinn. The handover of the insurance company took place simultaneously, with Landsbankinn paying Kvika the agreed purchase price upon completion. As previously communicated by Kvika on 30 May 2024, the final purchase price has been adjusted based on changes in TM’s tangible equity from the beginning of 2024 until the closing date, 28 February 2025. The initially agreed purchase price was ISK 28.6 b illion, but the final purchase price amounted to ISK 32.3 billion, reflecting the purchase price adjustment for 2024 and for the period 1 January to 28 February 2025. Lífeyrissjóður starfsmanna ríkisins A-deild .... Stoðir hf. ......................................................... Consolidated Financial Statements 31 December 2025 60 ===== SIDA 64 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 0 Significant accounting policies Page 70 Basis of consolidation ............................................................................ 62 71 Foreign currency .................................................................................... 63 72 Interest income and expense ................................................................. 63 73 Fee and commission income and expense ............................................ 63 74 Net financial income .............................................................................. 64 75 Dividend income .................................................................................... 64 76 Administrative expenses ........................................................................ 64 77 Employee benefits ................................................................................. 64 78 Income tax .............................................................................................. 64 79 Financial assets and financial liabilities ................................................. 65 80 Offsetting ............................................................................................... 66 81 Determination of fair value .................................................................... 66 82 Impairment ............................................................................................ 67 83 Cash and balances with Central Bank .................................................... 69 84 Fixed income securities .......................................................................... 69 85 Shares and other variable income securities ......................................... 69 86 Securities used for hedging .................................................................... 69 87 Loans to customers ................................................................................ 70 88 Derivatives .............................................................................................. 70 89 Investments in associates ...................................................................... 70 90 Investment properties ........................................................................... 70 91 Intangible assets .................................................................................... 71 92 Operating lease assets ........................................................................... 71 93 Property and equipment ........................................................................ 72 94 Other assets ........................................................................................... 72 95 Deposits ................................................................................................. 72 96 Borrowings ............................................................................................. 72 97 Issued bonds .......................................................................................... 72 98 Subordinated liabilities .......................................................................... 72 99 Short positions held for trading ............................................................. 72 100 Short positions used for hedging ........................................................... 73 101 Other liabilities ....................................................................................... 73 102 Assets and disposal groups held for sale ............................................... 73 103 Right of use asset and lease liability ...................................................... 73 104 Financial guarantees .............................................................................. 73 105 Share capital ........................................................................................... 73 106 Nature and purpose of equity reserves ................................................. 73 107 Earnings per share .................................................................................. 74 108 New standards and interpretations ....................................................... 74 109 Use of estimates and judgements ......................................................... 74 Consolidated Financial Statements 31 December 2025 61 ===== SIDA 65 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 69 Significant accounting policies 70. Basis of consolidation a. Subsidiaries b. Business combinations c. Non-controlling interest d. Fiduciary services e. Transactions eliminated on consolidation f. Structured entities The accounting policies set out below have been applied consistently to all periods presented in these Consolidated Financial Statements, and have been applied consistently by Group entities. The Group provides custody services, fund management and discretionary and advisory investment management services which require the Group to make decisions on the handling, acquisition or disposal of financial instruments on behalf of its clients. The financial statements of managed funds and investment portfolios managed by the Group on behalf of customers are not included in the financial statements, as they do not constitute assets or liabilities of the Group. Intra-group balances, income and expenses, and unrealised gains and losses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Group's interest in the associate. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. This also applies to subsidiaries classified as disposal groups held for sale. The Group acts as investment manager or investment advisor, for example, to a number of investment funds operated by the fund management company Kvika eignastýring hf. The purpose of such a fund management company is to generate fees from managing assets on behalf of third-party investors by providing investment strategies. These investment funds are financed through the issue of units to investors. The Group has no contractual obligation to provide financial support to these structured entities. From time to time, the Group makes seed capital investments in certain fund products in order to establish track records for new products, to test new investment strategies or to launch new products at a viable minimum size. The Group has set up a formal procedure to assess whether or not to consolidate investment funds managed and administered by the Group on behalf of its customers and other investors in the consolidated financial statements. As part of this assessment, the Group reviews all facts and circumstances including the purpose and design of the investment fund, to determine whether the Group, as fund manager, is acting as agent or principal. The Group is deemed to be a principal when the Group acts as fund manager and cannot be removed without cause, has variable returns through significant holdings and is able to influence the returns of the funds by exercising its power. Structured entities are entities that have been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is account for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit and loss. Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Group reassesses its relationship with an entity when there is a change in one or more of the elements of control. The Group uses the acquisition method to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value, at the date of exchange, of the assets given, liabilities incurred or assumed and equity instruments issued. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recognised as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised immediately in the income statement. Non-controlling interest represent the portion of profit or loss and equity not owned, directly or indirectly, by the Bank. Non-controlling interes t is presented separately in the income statement and is included in equity in the statement of financial position, separately from equity attributable to owners of the Bank. The Group chooses on an acquisition-by-acquisition basis whether to measure non-controlling interest in an acquiree at fair value or according to the proportion of non-controlling interests in the acquiree's net assets. Changes in the Bank's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances the carrying amounts of the controlling and non- controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Bank. Consolidated Financial Statements 31 December 2025 62 ===== SIDA 66 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 69 71. Foreign currency a. Foreign currency transactions b. Foreign operations 72. Interest income and expense Effective interest rate Amortised cost and gross carrying amount Presentation - - - - 73. Fee and commission income and expense - - - - - - - Fees attributable to a specific service or action are recognised as income when the service has been performed. Examples of such fees are brokerage and payment commissions financial assets at fair value through profit and loss Translation differences on foreign operations are presented as a separate category in the statement of changes in equity. Interest income and expense are recognised in the income statement usi ng the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life of the financial instrument to the gross carrying amount of the financial asset or the amortised cost of the financial liability. When calculating the effective interest rate for financial instruments other than purchased or originated credit-impaired assets, the Group estimates future cash flows considering all contractual terms of the financial instrument but not ECL. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate is calculated usi ng estimated future cash flows including ECL. The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured on initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any expected credit loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any expected credit loss a llowance. Transactions in foreign currencies are translated into the functional currency of the respective Group's entity using the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency using the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated using the exchange rate at the date the fair value was determined. The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the functional currency at spot exchange rate current at the reporting date. The income and expenses of foreign operations are translated into the functional currency at the spot exchange rates at the dates of the transactions. Fee and commission income and expense are recognised in the inco me statement when an agreement with a customer meets all of the following criteria: Fees that are earned gradually as the services are performed, such as management fees in asset management, are recognised as income at the rate these services are delivered. In practice, these are on a straight line basis financial assets at fair value through other comprehensive income (FVOCI) Interest income and expense presented in the income statement includes interest on: Foreign currency differences are posted as a separate line item under net financial income as disclosed in notes 7 and 74. the transaction price can be allocated to each individual service in the agreement it is probable that a consideration will be collected in exchange for the services that will be transferred to the customer The following applies to recognition of income for various types of fees and charges: derivatives The Group earns income from providing various services to its customers. This includes fees for managing assets on behalf of customers, commissions received for equity and bond transactions and fees and c ommissions for various other fina ncial services. Fee and commission income and expenses that are integral to the effective interest rate on a financial asset or liability are included in the measurement of the effective interest rate. financial assets and liabilities measured at amortised cost the parties to the contract have approved the contract and are committed to perform their respective obligations performance obligations have been established for services to be transferred the payment terms have been established for the services to be transferred Consolidated Financial Statements 31 December 2025 63 ===== SIDA 67 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 69 74. Net financial income - - - - - - - 75. Dividend income 76. Administrative expenses 77. Employee benefits a. Short-term employee benefits b. Defined contribution plans c. Share-based payments 78. Income tax Short-term employee benefits obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estim ated reliably. Fair value changes of loans to customers held at fair value Net financial income comprises the following: Realised and unrealised gains or losses from price changes of fixed income securities measured at fair value Current tax liabilities include the estimated tax payable next year on current year's profit according to the tax rates prevailing at reporting date, in addition to corrections on tax from previous years. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised. The deferred income tax asset and/or liability has been calculated and recognised in the statement of financial position. The calculation is based on the difference between assets and liabilities as presented in the tax return on the one hand, and in the consolidated financial statements on the other, taking into consideration tax losses carried forward. This difference is due to the fact that the tax assessment is based on premises that differ from those governing the financial statements, mostly due to temporary differences arising from the recognition of revenue and expense in the tax returns and in the financial statements. Deferred tax assets and tax liabilities are offset in the statement of financial position when there is a legal right to settle on a net basis and they are levied by the same taxing authority on the same entity or on different entities subject to joint taxation. Administrative expenses comprise expenses other than interest exp enses, fee and commission expenses an d expenses related to fair value changes. A breakdown of administrative expenses is provided in note 9. Obligations for contributions to defined contribution plans are expensed in profit or loss as the related service is provided. The Group has no further obligations once those contributions have been paid. Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at grant date. The grant date fair value of equity-settled share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. Income tax comprises current and deferred tax. Income tax is recognised in the income statement, except to the extent that it relates to items recognised directly in other comprehensive income or equity, in which case it is recognised there. Realised and unrealised gains or losses from price changes of variable income securities Interest income from fixed income securities carried at fair value through profit or loss Dividends Fair value changes in derivatives Foreign exchange difference Dividend income is recognised when the right to receive income is established. Usually this is the ex-dividend date for equity securities. Dividends are presented as a component of net financial income. Consolidated Financial Statements 31 December 2025 64 ===== SIDA 68 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 69 79. Financial assets and financial liabilities a. Recognition b. Classification Financial assets Financial assets at amortised cost Financial assets at fair value through other comprehensive income (FVOCI) Financial assets at fair value through profit or loss (FVTPL) Business model assessment - - - - - A financial asset is measured at amortised cost if the contractual terms of the financial asset give rise to cash flows that are solely payment of principal and interest and the asset is held within a business model whose objective is to collect contractual cash flows, i.e. Held to collect. After initial measurement, financial assets in this category are carried at amortised cost using the effective interest rate method. Amortisation is included in interest income in the Consolidated Income Statement. The majority of the Group's loans to customers are carried at amortised cost using the effective interest rate method. Interest on loans to customers is recognised as interest income. The Group makes an assessment of the objective of a business model in which an asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes: the stated policies and objectives for the portfolio and the operation of those policies in practice. In particular, whether management's strategy focuses on earning contractual interest revenue, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of the liabilities that are funding those assets or realising cash flows through the sale of the assets; how the performance of the portfolio is evaluated and reported to the Group's management; Impairment on financial assets measured at amortised cost is calculated using the expected credit loss approach. Loans and debt securities measured at amortised cost are presented net of allowance for credit losses in the Consolidated Statement of Financial Position. Financial assets at fair value through profit or loss are measured in the Consolidated Statement of Financial Position at fair value. Loans to customers which are measured at fair value through profit or loss are assets whose cash flows do not represent payments that are solely payments of principal and interest but are non-trading assets. Interest on loans to customers measured at fair value through profit or loss is recognised as interest income. Changes in fair value, as well as any gains or losses realised on disposal, are recognised in the line item Net financial income (expense) in the Consolidated Income Statement. how managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and the frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectations about future sales activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of how the Group's stated objective for managing the financial assets is achieved and how cash flows are realised. Financial assets that are held for trading or managed and whose performance is evaluated on a fair value basis are measured at fair value through profit or loss because they are neither held to collect contractua l cash flows nor held to both collect contractual cash flows and to sell financial assets. Financial assets classified at fair value through profit or loss are all other financial assets which are not classified at amortised cost or at fair va lue through other comprehensive income. This includes financial assets classified mandatorily at fair value through profit or loss and financial asset s which are irrevocably designated by the Group at initial recognition as at fair value through profit or loss that would otherwise meet the requirements to be measured at amortised cost or at fair value through other comprehensive income. The Group may designate financial assets as at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch that would other wise arise. Fixed income securities may be classified as financial instruments measured at fair value through other comprehensive income ("FVOCI") when they meet the classification criteria. Interest income is calculated using the effective interest rate. Interest income and foreign exchange gains or losses are recognised in the Consolidated Statem ent of Comprehensive Income. F ixed income securities classified as FVOCI are subject to impairment measurement using the expected credit loss approach. Fair value measurements are recognised in Other Comprehensive Income while on derecognition, cumulative gains (losses) recognised in Other Comprehensive Income are reclassified to the Consolidated Statement of Income. the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed; The Group's financial assets are classified into one of three measurement categories, i.e. i) at amortised cost, ii) at fair value through other comprehensive income or iii) at fair value through profit or loss. The measurement basis of individual financial assets is determined based on an assessment of the cash flow characteristics of the assets and the business models under which they are managed. The Group initially recognises loans and advances, deposits, debt securities issued and subordinated liabilities on the date on which they are originated. All other financial assets and liabilities are initially recognised on the trade date, which is the date when the Group becomes a party to the contractual provisions of the instrument. Consolidated Financial Statements 31 December 2025 65 ===== SIDA 69 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 69 79. Financial assets and financial liabilities (cont.) Cash flow characteristics assessment Reclassifications Financial liabilities Derecognition Financial assets Financial liabilities 80. Offsetting 81. Determination of fair value The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price – i.e. the fair value of the consideration given or received. If the Group determines that the fair value at initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis ov er the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out. If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction. For further information on valuation techniques, refer to notes 60 - 61. Income and expenses are presented on a net basis for gains and losses arising from a group of similar transactions, such as in the Group's trading activity, or other circumstances permitted by International Financial Reporting Standards. A financial asset is derecognised when the contractual rights to the cash flows from the asset expire, or when the Group enters into a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. The Group enters into transactions whereby it transfers assets recognised on its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets or a portion of them. In such cases, the transferred assets are not derecognised. Examples of such transactions are securities lending and sale and repurchase agreements. Financial liabilities are derecognised when the obligation of the Group is discharged, cancelled or expires. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk. When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Financial assets and liabilities are offset, and the net amount reported in the statement of financial position, when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Group changes its business model and if the change is significant to the Group's operations. The Group's financial liabilities are classified into one of two measurement categories, i.e. at amortised cost or at fair value through profit or loss. Financial liabilities held for trading are measured at fair value through profit or loss, all other financial liabilities are measured at amort ised cost. Financial liabilities measured at amortised cost are initially recognised at fair value, which is typically equal to cost, i.e. cash advanced l ess any transaction costs. They are subsequently measured at amortised cost using the effective interest method. Accrued interest, in the case of interest bearing liabilities is included in the carrying amount. Interest expense is recognised in net interest income. Where the contractual terms introduce exposure to other risk or variability of cash flows that are inconsistent with a basic lending arrangement, the related financial asset is classified and measured at fair value through profit or loss. Financial assets held within the business models Held to collect and Held to collect and sell are assessed to evaluate if their contractual cash flows are comprised of solely payments of principal and interest (SPPI). SPPI payments are those which are consistent with a basic lending arrangement. Principal is the fair value of the financial asset at initial recognition and may change over the life of the instruments, e.g. due to repayments. Interest relates to basic lending returns, including compensation for the time value of money and credit risk associated with the principal amount outstanding and for other basic lending risks (expected losses, liquidity risks and administrative costs), as well as a profit margin. Consolidated Financial Statements 31 December 2025 66 ===== SIDA 70 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 69 82. Impairment Expected Credit Loss - - - - - - 1. 2. 3. Lifetime expected credit losses Lifetime expected credit losses are the expected shortfalls in contractual cash flows, taking into account the potential for default at any point during the life of the financial instrument. Expected credit losses 12 month expected credit losses Stage 2 covers financial assets that have deteriorated significantly in credit quality since initial recognition (unless the low credit risk simplification has been applied and is relevant) but that do not have objective evidence of a credit loss event. Stage 1 covers financial assets that have not deteriorated significantly in credit quality since initial recognition or (where the optional low credit risk simplification is applied) have low credit risk. The Group measures the ECL at least on each balance sheet date according to a three-stage expected credit loss impairment model. The general approach 12-month expected credit losses are a portion of the lifetime expected credit losses. They are calculated by multiplying the probability of a default occurring on the instrument in the next 12 months by the total (lifetime) expected credit losses that would result from that default. They are not the expected cash shortfalls over the next 12 months. They are also not the credit losses on financial instruments that are forecast to actually default in the next 12 months. Expected credit losses are defined as the difference between all the contractual cash flows that are due to an entity and the cash flows that it actually expects to receive (‘cash shortfalls’). This difference is discounted at the original effective interest rate (or credit-adjusted effect ive interest rate for purchased or originated credit-impaired financial assets). contract assets; loan commitments issued; and financial guarantee contracts issued. For trade receivables and contract assets without a significant financing component a simplified (lifetime expected loss) approach can be applied. For assets that are credit-impaired at purchase or origination lifetime expected loss approach shall be applied. For other assets/exposures a general (or three-stage) approach shall be applied. The Group estimates an ECL for each of these types of assets or exposures. However, IFRS 9 specifies three different approaches depending on the type of asset or exposure: debt instruments measured at fair value through other comprehensive income; finance lease receivables measured at amortised cost; The Group recognises loss allowances for ECL on the following financial instruments that are not measured at FVTPL: debt instruments measured at amortised cost; Stage 3 covers financial assets that have objective evidence of a credit loss event at the reporting date. 12-month expected credit losses are recognised in stage 1, while lifetime expected credit losses are recognised in stages 2 and 3. IFRS 9 draws a distinction between financial instruments that have not deteriorated significantly in credit quality since initial recognition and those that hav e. Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument. An asset moves from 12-month expected credit losses to lifetime expected credit losses when there has been a significant deterioration in credit quality since initial recognition. Hence the ‘boundary’ between 12-month and lifetime losses is based on the change in credit risk not the absolute level of risk at the reporting date. There is also an important operational simplification that permits companies to stay in ‘12-month expected credit losses’ if the absolute level of credit risk is ‘low’. This applies even if the level of credit risk has increased significantly. There is also a third stage. This applies to assets for which there is objective evidence of impairment. In Stage 3 the credit loss allowance is still based on lifetime expected losses but the calculation of interest income is different. In the periods subsequent to initial recognition, interest is calculated based on the amortised cost net of the loss provision, whereas the calculation is based on the gross carrying value in Stages 1 and 2. Finally, it is possible for an instrument for which lifetime expected credit losses have been recognised to revert to 12-month expected credit losses should the credit risk of the instrument subsequently improve so that the requirement for recognising lifetime expected credit losses is no longer met. Consolidated Financial Statements 31 December 2025 67 ===== SIDA 71 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 69 82. Impairment (cont.) - - - - - 1. 2. Origination grade 1 2 3 4 5 6 7 8 9 6 6 6 6 Migration of corporations by one or two risk grades in the PD model is considered to be a significant increase in risk and therefore warrant a transfer to stage 2, depending on the origination grade. However, the Group considers risk grade 5 and lower for corporations to be low risk and therefore excludes any movement between categories that does not result in a rating above that level. If the borrower is in Creditinfo's default registry then he moves to stage 3 if he is more than 30 days delinquent but stage 2 otherwise. The rating scale for individuals is A1–A3, B1–B3, C1–C3, D1–D3 and E1–E3. A loan is considered a SICR if the rating has deteriorated by at least two risk grades from origination and is B3 or worse at the reporting date. Risk Management is responsible for managing the credit risk of the Group which includes a qualitative SICR assessment. Risk Management reviews at least quarterly all significant exposures on a loan by loan basis, such as the largest borrowers in each loan portfolio and the largest borrowers in default. i. Based on the Bank’s assessment, the obligor’s payment capacity has improved materially such that full repayment of the exposure is now The Group utilises an economic forecast and the current 12 month PD for the purpose of estimating lifetime PD for loans in stage 2. The 12 month PD is adjusted with a survival rate for each year until maturity with the following formula: PD t =P D12 *S Rt where PD12 is the 12 month PD from the credit rating model and SR t is the survival rate at time t, which is calculated recursively as SR t =S Rt-1 *( 1 - P Dt). The Group monitors the appropriateness of the assumption as a part of it’s yearly validation and monitoring process. The PD assessment for portfolios in the UK is primarily individually assessment done by credit specialists based on payment history and general creditworthiness where performing customers are ranked in three different risk classes. When considering whether a significant increase in credit risk (SICR) has occurred the Group considers both quantitative and qualitative factors. In general the Group will rely on a quantitative analysis based on the PD model but will additionally consider qualitative factors based on the information available to the Group. Definition of default Probability of default and credit risk rating The Group considers a financial asset to be in default if one of the following applies: ii. The obligor is less than 90 days past due on all exposures that have been classified as being in default. An exposure shall cease to be considered in default when all of the following conditions are met. the borrower is considered to be unlikely to pay as determined by the B ank's Risk Management department. Events that are likely to lead to default as determined by the Risk Management department include the following: - i. An increased impairment of the exposure, for example as a result of a deterioration in the obligor’s creditworthiness or credit rating - ii. The Bank has approved a loan restructuring that is likely to result in an impairment or write-off of the exposure. - iii. The Bank has initiated bankruptcy proceedings against the obligor. - iv. The obligor has initiated bankruptcy proceedings that affect or delay the repayment of the exposure to the Bank. - v. The obligor is more than 30 days past due on one or more of its material credit obligations and is on Creditinfo’s default registry. the borrower is more than 90 days past due of one of his exposures with the Bank; Quantitative SICR assessment Grading migrations – SICR has occurred if the current grade has increased compared to the origination grade. For the domestic portfolio, more or equal to the following thresholds are considered to be significant increase in credit risk: Significant increase in credit risk The Group has defined the following criteria’s for SICR: Over 30 days past due of any of the client's exposures or client is in Creditinfo's default registry 7 8 iii. None of the conditions which resulted in the obligor being classified as in default as referred to in 2.2 have been present for a period of 3 months, or 12 months if the borrower has received a forbearance measure. The Group utilises internal and external Probability of Default models (PD models). Internal models are developed using internal default data along with demographic and other explanatory variables. External models are developed by Creditinfo, an Icelandic credit bureau, for the domestic corporate and invidiual portfolios. The Creditinfo PD models are calibrated to the default rate of the underlying portfolios. The PD models calculate a 12 month PD and a lifetime PD is calculated for stage 2 loans. All PD models use an economic regression model which uses forecasted macro variables to adjust the PD values for economic scenarios. Threshold grade Qualitative SICR assessment 9 9 10 Consolidated Financial Statements 31 December 2025 68 ===== SIDA 72 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 69 82. Impairment (cont.) Forward looking probability weighted scenarios 83. Cash and balances with Central Bank 84. Fixed income securities 85. Shares and other variable income securities 86. Securities used for hedging The Group considers the lifetime of each exposure to be the contractual maturity of each loan. The Group considers this to be the case as any lending subsequent to that period would be based on an independent le nding decision at that time based on the prevailing market terms. The Group only considers contractual cash flows when estimating exposure at default. The average lifetime of the Group's exposures is relatively short and it does therefore not consider the likelihood of prepayment when concluding on the lifetime of the assets. Exposure at default Expected credit loss measurement The Group considers the off-balance portion of exposure at default to be 50% (credit conversion factor) of any facilities not drawn upon that are considered committed. Such facilities include overdrafts, credit cards and guarantees. The credit conversion factor is subject to expert review on a case by case basis. The Bank does not consider credit line facilities to be committed facilities as disbursements are subject to predetermined conditions and constitute a separate credit review. These predetermined conditions will in most cases lead directly to an increase in posted collateral and disbursements therefore stay within acceptable collateral coverage. Committed facilities Exposure at Default (EAD). This is an estimate of the exposure at a future date, taking into account expected changes in the exposure after the reporting date, including repayments of principal and interest, and expected drawdowns on committed facilities. Shares and other variable income securities consist of equity investments and unit shares in mutual funds. Shares and other variable income securities are initially measured at fair value and subsequently accounted for depending on their classification as discussed i n note 79. Securities used for hedging consist of non-derivative financial assets that are used to hedge the Group's exposure arising from derivative contracts with customers. Securities used for hedging are measured at fair value as discussed in note 79. Cash and balances with Central Bank are carried at amortised cost in the statement of financial position. Cash and balances with Central Bank include notes and coins on hand, balances held with the Central Bank and other financial institutions, and highly liquid financial assets with original maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments. Discount rate. This is used to discount an expected loss to present value at the reporting date using the effective interest rate (EIR) at initial recognition. The Group's management has identified and probability weighted three domestic macro-economic scenarios and four scenarios for its UK loan portfolios for the purpose of estimating the development of PD valu es in the calculation of expected credit losses. The forecasts of macro-economic variables and the associated scenario weights are based on management judgement and are applied to those loan portfolios that are affected by these variables. The Group incorporates the following forward-looking macro- economic variables into its probability weighted expected credit loss calculations: (i) unemployment rate and (ii) inflation rate. Loss Given Default (LGD). This is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, including from any collateral. It is expressed as a percentage of EAD and derived from value of underlying collaterals. Lifetime definition IFRS 9 requires the Group to determine an expected credit loss (ECL) amount on a probability-weighted basis as the difference between the cash flows that are due to the Group in accordance with the contractual terms of a financial instrument and the cash flows that the Group expects to receive. The Group has implemented an ECL model which is consistent with regulatory and best practices. The model is based on four components. Probability of Default (PD) . This is an estimate of the likelihood of default over a given time horizon. The Bank has primarily used calibrated external credit ratings to assess the default probability of its customers. Some of the larger borrowers are furthermore individually assessed by credit specialists. The Bank has implemented internal credit rating models for part of the loan portfolio and intends to continue this development. Fixed income securities are initially measured at fair value and subsequently accounted for depending on their classification as discussed in note 79. Consolidated Financial Statements 31 December 2025 69 ===== SIDA 73 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 69 87. Loans to customers 88. Derivatives - - - 89. Investments in associates 90. Investment properties The contract requires no initial investment or an initial 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 An investment property is an asset which is specified for leasing to third parties, for returns or for both purposes. Investment properties are initially recognised at cost and subsequently measured at fair value. Changes in fair value are recognised as gains or loss in the income statement. Settlement takes place at a future date The Group uses derivatives for trading purposes and to hedge its exposure to market price risk, foreign exchange risk and inflation and interest risk arising from operating, financing and investing activities. Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence generally exists when the Group holds between 20% and 50% of the voting power, including potential voting rights, if any. Investments in associates are initially recognised at cost. If the Group's share of loss exceeds its interest in an associate, the Group's carrying amount is reduced to zero 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 recognising its share of those profits only after its share of the profits equals the share of losses not recognised. The Group's share of the total recognised gains and losses of associates is included in the financial statements of the Group on an equity accounted basis, from the date the significant influence commences until the date it ceases. Derivative assets and liabilities are initially recognised and subsequently measured at fair value in the statement of financial position. Derivatives with positive fair values are classified as financial assets and derivatives with negative fair values as financial liabilities. Reven ue from derivatives is split into interest income and net income from financial instruments at fair value and presented in the corresponding line items in the income statement. Loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and include loans provided by the Group to its customers, participation in loans from other lenders and purchased loans that are not quoted in an active market and which the Group has no intention of selling immediately or in the near future. Finance lease receivables are a part of the line item Loans to Customers. Loans are initially recognised at fair value, which is the cash advanced, plus any transaction costs. Subsequently, they are measured at amortised cost using the effective interest method. Accrued interest is included in the carrying amount of the loans and advances. The carrying amount of impaired loans is reduced through the use of an allowance account. When the Group purchases a financial asset and simultaneously enters in to an agreement to resell the asset, or a substantially similar asset, at a fixed price at a future date ("reverse repo" or "stock borrowing"), the arrangement is accounted for as a loan and the underlying asset is not recognised in the Group's statement of financial position. A derivative is a financial instrument or another contract that falls under the scope of IFRS 9 and generally has the following three characteristics: Its value changes due to changes in an underlying variable, such as bond price, share price, security or price index (including CPI), foreign currency exchange rate or interest rate Consolidated Financial Statements 31 December 2025 70 ===== SIDA 74 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 69 91. Intangible assets a. - - - - - b. c. d. 7-16 years 4-20 years 3-14 years 92. Operating lease assets Asset categories Customer relationships Development cost that has been capitalised is amortized on the day that the product is launched using the straight line method over their useful life, but not exceeding 14 years. Brands Brands have been acquired as part of recent acquisitions and are capitalised and amortised using the straight line method over their useful life, but not exceeding 20 years. Customer relationships have been acquired as part of recent acquisitions and are capitalised and amortised using the straight line method over their useful life of maximum 16 years. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis. An impairment loss in respect of goodwill is not reversed. For other asse ts, 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 amortisation, if no impairment loss had been recognised. Goodwill arises in business combinations. It is recognised as of the acquisition date and measured as the aggregate of (a) the fair value of the consideration transferred, (b) the recognised amount of any non-controlling interest in the acquiree, and (c) the fair value of any previously held equity interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as at the acquisition date. The consideration transferred includes the fair value of assets transferred, liabilities incurred and equity interests issued by the Group. In addition, consideration transferred includes the fair value of any contingent consideration. Initial recognition The Group uses the cost model for measurement after recognition and intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Intangible assets are reviewed for indications of impairment or changes in estimated future economic benefits at each reporting date. If such indications exist, then the asset's recoverable amount is estimated. Goodwill is tested annually for impairment. Intangible assets are initially recognised at cost. Subsequent measurement For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that is largely independent of the cash inflows of other assets or cash generating units (CGUs). Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination. Customer relationships ............................................................................................................................................................................... Brands ......................................................................................................................................................................................................... Operating lease assets are rental agreements on vehicles and heavy equipments where the bank is the lessor. Operating lease assets are recognised at cost less depreciation and impairment. Depreciation is calculated and recognised in the income statement on a straight-line basis based on estimated useful life, taking into account the residual value. Software comprise acquired software licences and external costs associated with the development of bespoke applications. Goodwill Software and other ..................................................................................................................................................................................... Depreciation of property and equipment and amortisation of intangible assets are presented together as a separate line item in administrative expenses as disclosed in note 9. Further breakdown on depreciation of intangible assets is provided in note 28. Amortisation Intangible assets with finite useful life are amortised using the straight-line method over their estimated useful economic life, with the amortisation recognised in the income statement. The estimated useful life of intangible assets is as follows: The Group groups intangible assets into four categories: The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, 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 or CGU. Software and other Consolidated Financial Statements 31 December 2025 71 ===== SIDA 75 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 69 93. Property and equipment a. - - b. c. d. e. 15-50 years 3-5 years 94. Other assets 95. Deposits 96. Borrowings 97. Issued bonds 98. Subordinated liabilities 99. Short positions held for trading Short positions are obligations of the Group to deliver financial assets borrowed by the Group and sold to third parties. Short positions are carried at fair value through profit or loss with all fair value changes recognised in the income statement under net financial income. Subordinated liabilities are initially recognised at fair value less attributable transaction costs. Subsequently, they are measured at amortise d cost using the effective interest method. Accrued interest is included in their carrying amount. Asset categories Deposits consist of time deposits and demand deposits, as well as money market deposits. They are recognised at amortised cost, including accrued interest. Issued bonds are initially recognised at fair value less attributable transaction costs. Subsequently, they are measured at amortised cost using the effective interest method. Accrued interest is included in their carrying amount. Subsequent cost Borrowings are initially recognised at fair value less attributable transaction costs. Subsequently, they are measured at amortised cost using the effective interest method. Accrued interest is included in their carrying amount. Other assets are measured at amortised cost. Initial recognition Property and equipment is initially recognised at cost, which includes direct expenses related to the purchase. Where parts of an item of property and equipment have different useful lives, those components are accounted for separately. Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of each component of an item of property and equipment. The estimated useful lives are as follows: Real estate .................................................................................................................................................................................................. Other property and equipment .................................................................................................................................................................. Subsequent measurement The Group uses the cost model for the measurement after recognition and property and equipment is carried at cost less any accumulated depreciation and any accumulated impairment losses. Property and equipment is reviewed for indications of impairment or changes in estimated future economic benefits at each reporting date. If such indications exist, the assets are analysed to assess whether their carrying amount is fully recoverable. Other property and equipment, which includes automobiles for own use, furniture and fixtures, computers and other office equipm ent The Group groups tangible assets into two categories: Real estate, which includes office and residential buildings, land and building rights When the Group sells a financial asset and simultaneously enters into an agreement to repurchase the asset, or a substantially similar asset, at a fixed price at a future date ("repo" or "stock lending"), the arrangement is accounted for as a borrowing and the underlying asset continues to be recognised in the Group’s statement of financial position. The Group recognises in the carrying amount of an item of property and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. The decision whether subsequent costs are added to the acquisition cost of property and equipment is based on whether an identified component, or part of such component, has been replaced or not, or if the nature of the subsequent cost means a contribution of a new component. All other costs are expensed in the income statement when incurred. Depreciation Consolidated Financial Statements 31 December 2025 72 ===== SIDA 76 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 69 100. Short positions used for hedging 101. Other liab ilities 102. Assets and disposal groups held for sale 103. Right of use asset and lease liab ility 104. Financial guarantees 105. Share capital a. Treasury shares b. Share premium c. Dividends on share capital 106. Nature and purpose of equity reserves a. Option reserve b. Deficit reduction reserve c. Fair value reserve Short positions used for hedging are obligations of the Group to deliver financial assets borrowed by the Group and sold to third parties. Short positions used for hedging consist of non-derivative financial liabilities that are used to hedge the Group's risk exposure arising from derivative contracts with customers. Short positions used for hedging are carried at fair value through profit or loss with all fair value changes recognised in the income statement under net financial income. The Group classifies an 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. 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. The fair value reserve represents fair value changes, net of tax, for assets held at fair value through other comprehensive income. The reserve is released in correlation with realization of gains or losses of financial assets upon sale or derecognition. The deficit reduction reserve was created as a part of a share capital reduction approved by the Bank's Annual General Meeting in April 2014. The reserve has no specified purpose and can only be used with the approval of a shareholders' meeting. Other liabilities are measured at amortised cost, except for the contingent consideration which is measured at fair value. Acquired own shares and other equity instruments (treasury shares) are deducted from equity. No gain or loss is recognised in income statement on the purchase, sale, issue or cancellation of treasury shares. Consideration paid or received is recognised directly in equity. Incremental transaction costs of treasury share transactions are accounted for as a deduction from equity, net of any related income tax benefit. Share premium represents excess of payment above nominal value (ISK 1 per share) that shareholders have paid for shares sold by the Group. Dividends on share capital are deducted from equity in the period in which they are approved by the Group's shareholders meetin gs. The option reserve represents the cumulative charge to the income statement for options to purchase shares in the Bank granted under the Bank's Remuneration policy, which is discussed in notes 64-66. Financial guarantees are contracts that require the Group to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantee liabilities are initially recognised at their fair value. The guarantee liability is subsequently measured at the higher of the loss allowance determined in accordance with IFRS 9 and the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15. Liabilities arising from financial guarantees are included with provis ions. Consolidated Financial Statements 31 December 2025 73 ===== SIDA 77 ===== Kvika banki hf. Notes to the Consolidated Financial Statements 69 106. Nature and purpose of equity reserves (cont.) d. Translation reserve e. Restricted retained earnings f. Retained earnings - accumulated deficit 107. Earnings per share 108. New standards and interpretations 109. Use of estimates and judgements a. b. c. d. The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations , until the operations are sold, dissolved or abandoned. Judgement is required to determine the extent to which deferred tax asse ts are recognised in the statement of financial position, based on the likely timing and level of future taxable profits. Fair value of financial instruments The fair value of financial instruments that are not quoted in active markets is determined using valuation techniques which are reviewed regularly as discussed in note 60. A number of new standards, amendments to standards and interpretations were not yet effective for the year ended 31 December 2025 and have not been applied in the preparation of these financial statements. Early adoption of new standards and amendments is not p lanned. The areas where the use of judgements and estimates has the most significant effect on the amounts recognised in the statement of financial position or the income statement are disclosed in this note. Impairment of financial assets As outlined in note 82, the use of estimates and judgement is an important component of the calculation of impairment losses. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience. Unfores een events could, however, result in further impairment losses which would have a material effect on the income statement and statement of financial position. Deferred tax assets In the process of applying the Group's accounting policies, management makes use of judgements and estimates which are based on various assumptions. These judgements and estimates can affect the reported amounts of assets and liabilities, income and expense. Assumptions and estimates are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are reviewed on an on-going basis. The estimates form the basis for judgements about the carrying value of assets and liabilities that are not readily available from other sources and actual results may differ. Judgement may also be required in circumstances not involving estimates, e.g. when determining the substance of a particular transaction, contract or relationshi p. Impairment of intangible assets The carrying amount of intangible assets are reviewed annually to determine whether there is indication of impairment as disclosed in note 91. If any such indication exists the asset's recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. 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 retained earnings reserve, net of tax, which is not subject to dividend payments. When shareholding in subsidiary or associate is sold or written off the restricted retained earnings reserve shall be released and the amount transferred to retained earnings. Retained earnings (accumulated deficit if negative) consists of undistributed profits and losses accumulated, less transfers to other reserves. The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss that is attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares, which comprise share options granted to employees and issued warrants. When development cost is capitalized a corresponding amount is transferred from retained earnings to restricted retained earnings according to the Financial Statements Act No. 3/2006. The reserve is then transferred back to retained earnings in line with amortization of the asset through income statement. Consolidated Financial Statements 31 December 2025 74 ===== SIDA 78 ===== 75 Appendix 1: Statement on the Corporate Governance of Kvika banki hf. 2025 Unaudited ===== SIDA 79 ===== Kvika banki hf. Statement on the Corporate Governance of Kvika banki hf. 0 Investment Banking provides a range of professional services in the fields of specialised financing, securities and foreign exchange transactions and corporate finance services. Capital Markets provide customers with com prehensive services in securities an d foreign exchange brokerage. The Corporate Finance segment provides advice on the acquisition, sale and merger of companies and business entities, financing businesses via stock or bond auctions, listing and delisting stocks and bonds. The Lending segment provides businesses, institutions, and investors with specialised lend ing to finance such things as real estate, real estate development, securities transactions and other investments. The division also uses the Bank’s infrastructure to distribute loans to other institutional investors. Kvika’s UK operations are operated through the subsidiary Kvika Limited. (hereinafter referred to as “KL”). KL, established in 2017, is a subsidiary regulated in the United Kingdom by the Financial Supervisory Authority. KL’s focus is on corporate finance, as well as fund and asset management services. KL also handles specialized real estate mortgage transactions under the brand Ortus Secured Finance. A special sustainability committee is in place at Kvika and is now composed of the CEO, CFO and managing directors of most divisions of the bank and KES, as well as the Director of Sustainability. The Director of Sustainability has day-to-day oversight of sustainability matters on behalf of the Sustainability Committee, but the subject area falls under the Operation and Development Division.Kvika’s sustainability risk policy was reviewe db y the BOD in September 2025. The policy forms part of the Bank’s overall risk management framework, with the Risk Management Division overseeing sustainability risk. As part of the updates to the risk management framework in 2024, a position of a specialist in sustainab ility risk was added to the Risk Management Division. Additionally, sustainability risk was elevated within the framework, becoming an independent risk factor and one of the Bank’s key risk factors. The policy was revised to expand its scope from its previous focus on climate risk. The policy now covers all of Kvika’s sustainability risks, based on the results of a double materiality assessment from 2024. Commercial Banking provides businesses, institutions, and investors with general banking services. Customer’s daily banking transactions are handled mostly via Kvika’s online banking system. Kvika’s specialized brands provide diverse financial services to customers. Auður offers individuals wi th a wide selection of savings accounts as well as favourable mortgage lending, which the bank began offering in 2025. A uður also offers corporate accounts to legal entities. Aur provides individuals with access to a variety of online banking services. Lykill makes financing in the form of loan an d lease agreements for cars, machinery, and equipment available for individua ls and legal entities. Kvika also operates the brand Framtíðin exclusiv ely online and provides mortgages to individuals in the form of secondary mortgages. Lastly, Kvika provides payment services to customers through its brands Netgíró and Straumur. In parallel with the sustainability strategy, it was decided to reduce the number of United Nations Sustainable Development Goals (SDGs) that Kvika places special emphasis on from six to four so that the goals best align with Kvika's sustainability priorities. They are: SDG 5 on gender equality; SDG 9 on industry, innovations, and infrastructure; SDG 13 on climate action and SDG 17 on partnership for the goals. Business strategy and values Kvika banki hf. (hereinafter referred to as “Kvika” or the “Bank”) is the parent company of the Kvika group. Kvika’s purpose is to increase competition and simplify customers’ finances by utilizing infrastructure and financial strength. Kvika’s vision is to transform financial services in Iceland with mutual benefits in mind. On that journey, Kvika is guided by three values that contribute to the development of robust business relationships, long-term results, and active innovation. Kvika’s values are long-term thinking, simplicity, and courage. In accordance with those values the Bank places emp hasis on thinking of the future and contributing to a sustainable community through active participation. Emphasis is placed on putting ourselves in the customer’s shoes, rethinking things and selecting projects that provide the most long-term value for customers and the Bank. Kvika offers its customers diversified financial services through four business segments: Commercial Banking, Investment Banking, Asset Managem ent and UK operations. The business segments Asset Management and the UK operations are operated in the subsidiaries Kvika eignastýring hf. and Kvika Limited. The sale of TM tryggingar hf. to Landsbankinn was completed on February 28, 2025, and the Bank is no longer defined as a financial conglomerate in the financial sector. Sustainability Kvika’s purpose, as previously stated, is to increase competition in financial services and simplify customers’ finances. Kvika’s BOD approved a ne w sustainability policy in September 2025, which is based on the priorities that emerged from Kvika’s double materiality assessment co nducted in 2024. In parallel with the new policy, Kvika’s sustainability committee also approved new procedures during the year, setting out goals and metrics relate dt o the priorities in the sustainability policy. The sustainability policy applies to the Kvika group based on Kvika’s ownership policy for significant subsidiaries. Kvika takes the independence of its licenced subsidiaries, both with regards to management and day-to-day operations, seriously. However, Kvika, a sa parent company, is responsible for internal governance on a consolidated basis. In that context Kvika has laid down ground rules for its subsidiaries , both in terms of administrative structure and internal governance, through ownership policies for its significant subsidiaries and requires regul ar and ad hoc information from the subsidiaries to the parent company. Kvika requires harmonized and professional work ethics within the Kvika group, harmonized corporate culture, coordinated human resources working under the same conditions and that Kvika’s values are maintained within the group to the extent allowed by law. Further reference is made to annual reports of the Bank’s subsidiaries, available at www.skatturinn.is. Asset Management emphasises on offering clients a broad range of services for investing in Iceland as well as in foreign markets. Its aim is to provide the best asset and fund management services, guided by clients’ long-term interests. Asset and fund management operations are mostly handled by Kvika’s subsidiary, Kvika eignastýring hf. (hereinafter referred to as “KES”). Return on equity is determined by decisions made in accordance with the Bank’s risk appetite, which reflects its profitability targets. Consequentl y, decisions regarding the optimal composition of the balance sheet to generate income are restricted by risk appetite. Kvika’s target is a return on tangible equity of at least 20% and keeping the capital adequacy ratio (CAR) 2-4% above legal and regulatory requirements set by the Financial Supervision of the Central Bank of Iceland (hereinafter referred to as “the Icelandic Financial Supervision”). Kvika’s objective is to deliver to shareholders an annual compensation equivalent to a minimum of 25% of profit, whether in the form of dividend payments or share repurchases, under a formal buy-back programme, as authorised by applicable laws and decisions made at shareholders’ meetings. When deciding on the amount of dividends or, as the case may be, the funds allocated for share buy-backs, care is taken to maintain Kvika’s strong financial position, bearing in mind risks in the internal and external environment and growth prospects, to ensure that the Bank maintains a solid capital ratio and liquidity for the future. Consolidated Financial Statements 31 December 2025 76 ===== SIDA 80 ===== Kvika banki hf. Statement on the Corporate Governance of Kvika banki hf. 0 The main elements of internal control, risk management and accounting The BOD is responsible for ensuring that an active system of internal control is in place within the Bank, which is based on three lines of defence. The first line of defence consists of the management and the employees of business and supporting units in charge of the Bank’s daily management and organization. The main responsibility of the first line of defence is to ensure the functionality and implementation of internal control measures in daily operations. The second line of defence is comprised of the Compliance Officer and Risk Management. The Compliance Officer is responsible for the training of employees and the BOD, monitors and regularly and preventively assesses compliance with relevant legislation, monitors compliance ris k, as well as consulting on implementation of laws and regulations in Kvika’s operations. Risk Management oversees the Bank’s identified risk factors and is responsible for developing methods to identify, assess, monitor and manage them in a systematic manner. Compliance and risk management oversight is additional to internal controls of the first line of defense. Other units may also be assigned a supervisory role in the second line of defe nce, in line with Kvika’s policy on internal control. The third line of defence is the internal auditor, operating independently from other units within Kv ika’s organization and directly under the control of the BOD, according to a formal statement of duties and job description of the internal audit function. The internal audit function assesses the effectiveness of risk management, control methods and internal governance in an independent and objective manner and in accordance with internal auditing standards. Among other things, the function prepares independent audits, verifications, and advic et o the BOD and the Audit Committee. The implementation and functioning of internal control are the responsibility of the management of the Bank. Internal control is based on risk assessments and control measures intended to reduce risk factors in the operations of the Bank. Internal control includes documented and formal procedures which Kvika’s employees follow in their daily work, and which are reviewed by the control units. Kvika is a member of the United Nations Principles for Responsible Investment (UN PRI) and is working on integrating the principles of the UN PRI into its operations, particularly within KES. Kvika is one of the founding members of IcelandSIF, an organisation for responsible investments, is a membe ro f Festa Centre for Sustainability and supports Grænvangur, which is a co-operation forum between industry and government on clima te issues and green solutions. Kvika is a member of the Partnership for Carbon Accounting Financials (PCAF), an industry-led initiative to enable financial institutio ns to consistently measure and disclose GHG emissions financed by their loans and investments. In 2025, Kvika co nducted its third assessment of estimated financed emission using the PCAF methodology. Information on estimated financed greenhouse gas emissions from Kvika’s loans and investments is published annually in Kvika’s sustainability report. In 2024, work began with external consultants on a double materiality assessment, which is, among other things, the first step in the Risk Management Division’s risk management process for monitoring sustainability risk. The result of the assessment will form the foundation for further work in the sustainability area in the coming year and will also serve as the basis for Kvika’s sustainability reporting. Regulatory framework Kvika is a financial undertaking subject to provisions of Act No. 161/2002 on Financial Undertakings, Act No. 115/2021 on The Market for Financial Instruments, Act No. 60/2021 on Measures against Market Abuse, Act No. 45/2020 on Alternative Investment Funds, Act No. 116/2021 on undertakings for collective investment in transferable securities, Act No. 14/2020 on Prospectus for Public Offering or Admission to Trading on a Regulated Marke t, Act No. 33/2013 on Consumer Lending, Act No. 118/2016 on mortgage lending to consumers, Act No. 2/1995 on Limited Liab ility Companies, the Competition Act No. 44/2005, Act No. 114/2021 on Payment Services, Act No. 3/2006 on A nnual Financial Statements, Act No. 3/ 2023 on Payment Accounts, Act No. 140/2018 on Measures against Money La undering and Terrorist Financing and Act No. 78/ 2025 on digital operational res ilience for the financial sector. Moreover, Kvika is obliged to guarantee the safety of the personal data it processes in its activities, in accordance with Act No . 90/2018, on the Protection of Privacy as regards the Processing of Personal Data and follows Act No. 25/2023 on Sustainable Finance Disclosure. Kvika has an operating licence from the Icelandic Financial Supervision, which supervises the activities of the Bank. Kvika’s activities are therefore go verned by the rules and instructions of the Icelandic Financial Supervision and Central Bank of Iceland. Kvika is also subjective to further extensive legis lation and secondary acts that apply to the financial market, mostly originated from Europe, and incorporated in Icelandic law through various means. More details about the Icelandic Financial Supervision and an overview of the principal legislation and rules that apply to the Bank at any given time can be found on the website of the Central Bank of Iceland www.cb.is. Furthermore, Kvika’s activities comply with the recognised standards and rules of the European Banking Authority (EBA), including guidelines on internal governance (EBA/GL/2021/05), cf. Article 15 of regulation of the European Parliament and of the Council No. 1093/2010, which was incorporated into Icelandic law with act no. 24/2017 on a European Financial Supervisory System (hereinafter “EBA Guidelines”). The EBA Guidelines can be found on the Central Bank of Iceland’s website www.cb.is and on EBA’s website https://www.eba.europa.eu/homepage. Kvika awards a variety of grants that have a positive social impact, and the selection of projects reflects the four UN SDGs that have been adopted. Last year was, among other things, provided to UNICEF in Iceland and women and innovation with FrumkvöðlaAuður. A more detailed discussion of the scope, position, and impact of the group regarding environmental, social and governance matters (also known as “ESG factors”) can be found in Kvika’s sustainability report, which is published together with Kvika’s annual financial statement. When writing the report, data points from the ESRS standards of the CSRD (Corporate Sustainability Reporting Directive), which has not yet been implemented in Icelan d, are selected and taken into account. Deloitte provides a limited assurance assessment of selected information in Kvika’s 2025 sustainability report. Compliance with corporate governance guidelines Kvika is obliged to observe recognised corporate governance guidelines, pursuant to Par. 7 of Article 54 of Act No. 161/2002, on Financial Undertakings. The Bank complies with chapter VII of Act No. 161/2002, on Financial Undertakings, and with the Guidelines on Corporate Governance issued jointly in February 2021 by the Chamber of Commerce, NASDAQ Iceland, and SA – Business Iceland. Kvika has been recognized as a model company in good corporate governance, most recently in August 2025. The Guidelines are available on the website of the Chamber of Commerce www.vi.is. Consolidated Financial Statements 31 December 2025 77 ===== SIDA 81 ===== Kvika banki hf. Statement on the Corporate Governance of Kvika banki hf. 0 The BOD determines the risk policy and risk appetite of the group within Kvika Group’s Risk Policy, which also defines main risk factors in Kvika’s operations, including their nature and acceptable volume. The purpose of the policy is to establish an effective and transparent framework for managing the group’s risk and risk appetite, ensuring that risk management is aligned across the group on a consolidated basis. The Kvika Group Risk Policy stipulates that the Bank and its subsidiaries must ensure that the policy is implemented in their daily operations where applicable. It furthe r states that Kvika and its subsidiaries shall establish risk policies addressing the main risk factors relevant to their activities. These policies m ust define a risk appetite within the framework of the risk appetite outlined in the Kvika Group Risk Policy. The CEO reports to the BOD and verifies the effectiveness of internal controls and risk management in the Consolidated Financial Statements. Interna l controls and risk management applied in the preparation of the Consolidated Financial Statements are organised with a view to preventing any significant deficiencies in the accounting process. Kvika’s Finance division prepares annual financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted b yt h e EU, and additional requirements, as applicable, in the Act on Annual Accounts no. 3/ 2006, the Act on Financial Undertakings no. 161/2002 and rules on accounting for credit institutions no. 834/2003. The annual financial statements are audited by Kvika’s external auditors, Deloitte. The BOD hires an Internal Auditor, signs his/her formal statement of duties, and annually approves the internal audit plan. The CEO appoints the Compliance Officer, and the BOD confirms the appointment. The CEO appoints the Managing Director of the Risk Management function. The reports and findings of the internal control function are presented directly to the BOD. Kvika’s BOD has three sub-committees, the Audit Committee, Risk Committee and Remuneration Committee. The members of the Audit Committee are Ingunn Svala Leifsdóttir, as chairperson, Helga Kristín Auðunsdóttir and Margrét G. Flóvenz. The committee is intended to play an advisory and supervisory role for Kvika’s BOD by, among other things, ensuring the quality of financial statements and other financial information from the Bank and the independence of its auditors. The committee supervises accounting procedures and the effectiveness of internal controls as well as internal and external auditing. The committee met nine times in 2025 and all members attended all meetings. The members of the Risk Committee are Páll Harðarson, as chairperson, Ingunn Svala Leifsdóttir and Sigurður Hannesson. The committee has an advisory and supervisory role for the Bank’s BOD, among other things, in determining its risk policy and risk appetite. The committee also monitors th e organisation and effectiveness of risk management, management of credit risk, market risk, liquidity risk, operating risk, reputational risk, and other risks, as the case may be. The committee met 11 times in 2025 and all members attended all meetings. The members of the Remuneration Committee are Guðjón Reynisson, as chairperson, Sigurður Hannesson, and Helga Kristín Auðunsdóttir. The committee has an advisory and supervisory role for the Bank’s BOD regarding salaries and other remuneration, ensuring that this supports the Bank’s objectives and interests. The committee met seven times in 2025 and all members attended all meetings. All the BOD’s sub-committees have established rules of procedure prescribing the implementation of their tasks in detail and endorsed by the BOD. The BOD appoints sub-committee members by majority vote from its own ranks and nominates the chairpersons. Because of the nature of the committees, neither the CEO nor other employees can serve on them. The ru les of procedure of the committees and the BOD are accessible on Kvika’s website www.kvika.is.Kvika operates a nomination committee, whose role is to prepare and make proposals for candidates for election to the Bank’s BOD at its annual general meeting and at those shareholder meetings where board election is on the agenda. The committee’s proposals shall aim to ensure that the board is at all times composed in such a way that it has a diverse knowledge and experience that is useful to the Bank in policy-making and supervision in the environment in which the Bank operates at any given time. According to Kvika’s articles of association, the annual general meeting appoints/elects three members to the Nomination Committee. The committee consists of Jakobína Hólmfríður Árnadóttir, who is the chairman, Helga Melkorka Óttarsdóttir and Ragnar Páll Dyer, all appointed to the committee at the annual general meeting in 2025. The committee’s rules of procedure and further information are available on Kvika's website www.kvika.is. The members of Kvika’s Executive Committee, in addition to the CEO are the following employees: Anna Rut Ágústsdóttir, deputy CEO and Managing Director of Operations and Development, Bjarni Eyvinds Þrastarson, Managing Director of Investment Banking, Elísabet Guðrún Björnsdóttir, Manag ing Director of Risk Management, Eiríkur Magnús Jensson, CFO, Guðmundur Þórðarson, Managing Director of Business Development, Halldór Snæland, Managing Director of Commercial Banking, and Lilja Jensen, General Counsel. Additionally in the group’s Executive Committee is Hannes Frímann Hrólfsson, CEO of KES. More details about the Executive Committee are accessible on Kvika’s website www.kvika.is. The BOD is the supreme authority in the affairs of the Bank between shareholders’ meetings. Its main duties are to supervise all of Kvika’s operations and ensure that they are in good order at all times. The BOD is responsible for Kvika’s policy making and shall ensure that the accounting and handling of the Bank’s assets is properly supervised. The BOD prepares plans for Kvika in line with the Bank’s objectives and in accordance with its Articles of Association and determines the strategies to be followed to achieve the objectives set. The BOD appoints the CEO and supervises his work, e.g., by receiving regular reports from the CEO at board meetings. The BOD annually evaluates the CEO’s work in a documented manner. The BOD also represents the Bank before courts and government authorities and allocates authority to sign and to commit the Bank. Kvika’s BOD and control units regularly verify the effectiveness of internal controls and risk management. Composition and activities of the BOD, Executive Committee, sub-committees and the Nomination Committee Each year Kvika’s annual general meeting elects the BOD consisting of five board members and two alternates. Board members come from varied backgrounds, and all possess extensive experience and expertise. In accordance with the Act on Limited Liability Companies No. 2/1995, the Bank’s Articles of Association and Kvika’s policy for assessing the eligib ility of its board members and CEO care is taken to ensure at least 40% representation of each gender on the BOD and mong the alternates. The BOD is currently comprised of three men and two women. At the Bank’s 2025 annual general meeting Sigurgeir Guðlaugsson resigned from the board and Páll Harðarson joined the board. Regular board meetings are generally held once a month and meetings to review financial statements are held quarterly. Additional meetings may be called in between to discuss specific matters. In 2025, 25 board meetings were held and all current board members attended all board meetings. The Chairman attended all meetings of the BOD. Consolidated Financial Statements 31 December 2025 78 ===== SIDA 82 ===== Kvika banki hf. Statement on the Corporate Governance of Kvika banki hf. 0 Kvika has adopted a policy for assessing the eligibility of its board members and CEO as provided for in EBA guidelines and pursuant to Art. 52 of Act No. 161/2002 on Financial Undertakings, provisions of Rules No. 150/2017 on assessment of eligibility of managing directors and directors of financial undertakings and the guidelines. It addresses, inter alia, Kvika’s policy on the diversity of its BOD, Executive Committee, and senior management with regard to age, gender and educational and professional background. The composition of the BOD is also dealt with in Kvika’s Articles of Association, which state, among other things, that its BOD shall be so comprised that its members jointly possess adequate expertise, skills, and experience to understand the activities of the Bank, including key risk factors. Kvika has also adopted a Human Resources Policy and Equality Policy. According to the Bank’s Equality Policy, non-discrimination and diversity shall characterise all its operations. All employees should have the opportunity to make good use of their abilities at work and be valued on their own merit, have equal opportunities, and enjoy the same rights in their work and for career advancement, regardless of gender, age and origin. The status and opportunities of individuals shall be equal regardless of gender, race, nationality, religion, age, or other irrelevant factors when it comes to employment in management positions and participation in working groups, boards and committees. Information on Board members Sigurður Hannesson is the chairman of the BOD. He was appointed to Kvika’s BOD in March 2020. He was born in 1980 and is currently the Director General of the Federation of Icelandic Industries. From 2007-2017, Sigurdur worked in the financial markets, most recently serving as a Managing Director of Asset Management at Kvika’s (formerly MP Bank’s). In 2015, Sigurdur was the Vice-Chairman of the Government Task Force on lifting of capital controls and in 2013 the Chairman of the Expert Group on household debt relief. Sigurdur holds a DPhil degree in mathematics from the University of Oxford, a BS degree in mathematics from the University of Iceland and is a certified securities broker. Sigurður also sits on the boards of Iceland Symphony Orchestra, Grænvangur (Green by Iceland), Reykjavík University, Skólastræti and the Icelandic Cancer Society. Sigurður owns 8,550,107 shares in the Bank through shareholding in the private limited company BBL 39 ehf., but does not have interest links with major clients, competitors, or big shareholders in the sense of the corporate governance guidelines and is also independent from the bank in sense of the guidelines. Helga Kristín Auðunsdóttir is the deputy chairperson of the BOD. She was appointed to Kvika’s BOD in April 2021. She was born in 1980. Helga Kristín is a doctor in Law from Fordham University in New York. In her doctoral studies at Fordham University she researched corporate governance and hedge fund investments. Helga Kristín graduated with BS in Business Law from Bifröst University in 2004 and with a master’s degree in law from the same university in 2006. She graduated with an LL.M degree in law from the University of Miami, with a focus on international business law and contracts in 2010. Helga Kristín is an assistant professor at the Department of Law at Reykjavík University. Before that, she worked as a director and assistant professor at Bifröst University, as a lawyer for Stoðir hf., as a lawyer for FGM/Auðkenni, now part of the Central Bank of Iceland and as a lecturer at the faculty of law at University of Miami. Helga Kristín was a member of the board of directors of TM tryggingar hf. from 2023-2025 and of TM hf. in the years 2020-2021. She was also an appointed alternate on the board of directors of Tryggingamiðstöðin hf. in 2012-2015. Helga Kristín does not own shares in the Bank and does not have interest links with major clients, competitors, or big shareholders in the sense of the corporate governance guidelines and is also independent from the bank in sense of the guidelines. Guðjón Reynisson was appointed to Kvika’s BOD in March 2018. He was born in 1963 and works as an independent investor and board member. Between 2008 and 2017 he served as CEO of Hamleys of London. From 2003 to 2008, he served as managing director of the 10-11 stores. From 1998 to 2003 he was the managing director of the sales division of Tal, an Icelandic phone company. He graduated with an MBA degree from the University of Iceland in 2002. He graduated with an Operations and Business degree from the Continuing Education Study of the University of Iceland in 1999 and graduated with a degree as a licensed physical education teacher from the University of Iceland in 1986. Guðjón has been on the board of directors of Festi hf. since 2014, of Securitas hf. since 2018 and of Dropp ehf. since 2020. In 2024 Guðjón also took seat on the board of the private equity fund Harpa Capital Partners II. Guðjón controls 10,410,789 shares in Kvika through his private limited company, Hakk ehf., but does not have interest links with major clients, competitors, or big shareholders in the sense of the corporate governance guidelines and is also independent from the bank in sense of the guidelines. Ingunn Svala Leifsdóttir was appointed to Kvika’s BOD in September 2021. Ingunn was born in 1976. She graduated with a BS degree in Business from the University of Iceland in 1999, with a focus on accounting and finance, and with a Cand. Oecon business degree from the same University in 2001, with a focus on accounting and management. Ingunn Svala completed the Advanced Management program (AMP) from the IESE Business School in New York in 2018. Ingunn Svala currently works as a chief executive officer at Olís. Prior to that she worked as a COO for Dohop and as an executive director of operations at Reykjavík University. Ingunn Svala also has extensive experience from the financial sector. She worked for the Kaupthing’s Resolution Committee as Chief Financial Officer from 2009 to 2011 as well as working as a Global Business Controller in Investment Banking at Kaupþing bank in 2007 to 2009. Ingunn Svala also worked within the Actavis Group consolidation in 2001 to 2007 as a CFO for four subsidiaries, namely Actavis hf., Medís ehf., Actavis Group hf. and Actavis Group PTC ehf. Ingunn Svala has extensive experience of serving as a board member and has previously served on the boards of Ósar – lifeline of health hf. and of its subsidiary, Parlogis ehf., as well as Slippurinn Akureyri and Lífís, a subsidiary of VÍS. Ingunn Svala does not own shares in the Bank and does not have interest links with major clients, competitors, or big shareholders in the sense of the corporate governance guidelines and is also independent from the bank in sense of the guidelines. Páll Harðason was appointed to the Bank’s BOD in March 2025. He was born in 1966. Páll holds a Ph.D. degree in economics from Yale University and a B.A. degree in economics from Macalester College. Pall served as BU CFO of Nasdaq Trading Services from 2023 to 2024 and BU CFO of European Markets at Nasdaq from 2019 to 2023. Prior to these roles, Páll served as CEO of Nasdaq Iceland from 2011 to 2019, and as Deputy CEO and Chief Operating Officer from 2002 to 2011. He also worked as an economist at the National Economic Institute of Iceland from 1999 to 2002. Páll has extensive experience as a board member, having served on the boards of various companies and organizations, including the Nasdaq stock exchanges in the Nordic countries. Páll sits on the boards of Elma Orkuviðskipti and Ísaksskóli. Páll owns 700,000 shares in Kvika. Páll does not have interest links with major clients, competitors, or big shareholders in the sense of the corporate governance guidelines and is also independent from the bank in sense of the guidelines. The BOD considers all board members to be independent as defined by the corporate governance guidelines. Kolbrún Jónsdóttir and Thomas Skov Jensen are alternate members of the BOD. In the opinion of the BOD, Kolbrún is also an independent member of the BOD within the meaning of the corporate governance guidelines. Thomas is not since he worked as Management Director of Risk Management of Kvika until 2023. Consolidated Financial Statements 31 December 2025 79 ===== SIDA 83 ===== Kvika banki hf. Statement on the Corporate Governance of Kvika banki hf. 0 Communications between shareholders and the BOD Main factors in the BOD’s performance evaluation Information is provided to shareholders on a non-discriminatory basis and is mainly limited to shareholders’ meetings or the communication of harmonised information to all shareholders simultaneously. News of the Bank’s operations are posted on Kvika’s website and press releases are issued in accordance with disclosure obligations of issuers of shares when newsworthy events in the Bank’s operations take place. A detailed presentation o f the Bank’s operations over the past year is also provided at its AGM and information on the Bank’s operations is published in Kvika’s annual report and financial statements. This statement on the corporate governance practices of Kvika banki hf. was reviewed and approved by the BOD on 11 February 2026. The BOD annually evaluates its performance. It evaluates the performance of tasks and work of the BOD for the previous year. The focus of the assessment is on strategic planning, disclosure and future vision, the size and composition of the BOD, performance of board members, the work of sub-committees and performance of the CEO, the internal auditor, and the secretary of the BOD. The development of the Bank is reviewed to assess whether it is line with objectives. Following the annual performance assessment, the BOD defines tasks in areas where improvements are needed. The last performance assessment was conducted in December 2025. The BOD also regularly co nducts special self-assessments on its composition in accordance with the guidelines of the European Banking Authority (EBA), and last did so in December 2025. Information on the CEO of Kvika and his main duties Ármann Þorvaldsson became CEO of Kvika in August 2023. Ármann was born in 1968 and previously worked as CEO in the years 2017-2019 and Deputy CEO in the years 2019-2022. Ármann has worked in the financial market for nearly thirty years. From 1997-2005 he was Head of Corporate Finance at Kaupthing and in 2005-2008 he was CEO of Kaupthing Singer & Friedlander in London. Later he worked at Ortus Secured Finance in London until 2015 when he joined Virðing. Ármann headed up Virðing’s Corporate Finance division before joining Kvika. Ármann has an MBA degree from Boston University and a BA degree in history from the University of Iceland. Ármann controls 759.892 shares in Kvika and has also entered into call option agreements with Kvika in accordance with Kvika’s remuneration policy and incentive scheme. Further, Ármann and his family own the company BMA ehf. which controls 4,082,158 shares in the Bank. He does not have interest links with major clients, competitors or major shareholders as defined by the corporate governance guidelines. The CEO oversees the daily operations of Kvika and in so doing follows the policies and instructions which have been laid down by the Bank’s BOD. Daily operations do not include unusual or major arrangements. The CEO shall ensure that Kvika’s accounts are kept in accordance with laws and customs and that the Bank’s assets are handled in a secure manner. The CEO appoints and dismisses employees of the Bank. Furthermore, he is required to follow all of the BOD’s instructions. The CEO shall provide Kvika’s external auditors with all requested information. Information on violations of laws and regulations, determined by the relevant supervisory body or adjudicating entity Kvika has not been subject to withdrawal, revocation or dismissal of registration, authorization, membership, or permissions to perform certain tr ades, operations or work. Kvika was not fined by any supervisory body in the year 2025. In December 2025 the Icelandic Financial Supervision offered the Bank to settle a case regarding Article 26 (1) of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (MiFIR). In January 2026 the Bank reached an agreement with the Icelandic Financial Supervision to settle the case, which included the payment of a fine of ISK 20,000,000. As per usual the Central Bank of Iceland carried out routine inspections in 2025. No court cases or arbitration proceedings which may have significant effects on the Bank, or the Group, were ongoing or pending at the end of the year. Consolidated Financial Statements 31 December 2025 80 ===== SIDA 84 ===== 82 Appendix 2: EU Taxonomy Regulation Unaudited ===== SIDA 85 ===== Kvika banki hf. Amounts are in ISK millions EU Taxonomy Regulation Business loans Loans to individuals Limitations of the 2025 Reporting 2 The delegated regulation on the technical criteria that economic activities must meet to be considered as significantly contri buting to climate change mitigation and adaptation, and determining when an economic activity causes significant harm to one or more of the regulation's objectives. Regulation (EU) No. 2020/852 (hereinafter referred to as the "EU Taxonomy") and delegated regulations were incorporated into Icelandic law with Act No. 25/2023 on Sustainability Disclosure in Financial Services and the Classification System for Sustainable Investments. According to Article 8 of the EU Taxonomy, companies subject to its provisions are required to disclose how and to what extent their activities are linked to economic activities considered environmentally sustainable. Kvika reports its Green Asset Ratio (GAR) in accordance with the requirements of the EU Taxonomy. The information is presented in templates specified in the annexes to the EU’s delegated regulations, as provided later in this document for the Bank and Kvika Asset Management. There is a one-year delay in Kvika´s disclosures, as the GAR is based on companies’ disclosures from the previous year. Information covering all six environmental objectives will be included in the sustainability disclosures for the financial year 2026. Eligible assets under the EU Taxonomy are assets linked to activities specified in the delegated regulations of the EU Taxonomy, for which technical criteria exist to assess whether the activity is environmentally sustainable and therefore taxonomy aligned. Kvika’s eligible assets, as defined by Delegated Regulation (EU) No. 2021/2139, include loans to companies subject to the non-financial reporting obligation under Article 66(d) of the Annual Accounts Act No. 3/ 2006, as well as loans to households (primarily financing of motor vehicles and residential real estate). For eligible assets to be considered environmentally sustainable and included in Kvika’s GAR, they must meet four key criteria: Companies subject to the non-financial reporting obligation under Article 66(d) of the Annual Accounts Act are companies that are considered large and of public interest. They are re quired by law to disclose information and key performance indicators in accordance with the requirements of the EU Ta xonomy. Financial institutions are required to use counterparty data to calculate their GAR and must therefore rely on the information from the companies included in their investment and loan portfolios that fall within this scope. Kvika’s loan portfolio is structured in such a way that a large portion of its business loans (98.3% of the Group´s loans) are granted to small and medium-sized companies that do not meet the criteria. As a result, a very small portion of Kvika´s business loans are eligible for Kvika´s GAR. Motor vehicle financing (6.5: transport with motorcycles, passenger cars, and light commercial vehicles) is an eligible activity, as previously stated. A significant portion of Kvika’s lending to individuals falls within this category. However, loans issued prior to June 1, 2023, when the EU Taxonomy came into effect in Iceland, are not eligible. Furthermore, for motor vehicle financing to be considered environmentally sustainable and contribute significantly to climate change mitigation, the emissions of the vehicles in question must be below 50g CO ₂/km. Additionally, the activity must not cause harm to other environmental objectives and must comply with minimum safeguards. To assess this, information on various aspects of the underlying vehicles, such as their equipment and specifications, must be collected. However, such information is not readily available in most cases. For this reason, Kvika cannot consider motor vehicle financing as environmentally sustainable, and the activity is thus excluded from the Bank´s GAR. Kvika maintains a relatively modest portfolio of real estate-backed loans. While these loans fall within the scope of the EU Taxonomy as financing of eligible activities, they are current ly not considered environmentally sustainable and taxonomy aligned. For real estate-backed loans to be classified as enviro nmentally sustainable, information on the energy efficiency of the underlying assets is required. Energy efficiency is based on energy performance certificates, as defined in EU Directive No. 2010/31, that show the energy performance of buildings. Iceland is exempt from implementing this directive and no formal energy performance certificates have theref ore been issued for buildings in Iceland. Thus, real estate- backed loans do not meet the technical screening criteria to be classified as environmentally sustainable and are therefore excluded from the Bank’s GAR. - The activity must significantly contribute to one or more of the environmental objectives of the EU Taxonomy (so far only two of the six objectives have been considered at Kvika, as required by law, which will change for the financial year 2026). - The activity must comply with the technical screening criteria set out in the delegated regulations. - The activity must be conducted in accordance with minimum safeguards. - The activity must not significantly harm other environmental objectives established in the EU Taxonomy. The implementation and follow-up of the EU Taxonomy is still evolving, and it is anticipated it will take time to enhance data flow and evolve data collection, analysis, and reporting. As companies gain experience with the disclosure requirements associated with the EU Taxonomy it will become clearer how effective key indicators, such as the GAR will be. The technical criteria tailored to different industries has proved useful in considering green financing. Kvika will continue to monitor the development of the EU Taxonomy, both in Iceland and in Europe. 1 The information has been prepared in accordance with the templates in the annexes to Delegated Regulation (EU) No. 2021/2178, which specifies the content and presentation of disclosures that companies must provide regarding environmentally sustainable economic activities and the methodology for complying with this disclosure obligat ion. Regulation 2021/2178 was implemented in Iceland through Regu lation 10/2024 on the classification system for sustainable investments. On January 1, 2024, Regulation 10/2024 was amended by Regulation 1207/2024, which, among other things, incorporated Delegated Regu lation (EU) No. 2023/2486 on additions to the EU Taxonomy and Regulation (EU) 2021/2178. Regulation 2023/2486 in troduces additions to the EU Taxonomy by establishing technical screening criteria to determine the conditions under which economic activities are cons idered to contribute significantly to the sustainable use and protection of water and marine resources, the transition to a ci rcular economy, pollution prevention and control, or the protection and restoration of biodiversity and ecosystems. It also defines whether such activi ties cause significant harm to any other overarching environmen tal objectives. Additionally, it includes amendments to Regulation (EU) 2021/2178 regarding specific public disclosure requirem ents for these economic activities. The delegated regulation sets out the technical criteria that economic activities must meet to be considered as sig nificantly contributing to climate change mitigation and adaptation, as well as when an economic activity causes significant ha rm to one or more of the regulation’s objectives. Consolidated Financial Statements 31 December 2025 82 ===== SIDA 86 ===== Kvika banki hf. Amounts are in ISK millions Annex VI - Template for the KPIs of credit institutions Name * For credit institutions that do not meet the conditions of Article 94(1) of the CRR or the conditions set out in Article 325a(1) of the CRR ** Fees and Commissions and Trading Book KPIs shall only apply starting 2026. SMEs´inclusion in these KPI will only apply subject to a positive result of an impact assessment 0. Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulatio n Total environmentally sustainable assets KPI**** KPI***** % 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) 31.12.2025 Main KPI Green asset ratio (GAR) stock 0.0% 0.0% 56.7% 24.5% 31.12.202 4 Main KPI Green asset ratio (GAR) stock 0.0% 0.0% 65.2% 24.6% Total environmentally sustainable activities KPI KPI % 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) Trading book* Financial guarantees Assets under management 1.7% 1.0% Fees and commissions income** * For credit institutions that do not meet the conditions of Article 94(1) of the CRR or the conditions set out in Article 325a(1) of the CRR **Fees and commissions income from services other than lending and AuM *** % of assets covered by the KPI over banks´ total assets ****based on the Turnover KPI of the counterparty *****based on the CapEx KPI of the counterparty, except for lending activities where for general lending Turnover KPI is used Note 1: Across the reporting templates: cells shaded in black should not be reported . Note 2: Fees and Commissions and Trading Book KPIs shall only apply starting 2026. SMEs´inclusion in these KPI will only apply subject to a positive result of an impact assessment. % coverage (over total assets) 75.5% 75.4% 0 23.8% 0 6** KPI on fees and commissions income from services other than lending and asset management* 7** KPI Trading book portfolio* % coverage (over total assets)*** 3 GAR KPI stock 4 GAR KPI flow 5 KPI off-balance sheet exposures 2 GAR sector information Template number 0 Summary of KPIs 1 Assets for the calculation of GAR 1,397 Consolidated Financial Statements 31 December 2025 83 ===== SIDA 87 ===== Kvika banki hf. Amounts are in ISK millions 1. Assets for the calculation of GAR - Turnover-based ab cd e f g h i j k l m n o p Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which adaptation Of which enabling Of which Use of Proceeds Of which transitional/ adaptation Of which enabling 1 GAR - Covered assets in both numerator and denominator*** 2 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 64,701 22,373 0 0 22,374 0 3 Financial undertakings 4,751 1 0 0 1 0 0 4 Credit institutions 2 5 Loans and advances 2 6 Debt securities, including UoP - 7 Equity instruments - 8 Other financial corporations 4,749 1 0 0 1 0 0 9 of which investment firms - 10 Loans and advances - 11 Debt securities, including UoP - 12 Equity instruments - 13 of which management companies 4,748 14 Loans and advances 4,748 15 Debt securities, including UoP - 16 Equity instruments - 17 of which insurance undertakings 1 1 0 0 1 0 0 18 Loans and advances 1 1 0 0 1 0 0 19 Debt securities, including UoP - 20 Equity instruments - 21 Non-financial undertakings 2,450 22 NFCs subject to NFRD disclosure obligations 2,450 23 Loans and advances 2,450 24 Debt securities, including UoP - 25 Equity instruments - 26 Households* 56,102 22,373 22,373 27 of which loans collateralised by residential immovable property 1,705 1,705 1,705 28 of which building renovation loans - 29 of which motor vehicle loans** 20,983 20,668 20,668 30 Local governments financing 1,399 31 Housing financing - 32 Other local government financing 1,399 33 Assets excluded from the numerator for GAR calculation (covered in the denominator)**** 194,497 ISK Million Disclosure 31.12.2025 Total gross carrying amount Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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) Consolidated Financial Statements 31 December 2025 84 ===== SIDA 88 ===== Kvika banki hf. Amounts are in ISK millions 1. Assets for the calculation of GAR - Turnover-based (cont.) ab cd e f g h i j k l m n o p Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which adaptation Of which enabling Of which Use of Proceeds Of which transitional/ adaptation Of which enabling 34 Financial and Non-financial undertakings 144,253 35 SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations 101,190 36 Loans and advances 101,190 37 of which loans collateralised by commercial immovable property 45,247 38 of which building renovation loans - 39 Debt securities - 40 Equity instruments - 41 Non-EU country counterparties not sub ject to NFRD disclosure obligations 43,063 42 Loans and advances 43,063 43 Debt securities - 44 Equity instruments - 45 Derivatives 9,944 46 On demand interbank loans 8,154 47 Cash and cash-related assets 12 48 Other categories of assets (e.g. Goodwill, commodities etc.) 32,134 49 Total GAR assets 259,198 22,373 0 - 0 - - - - - - 22,373 0 - 0 - 50 Assets not covered for GAR calculation***** 83,924 51 Central governments and Supranational issuers 43,128 52 Central banks exposure 20,132 53 Trading book 20,663 54 Total assets 343,122 22,373 0 - 0 - - - - - - 22,373 0 - 0 - 55 Financial guarantees 214 9 9 56 Assets under management *** 81,158 11,227 1,397 15 268 11,227 1,397 15 268 57 Of which debt securities 32,099 2,874 1,353 15 268 2,874 1,353 15 268 58 Of which equity instruments 49,059 8,353 44 8,353 44 - *Households include all retail loans issued to individuals **Motor vehicle loans for households include cars in vehicle groups (M1) and (N1) **For motor vehicle loans, only exposures generated after 1 June 2023 (the date of application of the disclosure) are included ***Accounting categories of financial assets used for the calculation of the green asset ratio ****Certain assets are excluded from the numerator e.g. financial assets held for trading, on-demand interbank loans, derivates and exposures to undertakings that are not obliged to publish non-financial information pursuant to Article 19a or 29a of Directive 2013/34/EU *****The exposures to central governments, central banks and supranational issuers shall be excluded from the calculation of the numerator and denominator of key performance indicators of financial undertakings Off-balance sheet exposures - Corporates subject to NFRD disclosure obligations Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) ISK Million Disclosure 31.12.2025 Total gross carrying amount 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) Consolidated Financial Statements 31 December 2025 85 ===== SIDA 89 ===== Kvika banki hf. Amounts are in ISK millions 1. Assets for the calculation of GAR - Turnover-based ab cd e f g h i j k l m n o p Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which adaptation Of which enabling Of which Use of Proceeds Of which transitional/ adaptation Of which enabling 1 GAR - Covered assets in both numerator and denominator**** 2 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 36,034 12,465 12,465 3 Financial undertakings 1,257 4 Credit institutions 2 5 Loans and advances 2 6 Debt securities, including UoP - 7 Equity instruments - 8 Other financial corporations 1,255 9 of which investment firms - 10 Loans and advances - 11 Debt securities, including UoP - 12 Equity instruments - 13 of which management companies 1,255 14 Loans and advances 1,255 15 Debt securities, including UoP - 16 Equity instruments - 17 of which insurance undertakings - 18 Loans and advances - 19 Debt securities, including UoP - 20 Equity instruments - 21 Non-financial undertakings 67 22 NFCs subject to NFRD disclosure obligations 67 23 Loans and advances 67 24 Debt securities, including UoP - 25 Equity instruments - 26 Households* 33,209 12,465 12,465 27 of which loans collateralised by residential immovable property 1,675 1,675 1,675 28 of which building renovation loans - 29 of which motor vehicle loans** 20,089 10,790 10,790 30 Local governments financing 1,466 31 Housing financing 32 Other local government financing 1,466 33 Assets excluded from the numerator for GAR calculation (covered in the denominator)***** 231,175 TOTAL (CCM + CCA) 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) ISK Million Disclosure 31.12.2024 Total gross carrying amount Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) Consolidated Financial Statements 31 December 2025 86 ===== SIDA 90 ===== Kvika banki hf. Amounts are in ISK millions 1. Assets for the calculation of GAR - Turnover-based (cont.) ab cd e f g h i j k l m n o p Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which adaptation Of which enabling Of which Use of Proceeds Of which transitional/ adaptation Of which enabling 34 Financial and Non-financial undertakings 115,644 35 SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations 78,017 36 Loans and advances 78,017 37 of which loans collateralised by commercial immovable property 30,409 38 of which building renovation loans - 39 Debt securities - 40 Equity instruments - 41 Non-EU country counterparties not sub ject to NFRD disclosure obligations 37,627 42 Loans and advances 37,627 43 Debt securities - 44 Equity instruments - 45 Derivatives 13,798 46 On demand interbank loans 9,726 47 Cash and cash-related assets 16 48 Other categories of assets (e.g. Goodwill, commodities etc.) 91,992 49 Total GAR assets 267,285 12,465 12,465 50 Assets not covered for GAR calculation***** 87,340 51 Central governments and Supranational issuers 63,335 52 Central banks exposure 18,578 53 Trading book 5,427 54 Total assets 354,595 12,465 12,465 55 Financial guarantees 33 - 56 Assets under management *** 73,034 10,564 549 468 10,564 549 468 57 Of which debt securities 26,445 1,619 542 462 1,619 542 462 58 Of which equity instruments 46,589 8,945 7 7 8,945 7 7 *Households include all retail loans issued to individuals **Motor vehicle loans for households include cars in vehicle groups (M1) and (N1) **For motor vehicle loans, only exposures generated after 1 June 2023 (the date of application of the disclosure) are included ***Accounting categories of financial assets used for the calculation of the green asset ratio ****Certain assets are excluded from the numerator e.g. financial assets held for trading, on-demand interbank loans, derivates and exposures to undertakings that are not obliged to publish non-financial information pursuant to Article 19a or 29a of Directive 2013/34/EU **** GAR - Covered assets in both numerator and denominator: Accounting categories of financial assets used for the calculation of the green asset ratio. Of which environmentally sustainable (Taxonomy- aligned) Of which environmentally sustainable (Taxonomy- aligned) Off-balance sheet exposures - Corporates subject to NFRD disclosure obligations ISK Million Disclosure 31.12.2024 Total gross carrying amount Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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) Consolidated Financial Statements 31 December 2025 87 ===== SIDA 91 ===== Kvika banki hf. Amounts are in ISK millions 1. Assets for the calculation of GAR - Cap-Ex based ab cd e f g h i j k l m n o p Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which adaptation Of which enabling Of which Use of Proceeds Of which transitional/ adaptation Of which enabling 1 GAR - Covered assets in both numerator and denominator*** 2 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 64,701 22,373 0 0 22,373 3 Financial undertakings 4,751 1 0 0 4 Credit institutions 2 5 Loans and advances 2 6 Debt securities, including UoP - 7 Equity instruments - 8 Other financial corporations 4,749 1 0 0 9 of which investment firms - 10 Loans and advances - 11 Debt securities, including UoP - 12 Equity instruments - 13 of which management companies 4,748 14 Loans and advances 4,748 15 Debt securities, including UoP - 16 Equity instruments - 17 of which insurance undertakings 1 1 0 0 18 Loans and advances 1 1 0 0 19 Debt securities, including UoP - 20 Equity instruments - 21 Non-financial undertakings 2,450 22 NFCs subject to NFRD disclosure obligations 2,450 23 Loans and advances 2,450 24 Debt securities, including UoP - 25 Equity instruments - 26 Households* 56,102 22,373 22,373 27 of which loans collateralised by residential immovable property 1,705 1,705 1,705 28 of which building renovation loans - 29 of which motor vehicle loans** 20,983 20,668 20,668 30 Local governments financing 1,399 31 Housing financing - 32 Other local government financing 1,399 33 Assets excluded from the numerator for GAR calculation (covered in the denominator)**** 194,497 TOTAL (CCM + CCA) 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) ISK Million Disclosure 31.12.2025 Total gross carrying amount Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) Consolidated Financial Statements 31 December 2025 88 ===== SIDA 92 ===== Kvika banki hf. Amounts are in ISK millions 1. Assets for the calculation of GAR - Cap-Ex based (cont.) ab cd e f g h i j k l m n o p Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which adaptation Of which enabling Of which Use of Proceeds Of which transitional/ adaptation Of which enabling 34 Financial and Non-financial undertakings 144,253 35 SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations 101,190 36 Loans and advances 101,190 37 of which loans collateralised by commercial immovable property 45,247 38 of which building renovation loans - 39 Debt securities - 40 Equity instruments - 41 Non-EU country counterparties not sub ject to NFRD disclosure obligations 43,063 42 Loans and advances 43,063 43 Debt securities - 44 Equity instruments - 45 Derivatives 9,944 46 On demand interbank loans 8,154 47 Cash and cash-related assets 12 48 Other categories of assets (e.g. Goodwill, commodities etc.) 32,134 49 Total GAR assets 259,198 22,373 0 - 0 - - - - - - 22,373 - - - - 50 Assets not covered for GAR calculation***** 83,924 51 Central governments and Supranational issuers 43,128 52 Central banks exposure 20,132 53 Trading book 20,663 54 Total assets 343,122 22,373 0 - 0 - - - - - - 22,373 - - - - 55 Financial guarantees 214 9 9 56 Assets under management *** 81,158 12,503 1,485 15 268 12,503 1,485 15 268 57 Of which debt securities 32,099 2,874 1,383 15 268 2,874 1,383 15 268 58 Of which equity instruments 49,059 9,628 102 9,628 102 - *Households include all retail loans issued to individuals **Motor vehicle loans for households include cars in vehicle groups (M1) and (N1) **For motor vehicle loans, only exposures generated after 1 June 2023 (the date of application of the disclosure) are included ***Accounting categories of financial assets used for the calculation of the green asset ratio ****Certain assets are excluded from the numerator e.g. financial assets held for trading, on-demand interbank loans, derivates and exposures to undertakings that are not obliged to publish non-financial information pursuant to Article 19a or 29a of Directive 2013/34/EU *****The exposures to central governments, central banks and supranational issuers shall be excluded from the calculation of the numerator and denominator of key performance indicators of financial undertakings ISK Million Disclosure 31.12.2025 Total gross carrying amount Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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) Off-balance sheet exposures - Corporates subject to NFRD disclosure obligations Consolidated Financial Statements 31 December 2025 89 ===== SIDA 93 ===== Kvika banki hf. Amounts are in ISK millions 1. Assets for the calculation of GAR - Cap-Ex based ab cd e f g h i j k l m n o p Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which adaptation Of which enabling Of which Use of Proceeds Of which transitional/ adaptation Of which enabling 1 GAR - Covered assets in both numerator and denominator**** 2 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 36,034 12,465 12,465 3 Financial undertakings 1,257 4 Credit institutions 2 5 Loans and advances 2 6 Debt securities, including UoP - 7 Equity instruments - 8 Other financial corporations 1,255 9 of which investment firms - 10 Loans and advances - 11 Debt securities, including UoP - 12 Equity instruments - 13 of which management companies 1,255 14 Loans and advances 1,255 15 Debt securities, including UoP - 16 Equity instruments - 17 of which insurance undertakings - 18 Loans and advances - 19 Debt securities, including UoP - 20 Equity instruments - 21 Non-financial undertakings 67 - 0 - 22 NFCs subject to NFRD disclosure obligations 67 23 Loans and advances 67 24 Debt securities, including UoP - 25 Equity instruments - 26 Households* 33,209 12,465 12,465 27 of which loans collateralised by residential immovable property 1,675 1,675 1,675 28 of which building renovation loans - 29 of which motor vehicle loans** 20,089 10,790 10,790 30 Local governments financing 1,466 31 Housing financing 32 Other local government financing 1,466 33 Assets excluded from the numerator for GAR calculation (covered in the denominator)***** 231,175 ISK Million Disclosure 31.12.2024 Total gross carrying amount Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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) Consolidated Financial Statements 31 December 2025 90 ===== SIDA 94 ===== Kvika banki hf. Amounts are in ISK millions 1. Assets for the calculation of GAR - Cap-Ex based (cont.) ab cd e f g h i j k l m n o p Of which Use of Proceeds Of which transitional Of which enabling Of which Use of Proceeds Of which adaptation Of which enabling Of which Use of Proceeds Of which transitional/ adaptation Of which enabling 34 Financial and Non-financial undertakings 115,644 35 SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations 78,017 36 Loans and advances 78,017 37 of which loans collateralised by commercial immovable property 30,409 38 of which building renovation loans - 39 Debt securities - 40 Equity instruments - 41 Non-EU country counterparties not sub ject to NFRD disclosure obligations 37,627 42 Loans and advances 37,627 43 Debt securities - 44 Equity instruments - 45 Derivatives 13,798 46 On demand interbank loans 9,726 47 Cash and cash-related assets 16 48 Other categories of assets (e.g. Goodwill, commodities etc.) 91,992 49 Total GAR assets 267,285 10,607 10,607 50 Assets not covered for GAR calculation***** 87,340 51 Central governments and Supranational issuers 63,335 52 Central banks exposure 18,578 53 Trading book 5,427 54 Total assets 354,595 12,465 12,465 55 Financial guarantees 33 - 56 Assets under management *** 73,034 15,440 746 746 15,440 746 746 57 Of which debt securities 26,445 1,966 462 462 1,966 462 462 58 Of which equity instruments 46,589 13,474 284 284 13,474 284 284 *Households include all retail loans issued to individuals **Motor vehicle loans for households include cars in vehicle groups (M1) and (N1) **For motor vehicle loans, only exposures generated after 1 June 2023 (the date of application of the disclosure) are included ***Accounting categories of financial assets used for the calculation of the green asset ratio ****Certain assets are excluded from the numerator e.g. financial assets held for trading, on-demand interbank loans, derivates and exposures to undertakings that are not obliged to publish non-financial information pursuant to Article 19a or 29a of Directive 2013/34/EU *****The exposures to central governments, central banks and supranational issuers shall be excluded from the calculation of the numerator and denominator of key performance indicators of financial undertakings Off-balance sheet exposures - Corporates subject to NFRD disclosure obligations ISK Million Disclosure 31.12.2024 Total gross carrying amount Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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) Consolidated Financial Statements 31 December 2025 91 ===== SIDA 95 ===== Kvika banki hf. Amounts are in ISK millions 2. GAR sector information ab c d e f gh i j kl m ISK Million Of which environmentally sustainable (CCM) ISK Million Of which environmentally sustainable (CCM) ISK Million Of which environmentally sustainable (CCA) ISK Million Of which environmentally sustainable (CCA) ISK Million Of which environmentally sustainable (CCM + CCA) ISK Million Of which environmentally sustainable (CCM + CCA) 31.12.2025 - Turnover-based 1 - - - 31.12.2025 - Cap-Ex based 1 - - - 31.12.2024 - Turnover-based 1 C2442 - Aluminium production 8 - 8 31.12.2024 - Cap-Ex based 1 C2442 - Aluminium production 8 - 8 2. The sector breakdown by activity is only applicable to activities covered by the delegated acts that have been adopted in I celand. 3. The breakdown by sector is based on ISAT 2008 mapping onto NA CE codes, by the principal activity of the counterparty availab le in public records, the Group expects this to possibly change next year as more companies publish their Taxonomy disclosures in 2024. 4. This table only covers exposures to non-financial corporates subject to disclosure obligations according to article 8 of th e EU Taxonomy. For the first reporting year the Group cannot disclose which corporates classify as an activity under the object ives of "climate change mitigation" (CCA) og "climate change adaptation" (CCA), as that is dependent on the public disclosures by said corporates, and therefore the results are published as a total for both objectives. Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Gross carrying amount Breakdown by sector - NACE 4 digits level (code and label) ISK Million Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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 Non-Financial corporates (Subject to NFRD) SMEs and other NFC not subject to NFRD 1. Credit institutions shall disclose in this template information on exposures in the banking book towards those sectors cover ed by the Taxonomy (NACE sectors 4 levels of detail), using the re levant NACE Codes on the basis of the principal activity of t he counterparty. Consolidated Financial Statements 31 December 2025 92 ===== SIDA 96 ===== Kvika banki hf. Amounts are in ISK millions 3. GAR KPI stock - Turnover-based ab c d e f g h i j k l m n o p 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 1 GAR - Covered assets in both numerator and denominator 2 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 34.6% 34.6% 18.9% 3 Financial undertakings 0.0% 0.0% 1.4% 4 Credit institutions 0.0% 0.0% 0.0% 5 Loans and advances 0.0% 0.0% 0.0% 6 Debt securities, including UoP 0.0% 0.0% 0.0% 7 Equity instruments 0.0% 0.0% 0.0% 8 Other financial corporations 0.0% 0.0% 1.4% 9 of which investment firms 0.0% 0.0% 0.0% 10 Loans and advances 0.0% 0.0% 0.0% 11 Debt securities, including UoP 0.0% 0.0% 0.0% 12 Equity instruments 0.0% 0.0% 0.0% 13 of which management companies 0.0% 0.0% 1.4% 14 Loans and advances 0.0% 0.0% 1.4% 15 Debt securities, including UoP 0.0% 0.0% 0.0% 16 Equity instruments 0.0% 0.0% 0.0% 17 of which insurance undertakings 87.1% 6.0% 6.0% 87.1% 6.0% 6.0% 0.0% 18 Loans and advances 87.1% 6.0% 6.0% 87.1% 6.0% 6.0% 0.0% 19 Debt securities, including UoP 0.0% 0.0% 0.0% 20 Equity instruments 0.0% 0.0% 0.0% 21 Non-financial undertakings 0.0% 0.0% 0.7% 22 NFCs subject to NFRD disclosure obligations 0.0% 0.0% 0.7% 23 Loans and advances 0.0% 0.0% 0.7% 24 Debt securities, including UoP 0.0% 0.0% 0.0% 25 Equity instruments 0.0% 0.0% 0.0% 26 Households 39.9% 39.9% 16.4% 27 of which loans collateralised by residential immovable propert y 100.0% 100.0% 0.5% 28 of which building renovation loans 0.0% 0.0% 0.0% 29 of which motor vehicle loans 98.5% 98.5% 6.1% 30 Local governments financing 0.0% 0.0% 0.4% 31 Housing financing 0.0% 0.0% 0.0% 32 Other local government financing 0.0% 0.0% 0.4% 49 Total GAR assets 8.6% 0.0% 0.0% 8.6% 0.0% 0.0% 75.5% % (compared to total covered assets in the denominator) Disclosure 31.12.2025 Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Consolidated Financial Statements 31 December 2025 93 ===== SIDA 97 ===== Kvika banki hf. Amounts are in ISK millions 3. GAR KPI stock - Turnover-based ab c de f g hi j k lm n o p 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 1 GAR - Covered assets in both numerator and denominator 2 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 34.6% 34.6% 10.2% 3 Financial undertakings 0.0% 0.0% 0.4% 4 Credit institutions 0.0% 0.0% 0.0% 5 Loans and advances 0.0% 0.0% 0.0% 6 Debt securities, including UoP 0.0% 0.0% 0.0% 7 Equity instruments 0.0% 0.0% 0.0% 8 Other financial corporations 0.0% 0.0% 0.4% 9 of which investment firms 0.0% 0.0% 0.0% 10 Loans and advances 0.0% 0.0% 0.0% 11 Debt securities, including UoP 0.0% 0.0% 0.0% 12 Equity instruments 0.0% 0.0% 0.0% 13 of which management companies 0.0% 0.0% 0.4% 14 Loans and advances 0.0% 0.0% 0.4% 15 Debt securities, including UoP 0.0% 0.0% 0.0% 16 Equity instruments 0.0% 0.0% 0.0% 17 of which insurance undertakings 0.0% 0.0% 0.0% 18 Loans and advances 0.0% 0.0% 0.0% 19 Debt securities, including UoP 0.0% 0.0% 0.0% 20 Equity instruments 0.0% 0.0% 0.0% 21 Non-financial undertakings 0.0% 0.0% 0.0% 22 Loans and advances 0.0% 0.0% 0.0% 23 Debt securities, including UoP 0.0% 0.0% 0.0% 24 Equity instruments 0.0% 0.0% 0.0% 25 Households 37.5% 37.5% 9.4% 26 of which loans collateralised by residential immovable propert y 100.0% 100.0% 0.5% 27 of which building renovation loans 0.0% 0.0% 0.0% 28 of which motor vehicle loans 53.7% 53.7% 5.7% 29 Local governments financing 0.0% 0.0% 0.4% 30 Housing financing 0.0% 0.0% 0.0% 31 Other local government financing 0.0% 0.0% 0.4% 32 Collateral obtained by taking possession: residential and commercial immovable properties 0.0% 0.0% 0.0% 49 Total GAR assets 4.7% 4.7% 75.4% Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) % (compared to total covered assets in the denominator) Disclosure 31.12.2024 Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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-aligned) Consolidated Financial Statements 31 December 2025 94 ===== SIDA 98 ===== Kvika banki hf. Amounts are in ISK millions 3. GAR KPI stock - Cap-Ex based ab c d e f g h ij k l m n o p 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 1 GAR - Covered assets in both numerator and denominator 2 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 34.6% 34.6% 18.9% 3 Financial undertakings 0.0% 0.0% 1.4% 4 Credit institutions 0.0% 0.0% 0.0% 5 Loans and advances 0.0% 0.0% 0.0% 6 Debt securities, including UoP 0.0% 0.0% 0.0% 7 Equity instruments 0.0% 0.0% 0.0% 8 Other financial corporations 0.0% 0.0% 1.4% 9 of which investment firms 0.0% 0.0% 0.0% 10 Loans and advances 0.0% 0.0% 0.0% 11 Debt securities, including UoP 0.0% 0.0% 0.0% 12 Equity instruments 0.0% 0.0% 0.0% 13 of which management companies 0.0% 0.0% 1.4% 14 Loans and advances 0.0% 0.0% 1.4% 15 Debt securities, including UoP 0.0% 0.0% 0.0% 16 Equity instruments 0.0% 0.0% 0.0% 17 of which insurance undertakings 87.1% 6.0% 6.0% 0.0% 6.0% 6.0% 0.0% 18 Loans and advances 87.1% 6.0% 6.0% 0.0% 6.0% 6.0% 0.0% 19 Debt securities, including UoP 0.0% 0.0% 0.0% 20 Equity instruments 0.0% 0.0% 0.0% 21 Non-financial undertakings 0.0% 0.0% 0.7% 22 NFCs subject to NFRD disclosure obligations 0.0% 0.0% 0.7% 23 Loans and advances 0.0% 0.0% 0.7% 24 Debt securities, including UoP 0.0% 0.0% 0.0% 25 Equity instruments 0.0% 0.0% 0.0% 26 Households 39.9% 39.9% 16.4% 27 of which loans collateralised by residential immovable propert y 100.0% 100.0% 0.5% 28 of which building renovation loans 0.0% 0.0% 0.0% 29 of which motor vehicle loans 98.5% 98.5% 6.1% 30 Local governments financing 0.0% 0.0% 0.4% 31 Housing financing 0.0% 0.0% 0.0% 32 Other local government financing 0.0% 0.0% 0.4% 49 Total GAR assets 8.6% 0.0% 0.0% 8.6% 0.0% 75.5% Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) % (compared to total covered assets in the denominator) Disclosure 31.12.2025 Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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-aligned) Consolidated Financial Statements 31 December 2025 95 ===== SIDA 99 ===== Kvika banki hf. Amounts are in ISK millions 3. GAR KPI stock - Cap-Ex based ab c d e f g h ij k l m n o p 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 1 GAR - Covered assets in both numerator and denominator 2 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 34.6% 34.6% 10.2% 3 Financial undertakings 0.0% 0.0% 0.4% 4 Credit institutions 0.0% 0.0% 0.0% 5 Loans and advances 0.0% 0.0% 0.0% 6 Debt securities, including UoP 0.0% 0.0% 0.0% 7 Equity instruments 0.0% 0.0% 0.0% 8 Other financial corporations 0.0% 0.0% 0.4% 9 of which investment firms 0.0% 0.0% 0.0% 10 Loans and advances 0.0% 0.0% 0.0% 11 Debt securities, including UoP 0.0% 0.0% 0.0% 12 Equity instruments 0.0% 0.0% 0.0% 13 of which management companies 0.0% 0.0% 0.4% 14 Loans and advances 0.0% 0.0% 0.4% 15 Debt securities, including UoP 0.0% 0.0% 0.0% 16 Equity instruments 0.0% 0.0% 0.0% 17 of which insurance undertakings 0.0% 0.0% 0.0% 18 Loans and advances 0.0% 0.0% 0.0% 19 Debt securities, including UoP 0.0% 0.0% 0.0% 20 Equity instruments 0.0% 0.0% 0.0% 21 Non-financial undertakings 0.0% 0.0% 0.0% 22 Loans and advances 0.0% 0.0% 0.0% 23 Debt securities, including UoP 0.0% 0.0% 0.0% 24 Equity instruments 0.0% 0.0% 0.0% 25 Households 37.5% 37.5% 9.4% 26 of which loans collateralised by residential immovable propert y 100.0% 100.0% 0.5% 27 of which building renovation loans 0.0% 0.0% 0.0% 28 of which motor vehicle loans 53.7% 53.7% 5.7% 29 Local governments financing 0.0% 0.0% 0.4% 30 Housing financing 0.0% 0.0% 31 Other local government financing 0.0% 0.0% 0.4% 32 Collateral obtained by taking possession: residential and commercial immovable properties 0.0% 0.0% 0.0% 49 Total GAR assets 4.7% 4.7% 75.4% Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) % (compared to total covered assets in the denominator) Disclosure 31.12.2024 Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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-aligned) Consolidated Financial Statements 31 December 2025 96 ===== SIDA 100 ===== Kvika banki hf. Amounts are in ISK millions 4. GAR KPI flow - Turnover-based ab c d efg h i j k l m n o p 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 1 GAR - Covered assets in both numerator and denominator 2 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 29.9% 29.9% 29.8% 3 Financial undertakings 0.0% 0.0% 0.0% 4 Credit institutions 0.0% 0.0% 0.0% 5 Loans and advances 0.0% 0.0% 0.0% 6 Debt securities, including UoP 0.0% 0.0% 0.0% 7 Equity instruments 0.0% 0.0% 0.0% 8 Other financial corporations 0.0% 0.0% 0.0% 9 of which investment firms 0.0% 0.0% 0.0% 10 Loans and advances 0.0% 0.0% 0.0% 11 Debt securities, including UoP 0.0% 0.0% 0.0% 12 Equity instruments 0.0% 0.0% 0.0% 13 of which management companies 0.0% 0.0% 0.0% 14 Loans and advances 0.0% 0.0% 0.0% 15 Debt securities, including UoP 0.0% 0.0% 0.0% 16 Equity instruments 0.0% 0.0% 0.0% 17 of which insurance undertakings 0.0% 0.0% 0.0% 18 Loans and advances 0.0% 0.0% 0.0% 19 Debt securities, including UoP 0.0% 0.0% 0.0% 20 Equity instruments 0.0% 0.0% 0.0% 21 Non-financial undertakings 100.0% 100.0% 1.6% 22 NFCs subject to NFRD disclosure obligations 100.0% 100.0% 1.6% 23 Loans and advances 100.0% 100.0% 1.6% 24 Debt securities, including UoP 0.0% 0.0% 0.0% 25 Equity instruments 0.0% 0.0% 0.0% 26 Households 31.2% 31.2% 28.2% 27 of which loans collateralised by residential immovable propert y 100.0% 100.0% 0.7% 28 of which building renovation loans 0.0% 0.0% 0.0% 29 of which motor vehicle loans 100.0% 100.0% 27.6% 30 Local governments financing 0.0% 0.0% 0.0% 31 Housing financing 0.0% 0.0% 0.0% 32 Other local government financing 0.0% 0.0% 0.0% 49 Total GAR assets 10.5% 10.5% 29.8% 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 31.12.2025 Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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) Consolidated Financial Statements 31 December 2025 97 ===== SIDA 101 ===== Kvika banki hf. Amounts are in ISK millions 4. GAR KPI flow -Turnover-based ab c d e f g h i j k l m n o p 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 1 GAR - Covered assets in both numerator and denominator 2 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 100.0% 100.0% 38.4% 3 Financial undertakings 0.0% 0.0% 0.0% 4 Credit institutions 0.0% 0.0% 0.0% 5 Loans and advances 0.0% 0.0% 0.0% 6 Debt securities, including UoP 0.0% 0.0% 0.0% 7 Equity instruments 0.0% 0.0% 0.0% 8 Other financial corporations 0.0% 0.0% 0.0% 9 of which investment firms 0.0% 0.0% 0.0% 10 Loans and advances 0.0% 0.0% 0.0% 11 Debt securities, including UoP 0.0% 0.0% 0.0% 12 Equity instruments 0.0% 0.0% 0.0% 13 of which management companies 0.0% 0.0% 0.0% 14 Loans and advances 0.0% 0.0% 0.0% 15 Debt securities, including UoP 0.0% 0.0% 0.0% 16 Equity instruments 0.0% 0.0% 0.0% 17 of which insurance undertakings 0.0% 0.0% 0.0% 18 Loans and advances 0.0% 0.0% 0.0% 19 Debt securities, including UoP 0.0% 0.0% 0.0% 20 Equity instruments 0.0% 0.0% 0.0% 21 Non-financial undertakings 100.0% 100.0% 0.2% 22 Loans and advances 100.0% 100.0% 0.2% 23 Debt securities, including UoP 0.0% 0.0% 0.0% 24 Equity instruments 0.0% 0.0% 0.0% 25 Households 39.1% 39.1% 38.1% 26 of which loans collateralised by residential immovable propert y 100.0% 100.0% 0.7% 27 of which building renovation loans 0.0% 0.0% 0.0% 28 of which motor vehicle loans 100.0% 100.0% 37.4% 29 Local governments financing 0.0% 0.0% 0.0% 30 Housing financing 0.0% 0.0% 0.0% 31 Other local government financing 0.0% 0.0% 0.0% 32 Collateral obtained by taking possession: residential and commercial immovable properties 0.0% 0.0% 0.0% 49 Total GAR assets 15.5% 15.5% 38.4% 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 31.12.2024 Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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) Consolidated Financial Statements 31 December 2025 98 ===== SIDA 102 ===== Kvika banki hf. Amounts are in ISK millions 4. GAR KPI flow - Cap-Ex based ab c d efg h i j k l m n o p 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 1 GAR - Covered assets in both numerator and denominator 2 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 29.9% 29.9% 29.8% 3 Financial undertakings 0.0% 0.0% 0.0% 4 Credit institutions 0.0% 0.0% 0.0% 5 Loans and advances 0.0% 0.0% 0.0% 6 Debt securities, including UoP 0.0% 0.0% 0.0% 7 Equity instruments 0.0% 0.0% 0.0% 8 Other financial corporations 0.0% 0.0% 0.0% 9 of which investment firms 0.0% 0.0% 0.0% 10 Loans and advances 0.0% 0.0% 0.0% 11 Debt securities, including UoP 0.0% 0.0% 0.0% 12 Equity instruments 0.0% 0.0% 0.0% 13 of which management companies 0.0% 0.0% 0.0% 14 Loans and advances 0.0% 0.0% 0.0% 15 Debt securities, including UoP 0.0% 0.0% 0.0% 16 Equity instruments 0.0% 0.0% 0.0% 17 of which insurance undertakings 0.0% 0.0% 0.0% 18 Loans and advances 0.0% 0.0% 0.0% 19 Debt securities, including UoP 0.0% 0.0% 0.0% 20 Equity instruments 0.0% 0.0% 0.0% 21 Non-financial undertakings 100.0% 100.0% 1.6% 22 NFCs subject to NFRD disclosure obligations 100.0% 100.0% 1.6% 23 Loans and advances 100.0% 100.0% 1.6% 24 Debt securities, including UoP 0.0% 0.0% 0.0% 25 Equity instruments 0.0% 0.0% 0.0% 26 Households 31.2% 31.2% 28.2% 27 of which loans collateralised by residential immovable propert y 100.0% 100.0% 0.7% 28 of which building renovation loans 0.0% 0.0% 0.0% 29 of which motor vehicle loans 100.0% 100.0% 27.6% 30 Local governments financing 0.0% 0.0% 0.0% 31 Housing financing 0.0% 0.0% 0.0% 32 Other local government financing 0.0% 0.0% 0.0% 49 Total GAR assets 10.5% 10.5% 29.8% 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 31.12.2025 Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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) Consolidated Financial Statements 31 December 2025 99 ===== SIDA 103 ===== Kvika banki hf. Amounts are in ISK millions 4. GAR KPI flow - Cap-Ex based ab c d efg h i j k l m n o p 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 1 GAR - Covered assets in both numerator and denominator 2 Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation 66.9% 66.9% 38.4% 3 Financial undertakings 0.0% 0.0% 0.0% 4 Credit institutions 0.0% 0.0% 0.0% 5 Loans and advances 0.0% 0.0% 0.0% 6 Debt securities, including UoP 0.0% 0.0% 0.0% 7 Equity instruments 0.0% 0.0% 0.0% 8 Other financial corporations 0.0% 0.0% 0.0% 9 of which investment firms 0.0% 0.0% 0.0% 10 Loans and advances 0.0% 0.0% 0.0% 11 Debt securities, including UoP 0.0% 0.0% 0.0% 12 Equity instruments 0.0% 0.0% 0.0% 13 of which management companies 0.0% 0.0% 0.0% 14 Loans and advances 0.0% 0.0% 0.0% 15 Debt securities, including UoP 0.0% 0.0% 0.0% 16 Equity instruments 0.0% 0.0% 0.0% 17 of which insurance undertakings 0.0% 0.0% 0.0% 18 Loans and advances 0.0% 0.0% 0.0% 19 Debt securities, including UoP 0.0% 0.0% 0.0% 20 Equity instruments 0.0% 0.0% 0.0% 21 Non-financial undertakings 100.0% 100.0% 0.2% 22 Loans and advances 100.0% 100.0% 0.2% 23 Debt securities, including UoP 0.0% 0.0% 0.0% 24 Equity instruments 0.0% 0.0% 0.0% 25 Households 39.1% 39.1% 38.1% 26 of which loans collateralised by residential immovable propert y 100.0% 100.0% 0.7% 27 of which building renovation loans 0.0% 0.0% 0.0% 28 of which motor vehicle loans 100.0% 100.0% 37.4% 29 Local governments financing 0.0% 0.0% 0.0% 30 Housing financing 0.0% 0.0% 0.0% 31 Other local government financing 0.0% 0.0% 0.0% 32 Collateral obtained by taking possession: residential and commercial immovable properties 0.0% 0.0% 0.0% 49 Total GAR assets 15.5% 0.0% 38.4% 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 31.12.2024 Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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) Consolidated Financial Statements 31 December 2025 100 ===== SIDA 104 ===== Kvika banki hf. Amounts are in ISK millions 5. KPI off-balance sheet exposure s ab c d e f g h i j k l m n o 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 1 Financial guarantees (FinGuar KPI) 4% 4% 2 Assets under management (AuM KPI) 14% 2% 0% 14% 2% 0% 1 Financial guarantees (FinGuar KPI) 4% 4% 2 Assets under management (AuM KPI) 14% 2% 0% 14% 2% 0% 1 Financial guarantees (FinGuar KPI) 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2 Assets under management (AuM KPI) 14% 1% 0% 0% 1% 0% 0% 0% 0% 0% 14% 1% 0% 0% 1% 1 Financial guarantees (FinGuar KPI) 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2 Assets under management (AuM KPI) 21% 1% 0% 0% 1% 0% 0% 0% 0% 0% 21% 1% 0% 0% 1% 1. Institution shall dislcose in this template the KPIs for off-balance sheet exposures (financial guarantees and AuM) calculated based on the data disclosed in template 1, on covered assets, and by applying the formulas proposed in this template. 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 31.12.2025 Climate Change Mitigation (CCM) Climate Change Adaptation (CCA) TOTAL (CCM + CCA) 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) 31.12.2024 - Turnover-based 31.12.2024 - Cap-Ex based 31.12.2025 - Turnover-based 31.12.2025 - Cap-Ex based Consolidated Financial Statements 31 December 2025 101 ===== SIDA 105 ===== Kvika banki hf. Amounts are in ISK millions Disclosure by credit institutions under EU Taxonomy Regulation Article 8 and underlying Delegated Act (EU) 2021/2178, Article 10. Annex XI QUALITATIVE DISCLOSURES FOR ASSET MANAGERS, CREDIT INSTITUTIONS, INVESTMENT FIRMS AND INSURANCE AND REINSURANCE UNDERTAKINGS Additional or complementary information in support of the financial undertaking’s strategies and the weight of the financing of Taxonomy-aligned economic activities in their overall activity. For credit institutions that are not required to disclose quantitative information for trading exposures, qualitative information on the alignment of trading portfolios with Regulation (EU) 2020/852, including overall composition, trends observed, objectives and policy. The disclosure of quantitative KPIs shall be accompanied by the following qualitative information to support the financial undertakings’ explanations and markets’ understanding of these KPIs: Contextual information in support of the quantitative indicators including the scope of assets and activities covered by the KPIs, information on data sources and limitation. The Group has derived that the following assets can be considered as taxonomy-eligible; loans and advances to financial and non-financial corporates that are subject to non-financial disclosures according to Article 66 d of the Annual Accounts Act and loans to households, in particular motor vehicle loans (activity 6.5: Purchase, financing, renting, leasing) and residential real estate (mortgages, activity 7.7: Acquisition and ownership of buildings). Kvika has employed external data sourced from a third party, adhering to the criteria outlined in Article 66 d of the Annual Accounts Act. This information has been complemented, where needed, with data directly collected from the annual reports of corporate customers and counterparties. Kvika’s estimation of how and to what extent its activities are associated with taxonomy-aligned economic activities is dependent upon and limited to its counterparties’ reporting. Explanations of the nature and objectives of Taxonomy-aligned economic activities and the evolution of the Taxonomy aligned economic activities over time, starting from the second year of implementation, distinguishing between business-related and methodological and data-related elements. Not applicable for financial year 2025. No economic activities were Taxonomy- aligned for the financial year 2024. Description of the compliance with Regulation (EU) 2020/852 in the financial undertaking’s business strategy, product design processes and engagement with clients and counterparties. In 2024, Kvika updated it Green Funding Framework to better adhere to recent developments in sustainability related regulations, including the EU Taxonomy. In it's Green Funding Framework, Kvika has mapped applicable categories to EU environmental objectives and example of economic activities under the EU Taxonomy. Where possible, applicable eligibility criteria have been designed to comply with the technical screening criteria set out in the EU Taxonomy Delegated Act as at the time of this Framework publication. Consolidated Financial Statements 31 December 2025 102 ===== SIDA 106 ===== Kvika banki hf. Amounts are in ISK millions Kvika Asset Management Turnover-based: % 0.3% Turnover-based: [ISK Million] 2 CapEx—based: % 0.4% CapEx-based: [ISK Million] 2 Coverage: % 88.1% The value in monetary amounts of derivatives. 41 Percentage (%) 0.0% ISK Million 0 For non-financial undertakings: 40.1% For non-financial undertakings: ISK Million 163 For financial undertakings: 22.7% For financial undertakings: ISK Million 93 For non-financial undertakings: 1.7% For non-financial undertakings: ISK Million 7 For financial undertakings: 3.8% For financial undertakings: ISK Million 15 For non-financial undertakings: 8.4% For non-financial undertakings: ISK Million 34 For financial undertakings: 12.6% For financial undertakings: ISK Million 51 Percentage (%) 10.6% ISK Million 43 Percentage (%) 54.3% ISK Million 221 Percentage (%) ISK Million The proportion of exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI: Value of exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU: The proportion of exposures to other counterparties over total assets covered by the KPI: Value of exposures to other counterparties: The percentage of assets covered by the KPI relative to total investments (total AuM). Excluding investments in sovereign entities. The monetary value of assets covered by the KPI. Excluding investments in sovereign entities. The proportion of exposures to financial and non-financial undertakings from non- EU countries not subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI: Value of exposures to financial and non-financial undertakings from non-EU countries not subject to Articles 19a and 29a of Directive 2013/34/EU: The proportion of exposures to EU financial and non-financial undertakings not subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI: Value of exposures to EU financial and non-financial undertakings not subject to Articles 19a and 29a of Directive 2013/34/EU: The value of all the investments that are funding economic activities that are not taxonomy-eligible relative to the value of total assets covered by the KPI: Value of all the investments that are funding economic activities that are not taxonomy-eligible: The value of all the investments that are funding taxonomy-eligible economic activities, but not taxonomy-aligned relative to the value of total assets covered by the KPI: Value of all the investments that are funding Taxonomy eligible economic activities, but not taxonomy aligned: Kvika Asset Management publishes the following information pursuant to Article 8 of the EU Taxonomy, alongside Kvika Asset Management annual accounts for 2025. The information is presented in templates set out in Annexes IV and XI of the Delegated Regulation No. 2021/2178, and in all relevant updates to those templates, as laid out in Delegated Regulation (EU) No. 2023/2486, covering asset managers. Key performance indicators According to the Delegated Regulation no. 2021/2178, asset managers are to disclose the proportion of investment in taxonomy-aligned economic activities out of the total Assets under Management. This ratio is based on investees’ key performance indicators (turnover and capex) and is therefo re dependent upon and limited to the investees’ taxonomy disclosures. ANNEX IV TEMPLATE FOR THE KPI OF ASSET MANAGERS Standard template for the disclosure required under Article 8 of Regulation (EU) 2020/852 (asset managers) The weighted average value of all the investments that are directed at funding, or are associated with taxonomy-aligned economic activities relative to the value of total assets covered by the KPI, with following weights for investments in undertakings per below: The weighted average value of all the investments that are directed at funding, or are associated with taxonomy-aligned economic activities, with following weights for investments in undertakings per below: Additional, complementary disclosures: breakdown of denominator of the KPI The percentage of derivatives relative to total assets covered by the KPI. The value in monetary amounts of derivatives. Consolidated Financial Statements 31 December 2025 103 ===== SIDA 107 ===== Kvika banki hf. Amounts are in ISK millions Kvika Asset Management Turnover-based: % 0.3% Turnover-based: ISK Million 2 CapEx—based: % 0.4% CapEx-based: ISK Million 2 For financial undertakings: For financial undertakings: Turnover-based: % 0.0% Turnover-based: ISK Million 0 CapEx—based: % 0.0% CapEx-based:ISK Million 0 Turnover-based: % 0.0% Turnover-based: ISK Million 0 CapEx—based: % 0.0% CapEx-based: ISK Million 0 Turnover: 0.3% Transitional activities: A% (Turnover; CapEx) 0.0% Capex: 0.4% Enabling activities: B% (Turnover; CapEx) 100.0% Turnover: 0.0% Transitional activities: A% (Turnover; CapEx) 0.0% Capex: 0.0% Enabling activities: B% (Turnover; CapEx) 0.0% Turnover: 0.0% Transitional activities: A% (Turnover; CapEx) 0.0% Capex: 0.0% Enabling activities: B% (Turnover; CapEx) 0.0% Turnover: 0.0% Transitional activities: A% (Turnover; CapEx) 0.0% Capex: 0.0% Enabling activities: B% (Turnover; CapEx) 0.0% Turnover: 0.0% Transitional activities: A% (Turnover; CapEx) 0.0% Capex: 0.0% Enabling activities: B% (Turnover; CapEx) 0.0% Turnover: 0.0% Transitional activities: A% (Turnover; CapEx) 0.0% Capex: 0.0% Enabling activities: B% (Turnover; CapEx) 0.0% Explanatory notes 'taxonomy-aligned activities' 'not taxonomy-aligned' 'taxonomy-eligible activities' The proportion of taxonomy-aligned exposures to other counterparties in over total assets covered by the KPI: Value of taxonomy-aligned exposures to other counterparties: Breakdown of the numerator of the KPI per environmental objective Taxonomy-aligned activities –: ANNEX IV (cont.) Additional, complementary disclosures: breakdown of numerator of the KPI The proportion of Taxonomy-aligned exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI: Value of Taxonomy-aligned exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU: For non-financial undertakings: For non-financial undertakings: 5) Pollution prevention and control 6) The protection and restoration of biodiversity and ecosystems economic activities that qualify as environmentally sustainable under EU Taxonomy 1) Climate change mitigation 2) Climate change adaptation 3) The sustainable use and protection of water and marine resources 4) The transition to a circular economy For credit institutions that are not required to disclose quantitative information for trading exposures, qualitative information on the alignment of trading portfolios with Regulation (EU) 2020/852, including overall composition, trends observed, objectives and policy. Does not apply to asset managers. economic activities that do not qualify as environmentally sustainable under EU Taxonomy i.e. do not fulfil the criteria set out in the delegated acts activity that has a corresponding criteria in the EU Taxonomy delegated acts to be assessed against ANNEX XI QUALITATIVE DISCLOSURES FOR ASSET MANAGERS, CREDIT INSTITUTIONS, INVESTMENT FIRMS AND INSURANCE AND REINSURANCE UNDERTAKINGS The disclosure of quantitative KPIs shall be accompanied by the following qualitative information to support the financial undertakings’ explanations and markets’ understanding of these KPIs: Contextual information in support of the quantitative indicators including the scope and activities covered by the KPIs, information on data sources and limitation. The calculation of key indicators uses total assets under management (AuM), excluding exposures to central governments, central banks and supranational issuers. Investments in companies which are not obliged to disclose non-financial information under the Act on Annual Accounts should also be excluded. Furthermore, the calculations of Kvika Asset Management’s Taxonomy KPIs depend upon and are limited to investee companies’ 2025 Taxonomy disclosures for the financial year 2024. Explanations of the nature and objectives of Taxonomy-aligned economic activities and the evolution of the Taxonomy-aligned economic activities over time, starting from the second year of implementation, distinguishing between business-related and methodological and data-related elements. As according to investee companies’ Taxonomy disclosures, all Taxonomy-aligned economic activities are enabling activities, i.e. they all enable other activities to make a substantial contribution to climate change mitigation. Description of the compliance with Regulation (EU) 2020/852 in the financial undertaking’s business strategy, product design processes and engagement with clients and counterparties. Kvika Asset Management expects to increasingly consider the EU Taxonomy e.g. in product development as well as in communication with customers, additionally there has been increased education to employees on the topic. Consolidated Financial Statements 31 December 2025 104 ===== SIDA 108 ===== Kvika banki hf. Amounts are in ISK millions Group alignment Computation of weighted averages of KPIs on Taxonomy-aligned activities of Groups ISK Million Revenue Proportion of total group revenue KPI (Turnover) KPI (CapEx) KPI (Turnover) weighted KPI (CapEx) weighted Asset management 2,351 12.11% 0.34% 0.37% 0.05% 0.06% Banking activities 17,059 87.89% 0.00% 0.00% 0.00% 0.00% Total 19,411 Average KPI 0.05% 0.06% ISK Million Revenue Proportion of total group revenue KPI (Turnover) KPI (CapEx) KPI (Turnover) weighted KPI (CapEx) weighted Asset management 2,597 15.12% 0.14% 0.21% 0.02% 0.03% Banking activities 14,587 84.88% 0.00% 0.00% 0.00% 0.00% Total 17,184 Average KPI 0.02% 0.03% KPI per business segment KPI per business segment 31.12.2025 31.12.2024 Consolidated Financial Statements 31 December 2025 105