===== SIDA 1 ===== Condensed Interim Consolidated Financial Statements 31 March 2026 ===== SIDA 2 ===== Consolidated Financial Statements 31 March 2026 Kvika banki hf.  Katrínartún 2  105 Reykjavík  Iceland  Reg. no. 540502-2930 ===== SIDA 3 ===== Kvika banki hf. Table of Contents Page 1 2 4 5 6 7 9 10 11 12 14 17 25 41 45 Condensed Interim Consolidated Statement of Financial Position .................................................................................. Condensed Interim Consolidated Statement of Comprehensive Income ...................................................................... Condensed Interim Consolidated Statement of Changes in Equity ................................................................................. Notes to the Condensed Interim Consolidated Financial Statements ............................................................................. Condensed Interim Consolidated Income Statement ...................................................................................................... Endorsement and Statement by the Board of Directors and the CEO ............................................................................. Kvika highlights ................................................................................................................................................................. - General information ...................................................................................................................................................... Condensed Interim Consolidated Statement of Cash Flows ............................................................................................ - Risk management .......................................................................................................................................................... - Financial assets and financial liabilities ......................................................................................................................... - Income statement .......................................................................................................................................................... - Statement of Financial Position ..................................................................................................................................... - Other information .......................................................................................................................................................... - Segment information ..................................................................................................................................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited ===== SIDA 4 ===== Highlights 31.03.2026 Kvika in brief Kvika is a financial services company working to make banking more competitive and accessible in Iceland. Instead of operating traditional branches, Kvika delivers its services online, offering a wide range of solutions in asset management, payments, and banking for individuals, businesses, and investors. 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. operations are underpinned by a distinctive brand strategy. Retail financial services are delivered through specialized consumer brands such as Auður, Aur, Netgíró, Straumur 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. 3M 2026 3M 2025 Net operating income 4,886 4,449 Profit before tax, continuing operations 1,809 701 RoTE, continuing operations 15.7% 7.8% 31.03.2026 31.12.2025 Total assets 359,817 343,112 Loans to customers 216,933 207,560 Deposits 189,678 172,787 LCR 291% 404% NSFR 133% 137% Q1 25 Q2 25 Q3 25 Q4 25 Q1 26 4.4 5.1 4.9 5.0 4.9 Net operating income ISK bn. Loans to customers ISK bn. Total capital ratio (%) LCR ratio (%) 0 50 100 150 200 250 20 40 60 80 100 120 140 160 180 200 220 0 95.5% Q1 25 95.5% Q2 25 109.7% Q3 25 120.1% Q4 25 114.4% Q1 26 161 172 196 208 217 Loans to deposits 0 5 10 15 20 25 30 35 40 45 50 0 5 10 15 20 25 30 21.0% Q1 25 20.5% Q2 25 20.4% Q3 25 23.9% Q4 25 23.8% Q1 26 23.9% 23.3% 23.0% 26.8% 26.7% CET1 0 5 0 5 0 5 0 5 0 0 100 200 300 400 500 600 700 800 900 1.000 159% Q1 25 160% Q2 25 148% Q3 25 137% Q4 25 133% Q1 26 279% 910% 659% 404% 291% NSFR 34.8% 24.3% 12.3% 17.9% 10.7% Commercial Banking Investment Banking Asset Management UK Treasury and supporting units Diversified operations Revenues by segment 3M 2026 ===== SIDA 5 ===== Kvika banki hf. Endorsement and Statement by the Board of Directors and the CEO About the Bank Operations during the period in 2026 Financial position Merger with Arion banki hf. will not take place Capital adequacy and dividends In 2026, Kvika has continued to build on the previous year’s success in capital markets and successfully completed the issuance of Additional Tier 1 (AT1) notes in April. The issuance, which amounted to SEK 300 million, is a key component of the Bank’s capital optimisation, as outlined in connection with the publication of the Bank’s year end results in February. This was Kvika’s first issuance of AT1 notes and supports the Bank’s continued growth and profitability. The issuance was oversubscribed and placed with investors across Scandinavia. The Bank's 2026 A nnual General Meeting ("AGM") approved a motion from the Board of Directors ("BOD") to renew the BOD's authorisation from the Bank's 2025 AGM to purchase up to 10% of own shares subject to regulatory approvals. This authorisation applies until the next AGM in 2027. 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 and completed on 18 March 2026. At the end of March 2026, 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 Q1 with ratios of 56,7% and 32,1% respectively. These are the Condensed Interim Consolidated Financial Statements of Kvika banki hf. ("Kvika" or the "Bank") and its subsidiaries (together the "Group") for the period 1 January to 31 March 2026. The Condensed Interim Consolidated Financial Statements have not been audited or reviewed by the Bank's independent auditors. 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, Straumur and Lykill, each focused on a specific customer need, while corporate and institutional services in Iceland are provid ed under the 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 first quarter amounted to ISK 1,809 million (Q1 2025: ISK 701 million). Pre-tax annualised return on average tangible equity (RoTE) from continuing operations was 15.7% for the quarter (Q1 2025: 7.8%) based on the average tangible equity position of Kvika during the year. Tangible equity is the equity of shareholders of Kvika net of deferred tax assets and intangible assets. Profit after taxes fo rt h e first quarter amounted to ISK 1,374 million (Q1 2025: ISK 2,086 million, including discontinued operations). According to the Consolidated Statement of Financial Position, equity at the end of the period amounted to ISK 66,795 million (31.12. 2025: ISK 68,935 million), and total assets amounted to ISK 359,817 million (31.12.2025: ISK 343,112 million). The Group's total assets grew by ISK 16.7 billion or 4.9% from year-end 2025. Loans to customers grew by ISK 9.3 b illion or 4.5% during the first quarter of 2026. The Group's net operating income during the period was ISK 4,886 million (3m 2025: ISK 4,449 m illion). Net interest income amounted to ISK 3,266 million (3m 2025: ISK 2,917 million). Net fee income amounted to ISK 1,486 million (3m 2025: ISK 1,520 million). Other net operating income amounted to ISK 135 million (3m 2025: ISK 12 m illion). Administrative expenses during the period amounted to ISK 3,014 million (3m 2025: ISK 3,090 m illion). During the period, the Group had a net impairment charge of ISK 94 million (3m 2025: ISK 65 million). On 15 April the preliminary discussions between Kvika banki hf. and Arion banki hf. with the Competition Authority regarding the proposed merger concluded. On that day representatives of Kvika banki and Arion banki met with representatives of the Competition Authority, during which the authority presented its position following the completion of the preliminary discussions process. In light of the position expressed by the Competi tion Authority at the meeting, the Boards of Directors of Kvika banki and Arion banki concluded that the proposed merger cannot proceed. The Boards of Directors therefore decided to discontinue the merger plans that were announced in a Stock Exchange notice dated 6 July 2025. Kvika continues to maintain a strong capital position, significantly above regulatory requirements. At the end of March 2026, the Group’s capital adequacy ratio was 26.2% and CET1 ratio was 23.3%, or 26.7% and 23.8%, respectively, including unaudited earnings. This compares to regulatory requirements of 17.9% and 12.9%, including capital buffers. The 2026 AGM approved a motion from the BOD that a dividend of ISK 0.36 per share be paid in 2026 based on the results for the year 2025. Furthermore, the 2026 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 301,000,000 shares by cance lling treasury shares held by the Bank. In March 2026, both the dividend payment and the share capital reduction were carried out. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 2 ===== SIDA 6 ===== Kvika banki hf. Endorsement and Statement by the Board of Directors and the CEO Proposal for a special dividend payment Risk management 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 On 8 May the BOD convened a shareholders’ meeting to be held on 4 June 2026. The purpose of the meeting is a proposal from the BOD for a special dividend payment of ISK 2.35 per share, corresponding to just over ISK 10 billion. At Kvika’s Annual General Meeting on 18 March 2026, it was stated that the Bank’s capital position would remain very strong following a proposed dividend payment and that the BOD would consider proposing additional distributions to shareholders later in the year, should circumstances permit. As it is now clear that the proposed merger of Kvika and Ario n banki hf. will not take place and the Bank’s capital position remains very strong, there is now considerable capacity for further distribution to shareholders. In preparing the BOD’s proposal to the shareholders’ meeting, account has also been taken of the existing authorisation approved at Kvika’s Annual General Meeting to repurchase own shares of up to 10% of the Bank’s share capital. Accordingly, in addition to the proposed special dividend payment, the BOD aims, if conditions permit, to repurchase own shares for up to ISK 4 billion later in the year. The Condensed Interim Consolidated Financial Statements of Kvika banki hf. for the period ended 31 March 2026 are electronically certificated by the Board of Directors and the CEO. The Condensed Interim Consolidated Financial Statements of Kvika banki hf. for the period 1 January to 31 March 2026 have been prepared in accordance with IAS 34 Interim Financial Reporting 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 Condensed Interim Consolidated Financial Statements give a true and fair view of the Group's assets, liabilities an d financial position as at 31 March 2026 and the financial performance of the Group and changes of cash flows for the period 1 January to 31 March 2026. Furthermore, in our opinion the Condensed Interim 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. The Board of Directors and the CEO of the Bank have today discussed the Condensed Interim Consolidated Financial Statements for the period 1 January to 31 March 2026 and confirmed them by the means of their signatures. Reykjavík, 12 May 2026. Board of Directors 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 Condensed Interim Consolidated Financial Statements. Refer to notes 37-52 on the analysis of exposure to various types of risk. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 3 ===== SIDA 7 ===== Kvika banki hf. Amounts are in ISK millions Condensed Interim Consolidated Income Statement For the period 1 January 2026 to 31 March 2026 Notes 3m 2026 3m 2025 7,982 7,300 (4,716) (4,384) Net interest income 4 3,266 2,917 1,644 1,669 (159) (149) Net fee and commission income 5 1,486 1,520 6 84 (48) 51 60 Other net operating income 135 12 Net operating income 4,886 4,449 8 (3,014) (3,090) 10 (94) (65) - (593) 30 - Profit before taxes from continuing operations 1,809 701 11 (348) (438) 13 (87) (77) Profit for the period from continuing operations 1,374 186 Discontinued operations - 1,901 Profit for the period 1,374 2,086 Notes 3m 2026 3m 2025 1,371 2,086 22 3 - Profit for the period 1,374 2,086 Earnings per share 14 0.31 0.45 0.31 0.45 The notes on pages 11 to 46 are an integral part of these Condensed Interim Consolidated Financial Statements. Other operating income ........................................................................................................................................... Administrative expenses .......................................................................................................................................... Net impairment ........................................................................................................................................................ Revaluation of contingent consideration ................................................................................................................ Interest income ........................................................................................................................................................ Interest expense ....................................................................................................................................................... Fee and commission income .................................................................................................................................... Fee and commission expense .................................................................................................................................. Net financial income (expense) ............................................................................................................................... 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 ......................................................................................................................... Revaluation of investment properties ..................................................................................................................... Basic earnings per share (ISK per share) .................................................................................................................. Profit after tax from discontinued operations ......................................................................................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 4 ===== SIDA 8 ===== Kvika banki hf. Amounts are in ISK millions Comprehensive Income For the period 1 January 2026 to 31 March 2026 Notes 3m 2026 3m 2025 Profit for the period 1,374 2,086 (155) 46 (1) 25 Changes to reserve for financial assets at fair value through OCI (156) 71 (45) (30) (201) 41 Total comprehensive income for the period 1,173 2,127 Notes 3m 2026 3m 2025 1,171 2,127 3 - Total comprehensive income for the period 1,173 2,127 The notes on pages 11 to 46 are an integral part of these Condensed Interim Consolidated Financial Statements. Condensed Interim Consolidated Statement of 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 Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 5 ===== SIDA 9 ===== Kvika banki hf. Amounts are in ISK millions Condensed Interim Consolidated Statement of Financial Position As at 31 March 2026 Assets Notes 31.3.2026 31.12.2025 15 28,540 20,145 16 5,336 8,154 17 216,933 207,560 18 39,947 44,522 19 22,739 20,663 20 5,329 6,695 21 4,237 3,250 23 114 117 24 20,951 21,130 25 553 361 380 402 11 617 939 26 14,141 9,174 Total assets 359,817 343,112 Liabilities 44 189,678 172,787 27 7,378 6,806 28 72,714 73,249 29 6,080 5,841 30 616 433 31 493 432 21 548 773 228 257 32 15,285 13,599 Total liabilities 293,022 274,177 Equity 33 4,323 4,417 41,456 43,119 4,258 4,376 16,681 16,948 Total equity attributable to the shareholders of Kvika banki hf. 66,717 68,859 22 78 76 Total equity 66,795 68,935 Total liabilities and equity 359,817 343,112 The notes on pages 11 to 46 are an integral part of these Condensed Interim 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 .................................................................................................................... Deposits ............................................................................................................................................. Borrowings ......................................................................................................................................... Non-controlling interest ..................................................................................................................... Short positions held for trading ......................................................................................................... Short positions used for hedging ....................................................................................................... Share capital ....................................................................................................................................... Share premium ................................................................................................................................... Other liabilities ................................................................................................................................... Deferred tax liabilities ........................................................................................................................ Derivatives .......................................................................................................................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 6 ===== SIDA 10 ===== Kvika banki hf. Amounts are in ISK millions Condensed Interim Consolidated Statement of Changes in Equity For the period 1 January 2026 to 31 March 2026 Deficit Trans- Restricted Total share- Non- Share Share Option reduction Fair value lation retained Retained holders' controlling Total 1 January 2026 to 31 March 2026 Notes capital premium reserve reserve reserve reserve earnings earnings equity interest equity 4,417 43,119 7 1,204 (160) 40 3,285 16,948 68,859 76 68,935 1,371 1,371 3 1,374 (155) (155) (155) (1) (1) (1) (45) (45) - (45) - - - - (156) (45) - 1,371 1,171 3 1,173 178 (178) - - (96) 96 - - (94) (1,663) (1,757) (1,757) (1,556) (1,556) (1,556) Equity as at 31 March 2026 4,323 41,456 7 1,204 (315) (5) 3,367 16,681 66,717 78 66,795 The notes on pages 11 to 46 are an integral part of these Condensed Interim Consolidated Financial Statements. (10,962,275) 41,455,811 7,080 1,208,453 (4,638,114) (4,757) 3,360,033 15,477,149 78,147 Dividend paid to shareholders .................................................................. Transactions with owners of the Bank Other reserves Profit for the period ..................................................................................... Restricted due to subsidiaries and associates ............................................. Translation of foreign operations Exchange difference on translation of foreign operations ....................... Equity as at 1 January 2026 ......................................................................... Total comprehensive income for the period ............................................... 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 ................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 7 ===== SIDA 11 ===== Kvika banki hf. Amounts are in ISK millions Condensed Interim Consolidated Statement of Changes in Equity For the period 1 January 2025 to 31 March 2025 Deficit Trans- Restricted Total share- Non- Share Share Option reduction Fair value lation retained Retained holders' controlling Total 1 January 2025 to 31 March 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 2,086 2,086 - 2,086 46 46 46 25 25 25 Translation of foreign operations (30) (30) - (30) - - - - 71 (30) - 2,086 2,127 - 2,127 (6,166) 6,166 - - 21 (21) - - (49) (862) (911) (911) (23,135) (23,135) (23,135) (22) 22 - - Equity as at 31 March 2025 4,612 45,888 87 1,204 (512) 49 2,403 13,790 67,520 79 67,599 The notes on pages 11 to 46 are an integral part of these Condensed Interim Consolidated Financial Statements. Equity as at 1 January 2025 ......................................................................... Share options ............................................................................................ Total comprehensive income for the period ............................................... Treasury shares acquired as part of a buy-back programme ................... Restricted due to subsidiaries and associates ............................................. Transactions with owners of the Bank Restricted due to development costs .......................................................... Other reserves Dividend paid to shareholders .................................................................. Changes in fair value of financial assets through OCI ................................. Realized net loss transferred to the Income Statement .............................. Profit for the period ..................................................................................... Exchange difference on translation of foreign operations ....................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 8 ===== SIDA 12 ===== Kvika banki hf. Amounts are in ISK millions Condensed Interim Consolidated Statement of Cash Flows For the period 1 January 2026 to 31 March 2026 Cash flows from operating activities Notes 3m 2026 3m 2025 1,374 2,086 67 56 284 480 (3,266) (2,917) 94 65 435 515 - (1,901) (1,012) (1,615) Changes in: 52 (7,557) (8,570) 2,489 4,384 (10,478) (647) 2,543 1,366 (171) (988) (1,376) (213) (21) (5,251) (3,200) 16,436 4,240 245 331 (360) (2,425) 1,779 1,330 8,233 (14,295) 7,411 6,991 (3,806) (3,704) (67) (74) Net cash from (to) operating activities 10,758 (12,696) Cash flows from investing activities 24 (59) (70) (8) (39) - 32,285 Net cash (to) from investing activities (67) 32,176 Cash flows from financing activities 1,076 932 (534) 10,644 (1,757) (911) (1,556) - (108) (100) Net cash (to) from financing activities (2,879) 10,565 7,811 30,045 37,056 22,500 (550) 339 Cash and cash equivalents at the end of the period 15 44,317 52,884 Cash and cash equivalents 15 28,540 43,909 15 (6,404) (5,745) 16 5,336 14,720 19 16,845 - Cash and cash equivalents at the end of the period 44,317 52,884 The notes on pages 11 to 46 are an integral part of these Condensed Interim Consolidated Financial Statements. Interest received .......................................................................................................................................... Acquired own shares .................................................................................................................................... Additions of intangible assets ...................................................................................................................... Net acquisition and sale of property and equipment .................................................................................. Interest paid ................................................................................................................................................. Income tax paid ............................................................................................................................................ 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 ..................................................................................................................... Borrowings ................................................................................................................................................... Effects of exchange rate fluctuations on cash and cash equivalents .......................................................... Cash and cash equivalents at the beginning of the year ............................................................................. Derivatives - assets .................................................................................................................................... Fixed income securities ............................................................................................................................. Shares and other variable income securities ............................................................................................ Securities used for hedging ....................................................................................................................... Loans to customers .................................................................................................................................... Loans to credit institutions ........................................................................................................................ Profit for the period ..................................................................................................................................... Adjustments for: Indexation and exchange rate difference ................................................................................................. 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 Ba nk - 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 .................................................................................................................................................... Short positions ........................................................................................................................................... Other liabilities .......................................................................................................................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 9 ===== SIDA 13 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 0 General information Page Risk management Page 1 Reporting entity ............................................................................ 11 37 Hedging ........................................................................................... 25 2 Basis of preparation ..................................................................... 11 38 Credit risk - overview ...................................................................... 25 39 Maximum exposure to credit risk .................................................. 26 Segment information 40 Credit quality of financial assets .................................................... 26 3 Business segments ....................................................................... 12 41 Loan-to-value ................................................................................. 31 42 Collateral against exposures to derivatives ................................... 31 Income statement 43 Large exposures .............................................................................. 31 4 Net interest income ...................................................................... 14 44 Liquidity risk ................................................................................... 32 5 Net fee and commission income .................................................. 14 45 Market risk ...................................................................................... 36 6 Net financial income (expense) .................................................... 15 46 Interest rate risk ............................................................................. 36 7 Foreign currency exchange difference ......................................... 15 47 Interest rate risk associated with trading portfolios ...................... 36 8 Administrative expenses .............................................................. 15 48 Interest rate risk associated with non-trading portfolios .............. 37 9 Salaries and related expenses ...................................................... 15 49 Exposure towards changes in the CPI ............................................ 38 10 Net impairment ............................................................................ 15 50 Currency risk ................................................................................... 38 11 Income tax .................................................................................... 16 51 Equity risk ....................................................................................... 40 12 Special tax on financial activity .................................................... 16 52 Operational risk .............................................................................. 40 13 Special tax on financial institutions .............................................. 16 14 Earnings per share ........................................................................ 16 Financial assets and liabilities 53 Accounting classif. of financial assets and financial liabilities ....... 41 54 Financial assets and financial liabilities measured at fair value .... 42 Statement of Financial Position 15 Cash and balances with Central Bank .......................................... 17 16 Loans to credit institutions ........................................................... 17 Other information 17 Loans to customers ...................................................................... 17 55 Pledged assets ................................................................................ 45 18 Fixed income securities ................................................................ 17 56 Related parties ............................................................................... 45 19 Shares and other variable income securities ............................... 18 57 Others matters ............................................................................... 46 20 Securities used for hedging .......................................................... 18 58 Events after the reporting date ...................................................... 46 21 Derivatives .................................................................................... 18 22 Group entities ............................................................................... 19 23 Investment in associates .............................................................. 19 24 Intangible assets ........................................................................... 19 25 Operating lease assets .................................................................. 20 26 Other assets .................................................................................. 20 27 Borrowings ................................................................................... 20 28 Issued bonds ................................................................................. 21 29 Subordinated liabilities ................................................................ 21 30 Short positions held for trading ................................................... 21 31 Short positions used for hedging ................................................. 22 32 Other liabilities ............................................................................. 22 33 Share capital ................................................................................. 22 34 Capital adequacy ratio (CAR) ........................................................ 23 35 Leverage ratio ............................................................................... 23 36 Minimum requirements for own funds and eligible liabilities (MREL) ....................................................... 24 Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 10 ===== SIDA 14 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim 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 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 Condensed Interim Consolidated Financial Statements, is provided in the Consolidated Financia l Statements as at and for the year ended 31 December 2025. In order to enhance the informational value of the Condensed Interim 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"). The Condensed Interim Consolidated Financial Statements were approved and authorised for issue by the Board of Directors and the CEO on 12 May 2026. The Condensed Interim Consolidated Financial Statements have been prepared in accordance with International Accounting Standard IAS 34 Interim Financial Reporting, 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 Condensed Interim Consolidated Financial Statements have been prepared using the historical cost basis except for the follo wing: The Condensed Interim Consolidated Financial Statements for the period ended 31 March 2026 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, businesses 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 interim 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 Condensed Interim Consolidated Financial Statements are prepared in Icelandic krona (ISK), which is the Group's functional currency. All financial information has 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 March 2026. The Condensed Interim Consolidated Financial Statements do not include all of the information required for full Consolidated Financial Statements and should be read in conjunction with the Group's Consolidated Financial Statements for the financial year ending 31 December 2025. 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 Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 11 ===== SIDA 15 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 0 Segment information 3. Business segments - - - - -T r e a s u r y 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 provides 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 period in 2026 it accounted for 17.9% (3m 2025: 18.0%) of net operating income. 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 The Group defines the following reportable operating segments; Asset Management, Commercial Banking, Investment Banking, UK operations and Treasury. 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. 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. 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. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 12 ===== SIDA 16 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 0 3. Business segments (cont.) Asset Commercial Investment UK Supporting 3m 2026 Management Banking Banking operations Treasury units Total (2) 1,322 808 602 541 (6) 3,266 581 348 342 165 47 3 1,486 12 (3) 36 102 (62) (0) 84 11 33 - 7 - 0 51 Net operating income 602 1,699 1,186 876 526 (3) 4,886 (272) (253) (209) (247) (67) (768) (1,817) (17) (445) (48) (93) (32) (562) (1,197) Administrative expenses (289) (698) (258) (340) (100) (1,330) (3,014) - (43) (15) (36) (0) - (94) - - - - - - - - 2 - - - 28 30 (193) (430) (243) (76) (95) 1,037 - Profit (loss) before tax from continuing operations 120 529 671 424 332 (267) 1,809 Net segment revenue from external 623 693 2,531 1,362 (331) 9 4,886 Net segment revenue from other (21) 1,006 (1,345) (486) 857 (11) - Asset Commercial Investment UK Supporting 3m 2025 Management Banking Banking operations Treasury units Total (0) 1,177 570 535 643 (8) 2,917 614 361 543 133 47 (178) 1,520 19 1 (25) 124 (166) - (48) 3 51 - 7 - (1) 60 Net operating income 635 1,590 1,088 799 524 (187) 4,449 (277) (241) (217) (196) (64) (708) (1,703) (32) (525) (55) (104) (19) (651) (1,386) Administrative expenses (309) (766) (272) (300) (83) (1,359) (3,090) - (42) (13) (10) (0) - (65) (12) - - (580) - - (593) (172) (370) (220) (52) (88) 902 - Profit (loss) before tax from continuing operations 141 412 583 (143) 353 (645) 701 Net segment revenue from external 641 38 1,873 1,163 676 57 4,449 Net segment revenue from other (6) 1,552 (785) (364) (151) (244) - Revaluation of investment properties .................... Other operating income ......................................... Salaries and related expenses ................................ Other operating expenses ...................................... Net impairment ....................................................... customers ............................................................. segments .............................................................. 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 (expense) .............................. Revaluation of contingent consideration ............... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 13 ===== SIDA 17 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 3 Income statement 4. Net interest income Interest income is specified as follows: 3m 2026 3m 2025 406 591 6 111 6,461 4,994 235 563 747 1,042 128 0 Total 7,982 7,300 Interest expense is specified as follows: 3m 2026 3m 2025 2,598 2,651 592 607 1,105 684 239 138 173 291 11 13 Total 4,716 4,384 Net interest income 3,266 2,917 5. Net fee and commission income 3m 2026 3m 2025* 591 613 300 334 160 170 555 458 38 95 Total 1,644 1,669 (159) (149) Net fee and commission income 1,486 1,520 Derivatives ........................................................................................................................................................................... Fee and commission expense ............................................................................................................................................. 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 services, securities, derivatives and FX brokerage as well as market making. Other interest expense* ..................................................................................................................................................... Cash and balances with Central Bank ................................................................................................................................. Derivatives ........................................................................................................................................................................... Loans to customers ............................................................................................................................................................. Other interest income ......................................................................................................................................................... Deposits .............................................................................................................................................................................. Borrowings .......................................................................................................................................................................... Subordinated liabilities ....................................................................................................................................................... Issued bonds ........................................................................................................................................................................ Fixed income securities (FVOCI) .......................................................................................................................................... Loans to credit institutions .................................................................................................................................................. Loans and guarantees ......................................................................................................................................................... Asset Management ............................................................................................................................................................. Cards and payment solutions .............................................................................................................................................. * Thereof are lease liabilities' interest expense amounting to ISK 7 million (3M 2025: ISK 10 million). Total interest income recognised in respect of financial assets not carried at fair value through profit or loss amounts to ISK 6,875 million (3M 2025: ISK 5,655 million). Total interest expense recognised in respect of financial liabilities not carried at fair value through profit or loss amounts to ISK 4,543 million (3M 2025: ISK 4,093 million). Capital markets and corporate finance ............................................................................................................................... Othe r fee and commission income ..................................................................................................................................... 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. 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 3. * A portion of the fees that were recorded as other fee and commission income during the period in 2025 has been reclassified, as stated in the 2025 Consolidated Financial Statements. The reclassification primarily resulted in a decrease in other fee and commission income and an increase in fee income related to loans and guarantees. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 14 ===== SIDA 18 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 3 6. Net financial income (expense) Net financial income (expense) is specified as follows: 3m 2026 3m 2025 Net gain (loss) on financial assets and financial liabilities mandatorily measured at fair value through profit or loss 75 81 1 (31) 93 68 (0) (5) (17) (21) - (83) (67) (56) Total 84 (48) 7. Foreign currency exchange difference Shares and other variable income securities is specified as follows: 3m 2026 3m 2025 96 1,118 (163) (1,173) Total (67) (56) 8. Administrative expenses Administrative expenses are specified as follows: 3m 2026 3m 2025 1,817 1,703 913 906 246 393 39 87 Total 3,014 3,090 9. Salaries and related expenses Salaries and related expenses are specified as follows: 3m 2026 3m 2025 1,326 1,230 123 125 166 162 69 65 133 121 Total 1,817 1,703 248 252 248 253 10. 3m 2026 3m 2025 (101) (70) (1) (0) 8 4 Total (94) (65) Salaries ................................................................................................................................................................................ Other salary related expenses ............................................................................................................................................ Tax on financial activity ....................................................................................................................................................... Gain on financial instruments at fair value through profit and loss ................................................................................... Loss on other financial instruments .................................................................................................................................... Depreciation of right of use asset ....................................................................................................................................... Loss on prepayments of borrowings .................................................................................................................................... Derivatives ......................................................................................................................................................................... Salaries and related expenses ............................................................................................................................................. Fixed income securities ..................................................................................................................................................... Shares and other variable income securities .................................................................................................................... Pension fund contributions ................................................................................................................................................. Depreciation and amortisation ........................................................................................................................................... Total number of full time employees at the end of the period .......................................................................................... Performance based payments excluding share-based payments ...................................................................................... 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% (2025: 5.50%). Loans to customers ............................................................................................................................................................ Net ch ange in impairment of other assets .......................................................................................................................... Foreign currency exchange difference ................................................................................................................................ Other operating expenses ................................................................................................................................................... Financial assets at fair value through OCI ......................................................................................................................... Net change in impairment of loan commitments, guarantees and unused credit facilities .............................................. Net impairment Net change in impairment of loans ..................................................................................................................................... Average number of full time employees during the period ............................................................................................... The amount of performance based payments that has been expensed is based on the results for the year to date 2026 and the guidelines on performance based payments set forth in the Group’s remuneration policy. The performance based payments have not been allocated to any employees or business segments and are subject to approval by the Board of Directors. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 15 ===== SIDA 19 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 3 11. Income tax 12. Special tax on financial activity 13. Special tax on financial institutions 14. Earnings per share 3m 2026 3m 2025 3m 2026 3m 2025 3m 2026 3m 2025 Net earnings attributable to equity holders of the Bank 1,371 186 - 1,901 1,371 2,086 4,369 4,651 4,369 4,651 4,369 4,651 1 - 1 - 1 - Total 4,370 4,651 4,370 4,651 4,370 4,651 0.31 0.04 0.00 0.41 0.31 0.45 0.31 0.04 0.00 0.41 0.31 0.45 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) .......................................................... 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% (2025: 20.0%). Companies within the Group, which operate outside of Iceland, recognise income tax in accordance with the applicable tax laws in the country they reside. The Bank and some of its subsidiaries will not pay income tax on its profit for 2026 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 Condensed Interim Consolidated Statement of Financial Position. Discontinued operations 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. 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% (2025: 0.145%) and the tax is not a deductible expense for income tax purposes. The tax is presented separately in the Condensed Interim Consolidated Income Statement. 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% (2025: 6.0%) and the tax is not a deductible expense for income tax purposes. The tax is presented separately in the Condensed Interim Consolidated Income Statem ent. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 16 ===== SIDA 20 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 14 Statement of Financial Position 15. Cash and balances with Central Bank Cash and balances with Central Bank are specified as follows: 31.3.2026 31.12.2025 22,129 13,929 8 12 Included in cash and cash equivalents 22,136 13,941 6,404 6,203 Total 28,540 20,145 16. Loans to credit institutions Loans to credit institutions are specified as follows: 31.3.2026 31.12.2025 5,336 8,102 0 52 Total 5,336 8,154 17. Loans to customers Gross Gross Gross carrying Book carrying Book carrying Book 31.3.2026 amount value amount value amount value 65,538 64,625 149,449 147,990 214,988 212,615 - - 4,318 4,318 4,318 4,318 Total 65,538 64,625 153,767 152,308 219,306 216,933 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 18. Fixed income securities Fixed income securities are specified as follows: Mandatorily measured at fair value through profit or loss 31.3.2026 31.12.2025 1,952 1,793 2,148 2,425 1,706 1,436 Measured at fair value through other comprehensive income 32,697 37,473 1,443 1,394 Total 39,947 44,522 Listed government bonds and bonds with government guarantees ........................................................................ Listed bonds ............................................................................................................................................................... Loans to customers at amortised cost .................. Bank accounts .............................................................................................................................................................. Other loans ................................................................................................................................................................... The breakdown of the loan portfolio by individuals and corporates is specified as follows: The Group presents finance lease receivables as part of loans to customers at amortised cost. As at 31 March 2026, the book value of finance lease receivables amounted to ISK 23,387 million (31.12.2025: ISK 23,175 million). Loans to customers at FV through profit or loss ... TotalIndividuals Loans to customers at amortised cost .................. 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 ........................................................................................................................................................... Corporates Total Corporates Individuals Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 17 ===== SIDA 21 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 14 19. 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 31.3.2026 31.12.2025 1,031 996 3,152 3,097 16,845 15,013 1,711 1,558 Total 22,739 20,663 20. Securities used for hedging Securities used for hedging are specified as follows: 31.3.2026 31.12.2025 447 938 429 320 4,422 5,353 31 84 Total 5,329 6,695 21. Derivatives 31.3.2026 Assets Liabilities Assets Liabilities 28,749 28,738 978 - 55,336 44,314 1,504 - 18,288 18,285 61 48 - 9,380 353 - 8,764 7,908 1,024 183 1,994 1,994 317 317 Total 113,131 110,618 4,237 548 31.12.2025 Assets Liab ilities 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 31.3.2026 31.12.2025 124 (21) 197 182 (39) (36) Total 282 124 Foreign currency revaluation of the net foreign operations ....................................................................................... Tax effect ...................................................................................................................................................................... Bond and equity total return swaps ..................................................................... Currency forwards used for hedge accounting .................................................... Cross - currency interest rate swaps .................................................................... Currency forwards used for hedge accounting .................................................... Cross - currency interest rate swaps .................................................................... Equity options ....................................................................................................... Bond and equity total return swaps ..................................................................... Derivatives are specified as follows: Currency forwards ................................................................................................ Interest rate derivatives ....................................................................................... Unlisted shares .......................................................................................................................................................... Currency forwards ................................................................................................ Interest rate derivatives ....................................................................................... Notional Equity options ....................................................................................................... Carrying amount Listed shares .............................................................................................................................................................. Unit shares in cash equivalent liquidity funds .......................................................................................................... Unlisted unit shares ..................................................................................................................................................... Carrying amount Notional Listed government bonds and bonds with government guarantees .......................................................................... Listed bonds ................................................................................................................................................................. Unlisted unit shares ................................................................................................................................................... Listed shares ................................................................................................................................................................. Th e 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 ........................................................................................................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 18 ===== SIDA 22 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 14 22. Group entities Share Share Entity Nature of operations Domicile 31.3.2026 31.12.2025 Holding company Iceland 100% 100% Asset management Iceland 100% 100% Debt Collection Iceland 100% 100% Iceland 100% 100% Iceland 85% 85% UK 100% 100% UK 100% 100% 23. 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 31.3.2026 31.12.2025 Iceland 24% 24% Croatia 40% 40% b. Changes in investments in associates are specified as follows: 31.3.2026 31.12.2025 117 113 - (36) - 37 (3) 3 Total 114 117 24. Intangible assets Intangible assets are specified as follows: a. Customer Software 31.3.2026 Goodw ill relationships Brands and other Total 17,738 1,388 174 1,829 21,130 - - - 59 59 - - - (22) (22) - (51) (6) (111) (167) (38) (11) - - (48) Balance as at 31 March 2026 17,701 1,327 168 1,756 20,951 17,701 2,071 369 4,318 24,459 - (745) (201) (2,562) (3,508) Balance as at 31 March 2026 17,701 1,327 168 1,756 20,951 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 Currency adjustments ................................................................. Accumulated amortisation and impairment losses .................... Digital solutions provider Amortisation ................................................................................ Balance as at 1 January 2026 ....................................................... Discontinued ................................................................................ Amortisation ................................................................................ Discontinued ................................................................................ Balance as at 1 January 2025 ....................................................... Currency adjustments ................................................................. Gross carrying amount ................................................................ Gross carrying amount ................................................................ Accumulated amortisation and impairment losses .................... Additions during the year ............................................................ Dividend received ......................................................................................................................................................... Share in profit of associates, net of income tax ........................................................................................................... GAMMA Capital Management ehf. ...................... Moberg d. o. o. ..................................................... Exchange rate difference ............................................................................................................................................. AC GP 3 ehf. .......................................................... Additions during the year ............................................................ Payment facilitator Business consultancy services Th e main subsidiaries held directly or indirectly by the Group are listed in the table below. Holding company Balance at the beginning of the year ........................................................................................................................... Ortus Secured Finance ltd. ................................... Fund management Straumur greiðslumiðlun hf. ................................ Kvika Limited ........................................................ Lending operations Skilum ehf. ............................................................ The Group does not consider its associates material, neither individually nor as a group. Gláma fjárfestingar slhf. ....................................... Kvika eignastýring hf. ........................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 19 ===== SIDA 23 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 14 25. Operating lease assets Operating lease assets are specified as follows: 31.3.2026 31.12.2025 361 215 238 285 (24) (86) (22) (53) Total 553 361 699 494 (147) (132) Total 553 361 26. Other assets Other assets are specified as follows: 31.3.2026 31.12.2025 9,474 4,096 2,620 3,686 507 569 25 93 1,514 731 Total 14,141 9,174 Right of use asset and lease receivables are specified as follows: 31.3.2026 31.12.2025 569 1,024 5 30 (2) (3) - (201) (65) (282) Total 507 569 27. Borrowings Borrowings are specified as follows: 31.3.2026 31.12.2025 5,117 5,228 2,260 1,579 Total 7,378 6,806 Additions ...................................................................................................................................................................... Disposals ....................................................................................................................................................................... Depreciation ................................................................................................................................................................. Accumulated depreciation ........................................................................................................................................... Gross carrying amount ................................................................................................................................................. 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 ......................................................................................................................................................... Unsettled transactions ................................................................................................................................................. Accounts receivable ..................................................................................................................................................... Balance as at 1 January ................................................................................................................................................ Right of use asset and lease receivables ...................................................................................................................... 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 32. Impairment ................................................................................................................................................................... Currency adjustments .................................................................................................................................................. Right of use asset and lease receivables as at 1 January ............................................................................................. Sundry assets ................................................................................................................................................................ Inve stment properties .................................................................................................................................................. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 20 ===== SIDA 24 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 14 28. Issued bonds Issued bonds are specified as follows: First Maturity Currency, nominal value issued Maturity type Terms of interest 31.3.2026 31.12.2025 Unsecured bonds: 2023 2026 At maturity Floating, 3 month STIBOR + 4.10% 3,004 3,115 2023 2026 At maturity Floating, 3 month NIBOR + 4.10% 4,313 4,193 2023 2026 At maturity Floating, 3 month STIBOR + 4.0% 6,602 6,845 2021 2027 At maturity CPI-indexed, fixed 1.0% 7,368 7,172 2025 2028 At maturity Floating, 3 month NIBOR + 2.0% 5,184 5,039 2025 2028 At maturity Floating, 3 month STIBOR + 2.0% 7,934 8,228 2025 2028 At maturity Floating, 3 month REIBOR + 1.14 % 5,106 5,109 2025 2029 At maturity Fixed 4.50% 29,793 30,209 2022 2032 At maturity CPI-indexed, fixed 1.40% 2,634 2,579 Total 71,937 72,490 777 759 Total 72,714 73,249 29. Subordinated liabilities a. Subordinated liabilities: First Maturity Currency, nominal value issued Maturity type Terms of interest 31.3.2026 31.12.2025 2023 2034 At maturity CPI-Indexed, fixed 6.25% 2,844 2,733 2015 2045 At maturity CPI-Indexed, fixed 6.25% 3,236 3,109 Total 6,080 5,841 b. Subordinated liabilities are specified as follows: 31.3.2026 31.12.2025 5,841 5,629 - (272) - (76) 239 560 Total 6,080 5,841 30. Short positions held for trading Short positions held for trading are specified as follows: 31.3.2026 31.12.2025 616 108 - 253 - 72 Total 616 433 EMTN 26 1123 GB, SEK 500 million .. EMTN 26 0511, SEK 566 million * .... EMTN 26 0511, NOK 750 million * ... EMTN 28 0421, SEK 600 million ....... Unlisted senior unsecured bonds, total ....................................................................................................................... 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 ..... 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 ........................................................................................................................... Subordinated 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 and 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. The Group has the right to repay the TM 15 01 subordinated bond on any 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. Listed shares ................................................................................................................................................................. Paid interest ................................................................................................................................................................. KVB 21 02, ISK 5,400 million ............ 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. EMTN 29 0602, EUR 200 million ...... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 21 ===== SIDA 25 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 14 31. Short positions used for hedging Short positions used for hedging are specified as follows: 31.3.2026 31.12.2025 493 432 Total 493 432 32. Other liabilities Other liabilities are specified as follows: 31.3.2026 31.12.2025 7,252 3,252 3,914 5,268 1,408 1,688 1,011 1,055 696 802 293 641 422 433 8 16 281 444 Total 15,285 13,599 Lease liability is specified as follows: 31.3.2026 31.12.2025 802 1,158 (4) (5) (108) (382) 5 30 Total 696 802 33. Share capital a. Share capital 31.3.2026 31.12.2025 4,330 4,631 7 214 240 240 b. Changes made to the nominal amount of share capital c. Share capital increase authorisations Special taxes on financial institutions and financial activities ..................................................................................... A copy of the Bank's Articles of Association, including the temporary provisions, is available on the Bank's website, www.kvika.is, reference is mad e to them for more information. 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 26. Listed government bonds and bonds with government guarantees .......................................................................... Contingent consideration ............................................................................................................................................. During the period in 2026 the Bank's share capital was decreased by ISK 301 m illion in nominal value following a resolution by the AGM to cancel treasury shares. Furthermore, during the period in 2026 the Bank acquired treasury shares amounting to ISK 94 m illion in nominal value as a result of a share buy-back plan. 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 ........................................................................................................................................................ Lease liability as at 1 January ....................................................................................................................................... Other liabilities ............................................................................................................................................................. According to the Bank's Articles of Association dated 18 March 2026, 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. Authorised but not issued shares ................................................................................................................................ Nomi nal 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 s hareholders' meetings. Reference is made to the Bank's Articles of Association for more information about the share capital. Currency adjustments .................................................................................................................................................. Accounts payable and accrued expenses .................................................................................................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 22 ===== SIDA 26 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 14 34. Capital adequacy ratio (CAR) Own funds 31.3.2026 31.12.2025 66,795 68,935 (1,374) - - (3,323) (20,563) (20,925) (217) (217) (617) (939) 834 1,156 Common equity Tier 1 capital (CET 1) 44,858 44,687 5,953 5,416 (364) - Total own funds 50,448 50,103 Risk-weighted exposure amount (RWEA) 163,726 157,968 8,506 8,296 20,503 20,503 Total risk-weighted exposure amount 192,734 186,767 Capital ratios 23.3% 23.9% 23.3% 23.9% 26.2% 26.8% 51,480 23.8% 23.8% 26.7% Capital buffer requirement, % of RWEA 1.6% 1.6% 2.4% 2.4% 2.5% 2.5% Combined buffer requirement 6.4% 6.4% Capital requirement, % of RWEA 31.3.2026 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) ................................................................................................................................ Countercyclical capital buffer (CCyB) ........................................................................................................................... Pillar I capital requirement ................................................................................................................ Operational risk ............................................................................................................................................................ Total equity .................................................................................................................................................................. Market risk ................................................................................................................................................................... Tier 2 capital ................................................................................................................................................................. Amounts below the threshold for deduction ............................................................................................................. Deferred tax asset ....................................................................................................................................................... Capital adequacy ratio (CAR) ....................................................................................................................................... CET1 ratio including unaudited (positive) retained earnings and expected dividends ............................................... Pillar II-R capital requirement ............................................................................................................ Combined buffer requirement .......................................................................................................... T1 ratio ......................................................................................................................................................................... T1 ratio including unaudited (positive) retained earnings and expected dividends ................................................... Systemic risk buffer (SRB) ............................................................................................................................................. Goodwill and intangibles ............................................................................................................................................. Othe r unaudited (positive) changes to total equity in current period ........................................................................ 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 ..................................................................................................................................................................... Capital adequacy ratio (CAR) including unaudited (positive) retained earnings and expected dividends ................. Credit risk ..................................................................................................................................................................... Total own funds including unaudited (positive) retained earnings and expected di vidends ..................................... Deductions from Tier 2 capital ..................................................................................................................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 23 ===== SIDA 27 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 14 35. Leverage ratio 31.3.2026 31.12.2025 335,017 315,613 4,153 3,331 1,052 1,093 Total exposure measure 340,221 320,037 44,858 44,687 13.2% 14.0% 36. Minimum requirements for own funds and eligible liabilities (MREL) Own funds and eligible liabilities 31.3.2026 31.12.2025 44,858 44,687 5,953 5,416 58,786 59,096 Total own funds and eligible liabilities 109,598 109,199 MREL-RWEA and CBR 192,734 186,767 56.7% 58.5% 21.9% 21.9% 6.4% 6.4% MREL-RWEA requirement including CBR 28.3% 28.3% MREL-TEM 340,221 320,037 32.1% 34.1% 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) .................................................................................................................... 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 March are 21.9% of MREL-RWEA and 6% of MREL- TEM. Leverage ratio ............................................................................................................................................................... Tier 1 capital ................................................................................................................................................................. Total exposure measure ............................................................................................................................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 24 ===== SIDA 28 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 36 Risk management 37. Hedging 38. 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 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. 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. This 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 2025 Consolidated Financial Statements for more information on the Group's impairment policy. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 25 ===== SIDA 29 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 38 39. Maximum exposure to credit risk Public Financial Corporate On-balance sheet exposure entities institutions customers Individuals 31.3.2026 28,540 - - - 28,540 - 5,336 - - 5,336 6 3 152,300 64,625 216,933 36,592 3,165 189 - 39,947 - 3,594 553 90 4,237 2 682 12,886 39 13,609 65,140 12,781 165,928 64,754 308,602 Off-balance sheet exposure 16 6 8,976 932 9,930 - - 1,054 - 1,054 Maximum exposure to credit risk 65,156 12,786 175,958 65,686 319,586 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 40. 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% 5.0% 4.0% 6.4% Inflation CPI index 3.4% 3.0% 5.8% 3.4% 3.0% 5.8% Assigned weight 55.0% 10.0% 35.0% 55.0% 10.0% 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% 4.9% 2.3% 3.6% 5.9% Inflation CPI index 2.5% 4.4 % 5.9% 7.5% 2.5% 4.4% 5.9% 7.5% Assigned weight 50.0% 15.0% 25.0% 10.0% 50.0% 15.0% 25.0% 10.0% 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 2025 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 ....................................................................... 31.12.2025 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. 31.3.2026 31.3.2026 31.12.2025 Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 26 ===== SIDA 30 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 40 40. Credit quality of financial assets (cont. ) a. Impairment Listed Unlisted Claim due to expected Carrying Total securities and securities and Residential Commercial Industrial Unsecured 31.3.2026 value credit loss amount % collateral Deposits liquid funds other funds real estate real estate Automobiles equipment Guarantees Other claim value 6 (0) 6 0.0% 8 - - - - - 8 - - - 1 3 (0) 3 0.0% - - - - - - - - - - 3 Corporate Real estate activities .................................. 55,101 (303) 54,798 25.3% 91,918 56 371 669 35,792 52,840 1,042 375 100 673 842 Construction .............................................. 25,469 (156) 25,313 11.7% 48,613 5 - - 25,001 10,320 6,540 5,201 - 1,5 45 206 Service Activities ........................................ 16,172 (70) 16,102 7.4% 30,904 45 51 304 1,073 8,101 17,317 3,218 0 79 6 237 Accommodat. and Food Service Activit. ..... 14,327 (76) 14,252 6.6% 26,296 60 - - 3,872 21,698 543 78 0 45 273 Activities of Holding Companies ................. 14,276 (484) 13,791 6.4% 60,439 205 902 15,727 9,904 13,551 175 143 688 19,144 887 Act. of Hold. Comp. - Securities Financing .. 9,233 (282) 8,951 4.1% 16,020 517 14,326 252 925 - - - 0 - 682 Other ......................................................... 19,181 (88) 19,093 8.8% 38,633 187 4,155 3,703 3,138 10,763 7,866 5,033 115 3,673 2,086 65,538 (914) 64,625 29.8% 126,719 32 993 759 76,920 2,167 43,228 1,297 - 1,324 8,945 Total 219,306 (2,373) 216,933 100.0% 439,551 1,106 20,798 21,413 156,624 119,440 76,720 15,345 903 27,201 14,162 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 fund s other funds real estate real estate Automobile s equipment Guarantees 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 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 Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 27 ===== SIDA 31 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 40 40. Credit quality of financial assets (cont.) b. 31.3.2026 Loans to customers: Stage 1 Stage 2 Stage 3 FVTPL Total 143,406 1,544 - 4,002 148,951 38,834 4,482 - - 43,316 10,518 4,235 - 182 14,935 486 387 - 135 1,008 4 0 10,408 - 10,413 477 207 - - 684 Gross carrying amount 193,724 10,856 10,408 4,318 219,306 (348) (234) (1,791) 0 (2,373) Book value 193,376 10,622 8,617 4,318 216,933 Loan commitments, guarantees and unused credit facilities: Stage 1 Stage 2 Stage 3 FVTPL Total 7,918 3 - 112 8,033 2,499 20 - - 2,520 250 74 - 1 325 2 0 - - 2 2 - 4 - 6 98 - - - 98 Total off-balance sheet amount 10,769 97 4 113 10,984 (7) (0) (1) - (8) Net off-balance sheet amount 10,762 97 3 113 10,976 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 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 ............................................................................................. Exp ected credit loss ............................................................................. Credit quality band I ............................................................................. In default .............................................................................................. Non-rated ............................................................................................. Expected credit loss ............................................................................. Credit quality band I ............................................................................. Credit quality band II ............................................................................ Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 28 ===== SIDA 32 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 40 40. Credit quality of financial assets (cont.) c. Breakdown of loans to customers into not past due and past due Claim Expected Carrying 31.3.2026 value credit loss amount 203,119 (567) 202,552 5,190 (91) 5,099 4,485 (129) 4,356 1,896 (38) 1,858 1,311 (511) 800 1,374 (193) 1,181 1,931 (844) 1,087 Total 219,306 (2,373) 216,933 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 d. Allowance for expected credit loss on loans to customers and loan commitments, guarantees and unused credit facilities 31.3.2026 Expected credit loss allowance total Sta ge 1 Sta ge 2 Sta ge 3 Total Transfers of financial assets: Balance as at 1 January 2026 392 204 1,749 2,345 48 (30) (18) - (18) 68 (50) - (8) (31) 39 - (94) 20 133 59 107 27 71 206 (72) (24) (83) (179) - - (50) (50) Balance as at 31 March 2026 355 234 1,792 2,381 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 2026 379 203 1,747 2,329 47 (30) (17) - (18) 68 (50) - (8) (31) 39 - (87) 20 133 66 107 27 71 205 (72) (24) (82) (177) - - (50) (50) Balance as at 31 March 2026 348 234 1,791 2,373 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 d ue 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 .................................................................................................................................. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 29 ===== SIDA 33 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 40 40. 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 2026 13 0 3 16 1 (0) (1) - (0) 0 (0) - (0) (0) 0 - (7) (0) (0) (7) 0 - - 0 (0) (0) (0) (1) Balance as at 31 March 2026 7 0 1 8 31.12.2025 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 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 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 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) ..................................................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 30 ===== SIDA 34 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 40 41. Loan-to-value a. General b. Breakdown 31.3.2026 % 31.12.2025 % 62,667 28.9% 66,278 31.9% 83,020 38.3% 70,430 33.9% 51,821 23.9% 44,615 21.5% 3,852 1.8% 6,707 3.2% 1,849 0.9% 3,814 1.8% 849 0.4% 2,371 1.1% 1,292 0.6% 2,231 1.1% No or negligible collateral: 11,584 5.3% 11,112 5.4% Total 216,933 100.0% 207,560 100.0% 42. Collateral against exposures to derivatives Fixed Variable Other income income Real fixed Deposits securities securities estate assets Other 31.3.2026 1,721 96 249 - - - 2,066 429 41 1,250 - - - 1,721 62 18 113 - - - 192 Total 2,212 155 1,612 - - - 3,979 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 43. Large exposures 31.3.2026 31.12.2025 Large exposures before risk adjusted mitigation Number Amount Number Amount 3 14,803 2 9,610 0 - 0 - 0 - 0 - Total 3 14,803 2 9,610 0 - 0 - 1 4,781 1 4,662 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 34). 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% ........................................................................................................................ Othe r 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. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 31 ===== SIDA 35 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 44. Liquidity risk a. Definition b. Management 31.3.2026 Unweighted Weighted Unweighted Weighted Unweighted Weighted 57,090 57,090 1,410 1,340 59,074 58,975 2,735 2,325 1,436 1,149 4,689 3,888 - - 5,182 2,332 5,758 2,591 - - - (2,587) - - Total high quality liquid assets (HQLA) 59,825 59,415 8,028 2,233 69,521 65,454 142,789 35,223 4,238 1,573 150,182 38,094 109 109 - - 265 265 7,781 2,937 1,613 139 15,269 3,516 Total outflows (0-30 days) 150,678 38,268 5,851 1,711 165,717 41,875 284 284 980 980 7,956 7,956 10,853 7,430 374 373 15,579 11,417 - - - (70) - - Total inflows (0-30 days) 11,137 7,714 1,354 1,283 23,535 19,373 194% 522% 291% 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% 31.3.2026 31.12.2025 133% 137% 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 ................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 32 ===== SIDA 36 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 44. Liquidity risk (cont.) c. LCR deposit categories 31.3.2026 Run off date 0-30 days Over 30 days Total 5%-100% 107,610 17,368 124,978 5%-100% 8,607 223 8,830 20%-40% 10,701 70 10,771 40% 2,767 5 2,772 100% 20,668 19,625 40,292 2,007 29 2,035 Total 152,359 37,320 189,678 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 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 ................................................................................................................. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 33 ===== SIDA 37 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 44. Liquidity risk (cont.) d. Maturity analysis of financial assets and financial liabilities 31.3.2026 Up to 1 1-3 3-12 1-5 Over 5 Gross inflow/ Carrying Financial assets by type month months months years years (outflow) amount Non-derivative assets 28,555 - - - - 28,555 28,540 5,336 0 - 0 - 5,336 5,336 27,359 18,355 68,358 116,813 77,558 308,442 216,933 9,435 - 12,997 14,380 3,135 39,947 39,947 18,833 - 3,906 - - 22,739 22,739 5,329 - - - - 5,329 5,329 11,636 196 1,562 213 2 13,609 13,609 106,483 18,550 86,823 131,406 80,695 423,957 332,433 Derivative assets Inflow ....................................................... 5, 012 16,611 14,432 20,910 - 56,965 Outflow .................................................... (4, 003) (16,197) (13,762) (18,736) - (52,698) 1,009 414 670 2,175 - 4,267 4,237 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 (152,534) (21,834) (12,187) (3,879) (739) (191,173) 189,678 - (82) (1,120) (6,867) - (8,069) 7,378 (265) (8,841) (7,644) (60,599) (2,662) (80,012) 72,714 - (98) (274) (1,488) (9,516) (11,376) 6,080 (616) - - - - (616) 616 (493) - - - - (493) 493 (7,093) (5,304) (1,165) (1,745) - (15,307) 15,285 (161,002) (36,158) (22,391) (74,578) (12,918) (307,047) 292,245 Derivative liabilities Inflow ....................................................... 2, 831 8,326 1,227 10,808 - 23,193 Outflow .................................................... (3, 023) (8,387) (1,230) (11,131) - (23,771) (192) (60) (3) (323) - (578) 548 Unrecognised financial items Inflow ....................................................... 185 728 1,934 8,485 90 11,423 Outflow .................................................... (9,930) - - - - (9,930) Inflow ....................................................... - 144 852 51 7 1,054 Outflow .................................................... (1,054) - - - - (1,054) (10,799) 872 2,787 8,536 97 1,493 Summary 106,483 18,550 86,823 131,406 80,695 423,957 1,009 414 670 2,175 - 4,267 (161,002) (36,158) (22,391) (74,578) (12,918) (307,047) (192) (60) (3) (323) - (578) unrecognised items (53,702) (17,255) 65,099 58,679 67,777 120,599 (10,799) 872 2,787 8,536 97 1,493 Net assets (liabilities) (64,501) (16,382) 67,885 67,215 67,874 122,092 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 Fix ed income securities ................................. Securities used for hedging ........................... Loans to customers ........................................ Other assets ................................................... Loans to credit institutions ............................ Deposits ........................................................ Borrowings ..................................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 34 ===== SIDA 38 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 44. Liquidity risk (cont.) 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 by type Loan commitments 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 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. Der ivative 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 ............................ Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 35 ===== SIDA 39 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 44 45. Market risk a. Definition b. Management 46. Interest rate risk a. Definition b. Management 47. 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 31.3.2026 40 32 324 4,259 880 5,535 - - (44) (157) (415) (616) Net imbalance 40 32 280 4,102 465 4,918 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 b. Sensitivity analysis Shift in 31.3.2026 31.12.2025 basis points Downward Upward Downward Upward 50 14 (15) 43 (40) 100 51 (53) 59 (58) Total 64 (68) 102 (97) 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 46-51 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: Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 36 ===== SIDA 40 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 44 48. Interest rate risk associated with non-trading portfolios a. Breakdown 31.3.2026 Financial assets Up to 1 1-3 3-12 1-5 Over 5 month months months years years Total 28,540 - - - - 28,540 5,336 - - - - 5,336 202,215 3,023 7,664 4,025 5 216,933 3,861 44 13,019 13,889 3,599 34,412 8,418 8,427 - - - 16,845 Financial assets excluding derivatives 248,370 11,494 20,683 17,915 3,604 302,066 14,215 62,977 2,529 30,483 - 110,204 Total 262,585 74,471 23,212 48,398 3,604 412,270 Financial liabilities Up to 1 1-3 3-12 1-5 Over 5 month months months years years Total 159,635 18,096 9,781 2,167 0 189,678 5,250 730 - 1,399 - 7,378 18,183 15,154 36 36,884 2,457 72,714 - 3,237 167 2,676 - 6,080 82 - - 163 - 245 Financial liabilities excluding derivatives 183,149 37,217 9,984 43,289 2,457 276,096 16,290 83,771 2,462 - - 102,523 Total 199,439 120,988 12,446 43,289 2,457 378,618 Total interest repricing gap 63,146 (46,516) 10,765 5,110 1,147 33,652 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 mont h mont hs mont hs years years Tota l 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 b. Sensitivity analysis Shift in 31.3.2026 31.12.2025 Currency basis points Downward Upward Downward Upward 50 42 (38) 53 (49) 100 153 (151) 201 (197) 20 (2) 2 (6) 6 Total 193 (187) 248 (240) Issued bonds ..................................................................... Other liabilities ................................................................. Subordinated liabilities .................................................... Loans to customers .......................................................... Fixed income securities .................................................... Unit shares in cash equivalent liquidity funds ................. Borrowings ....................................................................... Effect of derivatives .......................................................... Issued bonds ..................................................................... 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'sp r e-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 .................................................... Other liabilities ................................................................. Effect of derivatives .......................................................... Unit shares in cash equivalent liquidity funds ................. Effect of derivatives .......................................................... Deposits ........................................................................... Borrowings ....................................................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 37 ===== SIDA 41 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 44 49. Exposure towards changes in the CPI a. Definition b. Management c. Balance of CPI linked assets and liabilities 31.3.2026 31.12.2025 29,826 31,407 (25,707) (24,971) Total 4,119 6,436 d. Sensitivity to changes in CPI 31.3.2026 31.12.2025 -1% 1% -1% 1% (31) 31 (25) 25 (34) 34 (35) 35 (213) 213 (233) 233 (20) 20 (20) 20 2 (2) 2 (2) 95 (95) 91 (91) 100 (100) 98 (98) 61 (61) 58 (58) (41) 41 (64) 64 The effect on equity would be the same. 50. 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 31.3.2026 3m 2026 31.12.2025 3m 2025 143.6 146.3 143.9 145.6 124.9 124.7 138.2 138.5 165.4 168.5 173.3 174.3 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 March 2026 and 31 December 2025 the Group's position in foreign currencies was within those limits. EUR/ISK ........................................................................................................................... USD/ISK .......................................................................................................................... GBP/ISK ........................................................................................................................... The Group applies hedge accounting according to IAS 39 against translation of foreign operations. Currency swap agreements are used as a hedge instrument against translation difference arising from foreign operations. Short positions ............................................................................................................... Deposits .......................................................................................................................... Subordinated liabilities .................................................................................................. Given the net balance of CPI linked assets and liabilities, a 1% change in the CPI would, with other things constant, result in the following changes to the Group's pre-tax profit. Government bonds ........................................................................................................ Other fixed income securities ........................................................................................ Loans to customers ........................................................................................................ Derivatives ...................................................................................................................... Exposure towards changes in CPI is the risk that fluctuations in the Icelandic Consumer Price Index (CPI) will affect the balance and cash flow of indexed financial instruments. The Group is exposed to inflation indexation of assets and liabilities den ominated in ISK. All indexed assets and liabilities are valued according to the CPI measure at any given time and changes in CPI are recognised in the income statement. The Group controls its indexation risk through derivatives contracts and sales and purchases of indexed bonds, mostly government bonds, and thus keeps its exposure to the CPI within the limits set by the ALCO committee. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 38 ===== SIDA 42 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 50 50. Currency risk (cont.) e. Breakdown of assets and liabilities denominated in foreign currencies 31.3.2026 Assets Other EUR USD GBP SEK currencies Total 1 1 1 - - 4 982 318 3,188 138 567 5,194 2,956 931 42,431 208 - 46,526 - 82 - - - 82 8,490 230 10,752 0 16 19,488 38 641 62 191 67 999 - - 2,226 - - 2,226 1,091 704 831 18 12 2,655 Assets excluding derivatives 13,559 2,906 59,490 555 663 77,173 60,709 4,296 - 17,021 14,825 96,850 Total 74,267 7,202 59,490 17,576 15,487 174,023 Liabilities Other EUR USD GBP SEK currencies Total 4,640 2,950 672 47 169 8,479 - - 5,117 - - 5,117 29,793 - - 17,540 9,496 56,829 2,149 1,260 1,092 - 8 4,509 Liabilities excluding derivatives 36,583 4,210 6,882 17,586 9,674 74,934 37,533 2,934 51,978 14 5,326 97,785 Total 74,115 7,144 58,860 17,601 14,999 172,719 Other Net currency position EUR USD GBP SEK currencies Total 74,267 7,202 59,490 17,576 15,487 174,023 (74,115) (7,144) (58,860) (17,601) (14,999) (172,719) 841 - - - - 841 Total 993 57 631 (24) 488 2,144 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 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 ............................................................................. Issue d 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 ............................................................................. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 39 ===== SIDA 43 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 50 50. Currency risk (cont.) f. Sensitivity to currency risk 31.3.2026 31.12.2025 Assets and liabilities denominated in foreign currencies -10% +10% -10% +10% 99 (99) 81 (81) 6 (6) 8 (8) 63 (63) 60 (60) (2) 2 2 (2) 49 (49) 25 (25) Total 214 (214) 174 (174) 51. Equity risk a. Definition b. Sensitivity analysis of equity risk 31.12.2025 -10% +10% -10% +10% (103) 103 (100) 100 (315) 315 (310) 310 (171) 171 (156) 156 Total (589) 589 (565) 565 52. 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. 31.3.2026 Listed shares ........................................................................................................................ Unlisted shares .................................................................................................................... Unlisted unit shares in funds ............................................................................................... SEK ....................................................................................................................................... The individual business units within the Group are primarily responsible for managing their respective operational risk. The risk management unit is furthermore responsible for identifying, monitoring and reporting the Group's operational risk. Operational risk can be reduced through staff training, process re-design and enhancement of the control environment. The risk management unit monitors operational risk by tracking loss events, quality deficiencies, potential risk indicators and other early-warning signals. The unit takes an active role in internal control and quality management. Operational risk is the risk of direct or indirect loss from inadequate or failed internal processes or systems, from human error or external events that affect the Group's reputation and operational earnings. EUR ...................................................................................................................................... USD ...................................................................................................................................... Other currencies .................................................................................................................. Equity risk is the risk that the fair value of equites decreases as the result of changes in the value of shares and other variable income securities in the Group’s portfolio. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 40 ===== SIDA 44 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 52 Financial assets and financial liabilities 53. Accounting classification of financial assets and financial liabilities Manda- 31.3.2026 Fair value torily at Total Financial assets Amortised through fair value carrying cost OCI through P/L amount 28,540 - - 28,540 5,336 - - 5,336 212,615 - 4,318 216,933 - 34,140 5,806 39,947 - - 22,739 22,739 - - 5,329 5,329 - - 3,885 3,885 - 353 - 353 13,609 - - 13,609 Total 260,100 34,493 42,077 336,670 Manda- Fair value torily at Total Financial liabilities Amortised through fair value carrying cost OCI through P/L amount 189,678 - - 189,678 7,378 - - 7,378 72,714 - - 72,714 6,080 - - 6,080 - - 616 616 - - 493 493 - - 548 548 14,992 - 293 15,285 Total 290,842 - 1,951 292,794 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 Derivatives .................................................................................................................. Other liabilities ............................................................................................................ 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 ............................................................................................... Sho rt 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 .................................................................................. Derivatives used for hedge accounting ...................................................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 41 ===== SIDA 45 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 52 54. Financial assets and financial liabilities measured at fair value a. - - - b. c. d. 31.3.2026 Financial assets Carrying Level 1 Level 2 Level 3 amount Mandatorily measured at fair value through profit and loss 4,698 95 1,013 5,806 19,084 1 3,654 22,739 5,329 - - 5,329 - - 4,318 4,318 - 3,885 - 3,885 Measured at fair value through other comprehensive income 34,140 - - 34,140 Derivatives used for hedge accounting - 353 - 353 Total 63,251 4,334 8,985 76,570 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 ...................................................................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 42 ===== SIDA 46 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 52 54. Financial assets and financial liabilities measured at fair value (cont.) 31.3.2026 Financial liabilities Carrying Level 1 Level 2 Level 3 amount Mandatorily measured at fair value through profit and loss 616 - - 616 493 - - 493 - 548 - 548 - - 293 293 Total 1,110 548 293 1,951 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 Derivatives used for hedge accounting - 156 - 156 Total 67,411 3,358 8,237 79,007 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 Total 865 773 641 2,278 e. Shares and Fixed other var. income income Loans to Other 31.3.2026 securities securities customers Derivatives liabilities Total Balance as at 1 January 2026 767 3,594 3,877 (0) (641) 7,596 30 60 106 - 8 205 217 0 396 - - 613 - - (61) - 340 278 Balance as at 31 March 2026 1,013 3,654 4,318 - (293) 8,692 Shares and Fixed other var. income income Loans to Other 31.12.2025 securities securities customers Derivatives liabilities 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 (0) (641) 7,596 Fixed income securities ............................................................................................ 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 ...................................................................................... Reclassification ................................................................. Tota l gains and losses in profit or loss ............................. Additions .......................................................................... Repayments ...................................................................... Total gains and losses in profit or loss ............................. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 43 ===== SIDA 47 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 52 54. Financial assets and financial liabilities measured at fair value (cont.) f. Book value Range 31.3.2026 0-95% 1,013 - 3,654 - 4,318 Total 8,985 Book value Range 31.12.2025 0-95% 767 - 3,594 - 3,877 Total 8,237 g. +10% -10% 101 (101) 365 (365) 432 (432) Total 899 (899) 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 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 Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 44 ===== SIDA 48 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 54 Other information 55. Pledged assets Settlement and Securities 31.3.2026 committed facilities borrowing Total 9,006 - 9,006 14,380 107 14,488 Total 23,387 107 23,494 Settlement and Securities 31.12.2025 committed facilities borrowing Total 9,045 - 9,045 13,659 324 13,984 - 47 47 Total 22,704 372 23,076 56. Related parties a. Definition of related parties b. Arm's length c. Balances with related parties 31.3.2026 Assets Liabilities 128 275 - 23 Total 128 298 31.12.2025 Assets Liabilities 130 243 - 39 Total 130 283 d. Transactions with related parties Interest Interest Other Other 3m 2026 income expense income expense 3 2 0 - - - - 76 Total 3 2 0 76 Interest Interest Other Other 3m 2025 income expense income expense - 1 1 0 - - - 76 Total - 1 1 76 Associates .......................................................................................................................................................................... Associates ......................................................................................................................... Management ...................................................................................................................................................................... Management .................................................................................................................... Associates ......................................................................................................................... Management ...................................................................................................................................................................... Associates .......................................................................................................................................................................... Loans to customers ................................................................................................................................... Fixed income securities ............................................................................................................................. 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. 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. 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 23, 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 .................................................................................................................... Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 45 ===== SIDA 49 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 54 57. Other matters Tax treatment of warrants sold by the Bank 58. Events after the reporting date Merger with Arion banki hf. will not take place 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 instrument. 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 15 April the preliminary discussions between Kvika banki hf. and Arion banki hf. with the Competition Authority regarding the proposed merger concluded. On that day representatives of Kvika banki and Arion banki met with representatives of the Competition Authority, during which the authority presented its position following the completion of the preliminary discussions process. In light of the position expressed by the Competition Authority at the meeting, the Boards of Directors of Kvika banki and Arion banki concluded that the proposed merger cannot proceed. The Boards of Directors therefore decided to discontinue the merger plans that were announced in a Stock Exchange notice dated 6 July 2025. Condensed Interim Consolidated Financial Statements 31 March 2026 - Unaudited 46