===== SIDA 1 ===== Condensed Interim Consolidated Financial Statements 30 September 2025 ===== SIDA 2 ===== Condensed Interim Consolidated Financial Statements 30 September 2025 Kvika banki hf.  Katrínartún 2  105 Reykjavík  Iceland  Reg. no. 540502-2930 ===== SIDA 3 ===== Kvika banki hf. Table of Contents Page 1 2 5 6 7 8 10 11 12 14 16 19 27 43 47 Condensed Interim Consolidated Income Statement ...................................................................................................... Endorsement and Statement by the Board of Directors and the CEO ............................................................................. Kvika highlights ................................................................................................................................................................. Condensed Interim Consolidated Statement of Comprehensive Income ...................................................................... Condensed Interim Consolidated Statement of Financial Position .................................................................................. Condensed Interim Consolidated Statement of Changes in Equity ................................................................................. Notes to the Condensed Interim Consolidated Financial Statements ............................................................................. - 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 30 September 2025 - Unaudited ===== SIDA 4 ===== Highlights 30.09.2025 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. Kvika’s shares are publicly traded on the Nasdaq Iceland. Kvika operates in four business segments: Commercial Banking, Investment Banking, Asset Management and UK operations, the latter through subsidiaries Kvika Asset Management and Kvika Limited. Kvika’s operations are underpinned by a distinctive brand strategy. Retail financial services are delivered through specialized consumer brands such as Auður, Aur, Netgíró, and Lykill, each focused on a specific customer need, while corporate and institutional services are provided under the Kvika and Kvika Asset Management brands. Key figures ISK m. 9M 2025 9M 2024 Net operating income 14,439 12,519 Profit before tax, continuing operations 4,695 4,217 RoTE, continuing operations 14.9% 18.1% 30.09.2025 31.12.2024 Total assets 352,743 354,594 Loans to customers 195,685 150,203 Deposits 178,406 163,378 LCR 659% 360% NSFR 148% 144% Q3 24 Q4 24 Q1 25 Q2 25 4.5 4.7 4.4 5.1 Q3 25 4.9 Net operating income ISK bn. Loans to customers ISK bn. Total capital ratio (%) LCR ratio (%) 0 50 100 150 200 250 0 100 50 150 200 89.0% Q3 24 92.0% Q4 24 95.5% Q1 25 95.5% Q2 25 146 150 161 172 Q3 25 109.7% 196 Loans to deposits* 0 5 10 15 20 25 30 35 40 45 50 0 5 10 15 20 25 20.6% Q3 24 19.9% Q4 24 21.0% Q1 25 20.5% Q2 25 23.5% 22.8% 23.9% 23.3% Q3 25 20.4% 23.0% CET1 -500 0 500 1.000 1.500 2.000 2.500 3.000 0 100 200 300 400 500 600 700 800 900 1.000 148% Q3 24 144% Q4 24 159% Q1 25 160% Q2 25 780% 360% 279% 910% Q3 25 148% 659% NSFR 34.7% 12.8% 18.6% 10.3% 23.6% Commercial Banking Investment Banking Asset Management UK Treasury and supporting units *Money market deposits were previously presented as part of borrowings but are now presented as part of deposits. Comparative figures have been restated. Reference is made to note 2 in Kvika’s Consolidated Financial Statements dated 31.12.2024 for further information Diversified operations Revenues by segment 9M 2025 ===== SIDA 5 ===== Kvika banki hf. Endorsement and Statement by the Board of Directors and the CEO About the Bank Operations during the period in 2025 Financial position Merger discussions with Arion banki hf. Kvika’s foray into the mortgage market Kvika banki has achieved several significant funding milestones in 2025, led by the successful issuance of its inaugural euro-denominated bond on 23 May—a €200 m illion 4-year Senior Preferred note. This marked the Bank’s entry into the European bond market and a key step in diversifying its funding base. The transaction followed a multi-day investor process, gathering over €350 m illion in orders and pricing at MS+ 250bps, with strong demand from the UK, Continental Europe, the Middle East and others. Earlier in the year, in January, Kvika completed a dual-currency Nordic bond issuance for NOK/SEK 1,000 million priced at 200bps over STIBOR and NIBOR. In June, Kvika also strengthened its presence in the domestic market with an ISK 5 billion bond issuance priced at a 1.14% spread over 3-month REIBOR. At the end of May 2025, Kvika’s well-known savings brand A uður entered the mortgage market with a new housing loan offering. The loans are non- indexed with a variable interest rates which are among the lowest compared to similar products. Auður emphasizes transparency, flexible terms, and helping homeowners build equity. Known for offering market-leading savings rates to over 50,000 customers, Auður now aims to increase competition in housing finance, continuing its track record of delivering better terms for consumers. At the end of the period mortgages amounted to ISK 21 billion. 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 30 September 2025. 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, and Lykill, each focused on a specific customer need, while corporate and institutional services are provided under the Kvika an d Kvika Asset Management brands. 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. 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 third quarter amounted to ISK 1,969 million (Q3 2024: ISK 1,813 m illion) and for the first nine months of the year it amounted to ISK 4,695 million (9m 2024: ISK 4,217 m illion). Pre-tax annualised return on average tangible equity (RoTE) from continuing operations was 17.8% for the quarter (Q3 2024: 22.4%) and 14.9% for the first nine months of the year (9m 2024: 18.1%) based on the average tangible equity position of Kvika net of TM in the period. Tangible equity is the equity of shareholders of Kvika net of deferred tax assets and intangible assets. Profit after taxes, including discontinued operations, for the third quarter amounted to ISK 1,472 million (Q3 2024: ISK 2,363 million) and for the first nine months of the year it amounted to ISK 4,998 million (9m 2024: ISK 4,703 million). According to the Consolidated Statement of Financial Position, equity at the end of the period amounted to ISK 67,508 million (31.12. 2024: ISK 89,517 million), and total assets amounted to ISK 352,743 million (31.12.2024: ISK 354,594 million). The Group's statement of financial position decreased by ISK 1.9 billion or 0.5% during the first nine months of 2025, the reduction was mainly due to the sale of TM Tryggingar hf. in Q1 2025. Loans to customers grew by ISK 45.5 billion or 30.3% during the period. The Group's net operating income during the first nine months was ISK 14,439 million (9m 2024: ISK 12,519 million). Net interest income amounted to ISK 8,831 million (9m 2024: ISK 7,183 million). Net fee income amounted to ISK 5,026 million (9m 2024: ISK 4,536 million). Other net operating income amounted to ISK 581 million (9m 2024: ISK 800 million). Administrative expenses during the period amounted to ISK 8,811 million (9m 2024: ISK 7,744 million). During the period, the Group had a net impairment charge of ISK 340 million (9m 2024: ISK 514 million). In March 2025, Kvika completed the acquisition of the remaining management shares in Ortus Secured Finance ltd. ("OSF"). The transaction s upports refinancing and streamlining of Kvika’s UK operations. An expense of ISK 580 million was recognized in the income statement, reflecting the revaluat ion of the contingent consideration for the remaining purchase price of OSF. On 6 July 2025, the Board of Directors of Kvika banki hf. approved a request from the Board of Arion banki hf. ("Arion") to initiate formal merger discussions between the two banks. Under the proposed terms, Kvika’s shareholders would receive new shares in Arion representing approximately 26% ownership in the combined entity. The objective of the proposed merger is to combine the strengths of both institutions to form a robust financial entity offering comprehensive services to customers. The parties have initiated preliminary discussions with the Icelandic Competition Authorit y, where the aims and anticipated benefits of the merger for customers and the Icelandic financial market will be presented. The parties anticipate that the preliminary discussions, finalization of contracts, and due diligence reviews will be completed in the coming months. Subject to a positive outcome of these discussions, the merger will be formally announced to regulators and submitted for approval at the shareholders’ meetings of both companies. Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 2 ===== SIDA 6 ===== Kvika banki hf. Endorsement and Statement by the Board of Directors and the CEO TM sale finalised Capital adequacy and dividends Risk management On 28 February 2025 Kvika and Landsbankinn hf. ("Landsbankinn") finalised the sale of 100% of TM tryggingar hf. ("TM") share capital to Landsbankinn. The handover of the insurance company took place simultaneously, with Landsbankinn paying Kvika the agreed purchase price upon completion. As previously communicated by Kvika on 30 May 2024, the final purchase price has been adjusted based on changes in TM’s tangible equity from the beginning of 2024 until the closing date, 28 February 2025. The initially agreed purchase price was ISK 28.6 b illion, but the final purchase price amounted to ISK 32.2 billion, reflecting the purchase price adjustment for 2024 and for the period 1 January to 28 February 2025. Following the completion of the sale of TM in February 2025, the Group is no longer designated by the Financial Supervisory Authority of the Central Bank of Iceland as a financial conglomerate as defined in Article no. 3 of Act no. 61/2017 on Additional Supervision of Financi al Conglomerates. 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 39-54 on the analysis of exposure to various types of risk. The Bank's 2025 A nnual General Meeting ("AGM") approved a motion from the Board of Directors ("BOD") to renew the BOD's authorisation from the Bank's 2024 AGM to purchase up to 10% of own shares subject to regulatory approvals. This authorisation applies until the next AGM in 2026. In February 2025, based on authorisation from the AGM and approval from the Financial Supervisory Authority of the Central Bank of Iceland, the BOD decided to establish a buy-back programme to carry out the purchase of shares for a total consideration amount of ISK 5 billion but for no higher nominal amount than 400,000,000 shares. Following the announcement of merger discussions with Arion banki hf., the BOD has decided that no further share buybacks will be carried out under the current buyback programme while merger discussions between Kvika and Arion banki h f. are ongoing. The MREL requirements as of 30 September 2025, including the combined buffer requirement, are 28.4% of RWEA and 6.0% of total exposure measure ("TEM"). The Group comfortably exceeded both at the end of Q3 with ratios of 50.5% and 33.2% respectively. This October, the Resolution Authority approved an updated resoluƟon plan for Kvika, seƫng a new MREL-RWEA requirement of 28.3% including combined buffer requirement. Kvika continues to maintain a strong capital position, significantly above regulatory requirements. At the end of September 2025, the Group’s capit al adequacy ratio was 22.5% and CET1 ratio was 19.8%. This compares to regulatory requirements of 17.9% and 12.9%, including capital buffers. Kvika has prepared for the upcoming implementation of Regulation (EU) No. 2024/1623 of the European Parliament and of the Council (CRR III). Based on the assumptions currently available, Kvika estimates that the implementation will lead to around 14% reduction in the Bank’s risk-weighted exposure amount, based on data as of 30 September 2025. The 2025 AGM also approved a motion from the BOD that a dividend of ISK 5 per share be paid in the year 2025 on 2024 operations and following the receipt of the purchase price for TM. Furthermore, the 2025 AGM also approved a motion from the BOD, based on an approval from the Financial Supervisory Authority of the Central Bank of Iceland, to decrease the share capital of the Bank by 91,073,340 shares by cance lling treasury shares held by the Bank. In April 2025, both the dividend payment and the share capital reduction were carried out. Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 3 ===== SIDA 7 ===== Kvika banki hf. Endorsement and Statement by the Board of Directors and the CEO Statement by the Board of Directors and the CEO Sigurður Hannesson, Chairman Helga Kristín Auðunsdóttir, Deputy Chairman Ingunn Svala Leifsdóttir Guðjón Reynisson Páll Harðarson Chief Executive Officer Ármann Þorvaldsson The Condensed Interim Consolidated Financial Statements of Kvika banki hf. for the period ended 30 September 2025 are electronically certificated b y the Board of Directors and the CEO. The Condensed Interim Consolidated Financial Statements of Kvika banki hf. for the period 1 January to 30 September 2025 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 30 September 2025 and the financial performance of the Group and changes of cash flows for the period 1 January to 30 September 2025. 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 30 September 2025 and confirmed them by the means of their signatures. Reykjavík, 5 November 2025. Board of Directors Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 4 ===== SIDA 8 ===== Kvika banki hf. Amounts are in ISK millions Condensed Interim Consolidated Income Statement For the period 1 January 2025 to 30 September 2025 Notes Q3 2025 Q3 2024 9m 2025 9m 2024 7,589 7,292 22,589 22,060 (4,636) (4,863) (13,757) (14,877) Net interest income 5 2,953 2,429 8,831 7,183 1,711 1,730 5,460 5,022 (141) (178) (433) (487) Net fee and commission income 6 1,571 1,552 5,026 4,536 7 305 403 445 547 25 0 0 22 26 33 70 115 227 Other net operating income 338 474 581 800 Net operating income 4,862 4,454 14,439 12,519 9 (2,740) (2,344) (8,811) (7,744) 11 (153) (261) (340) (514) 12 - (36) (593) (44) Profit before taxes from continuing operations 1,969 1,813 4,695 4,217 13 (351) (288) (1,213) (721) 14 (63) (54) (133) (128) 15 (82) (73) (252) (205) Profit for the period from continuing operations 1,472 1,398 3,097 3,162 Discontinued operations 3 - 965 1,901 1,541 Profit for the period 1,472 2,363 4,998 4,703 Notes Q3 2025 Q3 2024 9m 2025 9m 2024 1,472 2,361 4,998 4,697 24 - 2 - 7 Profit for the period 1,472 2,363 4,998 4,703 Earnings per share 16 0.33 0.50 1.11 1.00 0.33 0.50 1.10 1.00 The notes on pages 12 to 48 are an integral part of these Condensed Interim Consolidated Financial Statements. Other operating income ............................................................................................. Administrative expenses ............................................................................................ Net impairment .......................................................................................................... Revaluation of contingent consideration ................................................................... Share in profit of associates, net of income tax ......................................................... Interest income .......................................................................................................... Interest expense ......................................................................................................... Fee and commission income ...................................................................................... Fee and commission expense .................................................................................... Net financial income .................................................................................................. Diluted earnings per share (ISK per share) ................................................................. Income tax .................................................................................................................. Attributable to the shareholders of Kvika banki hf. ................................................... Attributable to non-controlling interest .................................................................... Special tax on financial institutions ............................................................................ Special tax on financial activity .................................................................................. Basic earnings per share (ISK per share) .................................................................... Profit after tax from discontinued operations ........................................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 5 ===== SIDA 9 ===== Kvika banki hf. Amounts are in ISK millions Comprehensive Income For the period 1 January 2025 to 30 September 2025 Notes Q3 2025 Q3 2024 9m 2025 9m 2024 Profit for the period 1,472 2,363 4,998 4,703 81 34 97 105 7 (0) 18 15 Changes to reserve for financial assets at fair value through OCI 88 34 116 120 (33) 36 (112) 52 55 70 4 172 Total comprehensive income for the period 1,527 2,433 5,001 4,876 Notes Q3 2025 Q3 2024 9m 2025 9m 2024 1,527 2,430 5,001 4,869 - 2 - 7 Total comprehensive income for the period 1,527 2,433 5,001 4,876 The notes on pages 12 to 48 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 30 September 2025 - Unaudited 6 ===== SIDA 10 ===== Kvika banki hf. Amounts are in ISK millions Condensed Interim Consolidated Statement of Financial Position As at 30 September 2025 Assets Notes 30.9.2025 31.12.2024* 17 32,532 18,593 18 9,653 11,530 19 195,685 150,203 20 45,986 64,795 21 30,198 5,432 22 5,676 12,601 23 2,827 1,197 25 133 113 79 - 26 21,155 21,693 27 217 215 404 543 13 1,096 2,273 28 7,100 7,704 3 - 57,702 Total assets 352,743 354,594 Liabilities 46 178,406 163,378 29 6,249 14,390 30 81,891 37,123 31 6,012 5,629 32 125 153 33 453 42 23 183 2,932 427 466 34 11,489 13,635 3 - 27,329 Total liabilities 285,235 265,077 Equity 35 4,417 4,660 43,119 46,750 3,674 9,357 16,220 28,672 Total equity attributable to the shareholders of Kvika banki hf. 67,430 89,439 24 79 79 Total equity 67,508 89,517 Total liabilities and equity 352,743 354,594 * Comparative information has been restated, reference is made to note 2 for further information. The notes on pages 12 to 48 are an integral part of these Condensed Interim Consolidated Financial Statements. Investment properties ........................................................................................................................ Other reserves .................................................................................................................................... Retained earnings ............................................................................................................................... Loans to credit institutions ................................................................................................................. Issued bonds ....................................................................................................................................... Operating lease assets ........................................................................................................................ Cash and balances with Central Bank ................................................................................................ Other assets ........................................................................................................................................ Deferred tax assets ............................................................................................................................. Subordinated liabilities ...................................................................................................................... Derivatives .......................................................................................................................................... Fixed income securities ...................................................................................................................... Shares and other variable income securities ..................................................................................... Securities used for hedging ................................................................................................................ Loans to customers ............................................................................................................................ Investment in associates .................................................................................................................... Intangible assets ................................................................................................................................. Property and equipment .................................................................................................................... Assets classified as held for sale ........................................................................................................ Deposits ............................................................................................................................................. Borrowings ......................................................................................................................................... Non-controlling interest ..................................................................................................................... Short positions held for trading ......................................................................................................... Short positions used for hedging ....................................................................................................... Share capital ....................................................................................................................................... Share premium ................................................................................................................................... Other liabilities ................................................................................................................................... Liabilities associated with assets classified as held for sale .............................................................. Deferred tax liabilities ........................................................................................................................ Derivatives .......................................................................................................................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - 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 30 September 2025 Deficit Trans- Restricted Total share- Non- Share Share Option reduction Fair value lation retained Retained holders' controlling Total 1 January 2025 to 30 September 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 4,998 4,998 - 4,998 97 97 97 18 18 18 (112) (112) - (112) - - - - 116 (112) - 4,998 5,001 - 5,001 220 (5,848) 5,628 - - 44 (44) - - (243) (3,632) (3,875) (3,875) (23,135) (23,135) (23,135) (102) 102 - - Equity as at 30 September 2025 4,417 43,119 7 1,204 (247) (33) 2,744 16,220 67,430 79 67,508 The notes on pages 12 to 48 are an integral part of these Condensed Interim Consolidated Financial Statements. (7,071,985) 43,118,541 7,080 1,236,525 (4,664,123) (32,828) 2,736,648 15,016,466 78,646 Dividend paid to shareholders .................................................................. Transactions with owners of the Bank Share options ............................................................................................ 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 2025 ......................................................................... 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 30 September 2025 - Unaudited 8 ===== SIDA 12 ===== Kvika banki hf. Amounts are in ISK millions Condensed Interim Consolidated Statement of Changes in Equity For the period 1 January 2024 to 30 September 2024 Deficit Trans- Restricted Total share- Non- Share Share Option reduction Fair value lation retained Retained holders' controlling Total 1 January 2024 to 30 September 2024 Notes capital premium reserve reserve reserve reserve earnings earnings equity interest equity 4,722 47,662 174 1,204 (930) 86 3,797 25,172 81,886 72 81,958 4,697 4,697 7 4,703 105 105 105 15 15 15 Translation of foreign operations 52 52 - 52 - - - - 120 52 - 4,697 4,869 7 4,876 2,690 (2,690) - - 7 (7) - - (64) (936) (1,000) (1,000) 33 33 33 Equity as at 30 September 2024 4,658 46,725 206 1,204 (810) 138 6,494 27,171 85,788 79 85,866 The notes on pages 12 to 48 are an integral part of these Condensed Interim Consolidated Financial Statements. Equity as at 1 January 2024 ......................................................................... Total comprehensive income for the period ............................................... Treasury shares acquired as part of a buy-back programme ................... Share options ............................................................................................ Restricted due to subsidiaries and associates ............................................. Transactions with owners of the Bank Restricted due to development costs .......................................................... Other reserves Changes in fair value of financial assets through OCI ................................. Realized net loss transferred to the Income Statement .............................. Profit for the period ..................................................................................... Exchange difference on translation of foreign operations ....................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 9 ===== SIDA 13 ===== Kvika banki hf. Amounts are in ISK millions Condensed Interim Consolidated Statement of Cash Flows For the period 1 January 2025 to 30 September 2025 Cash flows from operating activities Notes 9m 2025 9m 2024* 4,998 4,703 148 41 (22) (26) 1,065 818 (8,831) (7,183) 340 514 1,598 1,055 (1,901) (1,423) - 33 (2,605) (1,468) Changes in: 1,381 - (46,212) (7,689) 18,620 (3,340) (1,070) (437) 6,925 6,163 (1,630) 359 (40) 179 (605) (5,297) 13,892 13,126 383 141 (3,231) 181 (2,207) 1,479 (13,795) 4,863 21,643 20,775 (11,914) (13,164) (196) (485) Net cash (to) from operating activities (6,868) 10,520 Cash flows from investing activities 26 (234) (348) 214 (36) 32,217 - Net cash from (to) investing activities 32,198 (384) Cash flows from financing activities (5,868) (1,811) 44,768 6,528 - (300) (3,875) (1,000) (23,135) - (285) (292) Net cash from financing activities 11,606 3,125 36,935 13,261 22,500 19,856 50 (177) Cash and cash equivalents at the end of the period 17 59,485 32,941 Cash and cash equivalents 17 32,532 25,837 17 (6,546) (5,958) 18 9,230 13,062 21 24,269 - Cash and cash equivalents at the end of the period 59,485 32,941 * Comparative information has been restated, reference is made to note 2 for further information. The notes on pages 12 to 48 are an integral part of these Condensed Interim Consolidated Financial Statements. Interest received .......................................................................................................................................... Acquired own shares .................................................................................................................................... Additions of intangible assets ...................................................................................................................... Net acquisition 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 ..................................................................................................................... Subordinated loans ...................................................................................................................................... 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 ........................................................................................................................ Other adjustments ..................................................................................................................................... Profit for the period ..................................................................................................................................... Adjustments for: Indexation and exchange rate difference ................................................................................................. Share in profit of associates, net of income tax ........................................................................................ Depreciation and amortisation ................................................................................................................. Adjustment relating to assets held for sale ............................................................................................... Shares and other variable income securities - Unit shares in cash equivalent liquidity funds ................... Cash and balances with Central Bank .......................................................................................................... Loans to credit institutions - Bank accounts ................................................................................................ Restricted balances with Central Bank - fixed reserve requirement ........................................................... Net interest income ................................................................................................................................... Income tax and special tax on financial activity and institutions ............................................................. Net impairment ......................................................................................................................................... Other assets ............................................................................................................................................... Operating lease assets ............................................................................................................................... Derivatives - liabilities ............................................................................................................................... Deposits .................................................................................................................................................... Short positions ........................................................................................................................................... Other liabilities .......................................................................................................................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 10 ===== SIDA 14 ===== 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 ............................................................................ 12 39 Hedging ........................................................................................... 27 2 Basis of preparation ..................................................................... 12 40 Credit risk - overview ...................................................................... 27 3 Discontinued operations .............................................................. 13 41 Maximum exposure to credit risk .................................................. 28 42 Credit quality of financial assets .................................................... 28 Segment information 43 Loan-to-value ................................................................................. 33 4 Business segments ....................................................................... 14 44 Collateral against exposures to derivatives ................................... 33 45 Large exposures .............................................................................. 33 Income statement 46 Liquidity risk ................................................................................... 34 5 Net interest income ...................................................................... 16 47 Market risk ...................................................................................... 38 6 Net fee and commission income .................................................. 16 48 Interest rate risk ............................................................................. 38 7 Net financial income .................................................................... 17 49 Interest rate risk associated with trading portfolios ...................... 38 8 Foreign currency exchange difference ......................................... 17 50 Interest rate risk associated with non-trading portfolios .............. 39 9 Administrative expenses .............................................................. 17 51 Exposure towards changes in the CPI ............................................ 40 10 Salaries and related expenses ...................................................... 17 52 Currency risk ................................................................................... 40 11 Net impairment ............................................................................ 17 53 Equity risk ....................................................................................... 42 12 Revaluation of contingent consideration ..................................... 18 54 Operational risk .............................................................................. 42 13 Income tax .................................................................................... 18 14 Special tax on financial activity .................................................... 18 Financial assets and liabilities 15 Special tax on financial institutions .............................................. 18 55 Accounting classif. of financial assets and financial liabilities ....... 43 16 Earnings per share ........................................................................ 18 56 Financial assets and financial liabilities measured at fair value .... 44 Statement of Financial Position 17 Cash and balances with Central Bank .......................................... 19 Other information 18 Loans to credit institutions ........................................................... 19 57 Pledged assets ................................................................................ 47 19 Loans to customers ...................................................................... 19 58 Related parties ............................................................................... 47 20 Fixed income securities ................................................................ 19 59 Others matters ............................................................................... 48 21 Shares and other variable income securities ............................... 20 60 Events after the reporting date ...................................................... 48 22 Securities used for hedging .......................................................... 20 23 Derivatives .................................................................................... 20 24 Group entities ............................................................................... 21 25 Investment in associates .............................................................. 21 26 Intangible assets ........................................................................... 21 27 Operating lease assets .................................................................. 22 28 Other assets .................................................................................. 22 29 Borrowings ................................................................................... 22 30 Issued bonds ................................................................................. 23 31 Subordinated liabilities ................................................................ 23 32 Short positions held for trading ................................................... 23 33 Short positions used for hedging ................................................. 24 34 Other liabilities ............................................................................. 24 35 Share capital ................................................................................. 24 36 Capital adequacy ratio (CAR) ........................................................ 25 37 Leverage ratio ............................................................................... 26 38 Minimum requirements for own funds and eligible liabilities (MREL) ....................................................... 26 Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 11 ===== SIDA 15 ===== 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 - - - - - - - shared based payment is accounted for in accordance with IFRS 2; - - c. Functional and presentation currency d. Going concern e. Estimates and judgements f. Relevance and importance of notes to the reader derivatives are measured at fair value; short positions are measured at fair value. investment properties are measured at fair value; certain loans to customers which are measured at fair value; contingent consideration is measured at fair value; and Information about areas of estimation uncertainty and critical judgements made by management in applying accounting policies that can have a significant effect on the amounts recognised in the Condensed Interim Consolidated Financial Statements, is provided in the Consolidated Financia l Statements as at and for the year ended 31 December 2024. 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 on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period and future periods if the revision affects both current and future periods. Kvika banki hf. ("Kvika" or the "Bank") is a limited liability company incorporated and domiciled in Iceland, with its registered office at Katrínart ún 2, Reykjavík. The Bank operates as a bank based on Act No. 161/2002, on Financial Undertakings, and is supervised by the Financial Supervisory Authority of the Central Bank of Iceland ("FME"). Following the completion of the sale of TM in February 2025, the Group is no longer designated by the FME as a financial conglomerate as defined in Article no. 3 of Act no. 61/2017 on Additional Supervision of Financial Congl omerates. The Condensed Interim Consolidated Financial Statements were approved and authorised for issue by the Board of Directors and the CEO on 5 November 2025. 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 30 September 2025 comprise Kvika banki hf. and its subsidiaries (together referred to as the Group). The Group operates four business segments, Asset Management, Commercial Banking, Investment Banking and UK operations. Kvika is a financial services company 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. 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 30 September 2025. Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 12 ===== SIDA 16 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 0 g. Change in presentation Restated 31.12.2024 Reclassified 31.12.2024 Assets: 28,319 (9,726) 18,593 - 11,530 11,530 9,507 (1,804) 7,704 316,768 - 316,768 354,594 - 354,594 Liabilities and Equity: 265,077 - 265,077 89,517 - 89,517 354,594 - 354,594 Restated 9m 2024 Reclassified 9m 2024 Lines in the Consolidated Statement of Cash Flows (3,164) (2,133) (5,297) 23,681 (3,825) 19,856 38,899 (5,958) 32,941 3. Discontinued operations 30.9.2025 31.12.2024 - 57,702 - (27,329) - (55) Net assets directly associated with disposal group - 30,318 30.9.2025 31.12.2024 30,318 26,830 1,901 3,460 (32,217) - (2) 28 0 30,318 In 2025 the Group changed the way it presents cash and balances with central bank. The Group now presents loans to credit institutions as a separate line item in the statement of financial position. That line item includes balances with other credit institutions, which were previously included as part of cash and balances with central bank and other assets. The comparative figures for 31 December 2024 in the statement of financial position, 9m 2024 in the Consolidated Statement of Cash Flows and in the notes have been restated, as applicable. The table below shows the effect of the reclassification on the Consolidated Statement of Financial Position at 31 December 2024: On 28 February 2025 Kvika and Landsbankinn hf. finalised the sale of 100% of TM tryggingar hf. share capital to Landsbankinn hf. as specified in note 59. Other assets ....................................................................................................................................................... Cash and balances with Central Bank at the beginning of the year ................................................................. Eliminations with the Group .................................................................................................................................................... Other adjustments ................................................................................................................................................................... Balance at the beginning of the year ....................................................................................................................................... Purchase price ......................................................................................................................................................................... Net assets directly associated with disposal group Profit after tax from discontinued operations ........................................................................................................................ Set out below is the reconciliation of Net assets directly associated with disposal group: Assets classified as held for sale .............................................................................................................................................. Liabilities associated with assets classified as held for sale .................................................................................................... Total assets Cash and balance with Central bank ................................................................................................................. Liabilities ........................................................................................................................................................... Equity ................................................................................................................................................................. Total liabilities and equity All other assets .................................................................................................................................................. Loans to credit institutions ............................................................................................................................... Other assets ....................................................................................................................................................... Cash and cash equivalents at the end of the period ........................................................................................ Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 13 ===== SIDA 17 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 0 Segment information 4. Business segments - - - - - Asset Commercial Investment UK Supporting 9m 2025 Management Banking Banking operations Treasury units Total (6) 3,743 1,955 1,741 1,419 (21) 8,831 1,772 1,171 1,559 474 65 (14) 5,026 71 2 (106) 470 9 (0) 445 - - - - - 22 22 13 97 1 (4) - 8 115 Net operating income 1,849 5,012 3,408 2,682 1,493 (5) 14,439 (799) (695) (592) (645) (180) (2,115) (5,026) (99) (1,463) (156) (302) (92) (1,674) (3,785) Administrative expenses (898) (2,157) (748) (947) (272) (3,789) (8,811) 0 (191) (92) (56) (0) - (340) (12) - - (580) - - (593) (494) (1,066) (624) (149) (242) 2,575 - Profit (loss) before tax from continuing operations 444 1,598 1,945 949 978 (1,219) 4,695 Net segment revenue from external 1,823 688 6,432 3,828 1,403 265 14,439 Net segment revenue from other 26 4,324 (3,023) (1,146) 89 (270) (0) Treasury Commercial Banking offers various forms of banking services and related advisory services. Included in this operating segment is Lykill, the leasing operations of the Group, and the Group's fintech operations, such as Auður, Netgíró and Aur, as well as the payment facilitation operations of Straumur greiðslumiðlun hf. Investment Banking Investment Banking provide a range of professional services in the fields of specialised financing, securities and foreign exchange transactions and corporate finance services. UK operations The UK operations consist of asset management and corporate finance services through Kvika Limited and specialised lending services through Ortus Secured Finance Ltd, as well as the Bank's lending to customers in the UK. UK operations is the only geographic area outside of Iceland where the Group operates and for the period in 2025 it accounted for 18.6% (9m 2024: 16.0%) 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. 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. During the period in 2025, the Group defined the following reportable operating segments; Asset Management, Commercial Banking, Investment Banking, UK operations and Treasury. Treasury, which was previously r eported as part of Investment Banking, is now presented separately. Operating segments pay and receive interest to and from Treasury on an arm's length basis to reflect the allocation of capital and funding cost. During the period in 2025, the Group implemented the change that operating segments would receive interest from Treasury to reflect the allocation of capital. Comparative figures have been restated, as applicable. Commercial Banking Share in profit of associates .................................... Other operating income ......................................... Salaries and related expenses ................................ Other operating expenses ...................................... Net impairment ....................................................... customers ............................................................. segments .............................................................. Cost allocation ........................................................ 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. Net interest income ................................................ Net fee and commission income ............................ Net financial income ............................................... Revaluation of contingent consideration ............... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 14 ===== SIDA 18 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 0 4. Business segments (cont.) Asset Commercial Investment UK Supporting 9m 2024 Management Banking Banking operations Treasury units Total (15) 3,643 1,436 1,236 912 (29) 7,183 1,809 1,110 1,042 503 73 (2) 4,536 67 1 275 249 (41) (4) 547 - 26 - - - - 26 11 199 - 12 - 5 227 Net operating income 1,872 4,979 2,753 2,000 944 (28) 12,519 (727) (675) (564) (499) (159) (2,117) (4,740) (66) (1,205) (130) (302) (71) (1,229) (3,003) Administrative expenses (793) (1,880) (694) (801) (230) (3,346) (7,744) (3) (281) (113) (116) (1) - (514) (8) - - (36) - - (44) (547) (1,141) (617) (116) (224) 2,644 - Profit (loss) before tax from continuing operations 521 1,677 1,328 931 490 (731) 4,217 Net segment revenue from external 1,904 114 5,749 3,203 1,560 (11) 12,519 Net segment revenue from other (32) 4,864 (2,996) (1,203) (617) (17) 0 customers ............................................................. segments .............................................................. Share in profit of associates .................................... Other operating income ......................................... Salaries and related expenses ................................ Other operating expenses ...................................... Net impairment ....................................................... Revaluation of contingent consideration ............... Cost allocation ........................................................ Net interest income ................................................ Net fee and commission income ............................ Net financial income ............................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 15 ===== SIDA 19 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 4 Income statement 5. Net interest income Interest income is specified as follows: Q3 2025 Q3 2024 9m 2025 9m 2024 435 838 1,528 1,816 139 37 470 111 5,677 4,821 15,915 14,846 351 523 1,562 2,388 858 1,072 2,959 2,898 128 0 155 1 Total 7,589 7,292 22,589 22,060 Interest expense is specified as follows: Q3 2025 Q3 2024 9m 2025 9m 2024 2,473 2,897 7,715 8,369 576 713 1,782 2,066 1,174 875 2,797 2,636 151 137 463 509 248 227 962 1,254 13 12 38 44 Total 4,636 4,863 13,757 14,877 Net interest income 2,953 2,429 8,831 7,183 6. Net fee and commission income Q3 2025 Q3 2024 9m 2025 9m 2024 552 578 1,755 1,742 323 330 1,299 1,025 122 161 366 443 555 590 1,540 1,620 160 70 499 192 Total fee and commission income 1,711 1,730 5,460 5,022 (141) (178) (433) (487) Net fee and commission income 1,571 1,552 5,026 4,536 Total interest income recognised in respect of financial assets not carried at fair value through profit or loss amounts to ISK 17,897 million (9m 2024: ISK 16,671 million). Total interest expense recognised in respect of financial liabilities not carried at fair value through profit or loss amounts to ISK 12,795 million (9m 2024: ISK 13,623 million). Fee and commission income from cards and payment solutions relate to the Group's payment facilitations services as well as the issuance of debit and credit cards. Fee and commission income from loans and guarantees include the Group's lending operations, notification and collection fees, as well as fees from issuing guarantees. Asset Management ..................................................................................................................... Capital markets and corporate finance ...................................................................................... Asset management fees are earned by the Group for trust and fiduciary activities where the Group holds or invests assets on behalf of the customers. Fee and commission income from capital markets and corporate finance include fees and commissions generated by miscellaneous corporate finance service, securities, derivatives and FX brokerage as well as market making. Cards and payment solutions ..................................................................................................... Loans and guarantees ................................................................................................................. Other interest expense* ............................................................................................................. Issued bonds ............................................................................................................................... Derivatives .................................................................................................................................. Deposits ..................................................................................................................................... Cash and balances with Central Bank ......................................................................................... Derivatives .................................................................................................................................. Loans to customers ..................................................................................................................... Other interest income ................................................................................................................ Fixed income securities (FVOCI) ................................................................................................. Loans to credit institutions ......................................................................................................... Other fee and commission income ............................................................................................ Fee and commission expense ..................................................................................................... Fee and commission income is disclosed based on the nature and type of income generated across business segments. Information on net fee and commission income by segment is disclosed in note 4. Borrowings .................................................................................................................................. Subordinated liabilities ...................................................................................................... ......... * Thereof are lease liabilities' interest expense amounting to ISK 28 million (9m 2024: ISK 43 million). Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 16 ===== SIDA 20 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 4 7. Net financial income Net financial income is specified as follows: Q3 2025 Q3 2024 9m 2025 9m 2024 Net (loss) gain on financial assets and financial liabilities mandatorily measured at fair value through profit or loss 120 85 287 223 (9) (19) (23) (19) 179 159 454 (2) 44 265 40 453 (35) (58) (81) (67) - - (83) - 6 (29) (148) (41) Total 305 403 445 547 8. Foreign currency exchange difference Foreign currency exchange difference is specified as follows: Q3 2025 Q3 2024 9m 2025 9m 2024 988 (741) 1,329 (1,313) (983) 712 (1,477) 1,272 Total 6 (29) (148) (41) 9. Administrative expenses Administrative expenses are specified as follows: Q3 2025 Q3 2024 9m 2025 9m 2024 1,573 1,373 5,026 4,740 890 702 2,720 2,185 239 212 899 641 38 57 166 177 Total 2,740 2,344 8,811 7,744 10. Salaries and related expenses Salaries and related expenses are specified as follows: Q3 2025 Q3 2024 9m 2025 9m 2024 1,055 945 3,534 3,403 164 107 433 307 - 8 - 25 165 141 491 456 67 60 201 194 121 111 367 354 Total 1,573 1,373 5,026 4,740 243 244 249 246 246 249 246 249 11. Q3 2025 Q3 2024 9m 2025 9m 2024 (147) (261) (332) (508) - (0) (7) (3) (6) 0 (2) (3) Total (153) (261) (340) (514) Gain (loss) on financial instruments at fair value through profit and loss ................................. (Loss) gain on other financial instruments ................................................................................. Other salary related expenses .................................................................................................... Tax on financial activity .............................................................................................................. Salaries ........................................................................................................................................ Performance based payments excluding share-based payments ............................................. Net change in impairment of loans ............................................................................................ Fixed income securities ............................................................................................................ Financial assets at fair value through OCI ................................................................................ Derivatives ................................................................................................................................ Loans to customers .................................................................................................................. Total number of full time employees at the end of the period ................................................. Share-based payment expenses ................................................................................................. Loss on prepayments of borrowings .......................................................................................... Foreign currency exchange difference ....................................................................................... Shares and other variable income securities ........................................................................... Net impairment Net change in impairment of other assets ................................................................................. Net change in impairment of loan commitments, guarantees and unused credit facilities ..... Salaries and related expenses .................................................................................................... Other operating expenses .......................................................................................................... Depreciation and amortisation .................................................................................................. Depreciation of right of use asset .............................................................................................. According to Act No. 165/2011, passed in 2011, banks and other financial institutions providing VAT exempt services, must pay a tax based on salary payments, called tax on financial activity. The current tax rate is 5,50% (2024: 5,50%). During the first quarter of 2025, ISK 225 m illion in irregular and one-off costs were incurred by the Group, among other due to the finalisation of the sale of TM. The expenses are included in all the line items in the table above except salaries and related expenses. The amount of performance based payments that has been expensed is based on the results for the period in 2025 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. Average number of full time employees during the period ....................................................... Pension fund contributions ........................................................................................................ Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 17 ===== SIDA 21 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 4 12. Revaluation of contingent consideration 13. Income tax 14. Special tax on financial activity 15. Special tax on financial institutions 16. Earnings per share 9m 2025 9m 2024 9m 2025 9m 2024 9m 2025 9m 2024 Net earnings attributable to equity holders of the Bank 3,097 3,156 1,901 1,541 4,998 4,697 4,522 4,712 4,522 4,712 4,522 4,712 1 0 1 0 1 0 Total 4,523 4,712 4,523 4,712 4,523 4,712 0.68 0.67 0.42 0.33 1.11 1.00 0.68 0.67 0.42 0.33 1.10 1.00 Q3 2025 Q3 2024 Q3 2025 Q3 2024 Q3 2025 Q3 2024 Net earnings attributable to equity holders of the Bank 1,472 1,396 - 965 1,472 2,361 4,417 4,691 4,417 4,691 4,417 4,691 1 0 1 0 1 0 Total 4,418 4,691 4,418 4,691 4,418 4,691 0.33 0.30 - 0.21 0.33 0.50 0.33 0.30 - 0.21 0.33 0.50 Weighted average number of outstanding shares ............................. Adjustments for stock options ............................................................ Basic earnings per share (ISK) .............................................................. Diluted earnings per share (ISK) .......................................................... Continuing operations In March 2025, the Group completed the expedited acquisition of the remaining management shares in Ortus Secured Finance ltd. (OSF), originally scheduled to be acquired over a five-year period (2024–2028) with pricing linked to OSF’s a nnual performance . An expense of ISK 580 million was incurred in the first quarter of 2025 related to the expedited acquisition of the OSF shares. Continuing and discontinued operations The Bank and some of its subsidiaries will not pay income tax on its profit for 2025 due to the fact that Group has a tax loss carry forward that offsets the calculated income tax. At year-end 2024, the tax loss carry forward of the Group amounted to ISK 9.7 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. The contingent consideration related to the acquisition of Gamma Capital Management ehf. was revalued during the period in 2025. The revaluation led to an expense of ISK 12 million. Discontinued operations Weighted average number of outstanding shares ............................. Adjustments for stock options ............................................................ Basic earnings per share (ISK) .............................................................. Diluted earnings per share (ISK) .......................................................... The calculation of basic earnings per share is based on earnings attributable to shareholders and a weighted average number of shares outstanding during the period. The diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Bank has issued stock options that have a dilut ive effect. According to Act No. 155/2010 on Special Tax on Financial Institutions, certain types of financial institutions, including banks, must pay a nnually a tax based on the carrying amount of their liabilities as determined for tax purposes in excess of ISK 50 billion at year-end. The tax rate is set at 0,145% (2024: 0,145%) and the tax is not a deductible expense for income tax purposes. The tax is presented separately in the 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% (2024: 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. Income tax is recognised based on the tax rates and tax laws enacted during the current year, according to which the domestic corporate income tax rate was 20.0% (2024: 21.0%). Companies within the Group, which operate outside of Iceland, recognise income tax in accordance with the applicable tax laws in the country they reside. Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 18 ===== SIDA 22 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 16 Statement of Financial Position 17. Cash and balances with Central Bank Cash and balances with Central Bank are specified as follows: 30.9.2025 31.12.2024 25,973 12,759 14 16 Included in cash and cash equivalents 25,987 12,774 6,546 5,819 Total 32,532 18,593 18. Loans to credit institutions Loans to credit institutions are specified as follows: 30.9.2025 31.12.2024 9,230 9,726 423 1,804 Total 9,653 11,530 19. Loans to customers Gross Gross Gross carrying Book carrying Book carrying Book 30.9.2025 amount value amount value amount value 61,158 60,301 133,620 132,235 194,778 192,536 - - 3,149 3,149 3,149 3,149 Total 61,158 60,301 136,769 135,385 197,928 195,685 Gross Gross Gross carrying Book carrying Book carrying Book 31.12.2024 amount value amount value amount value 40,609 39,736 111,047 109,593 151,656 149,329 - - 874 874 874 874 Total 40,609 39,736 111,921 110,466 152,530 150,203 20. Fixed income securities Fixed income securities are specified as follows: Mandatorily measured at fair value through profit or loss 30.9.2025 31.12.2024 1,699 2,714 2,831 2,189 1,522 722 Measured at fair value through other comprehensive income 38,491 54,256 0 3,453 1,442 1,459 Total 45,986 64,795 The Group presents finance lease receivables as part of loans to customers at amortised cost. As at 30 September 2025, the book value of finance lease receivables amounted to ISK 23,470 million (31.12.2024: ISK 22,866 million). Loans to customers at FV through profit or loss ...... Deposits with Central Bank ........................................................................................................................................... Cash on hand ................................................................................................................................................................ Loans to customers at FV through profit or loss ...... Restricted balances with Central Bank - fixed reserve requirement ............................................................................ Listed government bonds and bonds with government guarantees ........................................................................ Listed bonds ............................................................................................................................................................... Unlisted bonds ........................................................................................................................................................... CorporatesIndividuals Loans to customers at amortised cost ..................... Bank accounts ............................................................................................................................................................... Other loans ................................................................................................................................................................... The breakdown of the loan portfolio by individuals and corporates is specified as follows: Listed government bonds and bonds with government guarantees ........................................................................ Listed treasury bills .................................................................................................................................................... Listed bonds ............................................................................................................................................................... Total Corporates TotalIndividuals Loans to customers at amortised cost ..................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 19 ===== SIDA 23 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 16 21. 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 30.9.2025 31.12.2024 1,186 1,101 3,144 3,069 24,269 - 1,599 1,262 Total 30,198 5,432 22. Securities used for hedging Securities used for hedging are specified as follows: 30.9.2025 31.12.2024 51 1,905 319 584 5,224 9,669 83 442 Total 5,676 12,601 23. Derivatives 30.9.2025 Assets Liab ilities Assets Liabilities 28,985 28,633 352 - 30,938 21,618 883 - 6,023 6,044 39 59 - 8,199 462 - 8,364 7,407 1,092 124 Total 74,310 71,900 2,827 183 31.12.2024 Assets Liab ilities Assets Liabilities 159 107 56 - 34,755 35,672 455 1,321 13,022 13,000 40 18 - 7,386 - 283 13,586 14,534 645 1,310 Total 61,522 70,699 1,197 2,932 30.9.2025 31.12.2024 (21) (53) 489 39 (98) (8) Total 370 (21) Balance at the beginning of the year ............................................................................................................................ Currency forwards .................................................................................................. Interest rate derivatives ......................................................................................... Notional Carrying amount Foreign currency revaluation of the net foreign operations ........................................................................................ Tax effect ...................................................................................................................................................................... Cross - currency interest rate swaps ...................................................................... Listed government bonds and bonds with government guarantees ........................................................................... Listed bonds .................................................................................................................................................................. Unlisted shares ........................................................................................................................................................... Listed shares ................................................................................................................................................................. Bond and equity total return swaps ...................................................................... Derivatives are specified as follows: Currency forwards .................................................................................................. Interest rate derivatives ......................................................................................... Listed shares ............................................................................................................................................................... Unit shares in cash equivalent liquidity funds ........................................................................................................... Unlisted unit shares ...................................................................................................................................................... Carrying amount Currency forwards used for hedge accounting ..................................................... Cross - currency interest rate swaps ...................................................................... Currency forwards used for hedge accounting ..................................................... Unlisted unit shares ................................................................................................................................................... Bond and equity total return swaps ...................................................................... Notional The hedging gain recognised in OCI before tax is equal to the change in fair value used for measuring effectiveness. There is no ineffectiveness recognised in profit or loss. Set out below is the reconciliation of foreign currency translation reserve component of equity due to hedge accounting and the analysis of other comprehensive income: Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 20 ===== SIDA 24 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 16 24. Group entities Share Share Entity Nature of operations Domicile 30.9.2025 31.12.2024 Holding company Iceland 100% 100% Asset management Iceland 100% 100% Debt Collection Iceland 100% 100% Iceland 100% 100% Insurance company Iceland - 100% Insurance company Iceland - 100% Iceland 85% 85% UK 100% 100% UK 100% 80% 25. 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 30.9.2025 31.12.2024 Iceland 24% 24% Croatia 40% 40% b. Changes in investments in associates are specified as follows: 30.9.2025 31.12.2024 113 96 - (20) 22 41 (1) (5) Total 133 113 26. Intangible assets a. Intangible assets are specified as follows: Customer Software 30.9.2025 Goodw ill relationships Brands and other Total 17,784 1,567 219 2,123 21,693 - - - 234 234 - (126) (34) (470) (630) (107) (34) (1) - (142) Balance as at 30 September 2025 17,677 1,407 185 1,887 21,155 17,677 2,064 369 4,214 24,323 0 (657) (184) (2,327) (3,168) Balance as at 30 September 2025 17,677 1,407 185 1,887 21,155 Customer Software 31.12.2024 Goodw ill relationships Brands and other Total 17,783 1,732 264 2,127 21,906 - - - 476 476 - - - (4) (4) - (167) (46) (476) (689) 1 2 0 0 4 Balance as at 31 December 2024 17,784 1,567 219 2,123 21,693 17,784 2,098 370 4,022 24,273 0 (531) (151) (1,898) (2,580) Balance as at 31 December 2024 17,784 1,567 219 2,123 21,693 Currency adjustments .................................................................... Gross carrying amount ................................................................... Amortisation ................................................................................... Discontinued .................................................................................. Balance as at 1 January 2024 ......................................................... Business consultancy services Holding company Balance at the beginning of the year ............................................................................................................................ Dividend received ......................................................................................................................................................... Share in profit of associates, net of income tax ........................................................................................................... Currency adjustments .................................................................... Accumulated amortisation and impairment losses ....................... Digital solutions provider Amortisation ................................................................................... Balance as at 1 January 2025 ......................................................... TM líftryggingar hf. .................................................. Skilum ehf. ............................................................... The Group does not consider its associates material, neither individually nor as a group. Gláma fjárfestingar slhf. .......................................... Kvika eignastýring hf. .............................................. GAMMA Capital Management ehf. ......................... Moberg d. o. o. ........................................................ TM tryggingar hf. ..................................................... The main subsidiaries held directly or indirectly by the Group are listed in the table below. Payment facilitator Gross carrying amount ................................................................... Accumulated amortisation and impairment losses ....................... Additions during the period ........................................................... Ortus Secured Finance ltd. ...................................... Fund management The sale of TM tryggingar hf. and TM líftryggingar hf. was concluded during the first quarter of 2025. Furthermore, during the same period the Group acquired the remaining shares in Ortus Secured Finance ltd. Additionally, during the same period, one of the Group's subs idiary was renamed from Kvika Securities ltd., to Kvika Limited. Straumur greiðslumiðlun hf. ................................... Kvika Limited ........................................................... Lending operations Exchange rate difference .............................................................................................................................................. AC GP 3 ehf. ............................................................. Additions during the period ........................................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 21 ===== SIDA 25 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 16 27. Operating lease assets Operating lease assets are specified as follows: 30.9.2025 31.12.2024 215 530 111 36 (71) (261) (38) (90) Total 217 215 356 465 (139) (250) Total 217 215 28. Other assets Other assets are specified as follows: 30.9.2025 31.12.2024 3,254 2,861 2,574 3,207 614 1,024 658 612 Total 7,100 7,704 Right of use asset and lease receivables are specified as follows: 30.9.2025 31.12.2024 1,024 1,321 - 13 - (15) 29 56 (8) 1 (201) - (230) (352) Total 614 1,024 29. Borrowings Borrowings are specified as follows: 30.9.2025 31.12.2024 5,042 13,809 1,207 580 Total 6,249 14,390 Additions ....................................................................................................................................................................... Disposals ....................................................................................................................................................................... Depreciation ................................................................................................................................................................. Accumulated depreciation ........................................................................................................................................... Balance as at 1 January ................................................................................................................................................. Gross carrying amount .................................................................................................................................................. Termination of lease agreements ................................................................................................................................. Currency adjustments ................................................................................................................................................... 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 .......................................................................................................................................................... Right of use asset and lease receivables ...................................................................................................................... Unsettled transactions .................................................................................................................................................. Accounts receivable ...................................................................................................................................................... Right of use asset and lease receivables as at 1 January .............................................................................................. Additions during the period .......................................................................................................................................... Sundry assets ................................................................................................................................................................ 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 period end. Lease liability is specified in note 34. Impairment ................................................................................................................................................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 22 ===== SIDA 26 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 16 30. Issued bonds Issued bonds are specified as follows: First Maturity Currency, nominal value issued Maturity type Terms of interest 30.9.2025 31.12.2024 Unsecured bonds: 2022 2025 At maturity Floating, 3 month REIBOR + 1.25 % 1,672 1,674 2023 2026 At maturity Floating, 3 month STIBOR + 4.10 % 7,352 9,832 2023 2026 At maturity Floating, 3 month NIBOR + 4.10% 9,213 9,891 2023 2026 At maturity Floating, 3 month STIBOR + 4.0% 6,478 6,325 2021 2027 At maturity CPI-indexed, fixed 1.0% 7,147 6,915 2025 2028 At maturity Floating, 3 month NIBOR + 2.0% 4,918 - 2025 2028 At maturity Floating, 3 month STIBOR + 2.0% 7,790 - 2025 2028 At maturity Floating, 3 month REIBOR + 1.14 % 5,111 - 2025 2029 At maturity Fixed 4.50% 28,901 - 2022 2032 At maturity CPI-indexed, fixed 1.40% 2,567 2,486 Total 81,150 37,123 741 - Total 81,891 37,123 31. Subordinated liabilities a. Subordinated liabilities: First Maturity Currency, nominal value issued Maturity type Terms of interest 30.9.2025 31.12.2024 2023 2034 At maturity CPI-Indexed, fixed 6.25% 2,857 2,634 2015 2045 At maturity CPI-Indexed, fixed 6.25% 3,155 2,994 Total 6,012 5,629 b. Subordinated liabilities are specified as follows: 30.9.2025 31.12.2024 5,629 5,993 - (800) - 500 (53) (113) (27) (346) 463 394 Total 6,012 5,629 32. Short positions held for trading Short positions held for trading are specified as follows: 30.9.2025 31.12.2024 0 128 61 25 65 - Total 125 153 Additions ....................................................................................................................................................................... Listed shares ................................................................................................................................................................. KVIKA 25 1201 GB ISK 1,660 million .... EMTN 28 0421, SEK 600 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 million 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/NOK 756,000,000 , SEK 339 m illion and NOK 417 million. Following both tenders, the remaining outstanding nominal amount of SEK Notes and NOK Notes are SEK 227,000,000 and NOK 333,000,000, respectively. EMTN 28 0421, NOK 400 million ......... TM 15 1, ISK 2,000 million .................. KVIKA 32 0112, ISK 2,000 million ........ Listed bonds .................................................................................................................................................................. 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. KVB 21 02, ISK 5,400 million ............... At the interest payment date in May 2025 for TM 15 01, the a nnual interest rate increased from 5.25% p.a. to 6.25% p.a. Furthermore, as of that interest payment date, the Group had the right to repay the TM 15 01 subordinated bond and on any subsequent interest payment dates until maturity. Additionall, 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. KVIKA 28 0703, ISK 5,000 million ........ EMTN 26 0511, SEK 566 million * ....... EMTN 26 0511, NOK 750 million * ...... EMTN 26 1123 GB, SEK 500 million .... Redemption of KVB 18 02 ....................................................................................................... ...................................... EMTN 29 0602, EUR 200 million ......... Unlisted senior unsecured bonds, total ....................................................................................................................... Paid interest .................................................................................................................................................................. Paid interests due to indexation ................................................................................................................................... Accrued interests and indexation ................................................................................................................................. Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 23 ===== SIDA 27 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 16 33. Short positions used for hedging Short positions used for hedging are specified as follows: 30.9.2025 31.12.2024 453 - - 42 Total 453 42 34. Other liabilities Other liabilities are specified as follows: 30.9.2025 31.12.2024 4,731 7,531 2,321 1,565 1,318 1,259 891 1,158 723 1,111 647 320 565 377 20 18 272 296 Total 11,489 13,635 Lease liability is specified as follows: 30.9.2025 31.12.2024 1,158 1,510 - 13 - (15) (12) 2 (285) (408) 29 56 Total 891 1,158 35. Share capital a. Share capital 30.9.2025 31.12.2024 4,631 4,722 214 62 240 310 b. Changes made to the nominal amount of share capital c. Share capital increase authorisations Listed government bonds and bonds with government guarantees ........................................................................... A copy of the Bank's Articles of Association, including the temporary prov isions, is available on the Bank's website, www.kvika.is, reference is mad e to them for more information. Additions during the period .......................................................................................................................................... Instalment ..................................................................................................................................................................... Contingent consideration ............................................................................................................................................. 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 28. Lease liability as at 1 January ........................................................................................................................................ Other liabilities .............................................................................................................................................................. During the period in 2025 the Bank's share capital was decreased by ISK 91 m illion in nominal value following a resolution by the AGM to cancel treasury shares. Furthermore, during the period, the Bank acquired treasury shares amounting to ISK 243 million in nominal value as a result of a share buy-back plan. Accounts payable and accrued expenses ..................................................................................................................... Lease liability ................................................................................................................................................................. Salaries and salary related expenses ............................................................................................................................ Share capital according to the Bank's Articles of Association ...................................................................................... Indexation ..................................................................................................................................................................... Expected credit loss allowance for loan commitments, guarantees and unused credit facilities ............................... Unsettled transactions .................................................................................................................................................. Withholding taxes ......................................................................................................................................................... Listed bonds .................................................................................................................................................................. According to the Bank's Articles of Association dated 26 March 2025, cf. temporary provision I, the Board of Directors is authorised to issue options or warrants for up to ISK 240 million in nominal value. To serve such instruments the Board of Directors is authorised to either increase the share capital accordingly or purchase own shares, as permitted by law. This authorisation is valid until 31 March 2027. Termination of lease agreements ................................................................................................................................. Special taxes on financial institutions and financial activities ..................................................................................... Authorised but not issued shares ................................................................................................................................. Nominal amount of treasury shares ............................................................................................................................. The nominal value of shares issued by the Bank is ISK 1 per share. All currently issued shares are fully paid. The holders of shares are entitled to receive dividends as approved by the general meeting and are entitled to o ne 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 ................................................................................................................................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 24 ===== SIDA 28 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 16 36. Capital adequacy ratio (CAR) Own funds 30.9.2025 31.12.2024 67,508 89,517 (1,472) - (2,007) (2,050) (20,814) (28,828) (217) (23,500) (1,096) (2,273) 1,313 5,801 Common equity Tier 1 capital (CET 1) 43,216 38,667 5,803 5,601 Total own funds 49,019 44,268 Risk-weighted exposure amount (RWEA) 180,089 158,178 9,569 7,586 28,080 28,080 Total risk-weighted exposure amount 217,739 193,844 Capital ratios 19.8% 19.9% 19.8% 19.9% 22.5% 22.8% 50,123 20.4% 20.4% 23.0% Capital buffer requirement, % of RWEA 1.5% 1.5% 2.4% 2.4% 2.5% 2.5% Combined buffer requirement 6.4% 6.4% Capital requirement, % of RWEA 30.9.2025 CET1 Tier 1 Total 4.5% 6.0% 8.0% 2.0% 2.6% 3.5% Minimum requirement under Pillar I and Pillar II-R 6.5% 8.6% 11.5% 6.4% 6.4% 6.4% Total capital reqiurement 12.9% 15.0% 17.9% Operational risk ............................................................................................................................................................ Total equity ................................................................................................................................................................... Market risk .................................................................................................................................................................... Tier 2 capital .................................................................................................................................................................. Amounts below the threshold for deduction * ............................................................................................................ Capital adequacy ratio (CAR) ........................................................................................................................................ CET1 ratio including unaudited (positive) retained earnings and expected dividends ............................................... Deferred tax asset * ...................................................................................................................................................... Goodwill and intangibles .............................................................................................................................................. Unaudited retained (positive) earnings from 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 dividends ...................................... The Group has updated its disclosure of the capital adequacy ratio and the key components in order to provide more information. As a part of this some comparative figures for 31 December 2024 have been restated, although the total figure for common equity Tier 1 capital (CET 1) remains the same. Those line items are marked with an asterisk (*). Pillar I capital requirement .............................................................................................................. Pillar II-R capital requirement ......................................................................................................... Combined buffer requirement ........................................................................................................ T1 ratio .......................................................................................................................................................................... T1 ratio including unaudited (positive) retained earnings and expected dividends ................................................... Systemic risk buffer (SRB) ............................................................................................................................................. Countercyclical capital buffer (CCyB) ........................................................................................................................... Capital conservation buffer (CCB) ................................................................................................................................ Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 25 ===== SIDA 29 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 16 37. Leverage ratio 30.9.2025 31.12.2024 327,096 253,117 3,356 2,533 500 800 Total exposure measure 330,952 256,450 43,216 38,667 13.1% 15.1% 38. Minimum requirements for own funds and eligible liabilities (MREL) Own funds and eligible liabilities 30.9.2025 31.12.2024 43,216 38,667 5,803 5,601 60,854 35,449 Total own funds and eligible liabilities 109,873 79,718 MREL-RWEA and CBR 217,739 193,844 50.5% 41.1% 22.0% 22.0% 6.4% 6.4% MREL-RWEA requirement including CBR* 28.4% 28.4% MREL-TE M 330,952 256,450 33.2% 31.1% 6.0% 6.0% Own funds and eligible liabilities as % of RWEA .......................................................................................................... Eligible liabilities ........................................................................................................................................................... Risk-weighted exposure amount (RWEA) ..................................................................................................................... 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) ............................................................................................................................ *Requirements were first set in January 2025 On-balance sheet exposures ........................................................................................................................................ Derivative exposures .................................................................................................................................................... Off - balance sheet exposures ...................................................................................................................................... The leverage ratio is calculated on the basis of the Group's consolidated numbers as per regulation no. 575/2013 of the EU. According to Act no. 161/2002 on Financial Undertakings the minimum leverage ratio requirement is 3%. MREL-TEM requirement* ............................................................................................................................................. According to Act No. 70/2020 on Resolution of Credit Institutions and Investment Firms, the Bank shall at all times meet the minimum requirement for own funds and eligible liabilisites (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 30 September are 22% of MREL-RWEA and 6% of MREL-TEM. This October, the Resolution Authority approved an updated resolution plan for the Bank, setting a new MREL-RWEA requirement of 21.9%. Leverage ratio ............................................................................................................................................................... Tier 1 capital .................................................................................................................................................................. Total exposure measure ............................................................................................................................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 26 ===== SIDA 30 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 38 Risk management 39. Hedging 40. Credit risk - overview a. Definition b. Management c. Credit approval process d. Collateral e. Credit rating, control and provisioning f. Loan portfolio management g. Impairment h. Derivatives i. Securities used for hedging 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 an effective diversification of the loan portfolio the board has set a limit framework defining maximum exposure as a ratio of the Group’s equity and/or the total size of the loan portfolio. These limits include limitation on joint exposure to associated clients, exposure to individual and associated industries, single regions and countries etc. It is the responsibility of risk management to monitor that these limits are not being violated and to report discrepancies to the credit committee. One of the Group's primary sources of risk is credit risk. Credit risk is defined as the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The risk management unit monitors credit risk and is responsible for developing methodologies to systematically identify, assess, monitor, and manage it. The Group uses a variety of tools and processes to manage credit risk, including collaterals, hedges and loan portfo lio management. To a very large extent the Group's loan portfolio consists of senior loans, most of which are highly collateralised. Securing loans with collateral is a traditional method to reduce credit risk. The Group uses different methods to reduce credit risk by obtaining collateral from customers where appropriate. Such collateral gives the Group right to the collateralised assets for current and future obligations incurred by the customer. The Group applies appropriate haircuts on all collateral in order to ensure proper risk mitigation. For all collateral in listed securities, the Grou p maintains the right to liquidate collateral in case its market value falls below a predefined limit. The risk management unit ensures that loans have a credit rating and is responsible for reviewing the loan portfolio. The Group monitors the value of collateral by listed securities on a real time basis and takes prompt action when necessary. The originating department prepares a proposal for each larger loan or credit line which is presented to the credit committee for approval. The proposal consists of a basic description of the client, the purpose of the loan, a simple credit assessment and arguments for or against granting the loan. The committee decides whether there is need for further cred it assessment and on what terms the loan may be granted. For smaller loans the originating department obtains a general credit approval from the credit committee with respect to the process, terms, credit limits and total amount of the specific lending type. A more thorough credit assessment may be conducted if considered appropriate and can include an assessment of a borrower's fundamental credit strength as well as the value of any collateral. To assess the borrower's capacity to meet his or her obligations the committee can request stress test analysis of the borrower's cash flow or call for third party assessments. Provisioning for loan impairments is estimated on the basis of expected loss models assessing the portfolio as a whole as well as individual lending. Risk management unit suggest a level of provisioning for the portfolio, based on the expected loss assessment. Risk management unit reassess impairments in the event of collateral decay, delayed payments, indication of increased risk, or other early warning signs. Provisions require approval from the credit committee. Refer to note 82 in the 2024 Consolidated Financial Statements for more information on the Group's impairment policy. Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 27 ===== SIDA 31 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 40 41. Maximum exposure to credit risk 30.9.2025 Public Financial Corporate On-balance sheet exposure entities institutions customers Individuals 30.9.2025 32,532 - - - 32,532 - 9,653 - - 9,653 6 3 135,376 60,301 195,685 42,569 3,162 255 - 45,986 - 2,393 327 107 2,827 1 646 5,803 35 6,486 75,109 15,857 141,761 60,443 293,170 Off-balance sheet exposure 10 5 4,899 810 5,724 - - 378 - 378 Maximum exposure to credit risk 75,119 15,862 147,039 61,253 299,272 31.12.2024 Public Financial Corporate On-balance sheet exposure entities institutions customers Individuals 31.12.2024 18,593 - - - 18,593 - 11,530 - - 11,530 7 2 110,458 39,736 150,203 62,660 1,889 245 - 64,795 - 1,001 144 52 1,197 1 1,115 5,423 142 6,680 81,261 15,536 116,270 39,930 252,997 Off-balance sheet exposure 7 2 5,038 1,013 6,060 - - 801 - 801 Maximum exposure to credit risk 81,268 15,538 122,109 40,943 259,858 42. Credit quality of financial assets Model parameters for Icelandic portfolio Scenarios Base case Upside Downside Base case Upside Downside Unemployment rate 4.6% 3.7% 5.5% 4.2% 3.7% 4.9% Inflation CPI index 3.9% 3.4% 5.8% 3.7% 3.4% 5.5% Assigned weight 50.0% 15.0% 35.0% 50.0% 15.0% 35.0% Model parameters for UK portfolio Scenarios Base case Upside Downside Severe Base case Upside Downside Severe Unemployment rate 4.8% 4.5% 5.9% 7.5% 4.1% 3.9% 5.8% 7.5% Inflation CPI index 3.3% 3.2% 3.5% 8.9% 5.0% 4.7% 8.3% 16.4% Assigned weight 50.0% 15.0% 25.0% 10.0% 50.0% 20.0% 25.0% 5.0% The Group utilises an economic forecast which is aligned with requirements for the calculation of expected credit loss. The Group owns loan portfolios in two geographical segments, i.e. Iceland and the United Kingdom ("UK"). In general, the Group utilises the same ECL methodology for the portfolios in both segments, although in the UK it is to a larger extent based on an individual assessment by credit specialists and a separate macroeconomic forecast is used to reflect the UK economy. The following tables shows the first 12 month macro economic values for the variables used in the expected credit loss model. Reference is made to note 82 in the 2024 Consolidated Financial Statements for further information about the Group‘s impairment methodology. Loans to customers ........................................................................................ Derivatives ..................................................................................................... Other assets ................................................................................................... Cash and balances with Central Bank ........................................................... The maximum exposure to credit risk for on-balance sheet and off-balance sheet items, before taking into account any collateral held or other credit enhancements, is specified as follows: Cash and balances with Central Bank ........................................................... Loans to credit institutions ............................................................................ Fixed income securities ................................................................................. Loans to credit institutions ............................................................................ Fixed income securities ................................................................................. Loans to customers ........................................................................................ Derivatives ..................................................................................................... Other assets ................................................................................................... Loan commitments ........................................................................................ Financial guarantee contracts ....................................................................... 31.12.2024 Loan commitments ........................................................................................ Financial guarantee contracts ....................................................................... The book value of financial assets which fall under the impairment requirements of IFRS 9 are presented as net of expected credit losses ("ECL") in the statement of financial position. The ECL are recalculated for each asset on at least a quarterly basis. The assessment of ECL is based on calculations from PD, LGD and EAD models. Furthermore, the assessment is based upon management's assumptions regarding the development of macroeconomic factors over the coming twelve months. The assumption s for macroeconomic development are decided for three scenarios: a base case, an upside scenario, a downside scenario and for the UK portfolio there is a fourth scenario, severe downturn. Each scenario includes a probability weight, and the ECL is derived as a weighted average. The amount of ECL to be recognized is dependent on the Group's definition of significant increase in credit risk, which controls the impairment stage each asset is allocated to. The factors that are used to measure significant increase in credit risk include comparison of changes in PD values, annualized lifetime PD values, days past due and watch list . 30.9.2025 30.9.2025 31.12.2024 Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 28 ===== SIDA 32 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 42 42. Credit quality of financial assets (cont. ) a. Impairment Listed Unlisted Claim due to expected Carrying Total securities and securities and Residential Commercial Industrial Unsecured 30.9.2025 value credit loss amount % collateral Deposits liquid funds other funds real estate real estate Automobiles equipment Guarantee s Other claim value 6 (0) 6 0.0% 9 - - - - - 9 - - - 1 3 (0) 3 0.0% - - - - - - - - - - 3 Corporate Real estate activities .................................. 47,224 (270) 46,954 24.0% 80,878 63 386 2,571 32,527 43,747 945 330 100 210 861 Construction .............................................. 22,382 (106) 22,275 11.4% 40,571 0 - - 18,778 10,128 6,070 4,947 0 648 155 Service Activities ........................................ 16,167 (558) 15,610 8.0% 31,087 31 58 2,004 1,394 6,304 17,243 2,865 2 1,187 277 Activities of Holding Companies ................. 14,116 (32) 14,084 7.2% 35,399 20 119 10,329 10,382 8,943 1,566 152 711 3,177 1, 656 Accommodat. and Food Service Activit. ..... 12,194 (65) 12,129 6.2% 24,480 103 - - 3,844 19,902 535 62 0 34 308 Act. of Hold. Comp. - Securities Financing .. 7,154 (275) 6,879 3.5% 14,307 508 13,389 372 38 - - - 0 - 425 Other ......................................................... 17,523 (78) 17,445 8.9% 34,031 62 3,421 245 3,263 10,286 7,895 4,9 39 115 3,804 296 61,158 (857) 60,301 30.8% 112,832 33 416 651 64,743 2,292 42,049 1,188 - 1,460 8,359 Total 197,928 (2,242) 195,685 100.0% 373,594 820 17,790 16,173 134,968 101,603 76,311 14,482 928 10,519 12,341 Impairment Listed Unlisted Claim due to expected Carrying Total securities and securities and Residential Commercial Industrial Unsecured 31.12.2024 value credit loss amount % collateral Deposits liquid fund s other funds real estate real estate Automobile s equipment Guarantees Other claim value 7 (0) 7 0.0% 10 - - - - - 10 - - 0 0 2 (0) 2 0.0% - - - - - - - - - - 2 Corporate Real estate activities .................................. 45,564 (339) 45,225 30.1% 84,189 31 50 31 41,523 41,134 974 240 0 206 49 1 Construction .............................................. 16,412 (92) 16,320 10.9% 32,487 0 0 - 12,426 9,668 5,260 4,426 0 707 2 56 Service Activities ........................................ 16,068 (162) 15,906 10.6% 29,302 26 122 577 1,020 2,523 19,253 3,815 0 1,966 317 Accommodat. and Food Service Activit. ..... 11,492 (86) 11,406 7.6% 22,151 105 - - 1,367 20,069 528 47 - 36 8 Activities of Holding Companies ................. 7,143 (654) 6,489 4.3% 20,066 13 201 9,762 4,864 3,344 217 183 1,468 15 1,434 Wholesale and Retail Trade ....................... 4,930 (56) 4,875 3.2% 7,474 24 - - 247 913 3,601 1,952 100 636 384 Other ......................................................... 10,303 (66) 10,237 6.8% 29,559 342 7,208 163 3,390 11,277 2,176 2, 190 22 2,791 415 40,609 (872) 39,736 26.5% 57,599 33 793 655 11,886 1,815 40,060 1,032 - 1,325 8,312 Total 152,530 (2,327) 150,203 100.0% 282,838 575 8,374 11,187 76,723 90,743 72,080 13,884 1,589 7,683 11,619 Public entities ................................................. Financial institutions ....................................... Individuals ....................................................... Collateral value is shown as the market- or accounting value of collateral allocated to exposures. Other collateral includes financial claims, inventories and receivables. Allocated collateral Breakdown of loans to customers by industry and information on collateral and other credit enhancements The Group applies the same valuation methods to collateral held as other comparable assets held by the Group. For other types of assets the Group uses third party valuation where possible. Public entities ................................................. Individuals ....................................................... Financial institutions ....................................... Allocated collateral Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 29 ===== SIDA 33 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 42 42. Credit quality of financial assets (cont.) b. 30.9.2025 Loans to customers: Stage 1 Stage 2 Stage 3 FVTPL Total 129,277 4,330 - 2,926 136,532 33,845 1,107 - - 34,952 9,901 7,627 - 110 17,638 282 955 - - 1,236 16 4 6,795 113 6,928 396 244 1 - 641 Gross carrying amount 173,716 14,266 6,796 3,149 197,928 (345) (204) (1,693) - (2,242) Book value 173,371 14,062 5,103 3,149 195,685 Loan commitments, guarantees and unused credit facilities: Stage 1 Stage 2 Stage 3 FVTPL Total 4,093 19 - 171 4,284 331 1 - - 331 510 569 - - 1,080 1 0 - - 1 0 - 406 - 406 0 1 - - 1 Total off-balance sheet amount 4,935 590 406 171 6,102 (9) (7) (3) - (19) Net off-balance sheet amount 4,926 583 403 171 6,083 31.12.2024 Loans to customers: Stage 1 Stage 2 Stage 3 FVTPL Total 89,427 1,266 - 17 90,710 40,153 3,159 - - 43,313 6,609 2,004 - - 8,613 227 381 - - 608 1 - 7,940 114 8,055 287 203 - 743 1,232 Gross carrying amount 136,704 7,012 7,940 874 152,530 (367) (189) (1,771) - (2,327) Book value 136,337 6,823 6,169 874 150,203 Loan commitments, guarantees and unused credit facilities: Stage 1 Stage 2 Stage 3 FVTPL Total 4,675 3 - - 4,678 1,568 0 - - 1,568 563 6 - - 569 2 1 - - 2 - - 34 10 44 - 0 - - 0 Total off-balance sheet amount 6,808 10 34 10 6,861 (11) (0) (7) - (18) Net off-balance sheet amount 6,797 9 27 10 6,843 Non-rated ............................................................................................. Expected credit loss ............................................................................. Expected credit loss ............................................................................. Credit quality band I ............................................................................. Credit quality band II ............................................................................ Credit quality band III ........................................................................... Credit quality band IV .......................................................................... In default .............................................................................................. Credit quality band II ............................................................................ Credit quality band III ........................................................................... Credit quality band IV .......................................................................... In default .............................................................................................. Non-rated ............................................................................................. The following tables show financial assets subject to the impairment requirements of IFRS 9 broken down by credit quality bands where band i denotes the lowest credit risk and band iv the highest credit risk. Assets measured at fair value through profit or loss are not subject to the stage classification requirements of IFRS 9 but are nevertheless included in the tables in order to give a more complete picture of the credit quality of loans to customers and reconcile the tables to the carrying amount on the balance sheet. The Bank has primarily used calibrated external credit ratings to assess the default probability of its customers. Some of the larger borrowers are furthermore individually assessed by credit specialist s. The Bank has implemented internal credit rating models for part of the loan portfolio and intends to continue this development in 2025. Credit quality band I ............................................................................. Credit quality band II ............................................................................ Credit quality band III ........................................................................... Credit quality band IV .......................................................................... Credit quality of financial assets by credit quality band Credit quality band III ........................................................................... Credit quality band IV .......................................................................... In default .............................................................................................. Non-rated ............................................................................................. Expected credit loss ............................................................................. Credit quality band I ............................................................................. In default .............................................................................................. Non-rated ............................................................................................. Expected credit loss ............................................................................. Credit quality band I ............................................................................. Credit quality band II ............................................................................ Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 30 ===== SIDA 34 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 42 42. Credit quality of financial assets (cont.) c. Breakdown of loans to customers into not past due and past due 30.9.2025 Claim Expected Carrying value credit loss amount 183,290 (976) 182,313 6,331 (77) 6,254 3,680 (76) 3,603 413 (12) 401 1,450 (105) 1,344 1,081 (199) 882 1,684 (796) 888 Total 197,928 (2,242) 195,685 31.12.2024 Claim Expected Carrying value credit loss amount 137,349 (625) 136,724 7,724 (104) 7,619 2,321 (73) 2,249 698 (16) 682 2,180 (820) 1,359 809 (248) 561 1,448 (441) 1,008 Total 152,530 (2,327) 150,203 d. Allowance for expected credit loss on loans to customers and loan commitments, guarantees and unused credit facilities 30.9.2025 Expected credit loss allowance total Sta ge 1 Sta ge 2 Sta ge 3 Total Transfers of financial assets: Balance as at 1 January 2025 377 189 1,778 2,345 91 (41) (49) - (22) 44 (22) - (15) (31) 46 - (148) 18 (36) (166) 235 95 541 870 (164) (61) (325) (550) (0) (0) (237) (238) Balance as at 30 September 2025 354 212 1,696 2,261 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 85 (41) (43) - (22) 44 (21) - (14) (31) 46 - (142) 18 (37) (161) 232 88 541 861 (161) (61) (325) (547) (0) (0) (237) (238) Balance as at 30 September 2025 345 204 1,693 2,242 New financial assets, originated or purchased .............................................................. Derecognitions and maturities ...................................................................................... Write-offs ....................................................................................................................... Derecognitions and maturities ...................................................................................... Write-offs ....................................................................................................................... Transfer to Stage 1 - (Initial recognition) .................................................................. Transfer to Stage 2 - (significantly increased credit risk) ......................................... Transfer to Stage 3 - (credit impaired) ..................................................................... Net remeasurement of loss allowance .......................................................................... The following tables show changes in the expected credit loss allowance of loans to customers and for loan commitments, guarantees and unused credit facilities during the year. Transfer to Stage 1 - (Initial recognition) .................................................................. Transfer to Stage 2 - (significantly increased credit risk) ......................................... Transfer to Stage 3 - (credit impaired) ..................................................................... Net remeasurement of loss allowance .......................................................................... New financial assets, originated or purchased .............................................................. Past due 61-90 days .................................................................................................................................. Past due 91-180 days ................................................................................................................................ Past due 181-360 days .............................................................................................................................. Past due more than 360 days ................................................................................................................... Past due 91-180 days ................................................................................................................................ Past due 181-360 days .............................................................................................................................. Past due more than 360 days ................................................................................................................... Not past due ............................................................................................................................................. Past due 1-30 days .................................................................................................................................... Past due 31-60 days .................................................................................................................................. Not past due ............................................................................................................................................. Past due 1-30 days .................................................................................................................................... Past due 31-60 days .................................................................................................................................. Past due 61-90 days .................................................................................................................................. Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 31 ===== SIDA 35 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 42 42. Credit quality of financial assets (cont.) Expected credit loss allowance for loan commitments, guarantees and unused credit facilities S t a g e 1S t a g e 2S t a g e 3 T o t a l Transfers of financial assets: Balance as at 1 January 2025 11 0 7 18 6 (0) (6) - (0) 0 (0) - (0) (0) 0 - (7) 0 2 (5) 2 7 0 9 (3) (0) (0) (3) Balance as at 30 September 2025 9 7 3 19 31.12.2024 Expected credit loss allowance total S t a g e 1S t a g e 2S t a g e 3 T o t a l Transfers of financial assets: Balance as at 1 January 2024 382 128 1,724 2,234 104 (22) (82) - (17) 30 (13) - (32) (35) 68 - (175) 16 845 686 271 120 224 615 (155) (47) (581) (783) (0) (1) (406) (407) Balance as at 31 December 2024 377 189 1,778 2,345 Expected credit loss allowance for loans to customers S t a g e 1S t a g e 2S t a g e 3 T o t a l Transfers of financial assets: Balance as at 1 January 2024 368 128 1,723 2,219 103 (21) (82) - (17) 30 (13) - (32) (35) 68 - (174) 16 843 685 268 120 219 608 (149) (47) (581) (778) (0) (1) (406) (407) Balance as at 31 December 2024 367 189 1,771 2,327 Expected credit loss allowance for loan commitments, guarantees and unused credit facilities S t a g e 1S t a g e 2S t a g e 3 T o t a l Transfers of financial assets: Balance as at 1 January 2024 14 1 1 16 1 (0) (0) - (0) 0 (0) - (0) (0) 0 - (1) (0) 1 0 3 0 4 7 (6) (0) (0) (6) Balance as at 31 December 2024 11 0 7 18 Transfer to Stage 2 - (significantly increased credit risk) ......................................... Transfer to Stage 3 - (credit impaired) ..................................................................... Net remeasurement of loss allowance .......................................................................... New financial assets, originated or purchased .............................................................. Derecognitions and maturities ...................................................................................... Write-offs ....................................................................................................................... Transfer to Stage 1 - (Initial recognition) .................................................................. Transfer to Stage 2 - (significantly increased credit risk) ......................................... Transfer to Stage 3 - (credit impaired) ..................................................................... Net remeasurement of loss allowance .......................................................................... New financial assets, originated or purchased .............................................................. Derecognitions and maturities ...................................................................................... Transfer to Stage 3 - (credit impaired) ..................................................................... Net remeasurement of loss allowance .......................................................................... New financial assets, originated or purchased .............................................................. Derecognitions and maturities ...................................................................................... Write-offs ....................................................................................................................... Transfer to Stage 1 - (Initial recognition) .................................................................. Net remeasurement of loss allowance .......................................................................... New financial assets, originated or purchased .............................................................. Derecognitions and maturities ...................................................................................... Transfer to Stage 1 - (Initial recognition) .................................................................. Transfer to Stage 2 - (significantly increased credit risk) ......................................... Transfer to Stage 1 - (Initial recognition) .................................................................. Transfer to Stage 2 - (significantly increased credit risk) ......................................... Transfer to Stage 3 - (credit impaired) ..................................................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 32 ===== SIDA 36 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 42 43. Loan-to-value a. General b. Breakdown 30.9.2025 % 31.12.2024 % 53,294 27.2% 41,225 27.4% 75,988 38.8% 57,209 38.1% 44,490 22.7% 33,497 22.3% 7,057 3.6% 2,958 2.0% 3,114 1.6% 3,461 2.3% 1,115 0.6% 1,505 1.0% 1,158 0.6% 1,378 0.9% No or negligible collateral: 9,469 4.8% 8,968 6.0% Total 195,685 100.0% 150,203 100.0% 44. Collateral against exposures to derivatives Fixed Variable Other income income Real fixed Deposits securities securities estate assets Other 30.9.2025 1,178 46 336 - - - 1,560 776 59 1,322 - - - 2,156 47 10 74 - - - 131 Total 2,001 115 1,733 - - - 3,848 Fixed Variable Other income income Real fixed Deposits securities securities estate assets Other 31.12.2024 548 114 161 - - - 824 709 28 1,401 - - - 2,138 62 16 80 - - - 158 Total 1,319 158 1,643 - - - 3,120 45. Large exposures 30.9.2025 31.12.2024 Large exposures before risk adjusted mitigation Number Amount Number Amount 2 9,524 2 11,133 0 - 0 - 0 - 0 - Total 2 9,524 2 11,133 0 - 1 6,522 1 4,547 1 6,702 10-20% of capital base ................................................................................................... 20-25% of capital base ................................................................................................... Exceeding 25% of capital base ....................................................................................... Thereof loans to credit institutions which are part of Large exposures net of risk adjusted mitigation ............................................................ Kvika's liquidity management ..................................................................................... Financial institutions .............................. Corporate customers .............................. Financial institutions .............................. Corporate customers .............................. Individuals .............................................. Greater than 200% ......................................................................................................... In accordance with regulation no. 575/2013 of the European Union on prudential requirements for credit institutions, which was incorporated into Icelandic law with Act No. 38/2022, total exposure towards a customer is classified as a large exposure if it exceeds 10% of the financial institution's Tier 1 capital (see note 36). According to the regulation a single exposure, net of risk adjusted mitigation, cannot exceed 25% of the eligible Tier 1 capital. Based on Icelandic rules no. 789/2022 on the Application of Optional Provisions and Authorisations Pursuant to the Act on Financial Undertakings, the value of exposures towards financial institutions shall not exceed 25% of the eligible Tier 1 capital or 10 bn. ISK, whichever is higher. Single large exposure s net of risk adjusted mitigation take into account the effects of collateral and other credit enhancements held by the financial institution, and other credit enhancements, in accordance with regulation no. 575/2013. The loan-to-value ratio (LTV) is the ratio of the gross amount of the loan to the value of the collateral, if any. The general creditworthiness of a customer is viewed as the most reliable indicator of credit quality of a loan. Besides collateral included in the LTV ratios the Group uses other risk mitigation measures, such as guarantees, negative pledge, cross-collateral and collateralization of non-quantifiable assets. The breakdown of loans to customers by LTV is specified as follows: Less than 50% ................................................................................................................. 50-70% ............................................................................................................................ 70-90% ............................................................................................................................ 90-100% .......................................................................................................................... Individuals .............................................. Amounts have been adjusted to exclude collateral in excess of claim value, i.e. overcollateralisation. 100-125% ........................................................................................................................ 125-200% ........................................................................................................................ Other loans with no collateral .................................................................................. The Group applies the same valuation methods to collateral held as other comparable assets held by the Group. Haircuts are applied to account for liquidity and other factors which may affect the collateral value of the asset. Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 33 ===== SIDA 37 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 45 46. Liquidity risk a. Definition b. Management 30.9.2025 Unweighted Weighted Unweighted Weighted Unweighted Weighted 67,950 67,950 5,438 5,166 74,421 74,098 958 814 2,263 1,810 4,308 3,494 - - 4,775 2,149 5,825 2,621 - - - (918) - - Total high quality assets 68,907 68,764 12,476 8,208 84,554 80,213 131,824 24,530 2,917 1,000 137,511 26,725 114 114 - - 274 274 8,853 4,333 924 158 12,011 4,755 Total outflows (0-30 days) 140,791 28,978 3,841 1,158 149,797 31,754 690 690 1,606 1,606 7,105 7,105 6,445 4,346 1,287 1,286 17,908 12,480 - - - (2,024) - - Total inflows (0-30 days) 7,136 5,036 2,893 868 25,013 19,585 287% 2835% 659% 31.12.2024 Unweighted Weighted Unweighted Weighted Unweighted Weighted 68,950 68,950 - - 72,409 72,409 823 700 - - 823 700 - - - - - - - - - - - - Total high quality assets 69,773 69,650 - - 73,232 73,109 122,660 23,181 - - 131,228 27,435 17 17 - - 17 17 13,201 8,730 - - 15,672 9,141 Total outflows (0-30 days) 135,878 31,928 - - 146,918 36,594 692 692 - - 10,559 10,559 16,441 4,838 - - 17,763 5,718 - - - - - - Total inflows (0-30 days) 17,133 5,530 - - 28,321 16,276 264% 0% 360% 30.9.2025 31.12.2024 148% 144% *Requirement first applies from June 2025 Liquidity risk is the risk that the Group will encounter difficulty in meeting contractual payment obligations associated with its financial liabil ities that are settled by delivering cash or another financial asset. This risk mainly arises from mismatches in the timing of cash flows. The Group has internal rules that require certain matching of the maturities of assets and liabilities. Furthermore, to ensure the ability to meet liquidity needs ,t h e Group maintains a stock of highly liquid unencumbered assets, e.g. cash, treasury bills and treasury bonds. Liquidity is managed by treasury and monitored by risk management. Liquidity position is reported to the ALCO committee. The Central Bank of Iceland sets minimum requirements for the liquidity coverage ratio (LCR) and the net stable funding ratio (NSFR). The minimum 30 day LCR regulatory requirement is 100% for LCR total, 50% minimum requirement for LCR in ISK and 80% minimum requirement for LCR in EUR. The minimum requirement for LCR EUR only applies when the Group‘s commitments in EUR represent 10% or more of the Group´s total commitments. The minimum regulatory requirement for NSFR total is 100%. NSFR total ........................................................................................................................................................................... Other inflows .......................................................................... Restrictions on inflows ........................................................... Liquidity coverage ratio .......................................................... Deposits .................................................................................. Other borrowings ................................................................... Other outflows ....................................................................... Restrictions on inflows ........................................................... Liquidity coverage ratio .......................................................... Deposits .................................................................................. Other borrowings ................................................................... Other outflows ....................................................................... Excess liquid asset amount .................................................... Excess liquid asset amount .................................................... Liquid assets level 2B .............................................................. Liquid assets level 2B .............................................................. Short-term deposits with other banks ................................... Other inflows .......................................................................... ISK EUR* Total all currencies Liquid assets level 1 ................................................................ Liquid assets level 2A ............................................................. ISK EUR* Total all currencies Liquid assets level 1 ................................................................ Liquid assets level 2A ............................................................. Short-term deposits with other banks ................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 34 ===== SIDA 38 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 45 46. Liquidity risk (cont.) c. LCR deposit categories 30.9.2025 Run off date 0-30 days Over 30 days Total 5%-100% 110,064 15,617 125,680 5%-100% 7,469 448 7,918 20%-40% 8,975 288 9,263 40% 68 3,031 3,100 100% 10,934 18,491 29,426 2,930 90 3,020 Total 140,441 37,964 178,406 31.12.2024 Run off date 0-30 days Over 30 days Total 5%-100% 103,372 15,899 119,271 5%-100% 5,807 200 6,007 20%-40% 11,124 48 11,172 40% 81 83 164 100% 10,843 12,439 23,282 3,440 41 3,481 Total 134,668 28,710 163,378 Financial entities ................................................................................................................. Other * ................................................................................................................................. Individuals ........................................................................................................................... Small and medium sized corporates ................................................................................... Large corporates ................................................................................................................. Public entities ...................................................................................................................... Public entities ...................................................................................................................... The Group's deposit base is divided into different categories depending on customer type according to the LCR methodology. Different run off rates are applied on each category representing their level of stickiness, which measures the stability of the deposit. Deposits with maturity over 30 days are defined as term deposits within the LCR calculations, other as demand deposits. Run off rates are applied on each category of demand deposits and the expected cash outflow over the next 30 days under stressed conditions calculated. The higher the run off rate, the more high quality liquid assets the Group must hold to ensure it can meet its obligations and maintain stability during a crisis. The table below shows the Group's deposit base divided into different categories depending on customer type and run off rates according to the LCR methodology. Individuals ........................................................................................................................... Small and medium sized corporates ................................................................................... *Pledged deposits do not have any run off rate according to liquidity rules. Financial entities ................................................................................................................. Other * ................................................................................................................................. Large corporates ................................................................................................................. Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 35 ===== SIDA 39 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 45 46. Liquidity risk (cont.) d. Maturity analysis of financial assets and financial liabilities 30.9.2025 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 32,564 - - - - 32,564 32,532 9,230 - - 423 - 9,653 9,653 20,315 14,233 64,537 111,820 57,028 267,934 195,685 12,544 - 255 29,583 3,604 45,986 45,986 26,413 - 3,785 - - 30,198 30,198 5,676 - - - - 5,676 5,676 4,502 308 1,461 215 - 6,486 6,486 111,244 14,542 70,039 142,041 60,632 398,498 326,218 Derivative assets Inflow ....................................................... 5, 977 235 1,965 42, 326 1,102 51,605 Outflow .................................................... (4, 937) (127) (1,928) (40,725) (936) (48,653) 1,040 108 37 1,601 166 2,952 2,827 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 (143,598) (16,847) (17,044) (1,414) (648) (179,552) 178,406 (8) (86) (315) (6,737) - (7,147) 6,249 (274) (2,107) (19,482) (66,782) (2,613) (91,258) 81,891 - (267) (95) (1,451) (9,543) (11,356) 6,012 (125) - - - - (125) 125 (453) - - - - (453) 453 (1,995) (6,061) (1,349) (2,125) - (11,530) 11,489 (146,454) (25,369) (38,285) (78,508) (12,805) (301,421) 284,625 Derivative liabilities Inflow ....................................................... 5,010 829 9,828 - - 15,667 Outflow .................................................... (5,195) (836) (9,944) - - (15,975) (185) (7) (116) - - (308) 183 Unrecognised financial items Inflow ....................................................... 751 1,033 1,460 2,830 - 6,074 Outflow .................................................... (5,724) - - - - (5,724) Inflow ....................................................... - - 144 227 7 378 Outflow .................................................... (378) - - - - (378) (5,351) 1,033 1,604 3,057 7 350 Summary 111,244 14,542 70,039 142,041 60,632 398,498 1,040 108 37 1,601 166 2,952 (146,454) (25,369) (38,285) (78,508) (12,805) (301,421) (185) (7) (116) - - (308) unrecognised items (34,355) (10,726) 31,674 65,134 47,994 99,720 (5,351) 1,033 1,604 3,057 7 350 Net assets (liabilities) (39,706) (9,693) 33,278 68,191 48,001 100,070 Derivative assets ............................................ Derivative liabilities ....................................... Non-derivative assets .................................... Non-derivative liabilities ............................... Other liabilities .............................................. Loan commitments Financial guarantee contracts Net unrecognised items ................................ Net assets (liabilities) excluding Issued bonds .................................................. Subordinated liabilities .................................. Short positions used for hedging .................. Short positions held for trading .................... Cash and balances with Central Bank ........... Shares and other variable income securities Fixed income securities ................................. Securities used for hedging ........................... Loans to customers ........................................ Other assets ................................................... Loans to credit institutions ............................ Deposits ........................................................ Borrowings ..................................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 36 ===== SIDA 40 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 45 46. Liquidity risk (cont.) 31.12.2024 Up to 1 1-3 3-12 1-5 Over 5 Gross inflow/ Carrying Financial assets by type month months months years years (outflow) amount Non-derivative assets 18,595 - - - - 18,595 18,593 9,726 - - 1,804 - 11,530 11,530 10,753 13,421 52,863 98,218 4,718 179,974 150,203 17,597 10,341 7,442 25,482 3,932 64,795 64,795 1,681 - 3,751 - - 5,432 5,432 12,601 - - - - 12,601 12,601 2,736 2,397 1,543 3 - 6,680 7,704 73,689 26,160 65,600 125,507 8,650 299,606 270,857 Derivative assets Inflow ....................................................... 13,279 143 2,346 920 1,036 17,724 Outflow .................................................... (12,289) (98) (2,329) (796) (940) (16,453) 989 45 17 124 95 1,271 1,197 Up to 1 1-3 3-12 1-5 Over 5 Gross inflow/ Carrying Financial liabilities by type month months months years years (outflow) amount Non-derivative liabilities (134,688) (15,130) (10,447) (3,739) (547) (164,551) 163,378 (1) (301) (1,132) (17,271) - (18,705) 14,390 (17) (535) (3,319) (34,010) (2,557) (40,439) 37,123 - - (336) (1,399) (9,304) (11,039) 5,629 (153) - - - - (153) 153 (42) - - - - (42) 42 (1,418) (9,219) (1,122) (1,927) - (13,686) 13,635 (136,320) (25,185) (16,355) (58,347) (12,407) (248,615) 234,350 Derivative liabilities Inflow ....................................................... 12,104 142 6,321 24,413 - 42,981 Outflow .................................................... (12,968) (145) (6,240) (26,506) - (45,858) (864) (2) 81 (2,092) - (2,877) 2,932 Unrecognised financial items by type Loan commitments Inflow ....................................................... 147 49 2,796 3,722 - 6,714 Outflow .................................................... (6,060) - - - - (6,060) Inflow ....................................................... - 1 756 37 7 801 Outflow .................................................... (801) - - - - (801) (6,714) 50 3,552 3,759 7 654 Summary 73,689 26,160 65,600 125,507 8,650 299,606 989 45 17 124 95 1,271 (136,320) (25,185) (16,355) (58,347) (12,407) (248,615) (864) (2) 81 (2,092) - (2,877) unrecognised items (62,506) 1,018 49,343 65,191 (3,662) 49,385 (6,714) 50 3,552 3,759 7 654 Net assets (liabilities) (69,220) 1,068 52,896 68,950 (3,655) 50,039 Non-derivative liabilities ............................... Deposits ........................................................ Borrowings ..................................................... Subordinated liabilities .................................. Short positions held for trading .................... Short positions used for hedging .................. Other liabilities .............................................. Derivative assets ............................................ Issued bonds .................................................. Financial guarantee contracts Non-derivative assets .................................... Other assets ................................................... Cash and balances with Central Bank ........... Shares and other variable income securities Securities used for hedging ........................... It should be noted that the Group's expected cash flows sometimes vary considerably from the contractual cash flows, most significantly in that demand deposits from customers are expected to remain stable or increase in the long term. In this case the presentation used reflects the worst case scenario from the Group's perspective. Furthermore, the analysis does not consider any measures that could be taken to convert long-term assets to cash through sale. Cash flows relating to unrecognised balance sheet items (unused loan commitments and financial guarantee contracts) are presented separately from financial assets and financial liabilities. Both contractual outflows and inflows are shown, to fully reflect the nature o f these items. Derivative liabilities ....................................... Net unrecognised items ................................ Net assets (liabilities) excluding Maturity analysis of financial assets and financial liabilities is based on contractual cash flows or, in the case of held for trading securities, exp ected cash flows. If an amount receivable or payable is not fixed, e.g. for inflation indexed assets and liabilities, the maturity analysis uses estimates based on current conditions. Loans to customers ........................................ Fixed income securities ................................. Loans to credit institutions ............................ Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 37 ===== SIDA 41 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 46 47. Market risk a. Definition b. Management 48. Interest rate risk a. Definition b. Management 49. 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 30.9.2025 28 41 432 2,608 1,748 4,857 (7) (1) (4) (50) - (61) Net imbalance 22 40 428 2,559 1,748 4,797 Up to 1 1-3 3-12 1-5 Over 5 month months months years years 31.12.2024 22 54 548 3,181 1,538 5,343 (1) (7) (1) (29) (116) (153) Net imbalance 21 48 547 3,152 1,422 5,190 b. Sensitivity analysis Shift in 30.9.2025 31.12.2024 basis points Downward Upward Downward Upward 50 68 (64) 53 (51) 100 87 (82) 67 (64) Total 155 (146) 120 (115) The Group performs monthly sensitivity analysis on financial assets and liabilities in trading portfolios that are subject to interest rate risk. Th e sensitivity analysis assumes a shift in the yield curves for all currencies. A parallel shift in yield curves would have the following impact on the Group's pre-tax profit and equity, assuming all other risk factors remain constant: Indexed ..................................................................................................... Non-indexed ............................................................................................. Market risk constitutes risk due to changes in the market prices of financial instruments and comprises interest rate risk, currency risk and other price risk. Notes 48-53 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 30 September 2025 - Unaudited 38 ===== SIDA 42 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 46 50. Interest rate risk associated with non-trading portfolios a. Breakdown 30.9.2025 Financial assets Up to 1 1-3 3-12 1-5 Over 5 month months months years years Total 32,532 - - - - 32,532 9,653 - - - - 9,653 181,829 2,930 5,040 5,613 274 195,685 2,875 4,987 1,210 28,666 3,391 41,129 Financial assets excluding derivatives 226,888 7,918 6,249 34,279 3,665 278,999 18,542 49,248 1,300 28,679 935 98,705 Total 245,431 57,166 7,550 62,957 4,600 377,704 Financial liabilities Up to 1 1-3 3-12 1-5 Over 5 month months months years years Total 147,179 16,196 14,992 40 0 178,406 6,249 - - - - 6,249 17,782 24,498 1,351 35,866 2,395 81,891 - 3,323 - 2,690 - 6,012 - 80 159 - - 239 Financial liabilities excluding derivatives 171,210 44,096 16,501 38,595 2,395 272,797 17,109 71,221 - - - 88,329 Total 188,319 115,317 16,501 38,595 2,395 361,126 Total interest repricing gap 57,112 (58,151) (8,952) 24,362 2,205 16,577 31.12.2024 Financial assets Up to 1 1-3 3-12 1-5 Over 5 month months months years years Total 18,593 - - - - 18,593 11,530 - - - - 11,530 136,380 3,761 3,955 5,748 358 150,203 11,158 10,434 9,184 25,308 3,368 59,451 Financial assets excluding derivatives 177,661 14,195 13,138 31,056 3,726 239,777 23,021 23,306 8,408 928 890 56,553 Total 200,682 37,501 21,546 31,984 4,616 296,330 Financial liabilities Up to 1 1-3 3-12 1-5 Over 5 month months months years years Total 135,370 14,930 9,594 3,259 225 163,378 14,390 - - - - 14,390 17 28,435 84 6,501 2,085 37,123 - - 2,963 2,666 - 5,629 Financial liabilities excluding derivatives 149,777 43,366 12,642 12,425 2,310 220,520 20,828 17,231 10,151 - - 48,210 Total 170,605 60,597 22,793 12,425 2,310 268,730 Total interest repricing gap 30,077 (23,096) (1,246) 19,558 2,306 27,600 b. Sensitivity analysis Shift in 30.9.2025 31.12.2024 Currency basis points Downward Upward Downward Upward 50 50 (46) (25) 26 100 283 (277) 450 (439) 20 (6) 6 (4) 4 Total 327 (317) 422 (410) Issued bonds ..................................................................... Other liabilities ................................................................. Subordinated liabilities .................................................... Loans to customers .......................................................... Fixed income securities .................................................... Issued bonds ..................................................................... Effect of derivatives .......................................................... Borrowings ....................................................................... Loans to credit institutions ............................................... Cash and balances with Central Bank .............................. Fixed income securities .................................................... Loans to customers .......................................................... Loans to credit institutions ............................................... ISK, non-indexed ...................................................................................... Other currencies ....................................................................................... The Group performs monthly sensitivity analysis on financial assets and liabilities in non-trading portfolios subject to interest rate risk. The sensitivity analysis assumes a shift in the yield curves for all currencies. A parallel shift in yield curves would have the following impact on the Group's pre-tax profit and equity, assuming all other risk factors remain constant: ISK, indexed .............................................................................................. The breakdown of financial assets and liabilities in non-trading portfolios by the earlier of interest repricing time or maturity is specified as follows: Cash and balances with Central Bank .............................. Deposits ........................................................................... Effect of derivatives .......................................................... Subordinated liabilities .................................................... Effect of derivatives .......................................................... Effect of derivatives .......................................................... Deposits ........................................................................... Borrowings ....................................................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 39 ===== SIDA 43 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 46 51. Exposure towards changes in the CPI a. Definition b. Management c. Balance of CPI linked assets and liabilities 30.9.2025 31.12.2024 31,219 38,426 (24,807) (23,653) Total 6,412 14,773 d. Sensitivity to changes in CPI 30.9.2025 31.12.2024 -1% 1% -1% 1% (27) 27 (55) 55 (42) 42 (31) 31 (223) 223 (278) 278 (21) 21 (21) 21 91 (91) 86 (86) 97 (97) 94 (94) 60 (60) 56 (56) (64) 64 (148) 148 The effect on equity would be the same. 52. 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 30.9.2025 9m 2025 31.12.2024 9m 2024 142.4 144.4 143.9 149.5 121.3 129.5 138.2 138.2 163.0 169.9 173.3 174.9 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 30 September 2025 and 31 December 2024 the Group's position in foreign currencies was within those limits. EUR/ISK ........................................................................................................................... USD/ISK .......................................................................................................................... GBP/ISK ........................................................................................................................... The Group applies hedge accounting according to IAS 39 against translation of foreign operations. Currency swap agreements are used as a hedge instrument against translation difference arising from foreign operations. Deposits .......................................................................................................................... Subordinated liabilities .................................................................................................. Given the net balance of CPI linked assets and liabilities, a 1% change in the CPI would, with other things constant, result in the following changes to the Group's pre-tax profit. Government bonds ........................................................................................................ Other fixed income securities ........................................................................................ Loans to customers ........................................................................................................ Derivatives ...................................................................................................................... Exposure towards changes in CPI is the risk that fluctuations in the Icelandic Consumer Price Index (CPI) will affect the balance and cash flow of indexed financial instruments. The Group is exposed to inflation indexation of assets and liabilities den ominated in ISK. All indexed assets and liabilities are valued according to the CPI measure at any given time and changes in CPI are recognised in the income statement. The Group controls its indexation risk through derivatives contracts and sales and purchases of indexed bonds, mostly government bonds, and thus keeps its exposure to the CPI within the limits set by the ALCO committee. Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 40 ===== SIDA 44 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 52 52. Currency risk (cont.) e. Breakdown of assets and liabilities denominated in foreign currencies 30.9.2025 Assets Other EUR USD GBP SEK currencies Total 0 2 2 - - 4 1,696 1,016 3,082 2,125 338 8,258 3,992 - 37,228 235 14 41,469 - 150 - - - 150 13,778 203 13,091 2 16 27,089 48 815 1 1,020 80 1,964 - - 2,283 - - 2,283 741 541 785 38 54 2,158 Assets excluding derivatives 20,255 2,726 56,472 3,420 501 83,374 51,467 888 2 18,165 14,051 84,573 Total 71,722 3,615 56,473 21,585 14,552 167,947 Liabilities Other EUR USD GBP SEK currencies Total 3,526 3,103 545 55 179 7,408 - - 5,042 - - 5,042 28,901 - - 21,620 14,131 64,653 1,582 304 1,279 8 49 3,223 Liabilities excluding derivatives 34, 010 3,407 6,867 21,683 14,360 80,326 37,466 96 48,519 20 73 86,175 Total 71,476 3,503 55,386 21,703 14,432 166,501 Other Net currency position EUR USD GBP SEK currencies Total 71,722 3,615 56,473 21,585 14,552 167,947 (71,476) (3,503) (55,386) (21,703) (14,432) (166,501) 142 - - - - 142 Total 389 111 1,087 (118) 120 1,589 31.12.2024 Assets Other EUR USD GBP NOK currencies Total 2 1 2 - - 6 6,669 1,380 1,216 110 340 9,715 4,058 - 37,222 - 20 41,300 - 3,593 - - - 3,593 113 936 2,753 14 2 3,817 36 2,187 2 3 79 2,306 - - 2,451 - - 2,451 713 1,602 589 - - 2,903 Assets excluding derivatives 11,590 9,699 44,233 127 441 66,091 4,967 908 1,636 9,959 16,156 33,626 Total 16,558 10,607 45,869 10,086 16,597 99,717 Liabilities Other EUR USD GBP NOK currencies Total 5,162 3,581 599 65 200 9,607 - - 13,700 - - 13,700 - - - 9,891 16,157 26,048 201 634 467 5 110 1,417 Liabilities excluding derivatives 5, 363 4,215 14,766 9,960 16,467 50,772 10,333 6,485 30,322 58 17 47,215 Total 15,696 10,700 45,088 10,019 16,485 97,987 Other Net currency position EUR USD GBP NOK currencies Total 16,558 10,607 45,869 10,086 16,597 99,717 (15,696) (10,700) (45,088) (10,019) (16,485) (97,987) 704 - - - - 704 Total 1,565 (92) 781 67 112 2,434 Total assets ............................................................................ Financial guarantee contracts ............................................... Fixed income securities ......................................................... Shares and other variable income securities ........................ Loans to customers ................................................................ Total liabilities ........................................................................ Financial guarantee contracts ............................................... Total assets ............................................................................ Derivatives ............................................................................. Other liabilities ....................................................................... Securities used for hedging ................................................... Borrowings ............................................................................. Issued bonds .......................................................................... Cash and balances with Central Bank .................................... Shares and other variable income securities ........................ Securities used for hedging ................................................... Loans to customers ................................................................ Cash and balances with Central Bank .................................... Other assets ........................................................................... Derivatives ............................................................................. Deposits ................................................................................ Deposits ................................................................................ Fixed income securities ......................................................... Other assets ........................................................................... Derivatives ............................................................................. Intangible assets .................................................................... Intangible assets .................................................................... Borrowings ............................................................................. Loans to credit institutions .................................................... Loans to credit institutions .................................................... Issued bonds .......................................................................... Total liabilities ........................................................................ Other liabilities ....................................................................... Derivatives ............................................................................. Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 41 ===== SIDA 45 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 52 52. Currency risk (cont.) f. Sensitivity to currency risk 30.9.2025 31.12.2024 Assets and liabilities denominated in foreign currencies -10% +10% -10% +10% 39 (39) 156 (156) 11 (11) (9) 9 109 (109) 78 (78) (12) 12 4 (4) (3) 3 7 (7) 15 (15) 8 (8) Total 159 (159) 243 (243) 53. Equity risk a. Definition b. Sensitivity analysis of equity risk 31.12.2024 -10% +10% -10% +10% (119) 119 (110) 110 (314) 314 (307) 307 (2,427) 2,427 - - (160) 160 (126) 126 Total (3,020) 3,020 (543) 543 54. 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 associates are excluded. 30.9.2025 Listed shares ........................................................................................................................ Unlisted shares .................................................................................................................... Unlisted unit shares in funds ............................................................................................... SEK ....................................................................................................................................... NOK ...................................................................................................................................... The individual business units within the Group are primarily responsible for managing their respective operational risk. The risk management unit is furthermore responsible for identifying, monitoring and reporting the Group's operational risk. Operational risk can be reduced through staff training, process re-design and enhancement of the control environment. The risk management unit monitors operational risk by tracking loss events, quality deficiencies, potential risk indicators and other early-warning signals. The unit takes an active role in internal control and qual ity management. Operational risk is the risk of direct or indirect loss from inadequate or failed internal processes or systems, from human error or external events that affect the Group's reputation and operational earnings. EUR ...................................................................................................................................... USD ...................................................................................................................................... Other currencies .................................................................................................................. Equity risk is the risk that the fair value of equites decreases as the result of changes in the value of shares and other variable income securities in the Group’s portfolio. Unit shares in cash equivalent liquidity funds .................................................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 42 ===== SIDA 46 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 54 Financial assets and financial liabilities 55. Accounting classification of financial assets and financial liabilities Manda- 30.9.2025 Fair value torily at Total Financial assets Amortised through fair value carrying cost OCI through P/L amount 32,532 - - 32,532 9,653 - - 9,653 192,536 - 3,149 195,685 - 39,933 6,053 45,986 - - 30,198 30,198 - - 5,676 5,676 - - 2,365 2,365 - 462 - 462 6,486 - - 6,486 Total 241,207 40,395 47,442 329,044 Manda- Fair value torily at Total Financial liabilities Amortised through fair value carrying cost OCI through P/L amount 178,406 - - 178,406 6,249 - - 6,249 81,891 - - 81,891 6,012 - - 6,012 - - 125 125 - - 453 453 - - 183 183 10,842 - 647 11,489 Total 283,400 - 1,408 284,808 Manda- 31.12.2024 Fair value torily at Total Financial assets Amortised through fair value carrying cost OCI through P/L amount 18,593 - - 18,593 11,530 - - 11,530 149,329 - 874 150,203 - 59,169 5,625 64,795 - - 5,432 5,432 - - 12,601 12,601 - - 1,197 1,197 7,704 - - 7,704 Total 187,156 59,169 25,729 272,054 Manda- Fair value torily at Total Financial liabilities Amortised through fair value carrying cost OCI through P/L amount 163,378 - - 163,378 14,390 - - 14,390 37,123 - - 37,123 5,629 - - 5,629 - - 153 153 - - 42 42 - - 2,649 2,649 - 283 - 283 13,315 - 320 13,635 Total 233,835 283 3,164 237,282 Derivatives .................................................................................................................. Other liabilities ............................................................................................................ Derivatives used for hedge accounting ...................................................................... The accounting classification of financial assets and financial liabilities is specified as follows: Fixed income securities ............................................................................................... Shares and other variable income securities .............................................................. Securities used for hedging ......................................................................................... Loans to customers ..................................................................................................... Derivatives .................................................................................................................. Other assets ................................................................................................................ Loans to credit institutions ......................................................................................... Cash and balances with Central Bank ......................................................................... Fixed income securities ............................................................................................... Shares and other variable income securities .............................................................. Securities used for hedging ......................................................................................... Loans to customers ..................................................................................................... Derivatives .................................................................................................................. Other assets ................................................................................................................ Deposits ...................................................................................................................... Borrowings .................................................................................................................. Derivatives used for hedge accounting ...................................................................... Issued bonds ............................................................................................................... Subordinated liabilities ............................................................................................... Short positions used for hedging ................................................................................ Short positions used for hedging ................................................................................ Short positions held for trading .................................................................................. Loans to credit institutions ......................................................................................... Derivatives .................................................................................................................. Other liabilities ............................................................................................................ Cash and balances with Central Bank ......................................................................... Deposits ...................................................................................................................... Borrowings .................................................................................................................. Issued bonds ............................................................................................................... Subordinated liabilities ............................................................................................... Short positions held for trading .................................................................................. Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 43 ===== SIDA 47 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 54 56. Financial assets and financial liabilities measured at fair value a. - - - b. c. d. 30.9.2025 Financial assets Carrying Level 1 Level 2 Level 3 amount Mandatorily measured at fair value through profit and loss 5,104 106 844 6,053 26,494 5 3,700 30,198 5,676 - - 5,676 - - 3,149 3,149 - 2,365 - 2,365 Measured at fair value through other comprehensive income 39,933 - - 39,933 - 462 - 462 Total 77,207 2,937 7,693 87,837 Inputs are quoted market prices (unadjusted) in active markets for identical instruments. Level 1 Level 2 Fixed income securities ............................................................................................ Inputs are not observable or unobservable inputs have a significant effect on the valuation. This category includes instruments that are valued based on quoted prices for similar instruments for which significant unobservable adjustments are required to reflect th e differences between the instruments. Inputs are not quoted market prices but are observable either directly, i.e. as prices, or indirectly, i.e. derived from prices. This category includes financial instruments valued using quoted prices in active markets for similar instruments, quoted prices for similar or identical instruments in markets that are considered less than active and other instruments which are valued using techniques which rely primarily on inputs that are directly or indirectly observable from market data. Level 3 The fair value of financial assets and liabilities that are traded in active markets are based on quoted market prices. For other financial instruments the Group determines fair value using various valuation techniques. IFRS 13 specifies a fair value hierarchy based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources whereas unobservable inputs reflect the Group's market assumptions. These two types of inputs result in the following fair valu e hierarchy: The Group uses widely recognised valuation techniques, including net present value and discounted cash flow models, comparison with similar instruments for which market observable prices exist, Black-Scholes and other valuation models. Fixed income securities ............................................................................................ Shares and other variable income securities ........................................................... Fair value hierarchy Fair value hierarchy classification The fair value of financial assets and financial liabilities measured at fair value in the statement of financial position is classified into the fair value hierarchy as follows: Valuation process The Bank's Credit committee is responsible for fair value measurements of financial assets and financial liabilities classified as level 2 or level 3 instruments. The valuation is carried out by personnel from respective departments under supervision from Risk. The valuations are revised at least quarterly, or when there are indications of significant changes in the underlying inputs. Valuation techniques For more complex instruments, the Group uses proprietary models, whic h usually are developed from recogn ised valuation models. Some or all of the inputs into these models may not be market observable and are derived from market prices or rates or are estimated based on assumptions. When entering into a transaction, the financial instrument is recognised initially at the transaction price, which is the best indicator of fair value, although the value obtained from the valuation model may differ from the transaction price. This initial difference, usually an increase in fair value, indicated by valuation techniques is recognised in income depending upon the individual facts and circumstances of each transaction and no later than when the market data becomes observable. The value produced by a model or other valuation technique is adjusted to allow for a number of factors as appropriate, because valuation techniques cannot appropriately reflect all factors market participants take into account when entering into a transaction. Valuation adjustments are recorded to allow for model risks, bid-ask spreads, liquidity risks, as well as other factors. Management believes that these valuation adjustments are necessary and appropriate to fairly state financial instruments carried at fair value in the statement of financial position. Valuation techniques include recent arm's length transactions between knowledgeable, willing parties, if available, reference to the current fai r value of other instruments that are substantially the same, the discounted cash flow analysis and option pricing models. Valuation techniques incorporate all factors that market participants would consider in setting a price and are consistent with accepted methodologies for pricing financial instruments. Periodically, the Group calibrates the valuation technique and tests it for validity using prices from any observable curre nt market transactions in the same instrument, without modification or repackaging, or based on any available observable market da ta. Derivatives ................................................................................................................ Loans to customers .................................................................................................. Securities used for hedging ...................................................................................... Derivatives used for hedge accounting .................................................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 44 ===== SIDA 48 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 54 56. Financial assets and financial liabilities measured at fair value (cont.) 30.9.2025 Financial liabilities Carrying Level 1 Level 2 Level 3 amount Mandatorily measured at fair value through profit and loss 125 - - 125 453 - - 453 - 183 - 183 - - 647 647 Measured at fair value through other comprehensive income - - - - Total 578 183 647 1,408 31.12.2024 Financial assets Carrying Level 1 Level 2 Level 3 amount Mandatorily measured at fair value through profit and loss 4,908 106 611 5,625 1,922 55 3,456 5,432 12,601 - - 12,601 - - 874 874 - 1,197 - 1,197 Measured at fair value through other comprehensive income 59,169 - - 59,169 Total 78,600 1,358 4,940 84,898 Financial liabilities Carrying Level 1 Level 2 Level 3 amount Mandatorily measured at fair value through profit and loss 153 - - 153 42 - - 42 - 1,710 939 2,649 - - 320 320 Measured at fair value through other comprehensive income - 283 - 283 Total 195 1,993 1,259 3,447 e. Shares and Fixed other var. income income Loans to Other 30.9.2025 securities securities customers Derivatives liab ilities Total Balance as at 1 January 2025 611 3,456 874 (939) (320) 3,682 8 194 79 17 11 309 778 836 579 (580) (3) 1,609 - - (758) 990 177 409 - (786) - - - (786) (553) - 2,376 513 (513) 1,823 Balance as at 30 September 2025 844 3,700 3,149 - (647) 7,046 Shares and Fixed other var. income income Loans to Other 31.12.2024 securities securities customers Derivatives liab ilities Total Balance as at 1 January 2024 114 2,517 682 (860) (405) 2,049 7 362 69 (168) (5) 265 604 612 - - - 1,217 - - (621) 89 90 (442) - (36) - - - (36) (114) - 743 - - 629 Balance as at 31 December 2024 611 3,456 874 (939) (320) 3,682 Fixed income securities ............................................................................................ Derivatives used for hedge accounting .................................................................... Additions .......................................................................... Repayments ...................................................................... Disposals ........................................................................... Derivatives ................................................................................................................ Derivatives ................................................................................................................ Other liabilities ......................................................................................................... Other liabilities ......................................................................................................... Short positions held for trading ............................................................................... Reconciliation of changes in Level 3 fair value measurements Short positions used for hedging ............................................................................. Derivatives ................................................................................................................ Short positions held for trading ............................................................................... Short positions used for hedging ............................................................................. Fixed income securities ............................................................................................ Shares and other variable income securities ........................................................... Loans to customers .................................................................................................. Securities used for hedging ...................................................................................... Derivatives used for hedge accounting .................................................................... Reclassified as assets held for sale ................................... Total gains and losses in profit or loss ............................. Additions .......................................................................... Repayments ...................................................................... Disposals ........................................................................... Reclassification ................................................................. Total gains and losses in profit or loss ............................. Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 45 ===== SIDA 49 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 54 56. Financial assets and financial liabilities measured at fair value (cont.) f. Book value Range 30.9.2025 0-95% 844 - 3,700 - 3,149 Total 7,693 Book value Range 31.12.2024 0-95% 611 - 3,456 - 874 Total 4,940 g. +10% -10% 84 (84) 370 (370) 315 (315) Total 769 (769) 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 30 September 2025 - Unaudited 46 ===== SIDA 50 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 56 Other information 57. Pledged assets Settlement and Securities 30.9.2025 committed facilities borrowing Total - 418 418 7,461 - 7,461 14,300 109 14,409 Total 21,761 527 22,288 Settlement and Securities 31.12.2024 committed facilities borrowing Total - 1,774 1,774 21,053 - 21,053 10,263 94 10,357 - 30 30 Total 31,316 1,897 33,214 58. Related parties a. Definition of related parties b. Arm's length c. Balances with related parties 30.9.2025 Assets Liabilities 117 225 - 36 Total 117 260 31.12.2024 Assets Liabilities 2 124 - 41 Total 2 165 d. Transactions with related parties Interest Interest Other Other 9m 2025 income expense income expense - 5 1 1 - - - 240 Total - 5 1 241 Interest Interest Other Other 9m 2024 income expense income expense - 2 1 1 - - - 259 Total - 2 1 260 Management .................................................................................................................... Management ...................................................................................................................................................................... The Group has a related party relationship with the board members of the Bank, the CEO of the Bank and key employees (together referred to as management), associates as disclosed in note 25, shareholders with significant influence over the Bank, close family members of individuals identified as related parties and entities under the control or joint control of related parties. Management ...................................................................................................................................................................... Associates .......................................................................................................................................................................... Loans to credit institutions ........................................................................................................................ Loans to customers ................................................................................................................................... Fixed income securities ............................................................................................................................. Loans to credit institutions ........................................................................................................................ Loans to customers ................................................................................................................................... Fixed income securities ............................................................................................................................. Other assets ............................................................................................................................................... Transactions with related parties are carried out at arm's length and subject to an annual review by the Bank's internal auditor. 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. Associates .......................................................................................................................................................................... Associates ......................................................................................................................... Management .................................................................................................................... Associates ......................................................................................................................... Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 47 ===== SIDA 51 ===== Kvika banki hf. Amounts are in ISK millions Notes to the Condensed Interim Consolidated Financial Statements 56 59. Other matters Sale of TM finalised Tax treatment of warrants sold by the Bank 60. Events after the reporting date There are no material events after the reporting date. As the Iceland revenue and customs has not yet concluded its review, the Bank has not charged any amount to its income statement nor made any changes to the tax returns for the respective years. The Bank is aware of that the Iceland revenue and customs ("Skatturinn") is currently reviewing the tax treatment of warrants that the Bank sold during the years 2017 to 2019. The Iceland revenue and customs is looking into whether the warrants should be taxed as perquisites instead of as a financial instruments. Should that be the case, then the Bank would be required to pay the respective social security tax and tax on financial activity. The Bank would however be able to deduct the amount of salary related expenses, as well as the amount of the perquisites, from its tax base for the respective years in question, and thereby increase its deferred tax losses. On 28 February 2025 Kvika and Landsbankinn hf. ("Landsbankinn") finalised the sale of 100% of TM tryggingar hf. ("TM") share capital to Landsbankinn. The handover of the insurance company took place simultaneously, with Landsbankinn paying Kvika the agreed purchase price upon completion. As previously communicated by Kvika on 30 May 2024, the final purchase price has been adjusted based on changes in TM’s tangible equity from the beginning of 2024 until the closing date, 28 February 2025. The initially agreed purchase price was ISK 28.6 b illion, but the final purchase price amounted to ISK 32.2 billion, reflecting the purchase price adjustment for 2024 and for the period 1 January to 28 February 2025. Condensed Interim Consolidated Financial Statements 30 September 2025 - Unaudited 48