FULLTEXT DEL 2 AV 2

Kvartalsrapport Q3 2025

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

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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 =====

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