Íslandsbanki's 2024 Annual and Sustainability Report, with the Consolidated Financial Statements and the Pillar 3 Report, provide a clear picture of the Bank's operations during the year.
Annual and Sustainability Report (PDF)
Financial Statements (PDF)
Pillar 3 Report (PDF)
There is a clear need for consolidation in the Icelandic financial market, and there are excellent opportunities for streamlining - opportunities we are keenly interested in exploring.
Íslandsbanki has long been a leader in education-related matters, and we plan to take further steps to help our customers gain an overview of their finances and move towards their financial goals.
The past few years have been trying for both employees and customers, owing to demanding conditions inthe markets. High inflation, high interest rates, and economic uncertainty have created challenges that call for adaptability, toughness, and resilience. This has
affected our daily lives and the lives of our customers, many of whom are also members of our team.
These conditions have motivated us to strengthen our infrastructure and place stronger emphasis on implementing what we call a culture of success and responsibility in the Bank's operations. This has entailed clarifying and simplifying targets, decision-making, and responsibilities in all of our tasks. We have maintained a high level of job satisfaction, dedication, and team spirit among our staff members. We are proud of the way we have stood together and used these challenges as a springboard for further growth – for it is through this joint effort that we succeed.
We have maintained a high level of job satisfaction, dedication, and team spirit among our staff members. We are proud of the way we have stood together and used these challenges as a springboard for further growth.
Hafsteinn Bragason
Head of Human Resources
In 2024, Íslandsbanki worked in accordance with the Strategy House model that was approved in 2023 and contained the Bank’s older strategy. A new strategy was approved by the Board at the end of 2024, and priorities for year-2025 tasks will be shaped by it.
The new strategy was presented to employees at the beginning of 2025, and emphasis will be placed on robust implementation and follow-up during the year. The strategy reflects Íslandsbanki’s focus on putting its customers in first place by providing outstanding service while promoting their financial health.
With financial health as a priority, the Bank's focus will be very clear. Our marketing, product development, service points, and digital sales emphasise enhancing customers' financial health, and in the coming term we will continue to roll out exciting innovations for customers' benefit. We will help customers to gain a better overview of their finances and will be available when they need us. Furthermore, we will help our customers make progress in their finances with even stronger target groups, where data enable us to know each customer better.
Financial health links well with physical health: the Íslandsbanki Reykjavík Marathon is not only the biggest public health event in Iceland, but also the country's largest charity donation drive.
Mental health is the third pillar of overall health, and we prioritise a strong workplace with a high level of employee satisfaction. This is the key to our being able to offer our customers outstanding service and a positive experience.
With financial health as a priority, the Bank’s focus will be very clear. Our marketing, product development, service interfaces, and digital sales emphasise enhancing customers’ financial health, and in the coming term we will continue to roll out exciting innovations for customers’ benefit.
Edda Hermannsdóttir
Executive Director, Marketing and Communications
During the last year, Personal Banking has taken major strides in initiating personalised contact with customers. Good service means being available to customers at all of the turning points they face. We want to anticipate and better understand our customers' needs and provide integrated personal and digital service. It is important to maintain personal relationships with our customers even though use of digital solutions has increased. Emphasis on stronger data infrastructure has given us a good foundation for leadership in offering personalised service and communications tailored to each customer's needs. Customers now receive telephone calls, e-mails, or in-app messages about products and services that suit them at any point in time.
We want to help Íslandsbanki customers to achieve their goals through healthier finances, whether they are acquiring their first home, preparing for retirement, or seeking a bit more financial flexibility each month. Emphasis has been placed on developing digital solutions that support financial health and on providing professional and personal service when customers seek us out.
Good service means being available to customers at all of the turning points they face. We want to anticipate and better understand our customers’ needs and provide integrated personal and digital service.
Ólöf Jónsdóttir
Managing Director, Personal Banking
Early in 2024, high interest rates and persistent inflation made their mark on Icelandic companies' operations. Economic resilience was put to the test, but companies showed tremendous toughness in a challenging environment. High interest rates cut into demand for new loans, particularly in the motor vehicle market, where new car sales contracted sharply. Despite challenging conditions, new lending totalled ISK 92 billion in 2024 and indicators of delinquencies were broadly unchanged, showing enormous determination and resilience among Icelandic companies.
Ergo, Iceland's oldest asset leasing firm, celebrates its 40th anniversary in 2025. Ergo's competitive advantage lies in its broad product range, professional service, and experienced and knowledgeable staff. In autumn 2024, Ergo premiered a new advertising campaign that we are using to welcome the anniversary year.
New solutions have been developed that will enable companies to conduct their finances on the go. Significant effort has been put into developing a new online bank for businesses, which we look forward to launching in the first quarter of 2025. As before, we are proud of our leading market share among SMEs.
New solutions have been developed that will enable companies to conduct their finances on the go. Significant effort has been put into developing a new online bank for businesses, which we look forward to launching in the first quarter of 2025.
Una Steinsdóttir
Managing Director, Business Banking
Corporate and Investment Banking has a robust group of customers that have used their strength for various investments despite high interest rates, and the Bank has supported them with loans for new projects and acquisitions. New lending totaled ISK 71 billion.
Íslandsbanki has adopted a policy of building and maintaining expertise in infrastructure development financing and has assembled a dedicated infrastructure team, and a number of projects are in the pipeline. The Bank has also increased its emphasis on foreign lending.
Securities Sales had an excellent year, despite challenging market conditions for most of the period. The Bank is a leader in the market, with the largest share of OMXI equity market turnover in 10 of the 12 months of 2024 and the second-largest share of combined equity and fixed income market turnover. Demanding markets over the past few years have also affected Asset Management customers, but those who weathered the storm patiently are now reaping the benefits as markets turn around. As before, Íslandsbanki is a leader in the foreign exchange market, with an experienced team who work closely with the Bank's customers.
Íslandsbanki has adopted a policy of building and maintaining expertise in infrastructure development financing and has assembled a dedicated infrastructure team, and a number of projects are in the pipeline. The Bank has also increased its emphasis on foreign lending.
Kristín Hrönn Guðmundsdóttir
Managing Director, Corporate and Investment Banking
After a protracted period of challenging interest rates and persistent inflation, the markets are once again favourable for savers. Foreign markets have remained strong, good terms are still available in the bond market, and stock market pricing is generally considered moderate.
The long-awaited monetary easing phase is underway, and the outlook is even brighter than in the recent past. In view of this, we launched IS Fixed Income Strategy in 2024. It is a bond fund with a broader investment strategy than conventional bond funds have, and it can therefore take full advantage of market opportunities that arise. All of the bond funds managed by Iceland Funds delivered positive real returns in 2024, and for years the company has been a leader in the Icelandic market, with a market share of 38%.
As regards young people's financial health, we have been particularly gratified to see a consistent rise in young people's interest in private pension savings. Íslandsbanki's Future Wealth private savings plan now has over 42,000 members, and all of the Future Wealth investment options managed by Iceland Funds delivered strong returns during the year.
All of the bond funds managed by Iceland Funds delivered positive real returns in 2024, and for years the company has been a leader in the Icelandic market, with a market share of 38%.
Kjartan Smári Höskuldsson
Managing Director, Iceland Funds Ltd.
As we reflect on the year's progress, I am immensely proud of our Digital and Data teams for delivering solutions that truly enhance the financial health of our customers whilst ensuring a stable and secure environment.
Highlights include the new digital car financing solution, AML/KYC improvements, corporate account onboarding, Payday integration into the app and new machine learning models to name a few.
Looking towards the future, the focus will remain on continuing our journey towards becoming a truly data driven organisation delivering more personalised products and services to our customers, reimagining the branch experience and leveraging the power of Generative AI and other new technologies.
Looking towards the future, the focus will remain on continuing our journey towards becoming a truly data driven organisation delivering more personalised products and services to our customers, reimagining the branch experience and leveraging the power of Generative AI and other new technologies.
Riaan Dreyer
Managing Director, Digital and Data
Banks' operating environment is constantly evolving, and new risks come to the fore on a regular basis. Technological advances, social and political changes, environmental impact, cyberthreats, and seismic activity are risks that can strongly affect banks' operating results and reputation. It is therefore important to remain vigilant at all times and ensure that risk management is flexible and effective, so as to enable the identification and assessment of new risks.
2024 was a year characterised by high interest rates and their impact on individuals and companies. Debt service burdens grew heavier, more borrowers retired non-indexed loans, and demand for CPI loans grew. The Bank's CPI imbalance grew, but there was no detectable increase in credit risk, as delinquencies have not grown. The Bank has strengthened its anti-money laundering framework following recommendations from the Central Bank and has placed increased emphasis on cybersecurity. Preparation for the implementation of new regulatory instruments was ongoing during the year, including the third Capital Requirements Regulation on the assessment of banks' capital requirements (CRR III), and the Regulation on digital operational resilience for the financial sector, commonly referred to as the Digital Operational Resilience Act (DORA). Íslandsbanki's Risk Management team works continuously to improve its assessment, framework, and management of risks.
2024 was a year characterised by high interest rates and their impact on individuals and companies. Debt service burdens grew heavier, more borrowers retired non-indexed loans, and demand for CPI loans grew. The Bank's CPI imbalance grew, but there was no detectable increase in credit risk, as delinquencies have not grown.
Guðmundur Kristinn Birgisson
Chief Risk Officer
We want to contribute to an effective financial market based on sound and appropriate business practices that develop between people and create the foundations for formal regulatory requirements in societies. Frequently, the formal European regulatory framework is intended to cover the activities of international financial institutions that operate in multiple markets and larger markets than is the case in Iceland, and with larger and more complex product offerings. This is true not only of business practices as such, but also of the supervision provided for in the regulatory framework.
The controls that are created and implemented must be well-grounded and effective, and Compliance provides solutions-oriented advice that supports this. Monitoring of their efficacy must be risk-oriented, effective, and useful, not only for Compliance in the second line of defence, but also in the first line of defence, with active monitoring that is integrated into daily operations via so-called management supervision.
We want to contribute to an effective financial market based on sound and appropriate business practices that develop between people and create the foundations for formal regulatory requirements in societies.
Barbara Inga Albertsdóttir
Managing Director, Compliance
Íslandsbanki's operations were strong in 2024. The Bank generated a profit of ISK 24.2 billion, which is equivalent to an annualised return on equity of 10.9%. The cost-to-income ratio for the year as a whole was 43.9%. In terms of both return on equity and cost-to-income ratio, the Bank's performance exceeded its financial targets, thanks to strong results from all of its operational units and subsidiaries. The Bank's balance sheet remains strong and is largely composed of the loan portfolio, on the one hand, and deposits, bond issues, and capital, on the other. Credit growth was robust during the year, at 6%, and deposits grew by 10%. The funding terms offered to the Bank continued to improve in 2024 and now are at their most favourable in quite some time. Capital ratios are strong, meeting internal targets and supervisory requirements with considerable room to spare. The entry into force of the third Capital Requirements Regulation (CRR III), set for 2025, will probably increase that scope still further. The Bank has set the objective of streamlining its capital, through growth and/or distributions to shareholders.
Íslandsbanki's operations were strong in 2024. The Bank generated a profit of ISK 24.2 billion, which is equivalent to an annualised return on equity of 10.9%. The cost-to-income ratio for the year as a whole was 43.9%.
Ellert Hlöðversson
Chief Financial Officer
The year 2024 marked a turning point for the Icelandic economy, transitioning from a robust growth phase to a period of adjustment. Unfavourable net trade contribution offset moderate domestic demand growth, resulting in a mild contraction in GDP. Both the housing and labor markets saw reduced tensions. Inflation declined notably during the year, prompting the start of an interest rate reduction cycle in 4Q. Moderate GDP growth is expected in 2025, characterised by continued economic rebalancing and declining inflation, which will enable further rate cuts in the coming year.
The management and ultimate control over Íslandsbanki is divided among shareholders, the Board of Directors, and the CEO, in accordance with the Bank's Articles of Association and the applicable law and regulatory provisions.
The Board oversees the Bank's activities and ensures that they are in compliance with the applicable regulatory provisions, sound business and governance practices, and rules adopted by the Board for the Bank's activities.
The Executive Committee oversees and coordinates key aspects of the Bank's activities and has decision-making authority in matters assigned to it by the CEO, in accordance with policies, goals, and risk appetite as defined by the Board.
Íslandsbanki has resolved to be a force for good in the Icelandic economy. The Bank is dedicated to working with its customers and thereby making an impact on Icelandic society.
Íslandsbanki’s Sustainability Policy aims at making the Bank a model of exemplary operations in the Icelandic business community and a catalyst for positive social action, moving Iceland forward by empowering its customers to succeed.
The sustainability statement covers Íslandsbanki's environmental, social and corporate governance factors for 2024.
We want to be a role model for the Icelandic economy and take an active part in society. We want our products to reflect rising customer demand for sustainable operations and development. We always want to be where you are.
