Earnings Release • Oct 29, 2025
Earnings Release
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Arion Bank - Q3 2025 results
Arion Bank reports net earnings attributable to shareholders of Arion Bank of ISK 8.2bn in Q3 2025. Investor meeting and webcast in English on 30 October at 9:30 CET (8:30 GMT)
Financial highlights for the third quarter of 2025
Consumer Association’s class-action lawsuit
Following the Supreme Court judgment on 14 October regarding consumer loans with variable interest rates, Arion Bank has reassessed its maximum potential loss in cases brought against the Bank. Arion Bank estimates the maximum potential loss on the Banks non-indexed consumer loans at just under ISK 500 million before tax, assuming the Supreme Court’s decision is applied to the Bank’s loans. Similarly, the potential maximum loss on indexed consumer loans is now estimated at about ISK 4.5 billion before tax, based on calculations that assume the lowest market interest rates published by the Central Bank will be used as a benchmark. The Bank has not made any provisions due to the significant uncertainty about the final decision made by the courts but will keep this under review.
Financial highlights for the first 9 months of 2025
Benedikt Gíslason, CEO of Arion Bank
“The Bank has performed well in the third quarter, and we have achieved all our key financial targets. Despite high interest rates the economy has been ticking along nicely, and our operations clearly reflect this. We reported strong loan growth in the corporate sector although there are signs that things are starting to slow down. As before, there is great strength in the diversity of the services we offer, and all of Arion Group’s business units are delivering solid results. Our capital and liquidity positions remain very strong.
Preliminary discussions between Arion Bank, Kvika Bank and the Icelandic Competition Authority on the proposed merger between the companies have begun. We expect these discussions to take some time, but they will provide us with the opportunity to discuss various issues with representatives of the ICA and exchange information before the merger is formally announced to the ICA. We firmly believe that Kvika and Arion will combine to create a robust financial institution where the strengths of each entity will be harnessed for the benefit of both customers and shareholders alike.
The recent Supreme Court judgment in a case brought against Íslandsbanki has naturally had an impact on the residential mortgage market. The judgment concerned non-indexed mortgages with variable interest and gives a fairly clear guideline on how lenders may change the interest rates on such loans if the terms are found to be partly unlawful. In general, it can be said that the interest rate adjustment terms for Arion loans differ from those terms to which the Supreme Court judgment applied. The Arion Bank loan terms contain both an exhaustive list of factors to be considered when changing interest rates, unlike the Íslandsbanki terms, and each factor is further defined with a concise description. A case against Arion Bank concerning the Bank’s interest rate adjustment terms for indexed mortgages will be heard by the Supreme Court on 17 November, and both the District Court and the Court of Appeal have ruled that the terms are lawful.
The Supreme Court’s judgment in the case against Íslandsbanki has added to the uncertainty over the consequences should the interest rate adjustment terms for indexed loans be deemed partly or entirely unlawful, particularly since interest rates on indexed loans generally do not follow Central Bank policy rates.
We are now seeking ways to offer indexed mortgages because the uncertainty is unfortunate for many of our customers. Providing people with mortgages is integral to our core business and we hope that in the coming weeks we will be able to give more details on the loans which then should be available at least until the Supreme Court has given its verdict on the legality of the interest rate adjustment terms of indexed loans.”
Investor meeting / webcast in English on 30 October at 9:30 CET (8:30 GMT)
Arion Bank will be hosting a meeting at the Bank’s headquarters in Borgartún 19, Reykjavík, on Thursday 30 October at 9:30 CET (8:30 GMT) where CEO Benedikt Gíslason will present the results and Chief Economist Erna Björg Sverrisdóttir will give an update on the economic environment. The meeting will take place in English and will also be streamed live.
The webcast will be accessible live on Lumiconnect and a link is also available on the Bank’s website under Investor Relations.
Participants attending virtually will be able to ask questions during the meeting through a message board on the same site. Answers will be provided by presenters at the end of the webcast.
Financial calendar
Arion Bank’s financial calendar is available on the Bank’s website.
For further information please contact:
Theodór Friðbertsson, Investor Relations at Arion Bank, [email protected], tel. +354 856 6760 or Haraldur Guðni Eiðsson, Head of Corporate Communications, [email protected], tel. +354 856 7108.
This information is information that Arion Bank is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2025-10-29 16:33 GMT.
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