From the Chairman of the Board

After a period of strong economic growth, activity slowed significantly in 2024. Despite challenging conditions, most indicators suggest that the economy is on track for a soft landing. The outlook for 2025 is positive, with Landsbankinn’s Economic Research department forecasting around 2% GDP growth. On a global scale, the International Monetary Fund (IMF) also holds an optimistic view, projecting 3.3% global economic growth in 2025. While inflation in Iceland has been more persistent than in neighbouring countries, signs of progress in combating inflation have emerged, providing the Central Bank with long-awaited room to lower interest rates. Nonetheless, numerous uncertainties remain, both domestically and internationally, posing potential challenges. 

Sound operation and robust Bank  

Landsbankinn delivered solid financial results in 2024, based on key performance indicators. The Group’s profit totalled ISK 37.5 billion, with a return on equity (ROE) of 12.1%, up from 11.6% in 2023. Cost has not grown alongside increased activity. Greater economies of scale were reflected in a cost-income ratio of 32.4% in 2024, down from 33.7% the previous year. With strong performance, the Bank’s position has further strengthened. At the end of 2024, equity stood at ISK 325 billion, with a capital ratio of 24.3%, well above regulatory requirements. At the turn of the year, total assets reached nearly ISK 2,200 billion, having doubled in nominal terms over the past decade and increased by 30% in real terms. In April, S&P Global Ratings upgraded Landsbankinn’s credit rating to BBB+ and, by year end, the rating outlook was revised to positive.  

Should this proposal be approved, dividends paid by the Bank in the years 2013-2025 will in total amount to ISK 210.5 billion.  

Strong support for households and companies 

Dividend payments are part of the positive impact Landsbankinn has on society. Thanks to economies of scale and efficient operations, the Bank is well-positioned to strongly support investment and economic development in Iceland. The Bank’s corporate lending activities are built on a solid foundation, as the Bank has deep expertise in Icelandic business operations and strong risk management practices. This is evident in the consistently low level of loans in arrears. Landsbankinn remains a leader in the construction sector and maintains a strong position in the seafood industry, despite intensifying competition from foreign financial institutions. In 2024, the Bank’s total lending increased by ISK 177 billion, of which ISK 109 billion was in corporate loans, with the increase distributed fairly evenly across industries. This growth was made possible by successful funding of the Bank, both through deposits and market financing. 

Landsbankinn is equally committed to serving individuals and households. The Bank's strategy prioritises customer satisfaction and surveys indicate that customers are happy with the service provided. Landsbankinn also enjoys strong customer trust, reflected in the growth of individual deposits. This increase is not only due to trust in the Bank but also to competitive interest rates and accessible, high-quality service. In 2024, total deposits grew by ISK 180 billion, with more than half of this increase coming from individuals and households. The Bank’s acquisition of TM tryggingar was announced in the first half of the year. The acquisition, still contingent on approval by regulatory authorities, and will herald further changes and breadth in the Bank’s service offering. 

On-going emphasis on cybersecurity 

Information technology is an increasingly critical component of financial services, and its role will only expand further in the coming years. Landsbankinn has made significant investments in IT in recent years, leading to a more efficient and flexible operation and improved customer service. At the same time, cybersecurity has been a key focus area and for good reason. Operational risk and non-financial risk factors have grown in scope, particularly in the areas of cybersecurity and IT risk management. Cyberattacks continue to pose a growing threat, and the Bank remains committed to strengthening its defences, ensuring the protection of customers and critical infrastructure. 

First-rate digital solutions and personal service throughout Iceland 

The Bank’s focus on developing diverse technological solutions that simplify customers’ daily lives has yielded strong results. Landsbankinn also remains committed to the personal touch and country-wide presence, as this approach benefits both the Bank and its customers, who have responded positively. The Bank operates 35 branches and outlets across Iceland.  

The results have been remarkable. As detailed in this Annual and Sustainability Report, tasks that can be handled regardless of location are now efficiently managed through the Hub, ensuring seamless service delivery across all regions. Within the Hub, branch employees across the country can access incoming service requests and respond by calling customers for mortgage consultations, hold virtual meetings, or handle inquiries via email, among other tasks. In addition to its branch network, Landsbankinn operates a robust Customer Service Centre, with staff based in the Bank’s headquarters at Reykjastræti and in Akureyri. Following the implementation of a new customer service system, branch employees across the country can now connect to the Customer Service Centre and assist with incoming inquiries and calls. The numbers speak for themselves. In the past year, around 45 branch employees from various locations participated in handling customer service tasks. Staff in rural areas facilitated 80% of the 7,600 virtual meetings requested by customers. The Hub has proven to be a highly successful initiative, strengthening the Bank’s operations in rural Iceland, a development that benefits both society and the Bank itself.  

Sustainability an important factor 

In recent years, sustainability has become an increasingly important aspect of the Bank’s operations, directly influencing treasury management and financing. In 2024, 61% of the Bank’s foreign funding was green financing. Sustainability is part of the European regulatory framework, prompting the Board of Directors to establish a temporary Sustainability Committee while mapping the implementation of the EU Taxonomy, sustainability disclosures and sustainability risk assessment. The Committee’s responsibilities have now been transferred to the Audit Committee and the Board of Directors. It is clear that sustainability will remain a key focus for the Bank, requiring continuous integration into daily operations. Ensuring a structured and strategic approach is crucial, and in 2024, the Bank updated its sustainability policy. 

Higher taxes than in other European countries 

As noted in a report from Intellecon, prepared for the Icelandic Financial Services Association and published in 2024, taxes on Icelandic banks are much higher than in other European countries. A significant factor is that Icelandic banks pay various special taxes, which are either not imposed in neighbouring countries or are significantly lower there. In addition, Icelandic banks operate under stricter capital requirements. The increase in reserve requirements announced by the Central Bank last year has resulted in additional costs. Due to this, the amount that Landsbankinn is required to hold interest-free in Central Bank accounts increased by ISK 38 billion. Based on 2024 interest rate levels, interest on this sum would have amounted to almost ISK 3 billion.  

A new Board of Directors was elected at Landsbankinn’s AGM in April 2024. On behalf of the Board, I thank the Bank’s employees and its management for their good work during the year and a pleasant acquaintanceship.