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Investor Presentation

Landsbankinn

November 2017

Landsbankinn

DISCLAIMER

This presentation is for information purposes only and shall not be construed as an offer or solicitation for the subscription or purchase or sale of any financial instrument.

This presentation may not be reproduced, retransmitted or further distributed to the press or any other person or published, in whole or in part, for any purpose. Failure to comply

with this restriction may constitute a violation of applicable securities laws. This presentation does not constitute or form part of and should not be construed as, an offer to sell or

issue or the solicitation of an offer to buy or acquire securities of Landsbankinn in any jurisdiction or an inducement to enter into investment activity. No part of this presentation, nor

the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever.

The information set out in this presentation has not been independently verified. No representation or warranty is made by Landsbankinn as to the accuracy, completeness or

fairness of the information or opinions contained in this presentation.

This presentation is intended only for persons having professional experience in matters relating to investments being relevant persons (as defined below). Solicitations resulting

from this presentation will only be responded to if the person concerned is a relevant person.

Neither this presentation nor any copy of it may be taken or transmitted into the United States of America, its territories or possessions, or distributed, directly or indirectly, in the

United States of America, its territories or possessions. Any failure to comply with this restriction may constitute a violation of U.S. securities laws. This presentation is not an offer of

securities for sale in the United States. Landsbankinn has not registered and does not intend to register any securities in the United States or to conduct a public offering of any

securities in the United States.

This presentation is made to and is directed only at persons in the United Kingdom having professional experience in matters relating to investments who fall within the definition of

"investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (the "Order"), and to those persons to whom it can

otherwise lawfully be distributed (such persons being referred to as "relevant persons").

The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including, without limitation,

management's examination of historical operating trends, data contained in Landsbankinn’s records and other data available from third parties. Although Landsbankinn believes

that these assumptions were reasonable when made, these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to

predict and are beyond its control, and Landsbankinn may not achieve or accomplish these expectations, beliefs or projections. Neither Landsbankinn, nor any of its members,

directors, officers, agents, employees or advisers intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in

this presentation.

Landsbankinn accepts no liability whatsoever for any direct or indirect loss, howsoever arising, from use of this presentation.

Landsbankinn assumes no obligation to update this presentation, provide any additional information or correct any errors, which may eventually become apparent.

2


Landsbankinn

The Big Picture – Iceland at a glance


Capital city Reykjavík

Population 343,960 (Q2 2017)

Size 102,775 km2

Government Parliamentary Constitutional Republic

Elections held 28 October 2017

Legislature Althingi

63 members elected for term every four years

Political

milestones

Full independence in 1944

Member of UN in 1946, OECD 1948, NATO

1949. Joined EFTA in 1970 and accessed the

European Economic Area in 1994

Currency ISK - Icelandic króna 1 EUR ≈ 122 ISK

GDP Total $19.4 billion

Per Capita $57,889 (2016)

Sovereign

long term

credit ratings

S&P: A/Stable (June 2017)

Moody’s: A3/Stable (Sept 2016)

Fitch: A-/Positive (July 2017)

3

Landsbankinn‘s branches

Source: www.statice.is, www.imf.org

Landsbankinn

A leading Icelandic universal bank

■ Landsbankinn hf. is the largest financial institution in Iceland offering universal banking services for households, corporates and institutional investors

■ The market leader in the Icelandic financial services sector

■ Market share ≈ 35-40 % in the domestic retail segment and corporate sector

■ Award winning mobile banking solutions for retail and corporates

■ The most extensive branch network in Iceland, 24 branches and 13 service points

■ Total number of staff 998 (9M 2017)

4


Landsbankinn

Strategy


5

Landsbankinn

Ownership

6

Icelandic State

Treasury

≈ 900 other shareholders

0.3%

The Icelandic State

Financial Investments

(ISFI)

98.2%

Landsbankinn

- Own shares

1.5%

■ The Finance Ministry published an ownership policy

in July 2017 in regards to equity holdings in financial

companies that are supervised by the Icelandic State

Financial Investments (ISFI)

■ In regards to Landsbankinn the policy states,

■ The government will retain a significant equity

stake in the bank (34-40%) to ensure stability in

the domestic financial sector

■ The remaining equity stake will be sold in the next

few years given favorable market conditions

■ Equity in Landsbankinn will be listed on a stock

exchange


Landsbankinn

Organisational chart

7

Perla Ösp Ásgeirsdóttir Hreiðar Bjarnason Hrefna Ösp Sigfinnsdóttir Arinbjörn Ólafsson Helgi Teitur Helgason Árni Þór Þorbjörnsson

Lilja B. Einarsdóttir


Landsbankinn 8

S&P credit rating

Fundamental factors for Landsbankinn:

■ Very strong capital and earnings

■ Strong liquidity position

■ Average funding profile

■ Adequate business position

■ Moderate risk position

Icelandic sovereign Landsbankinn hf.

Long-term rating A BBB+

Short-term rating A-1 A-2

Outlook Stable Stable

Last rating action March 2017 October 2017


1

3

5

7

9

11

13

15

17

19

07.10.2008 07.10.2009 07.10.2010 07.10.2011 07.10.2012 07.10.2013 07.10.2014 07.10.2015 07.10.2016 07.10.2017

Landsbankinn hf. Republic of Iceland - Foreign currency

20.01.2014

25.10.2017

25.10.2016 21.07.2015

Landsbankinn 9

Strong overall credit profile

■ Landsbankinn is among the global leaders in terms of its leverage and CET 1 ratio

■ Landsbankinn’s pro-forma RAC ratio as of mid-year 2017 is at 19.9%

■ Landsbankinn aims to be in the highest category for RAC ratio, as determined and measured by the relevant credit rating agency

Source: Standard&Poors – RatingsDirect

*Mid-year 2017 RAC ratio


29.7%

18.4% 16.3% 16.3%

12.3%

0%

5%

10%

15%

20%

25%

30%

35%

Landsbankinn Nordea Danske Bank DNB Bank of Ireland

CET 1 ratio Year-end 2016

20.3%

5.0% 4.6%

7.3% 7.3%

0%

5%

10%

15%

20%

25%

Landsbankinn Nordea Danske Bank DNB Bank of Ireland

Leverage ratio Year-end 2016

19.9%*

11.6% 10.3% 10.9%

12.3%

10.2% 10.1%

0%

5%

10%

15%

20%

25%

Landsbankinn Swedbank AB Jyske Bank AS Nordea BankAB

DNB Bank AS Danske BankAS

Bank of Ireland

S&P RAC ratio year-end 2016

Landsbankinn

Banking System in Iceland – Three Main Players


10

1199

1078

1144

900

950

1000

1050

1100

1150

1200

1250

Landsbankinn Íslandsbanki Arion banki

Assets (ISKbn)

243

178

222

0

50

100

150

200

250

300


Equity (ISKbn)

26.3%

22.5%

26.6%

15%

20%

25%

30%

35%


Tier 1 ratio

44.7%

60.2% 55.3%

0%

20%

40%

60%

80%


Cost to Income ratio

141.8%

130.0%

168.4%

100%

120%

140%

160%

180%

200%


Loans to Deposit ratio

18.1%

15.3% 16.8%

0%

5%

10%

15%

20%

25%


Leverage ratio

Source: 9M 2017 Financial Statements

Landsbankinn

Strong market position

11

Retail banking

Corporate banking


Source: Gallup

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9M 2017 Results

Landsbankinn

Financial highlights

Operations Balance Sheet

Profit after taxes ISK 16.84bn

Return on equity after

taxes 9.4%

Interest spread as a ratio

of assets and liabilities 2.5%

Cost-income ratio 44.7%

Total Assets ISK 1,199bn

26.3%

158%

1.0%

ISK 243bn Equity

Tier 1 Capital

LCR Total

Arrears (>90 days)

EUR 134.3m EUR 9.6bn

EUR 1.9bn

Exchange rate: EUR/ISK as at 30 September 2017 125.4

13


Landsbankinn


14

Development of KPIs

12.4% 12.5%

14.8%

6.6%

9.4%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2013 2014 2015 2016 9M 2017

Return on equity after taxes

26.7% 29.5% 30.4% 30.2%

26.8%

0%

5%

10%

15%

20%

25%

30%

35%

31.12.13 31.12.14 31.12.15 31.12.16 30.09.17

Total capital ratio

42.9%

56.0%

43.8% 48.4%

44.7%

0%

10%

20%

30%

40%

50%

60%

2013 2014 2015 2016 9M 2017

Cost-income ratio excluding valuation adjustments

4.4%

8.2% 9.4%

10.8%

5.2%

4.7%

0%

2%

4%

6%

8%

10%

12%

2012 2013 2014 2015 2016

Dividend yield Special dividend

Landsbankinn


15

Income Statement

Amounts in ISKm

9M 2017 9M 2016 Change Q3 2017 Q3 2016 Change

Net interest income 27,070 26,207 3% 8,894 8,596 3%

Net adjustments in valuation 2,067 4,419 -53% 766 2,144 -64%

Net interest income after adjustments in

valuation 29,137 30,626 -5%

9,660 10,740 -10%

Net fee and commission income 6,591 5,909 12% 2,159 2,015 7%

Other net operating income 5,914 5,157 15% 535 355 51%

Total operating income 41,642 41,692 0% 12,354 13,110 -6%

Salaries and related expenses 10,308 10,409 -1% 3,163 3,096 2%

Other operating expenses 7,378 7,173 3% 2,475 2,230 11%

Total operating expenses 17,686 17,582 1% 5,638 5,326 6%

Profit before tax 23,956 24,110 1% 6,716 7,784 -14%

Income tax expense and tax on liabilities of financial

institutions 7,115 7,710 -8%

2,528 2,682 -6%

Profit for the period 16,841 16,400 3% 4,188 5,102 -18%

Landsbankinn


16

Net operating income

Amounts in ISKm

62% 15%

9%

5%

4% 3%

2% Income mix

Net interest income

Net commission and fees

Equities

Other net operating income

Net adjustments in valuation

Bonds

FX gain (loss)

9,879 7,855 7,269 7,466 8,018

7,118 7,385 8,929 10,145 10,158

7,340 7,057

8,834 8,596 8,894

9,977

5,776

7,292 8,443

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2013 2014 2015 2016 2017

Net interest income Q1 Q2 Q3 Q4

4,430

14,027 12,334

4,419 2,067

3,932

6,101 5,882

-4,737

-10,000

-5,000

0

5,000

10,000

15,000

20,000

25,000

2013 2014 2015 2016 2017

Net adjustments in valuation 9M Q4

1,363 1,518 1,641 1,980 2,116

1,597 1,403 1,753

1,914 2,316

1,151 1,275

1,745

2,015

2,159

1,180 1,640

1,702

1,900

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2013 2014 2015 2016 2017

Net fee and commission income Q1 Q2 Q3 Q4

Landsbankinn


17

Net operating income

Amounts in ISKm

4,631

2,491

7,947

-100

3,975

2,372

3,572

1,724

555

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

2013 2014 2015 2016 2017

Equities 9M Q4

3,438

614

2,186

1,225 1,251

637

2

592

315

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2013 2014 2015 2016 2017

Bonds 9M Q4

1,350

-40

-1,219

33

-893

-203 107

-58

-212

-1,500

-1,000

-500

0

500

1,000

1,500

2013 2014 2015 2016 2017

FX gain (loss) 9M Q4

2,660

1,473

-238

3,999

1,581

750

1,358 4,296

744

-1,000

0

1,000

2,000

3,000

4,000

5,000

2013 2014 2015 2016 2017

Other operating income 9M Q4

Landsbankinn


18

Operating expenses

*2013, less expensed equity-based wages

Amounts in ISKm

■ In 2010 the government imposed a special tax on financial institutions

■ The tax of 0.376% is levied on the carrying amount of total liabilities in excess of ISK 50bn

3,173 3,455 3,702 3,754 3,491

3,122 3,288 3,179 3,559 3,654

2,810 3,019 3,466 3,096 3,163

3,508 3,805 3,407 3,640

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2013 2014 2015 2016 2017

Salaries and related expenses* Q1 Q2 Q3 Q4

1,183 1,126 1,063 1,012 998

0

200

400

600

800

1,000

1,200

1,400

31.12.13 31.12.14 31.12.15 31.12.16 30.09.17

Full time employees

2,611 2,649 2,580 2,499 2,426

2,593 2,395 2,597 2,444 2,477

2,371 2,164 2,127 2,230 2,475

2,372 3,313 2,674 2,292

0

2,000

4,000

6,000

8,000

10,000

12,000

2013 2014 2015 2016 2017

Other operating expenses Q1 Q2 Q3 Q4

Landsbankinn


19

Assets

Amounts in ISKm

5% 4% 2% 2% 2%

59% 65% 73% 77% 76%

6% 5%

2% 2% 3%

3% 3% 3%

2% 3% 25% 22% 18% 14% 13%

2% 1% 2% 3% 3%

0%

20%

40%

60%

80%

100%

31.12.13 31.12.14 31.12.15 31.12.16 30.09.17

Assets

Cash and balances with CB

Bonds and debt instruments

Equities and equity instruments

Loans and advances to financial institutions

Loans and advances to customers

Other assets

30.09.17 31.12.16 Change

Cash and balances with CB 33,157 30,662 2,495 8%

Bonds and debt instruments 160,223 154,892 5,331 3%

Equities and equity instruments 31,049 26,688 4,361 16%

Loans and advances to financial institutions 41,485 20,408 21,077 103%

Loans and advances to customers 905,927 853,417 52,510 6%

Other assets 22,740 17,641 5,099 29%

Assets classified as held for sale 4,377 7,449 -3,072 -41%

Total 1,198,958 1,111,157 87,801 8%

Landsbankinn


20

Balance sheet - loans

Amounts in ISKbn

* Problem loans are defined as loans and advances with individual allowance and / or more than 90 days in arrears

250 240 274 319 357

244 279 327

360 389

187 199

211 174

160

680 718

812 853

0

100

200

300

400

500

600

700

800

900

31.12.13 31.12.14 31.12.15 31.12.16 30.09.17

Loans to customers ISK-CPI loans ISK loans FX loans

138 110 111 121 132

151 171 200 239

267

185 198 210

173 160

474 480 521 533

559

0

100

200

300

400

500

600

31.12.13 31.12.14 31.12.15 31.12.16 30.09.17

Loans to corporates ISK-CPI loans ISK loans FX loans

5.3%

2.3% 1.8% 1.5% 1.0%

5.5%

4.0%

2.0% 0.9% 1.2%

10.8%

6.3%

3.8%

2.4% 2.2%

0%

2%

4%

6%

8%

10%

12%

31.12.13 31.12.14 31.12.15 31.12.16 30.09.17

Problem loans Arrears > 90 days Loans and advances with individual allowance

112 129 163

198 225

93 108

127

121 122

1

1

1 1

206 239

291 320 347

0

50

100

150

200

250

300

350

400

31.12.13 31.12.14 31.12.15 31.12.16 30.09.17

Loans to individuals ISK-CPI loans ISK loans FX loans

Landsbankinn


21

Balance sheet - Loans

Amounts in ISKbn

30.09.2017 31.12.2016 Change

ISK 394 361 33 9%

ISK CPI 357 319 38 12%

EUR 102 93 9 10%

USD 40 61 -21 -34%

Other currencies 13 19 -6 -32%

Total loans 906 853 53 6%

New

le

ndin

g

FX

change

CP

I changes

Changes in

im

pairm

ent &

W

rite

off

s

Insta

llments

853

203 --8 5 1 -113

906

400

500

600

700

800

900

1,000

1,100

Loans change 9M 2017 Loans 3

1.1

2.1

6

Loans 3

0.0

9.1

7

43%

39%

11%

5% 2%

Loans by currencies

ISK

ISK CPI

EUR

USD

Other currencies

Landsbankinn


22

Balance sheet - Loans

Amounts in ISKm

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Public entities Individuals Fisheries Constructioncompanies

Real estatescompanies

Holdingcompanies

Retail Services ITC Manifacturing Agriculture Other

Loans by industry sectors 31.12.15 31.12.16 30.09.17

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Indexedmortgage loans

Non-indexedmortgage loans

Overdrafts andcredit cards

Vehiclefinancing

Other

Loans to individuals by loan types 31.12.13 31.12.14 31.12.15

31.12.16 30.09.17

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Continous LTV distribution of mortages to individuals 31.12.2015

31.12.2016

30.9.2017

Weighted average LTV 30.09.17 60.1% (62.3% 31.12.16 ; 63.4% 31.12.2015)

Funding and Liquidity

23

Landsbankinn


24

Balance sheet – liabilities and equity

Amounts in ISKm

167,218

53,827 56,731 20,093 21,946

456,662

551,435 559,051 589,725

638,781

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

31.12.13 31.12.14 31.12.15 31.12.16 30.09.17

Deposits Due to financial institutions and CB Deposits from customers

21% 23% 23% 23% 20%

4% 3% 3% 2% 2%

21% 19% 19% 20% 23%

40% 50% 50% 53% 53%

14% 5% 5% 2% 2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

31.12.13 31.12.14 31.12.15 31.12.16 30.09.17

Liabilities and equity

Due to financial institutionsand CB

Deposits from customers

Borrowings &subordinated liabilities

Other liabilities

Equity

30.09.17 31.12.16 Change

Due to financial institutions and CB 21,946 20,093 1,853 9%

Deposits from customers 638,781 589,725 49,056 8%

Borrowings 267,853 223,944 43,909 20%

Other liabilities 27,017 25,776 1,243 5%

Subordinated liabilities 229 388 -159 -41%

Equity 243,132 251,231 -8,099 -3%

Total 1,198,958 1,111,157 87,801 8%

Landsbankinn


25

Borrowings

Amounts in ISKm

0

50,000

100,000

150,000

200,000

250,000

Issued bonds to LBI Covered bonds EMTN issuance Other unsecuredloans

Subordinatedliabilities

Borrowings 31.12.2013 31.12.2014 31.12.2015 31.12.2016 30.9.2017

7,775 6,740 16,240

3,720

19,540

5,640

16,140 941

40,246 12,160

26,976

62,700 40,274

2,736

2,654

-

100

200

300

400

500

600

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Q4 2017 2018 2019 2020 2021 2022 2023 2024 > 10 years

Maturity profile ISK FX

ISKm EURm

66%

25%

9%

Borrowings 30.09.2017

EMTN issuance

Covered bonds

Other Unsecured loans

Subordinated liabilities

Landsbankinn 26

Landsbankinn’s EUR senior unsecured issuance

54% 41%

3% 2%

58% 26%

8%

4% 4%

57% 31%

5% 4% 3%

32%

47%

12%

6% 3%

34%

31%

8%

10%

13%

4%

60% 13%

7%

6%

5% 9%

Type

Geography


● UK / Ireland

● Nordics

● France

● Ger / Aus / Swiss

● BeNeLux

● Asia / Other

Issue date: October 2015 September 2016 March 2017

Size: € 300 m € 500 m € 300 m

Issue rating (S&P): BBB-

(positive outlook)

BBB-

(positive outlook)

BBB

(positive outlook)

Tenor: 3-year 4.5-year 5-year

Maturity date: October 2018 March 2021 March 2022

Launch spread: + 295 bp + 190 bp + 130 bp

Joint lead managers: Citi, DB, JP Morgan Barclays, Citi, DB Barclays, BAML, Citi, JP Morgan

Roadshow locations:

Copenhagen, Oslo, Helsinki, Stockholm,

London

Copenhagen, Helsinki, London, Paris,

Holland London, Paris, Holland

Investors

● Asset Managers

● Insureres / Pensions

● Banks

● Official Institutions

● Other

Landsbankinn


27

Liquidity

*according to the liquidity and funding rules set by the Central Bank of Iceland, No. 266/2017

Amounts in ISKm

102%

131%

113%

128%

158%

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

31.12.13 31.12.14 31.12.15 31.12.16 30.09.17

Liquidity coverage ratio total LCR total

Regulatory requirements

208%

614%

360%

743%

873%

0%

100%

200%

300%

400%

500%

600%

700%

800%

900%

1000%

31.12.13 31.12.14 31.12.15 31.12.16 30.09.17

Liquidity coverage ratio FX LCR FX Regulatory requirements

Total* FX*

30.09.2017 Unweighted Weighted Unweighted Weighted

Level 1 liquid assets 128,927 128,927 49,299 49,299

Level 2 liquid assets 0 0 0 0

information items 28,806 0 10,375 0

A. Total liquid assets 157,733 128,927 59,674 49,299

Deposits 428,579 113,894 46,714 17,859

Borrowing 2,089 2,089 1,129 1,129

Other outflows 139,651 21,406 33,276 3,610

B. Total outflows (0-30 days) 570,319 137,389 81,119 22,598

Loans and advances to financial institutions 47,413 35,848 37,152 35,787

Other inflows 42,193 20,145 10,891 5,701

Limit on inflows 0 0 0 -24,540

C. Total inflows (0-30 days) 89,606 55,993 48,043 16,948

Liquidity coverage A/(B-C) 158% 873%

Landsbankinn


28

Capital requirements

■ Total capital ratio was 26.8% end of September 2017, as compared with 30.2% at year-end 2016

■ The Bank's target is to maintain a capital ratio above the FME's total capital requirement at any given time, plus an administration buffer specified in the Bank's risk appetite. The Bank also aims to be in the highest category for risk-adjusted capital ratio, as determined and measured by the relevant credit rating agencies

CET1 Tier 1 Total

Pillar I 4.5% 6.0% 8.0%

Pillar II A 2.8% 3.7% 4.9%

Minimum

requirements under

Pillar I and Pillar II A

7.3% 9.7% 12.9%

Systemic risk buffer 2.8% 2.8% 2.8%

Capital buffer for

systematically important

institutions

2.0% 2.0% 2.0%

Countercyclical capital

buffer 1.0% 1.0% 1.0%

Capital conservation

buffer 2.5% 2.5% 2.5%

Combined buffer

requirements under

Pillar II B

8.3% 8.3% 8.3%

Total capital

requirements 15.5% 17.9% 21.2%

8.0% 8.0% 8.0%

6.3% 6.0% 4.9%

3.0% 2.7% 2.8%

2.0% 2.0% 2.0%

0.9% 1.0%

2.5% 2.5% 2.5%

21.8% 22.1% 21.2%

29.5% 30.4%

30.2%

0%

5%

10%

15%

20%

25%

30%

31.12.14 31.12.15 31.12.16

Total capital requirements as defined by FME

Capital conservationbuffer

Countercyclical capitalbuffer

Capital buffer forsystematicallyimportant institutuionsSystemic risk buffer

Pillar II A

Pillar I

Total capital ratio

888,918 845,604 865,482 836,758

911,779

77.2% 77.0% 77.4% 75.3% 76.0%

50%

60%

70%

80%

90%

100%

0

200,000

400,000

600,000

800,000

1,000,000

31.12.13 31.12.14 31.12.15 31.12.16 30.09.17

Risk weighted assets

Risk weighted assets RWA / total assets

Amounts in ISKm

Landsbankinn

Landsbankinn key take-aways

29

Exceptionally strong

capital ratio’s

Positive credit rating

trajectory

» Currently BBB+/A-2,

stable outlook

Largest financial

institution in Iceland

Favorable economic

outlook in Iceland


Economic Outlook

Positive economic fundamentals

2017-2019 Landsbankinn Economic Research projections

Source: Statistics Iceland, Landsbanki Economic Research

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

GDP growth and contribution to growth

Private final consumption Government final consumption Gross fixed capital formation Changes in inventories Net exports Gross Domestic Product

%


-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Current account balance*

Trade balance Underlying balance on primary income ** Underlying current account balance ** Headline current account balance* Secondary income is included in the primary income.

** Excluding the calculated income and expenses of DMBs in winding-up proceedings but including the estimated effects of the settlement of their estates, and excluding the effects of pharmaceuticals company Actavis on

the primary income until 2012. Also adjusted for the failed DMBs' financial intermediation services indirectly measured (FISIM).

% of GDP

Positive economic fundamentals

32 Source: Statistics Iceland

-5

0

5

10

15

20

Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17

Components of CPI inflation

Other components Services Domestic goods Housing Petrol Imported goods CPI

%


0

1

2

3

4

5

6

7

8

9

10

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Unemployment rate %

Tourism has been a primary driver

33 Source: Icelandic Tourist Board

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 9M 2017

Number of foreign visitors

YoY change (right) Total number (left)

thousand visitors


100

120

140

160

180

200

220

240

2600

20

40

60

80

100

120

Exchange rate

Real exchange rate Nominal exchange rate (trade weighted average)

Jan. 2000 = 100 Index (inverted scale)

The Central Bank has been active on the buy side on the local FX market

34 Source: Central Bank of Iceland

0

100

200

300

400

500

600

700

800

900

1000

-20

-10

0

10

20

30

40

50

60

70

80

Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Nov-15 Apr-16 Sep-16 Feb-17 Jul-17

Central Bank intervention in foreign exchange market

FX purchase, spot market FX sale, spot market FX purchase, forward contracts FX sale, forward contracts Net accumulated purchase (right)

ISKbn ISKbn


-200

-180

-160

-140

-120

-100

-80

-60

-40

-20

0

20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Iceland International Investment Position is now close to zero

IIP IIP excluding DMBs undergoing winding up Estimated underlying IIP *

% GDP

* Central Bank of Iceland estimate of the underlying net external position that will result when the domestic and foreign assets of the deposit money banks in winding-up proceedings have

been sold and the proceeds distributed to creditors

35

Strong economic recovery – government deleveraging

0

10

20

30

40

50

60

70

80

90

100

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

General government debt

Net debt Gross debt

2016-2021 IMF staff estimations / projections

Source: IMF World Economic Outlook, April 2017

% GDP

0 50 100 150 200 250

Denmark

Sweden

Iceland

Germany

Ireland

United Kingdom

France

Belgium

United States

Portugal

Italy

Greece

Japan

General Government Gross Debt - International comparison (2016)

% of GDP

IMF Staff estimations

Source: IMF World Economic Outlook, Oktober 2017


Households and corporates have followed suit

36

Source: Financial Stability 2017/2, Central Bank of Iceland

1. Debt owed to domestic and foreign financial undertakings and market bonds issued.


0

20

40

60

80

100

120

140

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Household debt

Indexed Foreign currency Non-indexed Overdraft Asset financing

% GDP


0

20

40

60

80

100

120

140

160

180

2012 2013 2014 2015 2016 2017

Corporate debt¹

Indexed Non-indexed FX loans Asset financing agreements Domestic bonds issued Foreign bonds issued

% GDP

Corporate debt as percentage of GDP in international comparison

37 1. Debt owed to domestic and foreign financial undertakings and market bonds issued.


0.0

50.0

100.0

150.0

200.0

250.0

300.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Corporate debt –international comparison¹

Iceland Denmark Ireland Greece Spain Italy Cyprus Finland Sweden Norway

% GDP


or investor presentation landsbankinn · 9m 2017 9m 2016 change q3 2017 q3 2016 change net interest...

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