Best bank: Arion Bank
Arion Bank’s 2025 story is one of disciplined growth underpinned by digital innovation and a widening sustainability lens.
Net earnings climbed to ISK30.6 billion ($244 million) and return on equity reached 14.9%, while corporate lending improved by ISK90 billion despite a high-rate environment, signalling the bank’s role as the preferred partner for Icelandic businesses. The strength of this franchise kept capital and liquidity robust: the CET1 ratio ended the year at 18.4% and the liquidity coverage ratio at 199%, comfortably above regulatory floors.
Digital engagement took a decisive step forward with the launch of Arion Rewards, a group-wide loyalty platform that enrolled more than 48,000 customers in ten months. Its centrepiece is the Rewards Account – Iceland’s first instant-access savings account that credits interest weekly. Over 20,000 of these accounts were opened in just a few weeks, helping household deposits jump 14.7% and pulling funds from rival banks. The programme’s tiered benefits, visible in real time in the Arion app, have deepened cross-sales to insurance subsidiary Vörður and fund manager Stefnir, illustrating the Bank’s ‘one-stop-finance’ ambition.
Arion’s corporate franchise also chalked up signature transactions. The sale of Arnarland, a flagship mixed-use development in Garðabær, unlocked value in one of the capital region’s largest regeneration sites. Late in the year, the European Investment Bank extended a €100 million facility that Arion will channel into sustainable fisheries and aquaculture across Iceland and the wider Arctic.
To improve resilience of its operations, Arion refinanced its 2026 senior bond early and tapped Nordic investors with Swedish krona and Norwegian krone-denominated green bonds at pre-pandemic-tight spreads. Additionally, the bank overhauled its risk framework ahead of Europe’s new Digital Operational Resilience Act, including a third-party risk regime that is now live across all business lines.
Finally, management opened merger talks with Kvika Bank, aiming to forge a more diversified domestic champion; while still subject to regulatory review, the discussions epitomise Arion’s readiness to shape Iceland’s financial landscape for the next cycle.
