Annual Report 2025
1
Annual Report 2025
2
Contents
Overview of the Group...…………………………………….….… 3
Financial highlights and ratios.…….…………………………….4
Letter to our stakeholders…........…...........….........………5
Execution of our strategy ….........…...........….........………6
ESG - targets set for 2030…………………………………………..7
Management Review
Management’s Report
Financial Review……..…......…............……...............…..… 8
Our external environment…………………………………….… 14
Applied calculation methods and alternative
performance measures…………………....................….....15
Adjusted results……………………………………………………….16
Management and directorship………………………..…...… 17
Segments
Banking......................…………………………………….….......20
Personal Banking……………………………………………..........21
Corporate Banking…....…………….………………………..….…22
Insurance..................….……………………………………........ 23
Other activities...........…………………………………………..…24
Other matters
Investor Relations....………………………..……………….....… 25
Organisation and management.....….…….…………….…..26
Statement and reports
Statement by the Management…..………………..…………31
Internal auditor’s report…..……......……………………....... 32
Independent auditors’ reports…………………………........ 33
Financial statement
Contents..…........................................…………………...…39
Income statement.…………………………………………..........40
Balance sheet..………………………………….………………...... 42
Statement of changes in Equity …………………….…………44
Capital and Solvency………………………………………………..46
Cash flow statement……………………………………………...47
Notes......................………………………………………………... 48
Definitions of key financial ratios....……………….........107
Annual Report 2025
3
Overview of the Group
Føroya Banki
Trygd
100%
Skyn
100%
NordikLív
100%
Banking is the primary business activity under the Føroya Banki brand in the Faroe
Islands and the Bankivik brand in Greenland. The Group has non-life and life
insurance operations in the Faroe Islands under the Trygd and NordikLív brands.
NordikLív will be dissolved in 2026. Other activities include Skyn, a Faroese estate
agency.
Annual Report 2025
4
Financial highlights and ratios - Føroya Banki Group
Highlights
Full year Full year Index Q4 Q3 Q2 Q1 Q4
DKK 1,000 2025 2024 25 / 24 2025 2025 2025 2025 2024
Net interest income 388,103 442,251 88 94,358 94,386 101,149 98,209 103,019
Dividends from shares and other investments 21,077 11,997 176 6,669 0 14,259 148 0
Net fee and commision income 87,884 78,752 112 23,958 22,125 20,639 21,162 20,515
Net interest and fee income 497,064 533,000 93 124,985 116,511 136,047 119,520 123,534
Net insurance result 66,055 47,747 138 18,591 13,447 23,297 10,720 7,463
Interest and fee income and income from insurance activities, net 563,119 580,747 97 143,576 129,958 159,344 130,240 130,997
Market value adjustments 34,785 45,343 77 3,492 8,139 10,090 13,064 12,056
Other operating income 14,836 9,694 153 2,259 2,990 6,682 2,905 1,889
Staff costs and administrative expenses 256,533 248,369 103 64,165 67,027 62,462 62,880 65,929
Impairment charges on loans and advances etc. -3,982 -1,072 371 -2,346 -8,507 1,761 5,110 -11,400
Net profit 288,317 310,427 93 70,642 63,679 93,067 60,930 72,342
Loans and advances 9,669,773 9,086,392 106 9,669,773 9,598,042 9,694,764 9,270,369 9,086,392
Bonds at fair value 1,106,209 1,757,200 63 1,106,209 1,492,287 1,496,232 1,741,261 1,757,200
Intangible assets 4,415 5,084 87 4,415 4,591 4,834 4,679 5,084
Assets held for sale 2,207 2,207 100 2,207 2,207 2,207 2,207 2,207
Total assets 14,934,717 14,511,644 103 14,934,717 15,170,186 14,636,771 14,800,460 14,511,644
Amounts due to credit institutions and central banks 505,739 823,455 61 505,739 837,987 815,064 801,355 823,455
Issued bonds at amortised cost 903,790 981,190 92 903,790 901,052 898,966 803,231 981,190
Deposits and other debt 10,948,209 10,003,348 109 10,948,209 10,803,028 10,382,526 10,298,759 10,003,348
Total shareholders' equity 2,015,313 2,076,037 97 2,015,313 1,944,670 1,880,992 1,787,925 2,076,037
Dec. 31 Dec. 31 Dec. 31 Sept. 30 June 30 March 31 Dec. 31
Ratios and key figures
2025 2024 2025 2025 2025 2025 2024
Solvency
Total capital, incl. MREL capital, ratio, % 36.3 36.3 36.3 36.6 35.9 36.0 36.3
Total capital ratio, % 24.6 25.2 24.6 24.5 24.0 24.9 25.2
Tier 1 capital ratio, % 23.3 23.8 23.3 23.1 22.7 23.5 23.8
CET 1 capital 23.3 23.8 23.3 23.1 22.7 23.5 23.8
RWA, DKK mill 7,732 7,180 7,732 7,412 7,545 7,271 7,180
Profitability
Return on shareholders' equity after tax, % 14.1 15.8 3.6 3.3 5.1 3.2 3.5
Cost / income, % 42.3 40.3 42.9 43.0 36.6 48.3 39.6
Cost / income, % (excl. value adjustm. and impairments) 45.5 43.5 45.5 52.1 37.7 49.2 51.8
Return on assets 1.9 2.1 0.5 0.4 0.6 0.4 0.5
Market risk
Interest rate risk, % 0.6 1.2 0.6 0.8 0.9 1.2 1.2
Foreign exchange position, % 1.0 0.8 1.0 0.3 0.9 0.6 0.8
Foreign exchange risk, % 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Liquidity
Liquidity Coverage Ratio (LCR), % 306.4 337.4 306.4 294.5 259.7 261.1 337.4
Net Stable Funding Ratio. (NSFR), % 160.6 154.5 160.6 163.4 158.3 151.0 154.5
Credit risk
Change in loans and advances, % 6.4 2.3 0.7 -1.0 4.6 2.0 0.2
Gearing of loans and advances 4.8 4.4 4.8 4.9 5.2 5.2 4.4
Impairment and provisioning ratio, end of period, % 1.7 1.8 1.7 1.7 1.8 1.8 1.8
Write-off and provisioning ratio, % 0.0 0.0 0.0 -0.1 0.0 0.0 -0.1
Shares
Earnings per share after tax (nom. DKK 20), DKK 30.1 32.4 7.4 6.7 9.7 6.4 7.6
Market price per share (nom. DKK 20), DKK 286.0 162.0 286.0 195.0 188.0 171.0 162.0
Book value per share (nom. DKK 20), DKK 210.5 216.8 210.5 203.1 196.5 186.8 216.8
Othe r
Number of full-time employees, end of period 201 207 201 202 199 204 207
Annual Report 2025
5
Letter to our stakeholders
Overall, 2025 was a year characterised by positive
trends for the Føroya Banki Group. Our business
momentum made up for the low interest rate
environment, and the profit for the year exceeded our
expectations at the beginning of the year.
A strong year financially
On the global political scene, the year was marked by
geopolitical turmoil and a changing risk landscape,
putting our ability to navigate in an unpredictable
environment to the test. From a business perspective, we
were challenged by a low interest rate environment and
rising expenses, offset by significant extraordinary
income and a solid performance in our core business,
which reported a 7% increase in business volume
compared to 2024. Impairment charges were also lower
than expected, which is a testament to our customers’
robust financial position.
We delivered a profit after tax of DKK 288m, and at the
upcoming Annual General Meeting on 26 March, we
intend to propose dividend payments of DKK 202m (DKK
21.04 per share), representing 70% of the net profit for
2025.
The Faroese and Greenlandic economies
As a North Atlantic financial group, our performance is
linked to developments in the communities we are a part
of. The Faroese and Greenlandic economies are small,
and therefore vulnerable. Greenland has seen moderate
economic growth in recent years. The unemployment
rate is relatively low, whereas inflation has been rising –
albeit from a low level. The demand for housing in Nuuk
is high, and the new airport has led to a record number
of travellers. The Faroese economy is showing solid
momentum and growth, and unemployment and inflation
rates are low. Population growth continues, housing
demand is high in the large towns, and house prices
have been rising for several years. Moreover, 2025 was
a record year for the Faroese tourism industry.
A milestone on our digital journey
Enhancing our customers’ user experience was a key
strategic focus for us in 2025. In the spring, our efforts to
develop efficient digital solutions for our customers
reached another milestone with the launch of our new
chatbot, Vita, which makes banking easier. Also, it is the
first chatbot that is able to understand and answer
customers’ questions in Faroese. The solution is a step
on the journey towards digitalising the bank’s services
with the aim of further enhancing the digital customer
experience.
Customer and employee satisfaction on the rise
During the year, we hosted a number of events for our
personal and corporate customers, which gave rise to
many constructive dialogues and strengthened our
relationship with our customers. Our annual customer
satisfaction survey also showed progress. We are very
pleased to have seen customer satisfaction increase by
11 index points over a four-year period. There is no doubt
that our employees’ engagement and skills have a strong
impact on customer experience and loyalty – the two go
hand in hand. This made us extra proud of the results of
this year’s employee survey, which once again
documented a very high level of well-being and
commitment to the Group – with a ranking in the top-in-
class category, which comprises the top 25% of
companies of our size.
Sustainability and new recommendations
In 2025, sustainability remained central to our corporate
social responsibility, and during the year we focused on
integrating sustainability throughout the Group, for
example by providing training for all personal and
corporate customer advisors. At the same time, we
focused intently on reducing the carbon footprint of our
own operations and on supporting the green transition
through collaboration with customers and partners.
We updated our ESG targets towards 2030 and maintain
our focus on responsible leadership, employee
development, inclusion and transparent reporting. As a
consequence of the adoption of the EU omnibus
package on CSRD, we are adapting our approach in line
with the updated reporting framework.
Thank you to all employees
Since the start of our journey as a bank 120 years ago,
we have provided solid advisory services and developed
solutions to promote security and growth for people and
businesses alike. 2025 was a reminder that advising
customers in turbulent and complex times requires
professional strength and experience. I would like to
extend a sincere thank you to all our employees for their
dedicated efforts. On the threshold of a new and exciting
year, we remain committed to continuing our work on
generating customer-centric, sustainable growth.
Turið F. Arge
Chief Executive Officer
Annual Report 2025
6
Execution of our strategy
In 2024, we launched a new strategy period to 2026.
Embedded in the strategy is an ambition to maintain our
strong market position in the Faroe Islands, to
consolidate our position in the Faroese insurance market
and to become an even more important financial partner
for our customers in Greenland. We aim to achieve
sustainable growth by strategically prioritising a positive
customer experience while maintaining a continuous
focus on profitability.
Digital milestones
Enhancing the digital customer experience was a key
strategic focus for us in 2025. It was therefore a
milestone for us to be able to offer our customers the
option to set up accounts directly via our online banking
solution – a function that was refined and enhanced
during the year.
A highlight of the year for us was the launch in the spring
of our chatbot, Vita, which helps customers get quick
answers to questions about finance and banking-related
topics. Vita is the first chatbot of its kind in the Faroe
Islands that writes and understands Faroese. The
technology behind it was developed by the bank’s
employees with the support of language technology
experts in the Faroe Islands and Iceland. This marked an
important strategic step on our digital journey, and in the
new year we will continue our efforts to improve this and
other digital services to further enhance the customer
experience on our digital platforms.
Financial targets met
2025 was a year of progress and strong results for us,
and we delivered on all our financial targets – return on
equity, cost/income and CET1 ratios – which we consider
satisfactory. It is a fact, however, that the current
expected interest rate level for 2026 is lower than the
level on which we based our financial targets in 2024.
Assumptions for 2026 have therefore changed
compared to the original assumptions. Our current
strategy period expires in 2026. During the year, the
Board of Directors will therefore be considering a new
strategy period and thus also new financial targets.
Enhanced customer focus in 2026
Since our establishment 120 years ago, we have had a
clear focus on delivering competent advice and high-
quality services – both in periods of growth and in more
challenging times. After having dedicated much of our
strategic focus to strengthening our digital foundation in
2025, in 2026 we will give more priority to solutions that
create direct value for our customers. Our ambition is to
give our customers in the Faroe Islands and Greenland
the best possible experience within the Group. We will
execute on this ambition through a combination of
targeted digital initiatives and a strong physical
presence, meeting our customers on a day-to-day basis
and at our many customer events.
Annual Report 2025
7
ESG – targets set for 2030
Our sustainability commitments remain strong and
clearly anchored in the UN Global Compact, the Faroese
and Danish requirements applicable to Føroya Banki
Group, and alignment with the Paris Agreement. We are
on track to eliminate Scope 1 emissions by the end of
2025, progressing toward Scope 2 reductions by 2030,
while strengthening Scope 3 data quality through closer
collaboration with partners. Our impact on the green
transition is mainly found in Scope 3 and we are
improving data quality necessary for our reduction plans.
However, we work firmly on reducing our impact located
in our own operations. More generally and by building on
lessons learned since 2020, we have refreshed our ESG
targets toward 2030 in 2025, continuing to prioritise
responsible governance, employee development,
inclusion, and transparent reporting amid evolving
regulatory and global conditions.
Sustainability – adapting to new requirements
Operating a responsible and sustainable business
remains central to our role in supporting long-term
stability and positive community impact. In 2025, we
continued to strengthen sustainability integration across
the organisation, including training all person customer
advisors and corporate customer advisors to engage
customers on sustainability matters. Following the EU
Omnibus decision, which has altered the scope and
timing of CSRD reporting requirements, we have
adjusted our approach and will continue to prepare future
sustainability reporting in line with the updated
framework and, where appropriate, the VSME standard
as a pragmatic and recommended basis for transparent
and consistent reporting going forward.
Embedding sustainability across the Group
To support our strategic approach, we adopted a
sustainability policy in 2022, approved by the Board of
Directors. The policy provides a clear framework for
managing sustainability across the Group by defining
roles, processes, and guidelines that ensure integration
into our core business and transparency for
stakeholders. It also underpins the work of the
sustainability committee and working group.
The policy is based on Finance Denmark’s five key
recommendations: embedding sustainability in the
business model, developing sustainable products,
integrating sustainability into operations, ensuring
transparent communication, and publishing CO
₂
footprints with clear reduction targets. To ensure
accountability and continued relevance, the policy is
reviewed annually by the CEO and the Board of
Directors.
Further details are available in the 2025 Corporate
Responsibility Report.
Annual Report 2025
8
Financial Review
The following figures and comments are generally stated relative to 2024 and relate to the adjusted figures, see the section
“Applied calculation methods and alternative performance measures” on p. 15 for more information on the adjustments
made.
Income statement
Operating income
Net interest income amounted to DKK 316m in 2025
compared to DKK 347m in 2024, due to reduced interest
rate margins in 2025, and a relatively higher deposits
portfolio, partly compensated by lower funding costs.
Net fee and commission income increased by DKK 10m
year on year to DKK 84m in 2025 due to higher fees from
securities trading and brokerage commission related to
the transfer of the Group’s life insurance products from
the subsidiary NordikLív to LÍV.
Net insurance income was DKK 76m in 2025 compared
to DKK 57m in 2024 due to increased premium income
and lower claims in particular. Net insurance income
comprises income from the subsidiaries Trygd and
NordikLív. Due to the agreement with the life
‑
insurance
company LÍV regarding the transfer of the company’s
insurance contracts, NordikLív contributes to net
insurance income until the end of August.
Other operating income came in at DKK 58m in 2025
compared to DKK 41m in 2024. The increase was mainly
due to higher value adjustments and dividends from the
Bank’s sector shares, the sale of the Bank’s IT-platform
provider, SDC, and from the sale of one of the Bank’s
domicile properties.
The Group therefore recognised total operating income
of DKK 534m in 2025, a 3% increase from 2024.
Adjusted Income statement, Group
DKKm
2025 2024
Index
Q4 2025 Q3 2025
Index
Q2 2025 Q1 2025 Q4 2024
Net interest income 316 347 91 79 77 102 84 76 78
Net fee and commission income 84 74 114 24 21 113 19 20 19
Net insurance income 76 57 135 20 14 141 27 16 10
Other operating income (less reclassification) 58 41 140 10 11 94 24 13 9
Total operating income 534 519 103 132 123 108 154 125 117
Operating costs
1
280 273 102 70 73 95 68 69 72
Profit before impairment charges 255 245 104 63 50 126 86 56 46
Impairment charges, net -4 -1 373 -2 -9 28 2 5 -11
Operating profit 259 246 105 65 58 111 84 51 57
Investment portfolio earnings
2
97 136 71 20 22 92 30 25 31
Profit before tax 356 382 93 85 80 106 115 76 88
Operating costs/income, % 52 53 53 59 44 55 61
Number of FTE, end of period 201 207 97 201 202 100 199 204 207
1 Comprises staff costs, administrative expenses and amortisation, sector costs, depreciation and impairment charges (less reclassification to non-recurring items).
2 Incl. net income from investments accounted for under the equity method (excl. sector shares).
0
100,000
200,000
300,000
400,000
500,000
600,000
2021 2022 2023 2024 2025
Operang income
Other operang income (less reclassific aon) Net in su rance income
Net fee and commisio n i ncome & dividends Net interest i ncome
(DKK 1,000)
Annual Report 2025
9
Operating costs
Overall operating costs increased by DKK 6m in 2025, to
DKK 280m. The increase was driven by increased staff
costs as well as IT-related costs. Cost discipline remains
a focus area for the Group, and the drive to improve
operational efficiency and automation will continue in the
years ahead.
Net impairment charges
The Føroya Banki Group’s low-risk credit approach
meant that in 2025, for the nineth year in a row, net
impairment charges were a reversal - in 2025 a reversal
of DKK 4m against a reversal of DKK 1m in 2024. The
management provision was at DKK 116.5m at year-end
2025, up DKK 15m from DKK 101.5m at the end of 2024.
The Group’s management has taken the provision due
to continuing geopolitical and macroeconomic risk
factors as well as uncertainties related to the modelling
of future losses and possible errors in calculating the
Bank’s impairment charges.
The Group remains confident about its through-the-cycle
credit policy and its sound lending portfolio. Strong loan-
to-value private sector exposure makes up about half of
the Group’s loans and advances, and on the corporate
side, the Group is not overexposed to historically risky
industries. As a result, Føroya Banki still expects to be
able to keep impairment charges on a relatively low level.
Operating profit
The Group’s operating profit in 2025 came in at DKK
259m, DKK 13m higher than in 2024.
Investment portfolio earnings
The Bank’s investment portfolio earnings in 2025
amounted to DKK 97m, reflecting lower income from the
Bank’s bond portfolio and lower interest income from the
Bank’s liquidity holdings. The figure in 2024 was DKK
136m.
Profit before tax
The Føroya Banki Group achieved a profit before tax for
2025 of DKK 356m, a DKK 27m decrease on the DKK
382m reported in 2024.
Financial results for Q4 2025
Net interest income in Q4 2025 was DKK 79m, up from
DKK 77m in Q3 2025. Net fee and commission income
was DKK 24m in Q4, an increase of DKK 3m relative to
Q3, while net insurance income was DKK 20m in Q4
compared to DKK 14m in the previous quarter.
Operating costs amounted to DKK 70m in Q4, a DKK 3m
decrease compared to Q3. Impairment charges
amounted to a reversal of DKK 2m in Q4 2025 compared
to a reversal of DKK 9m in Q3. Profit before tax
amounted to DKK 85m in Q4 2025 compared to DKK
80m in Q3 2025.
Balance sheet
Lending
Loans and advances amounted to DKK 9,670m in 2025,
an increase of DKK 583m, or 6%, compared to DKK
9,086m in 2024. The increase was driven by a DKK
274m increase in the Personal Banking segment and by
a DKK 310m increase in the Corporate Banking
segment. The bank’s brokered mortgage credit saw
growth of 3%, or DKK 83m, during 2025, to DKK 2,824m.
0
50,000
100,000
150,000
200,000
250,000
300,000
2021 2022 2023 2024 2025
Operang costs
(DKK 1,000)
(DKK 1,000)
-90,000
-80,000
-70,000
-60,000
-50,000
-40,000
-30,000
-20,000
-10,000
0
2021 2022 2023 2024 2025
Impairment charges
(DKK 1,0 00)
Annual Report 2025
10
Føroya Banki expects the long-term trend of Faroese
household preferences shifting towards the traditional
Danish financing model of 80% mortgage funding and
the residual in 2nd lien bank lending to continue. In 2025,
the bank saw an increase of 2% in mortgage credit to
personal customers and an increase of 7% from
corporate customers.
Føroya Banki places great emphasis on maintaining
sound credit policy guidelines to ensure that lending
growth does not come at the expense of the Group’s
financial sustainability. About half of the loan portfolio is
allocated to personal lending and half to a well-diversified
corporate sector, as shown in the figure below.
Deposits
Total deposits amounted to DKK 10,948m at 31
December 2025, an increase of DKK 945m, or 9%, from
a year earlier. The increase is reflecting the Groups focus
on having a healthy balance between loans and
deposits. Deposits decreased by 2%, or DKK 107m, in
the personal banking segment, while corporate deposits
grew by 28%, or DKK 1,056m, during the year.
Solvency and liquidity
Føroya Banki held total capital of DKK 2,804m, incl.
Minimum Requirement for Own Funds and Eligible
Liabilities (MREL capital), at 31 December 2025
compared to DKK 2,603m at 31 December 2024. The
Bank maintains its target of having a CET 1 capital of
23% relative to REA. MREL capital and Senior Preferred
capital amounted to DKK 904m at 31 December 2025
compared to DKK 791m a year earlier. Subordinated
capital amounted to DKK 100m at 31 December 2025,
flat compared to 31 December 2024. Core capital
amounted to DKK 1,800m at 31 December 2025, which
was an increase of DKK 88m from DKK 1,712m at 31
December 2024. CET 1 capital amounted to DKK
1,800m at 31 December 2025, DKK 88m higher than the
CET 1 capital of DKK 1,712m at 31 December 2024. The
planned payment of dividends regarding the financial
year 2025, amounting DKK 202m, is deducted from the
CET 1 capital etc. mentioned above.
The Group’s MREL capital ratio was flat at 36.3% at 31
December 2025 compared to 2024. The total capital ratio
decreased to 24.6% at the end of 2025 from 25.2% at
the end of 2024. The core capital ratio decreased to
23.3% at the end of 2025 from 23.8% at the end of 2024,
while the Group’s CET 1 ratio decreased to 23.3% at the
end of 2025 from 23.8% the previous year. The reduction
in the capital ratio’s originates from higher risk-weighted
assets, mainly higher credit risk, reflecting the Group’s
increased lending compared to 2024. The Group’s
solvency requirement at the end of 2025 increased to
10.3% from 10.0% at year-end 2024. Consequently, the
solvency surplus at 31 December 2025 was 14.3%
compared to 15.2% in 2024. Relative to the external
capital requirements, incl. MREL requirements, totalling
31.0% at the end of 2025, Føroya Banki had a solvency
surplus of 5.2 percentage points.
As of 1. January 2026 capital requirements according
CRR 3 will be implemented in the Faroe Islands. The
Group has recalculated the risk-weighted assets
according to this new regulation and has seen a slight
0%
1%
2%
2%
3%
7%
8%
8%
8%
13%
48%
0% 20% 40% 60%
Financing and insurance
Energy supply
Building and construction
Other industries
Trade
Industry and raw material extraction
Public authorities
Transport
,
hotels and restaurants
Fisheries. agriculture, hunting and…
Real estate
Personal costumers
Loans and advances specified by sector
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
2021 2022 2023 2024 2025
Deposits
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
2021 2022 2023 2024 2025
Loans and mortgage credit
Loans and advances M ort gage cred it
Annual Report 2025
11
decrease compared to year-end 2025. Thus, the overall
effect of CRR 3 on the capital ratios will be positive going
forward.
The Group’s liquidity coverage ratio (LCR) was 306.4%
at year-end 2025, well above the requirement of 100%.
At year-end 2024 the ratio was 337.4%. The Group’s
NSFR ratio was 160.6% at the end of 2025, also well
above the requirement of 100%. At year-end 2024 the
NSFR ratio was 154.5%.
Other
Supervisory Diamond
The Supervisory Diamond is used to measure a bank’s
risk profile. The model identifies four areas that if not
within certain limits are considered to indicate increased
risk. As shown in the figure, the Bank met all criteria by
a comfortable margin.
Dividends proposed
At the upcoming Annual General Meeting, to be held on
26 March 2026, the Board intends to propose dividend
payments of DKK 202m for 2025 (70% of the net profit
reflecting the Groups dividend policy). The dividend is
thus DKK 21.04 per share.
More information on the dividend policy is available on
our website at
www.foroyabanki.com/dp
Debt issuance
Due to the continuous focus on optimising its CET 1
capital, Føroya Banki plans to continue issuing capital
instruments in 2026. More specific, the Bank intends to
replace one non-secured loan and the subordinated loan
capital (Tier 2) due to their call-date in 2026.
Rating
Føroya Banki obtained its initial rating from Moody’s on
21 March 2022, when both the long-term deposit and
issuer rating were set at A2, outlook positive. The Group
was very pleased that Moody’s, in continued recognition
of the Bank’s “very strong capitalisation and sound
recurring profitability” on 20 November 2023 upgraded
the Bank’s long-term deposit and issuer rating to A1.
On 19 September 2025 the issuer rating was
downgraded from A1 to A2 and the deposit rating was
affirmed. The outlook was negative. On 11 November
2025, due to a change in Moody’s methodology, the
rating was adjusted to the following, and the outlook is
stable:
Category
Moody’s rating
Counterparty risk rating
A2/P-1
Bank deposits
A2/P-1
Baseline credit assessment
baa2
Counterparty risk assessment
A2(cr)/P-1(cr)
Issuer rating
A3
Outlook
Stable
Events after the balance sheet date
Other than what is mentioned in the Annual Report, no
events of significance for the reporting period have
occurred after 31 December 2025.
Follow up on Outlook 2025
Throughout the year 2025, the bank twice revised its
profit guidance for the year upward, once in July and
again in November. The third and latest revision was in
January 2026. These revisions were based on strong
insurance results, growth in business activity, low
impairment charges and extraordinary income originated
from the bank’s ownership in sector companies and from
the sale of a branch office.
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
2021 2022 2023 2024 2025
Solvency
CET 1 capital Hybrid core capital Subordinated lo an capital MREL capital
The Supervisory Diamond
2025
2024 FSA limit
Sum of large exposures 131.9% 144.3% < 175%
Liquidity indicator 233.0% 260.9% >100 %
Loan growth 6.4% 2.3% < 20 %
Property exposure 13.1% 12.0% < 25 %
Outlook 2025 Net result
Return on
Equity
Initial outlook 2025 210-240m DKK
10.4% - 11.9%
Revised outlook 2025 235-265m DKK
Revised outlook 2025 260-280m DKK
Latest outlook 2025 280-290m DKK
Final results 2025 288m DKK 14.1%
Annual Report 2025
12
Outlook 2026
Føroya Banki expects to continue growing its overall
lending and mortgage volumes in 2026 to both personal
and corporate customers.
In the personal banking segment, the Group will continue
to build on the progress of previous years by establishing
stronger relationships and continuing to enhance the
user experience to attract new customers. In Greenland,
Føroya Banki expects to grow lending to existing
customers as well as attracting new customers, and
thereby growing its market share. Uncertainty related to
geopolitical factors may have an influence on the
expected results.
On the corporate side, the Group sees an opportunity to
increase volumes in 2026 due to continued investment
activity in both the Faroe Islands and Greenland, despite
the uncertain global economic outlook and in Greenland
in particular.
The Bank expects no changes in the Danish central
bank’s deposit rate in 2026. The Bank’s net interest
income is expected to decrease slightly in the coming
year due to the full effect of the interest rate decreases
in 2025. However, future interest rate movements are of
course subject to central bank policy.
Insurance premiums are expected to continue to grow
due to both customer acquisition and general price
increases. In 2025, claims were lower than expected due
to favourable conditions in general. Even though it is
difficult to predict the level of net insurance income due
to significant variations in claims levels from one year to
the next, Føroya Banki expects net insurance income to
decrease in 2026 compared to 2025.
The Group’s operating costs rose slightly in 2025, as
staff and IT costs continued to increase for the financial
sector in general. The Group expects operating costs in
2026 to be marginally higher than in 2025, driven by staff
and IT cost increases. Consequently, the cost/income
ratio is expected to be higher than the target of <53%
(2025: 52%).
The Føroya Banki Group is fully focused on serving the
Faroese and Greenlandic markets. It remains one of the
larger players in the Faroe Islands and a strong
challenger in Greenland. Focus will remain on increasing
efficiency and limiting growth in operating costs while
consistently offering market-leading services and strong
asset quality.
The guidance is based on impairment charges
amounting to 0.3% of the bank’s lending portfolio in
2026.
Earnings on the Group’s investment portfolio were strong
in 2025 and are expected to remain so in 2026, albeit not
quite at the level seen in 2025.
In 2026, Føroya Banki expects to achieve a net profit in
the range of DKK 195-235m (2025: DKK 288m).
The expectations for 2026 are subject to uncertainty
related to developments in interest rates, returns on the
investment portfolio, impairment charges, insurance
performance and geopolitical factors.
Outlook 2026
Net results 195-235m DKK
Return on Equity 10% - 12%
Annual Report 2025
13
Annual Report 2025
14
Our external environment
2025 was the year when established, long-held beliefs
were shaken to their core.
Firstly, questions were raised regarding long-term
viability of NATO, given a series of statements by
President Trump and other senior US officials. In
addition, has President Trump stated his wish for
Greenland to become part of the USA, although both
Denmark and Greenland have unequivocally stated that
Greenland is not for ’sale’. Secondly, international
commerce was dealt a significant blow when USA
introduced a wide range of new tariffs on imported
goods. These tariffs signal the end of the era of sustained
trade liberation and declining import tariffs that
commenced with the General Agreement on Tariffs and
Trade (GATT) in 1947.
Both of Føroya Banki’s main geographical markets,
Faroe Islands and Greenland, are small open economies
that are heavily dependent on international trade. The
increased global uncertainty is particularly noticeable in
Greenland. Føroya Banki’s customers in Greenland are
financially resilient, and the bank is in regular contact
with them. The bank does not register any significant
increase in credit risk in Greenland as a result of the
heightened uncertainty.
On a macro level, the Greenlandic economy is
experiencing a slowdown with modest growth. The
slowdown is due to reduced infrastructure investments
and a decrease in the value of total exports, mainly due
to lower volumes of shrimp being caught. In the medium-
to long-term perspective, the forecasted population
decline and aging population will put further pressure on
the economy. The impact of Greenland’s economic
stagnation is reflected in the property prices in
Greenland, which have remained relatively stable over
the past five years, as illustrated by the chart below.
On the positive side, the tourism industry is showing a
strong performance, especially after the opening of the
new airport in Nuuk and the cod fishery is exhibiting a
positive trend and the marine scientists consider the cod
stock to be in a healthy condition. The activity level within
mineral extraction is record high, with over 100 active
licences, of which 8 are exploitation licences.
In Føroya Banki’s main geographical market, the Faroe
Islands, the economic environment was strong during
2025, with the economy running on all cylinders, with all
time high exports, a record trade surplus, equivalent to
8% of GDP, and a sustained unemployment rate below
1%. The strong economic activity has attracted foreign
labourers to the Faroe Islands, and at year-end 2025,
foreigners made up approximately 8% of the total labour
force in the Faroe Islands. The inflation rate has stayed
at a modest level during this period and stood at 0.7%
(p.a.) in November 2025.
The strong economy, growing population and lower
interest rates have resulted in a very strong property
market in the Faroe Islands and Føroya Banki monitors
the situation very closely.
Despite the favourable economic tailwind, the Faroese
public finances have been running significant deficits in
recent years and going forward, demographic headwinds
will put additional strain on the public finances.
In general, Føroya Banki’s customers are financially
resilient and weathered the increased geopolitical and
trade uncertainties in 2025 well. Føroya Banki monitors
the situation closely, and should any customer or
customers be adversely impacted by the uncertainties
outlined above, the bank is in a strong financial position
to manage such a scenario.
15.000
20.000
25.000
30.000
35.000
2010 2012 2014 2016 2018 2020 2022 2024
THE PRICE OF APARTMENTS IN NUUK
kr pr m2
Source: Føroya Banki
15.000
25.000
35.000
45.000
2010 2012 2014 2016 2018 2020 2022 2024
THE PRICE OF APARTMENTS IN TORSHAVN
kr pr m2
Source: Føroya Banki
Annual Report 2025
15
Applied calculation methods and alternative
performance measures
Alternative performance measures
The Bank applies a number of alternative performance measures. These measures are applied where they provide greater
informational value about, e.g. the Bank’s earnings, or as a common denominator for multiple items. The Bank is aware of
the need to apply calculations consistently and with comparative figures. The alternative performance measures applied
are defined below:
Operating income
Sum of Net interest income (less interest income from the Groups bond portfolio), Net fee income, Net insurance income
and Other operating income.
Profit before impairment charges
Profit before Investment portfolio earnings, Impairment charges and Non-recurring costs.
Operating profit
Profit before non-recurring costs and before Investment portfolio earnings.
Other operating income
Other operating income, Dividends related to sector shares, Value adjustments related to sector shares, and Profit or loss
from currency transactions.
Operating costs
Sum of Staff costs and administrative expenses, Sector costs, Other operating expenses and Amortisation, depreciation
and impairment charges on intangible assets and property, plant and equipment.
Impairments
Sum of Impairment charges on loans and reversed impairment charges on loans taken over.
Non-recurring items
Non-recurring staff costs, administrative expenses and extraordinary impairment charges on tangible assets.
Investment portfolio earnings
Interest income from the bond portfolio, value adjustments, less value adjustments of sector shares and less of profit or
loss from currency transactions. Dividends less dividends related to sector shares, Income from holdings in associates.
Annual Report 2025
16
Adjusted results
Note Adjusted Incom e statem ent 2025, Group, (DKK 1,000) Income statement R
estatement
Restated income
statement
1, 4 Net interest income 388,103 -72,170 315,933
2 Net fee and commission income 108,961 -24,710 84,251
4, 5, 6 Net insurance income 66,055 10,251 76,306
2, 3 Other operating income 14,836 43,071 57,907
Operating income 577,954 -43,558 534,396
5 Operating costs 265,249 14,373 279,622
Profit before impairment charges 312,705 -57,931 254,774
Impairment charges -3,982 0 -3,982
Operating profit 316,686 -57,931 258,755
1, 3, 6 Investment portfolio earnings 39,189 57,931 97,120
Profit before tax 355,875 0 355,875
Note Adjusted Incom e statem ent 2024, Group, (DKK 1,000)
1, 4 Net interest income 442,251 -
95,367 346,884
2 Net fee and commission income 90,748 -16,986 73,762
4, 5, 6 Net insurance income 47,747 8,875 56,622
2, 3 Other operating income 9,694 31,543 41,237
Operating income 590,441 -71,935 518,506
5 Operating costs 258,990 14,322 273,312
Profit before impairment charges 331,451 -86,257 245,194
Impairment charges -1,072 0 -1,072
Operating profit 332,524 -86,257 246,267
1, 3, 6 Investment portfolio earnings 49,952 86,257 136,209
Profit before tax 382,475 0 382,475
Note 2025 2024
1 61,919 86,492
2 24,
710 16,986
3 18,361 14,557
4 10,251 8,875
5 14,373 14,322
6 14,373 14,322
Reclassification of interest income to Net insurance income due to IFRS 17
Reclassification of operating costs from Net insurance income to Operating costs due to IFRS 17
Reclassification of market value adjustments from net insurance income to Investment portfolio earnings
due to FRS 17
Reclassification of value adjustments related to sector shares and of profit or loss from currency
transactions to Other operating income.
Reclassification of interest income related to bonds from the item Interest income to Investment portfolio
earnings.
Dividends and fees reclassified from Net fee and commission income to Other operating income.
Restatements made to the income statement (DKK 1,000)
Annual Report 2025
17
Management and directorships
Birgir Durhuus (Chair)
Elected by the General Meeting
Year of birth 1963
Gender Male
Nationality Faroese
First time elected to the Board: 2023
Most recently re-elected: 2024
Term expires:
2026
Independent
Independent
Educational background: Master of Finance, Copenhagen Business School
Competencies:
Several years of working experiences from the Danish financial sector. Primarily Danske Bank, Nordea and Nykredit where he was
analyst and headed different departments within investments and Risk Management. Former CEO of Asgard Asset Management
Principal occupation: Partner at Absolute Return Partners, London
Directorships and other offices: Chairman of the Board at ELM Capital; Former chairman of Atlantic Petroleum
Annfinn Vitalis Hansen (vice chair)
Elected by the General Meeting
Year of birth 1963
Gender Male
Nationality Faroese
First time elected to the Board: 2024
Most recently re-elected:
Term expires:
2026
Independent
Non-independent
Educational background: Master of law, University of Copenhagen. Lawyer and Partner at LEKS lawfirm.
Competencies:
In-depth knowledge and several years og practical working experiences within various legal issues. Broad and extensive knowledge of
the Faroese business community and its structures.
Principal occupation: Partner at LEKS lawfirm
Directorships and other offices: Board member of Ruth Holding ApS, GTM Familie Holding ApS and Sp/f RMV Holding.
Árni Tór Rasmussen
Elected by the General Meeting
Year of birth 1975
Gender Male
Nationality Faroese
First time elected to the Board: 2024
Most recently re-elected:
Term expires:
2026
Independent
Non-independent
Educational background: Educated within finance, accounting and investments.
Competencies:
In-depth knowledge of the faroese business community and practical experiences within various commercial projects and investment
activities.
Principal occupation: Self-employed - CEO at different companies with investment activities
Directorships and other offices: CEO af Sp/f RMV Holding. Chairman at Sp/f Navigare shipping and P/F Reyni Service
Marjun Hanusardóttir
Elected by the General Meeting
Year of birth 1954
Gender Female
Nationality Faroese
First time elected to the Board: 2024
Most recently re-elected: 2025
Term expires:
2027
Independent
Independent
Educational background:
MSc. in Food Science, Royal Veterinary- and Agricultural University, Copenhagen. Diploma in Public Administration, Danish High School
of Public Administration. MSc. Distinction in Management, Robert Gordon University, Aberdeen.
Competencies:
Several years of practical experiences and in-depth knowledge of management and public administration, being head of the National
Administration and counsellor regarding political and public affairs.
Principal occupation: Self-employed
Directorships and other offices:
Former Permanent Secretary at the Prime Minister's Office (1996-2021). Former Executive Director at Heilsufrøðiliga Starvsstovan - The
Faroese Food and Environmental Agency (1987-1996).
Kristian Reinert Davidsen
Elected by the General Meeting
Year of birth 1966
Gender Male
Nationality Faroese
First time elected to the Board: 2022
Most recently re-elected: 2025
Term expires:
2027
Independent
Independent
Educational background:
HD (Graduate Deploma in Organisation and Strategy), Copenhagen Business School; MSc Electrical Engineering & Telecommunications,
DTU Denmark.
Competencies:
Working experiences and in-depth knowledge of management, strategy processes and project managing. In-depth knowledge of digital
transformation and security related to personal data and cyber security.
Principal occupation: CEO at Faroese Telecom, Former CEO at Tusass (TELE Greenland).
Directorships and other offices: Chair of LBF (Engineering Consultancy)
The current members of the Board of Directors and Executive Management of P/F Føroya Banki are the following:
Board of Directors
Annual Report 2025
18
Tom Ahrenst
Elected by the General Meeting
Year of birth 1960
Gender Male
Nationality Danish
First time elected to the Board: 2023
Most recently re-elected: 2025
Term expires:
2027
Independent
Independent
Educational background:
Executive Management program from Columbia Business School as well as Wharton Business School, and Graduate Diploma in
Business Administration (Financial and Management Accounting) from CBS.
Competencies:
More than three decades of practical credit-related experiences from Danske Bank and Nykredit, developing extensive knowledge in the
Credit and Corporate sectors. Expertise spans within financing relating to Mergers and Acquisitions, Capital Market transactions,
structuring company financing, and comprehensive management of overall credit-related risks.
Principal occupation: Independent Advisor and Board member
Directorships and other offices:
Board member of Core Property Management P/S. Former chair of Nykredit Leasing A/S and Nykredit Finance plc. Former board
member of Frankfurter Bodenkredit Gmbh.
Alexandur Johansen
Elected by the employees
Year of birth 1979
Gender Male
Nationality Faroese
First time elected to the Board: 2018
Most recently re-elected: 2022
Term expires:
2026
Educational background: Financial education and subsequent continuing education within financial and insurance aspects.
Competencies: In-depth understanding of insurance aspects. All-round advisory services.
Principal occupation: P/F Trygd - Commercial and Private Insurance - Head of Sales.
Directorships and other offices: None
Kenneth Samuelsen
Elected by the employees
Year of birth 1966
Gender Male
Nationality Faroese
First time elected to the Board: 2010
Most recently re-elected: 2022
Term expires:
2026
Educational background:
Financial education
Competencies: Broad knowledge of the financial sector and labour market relationships.
Principal occupation: Føroya Banki - IT-department - unit Faroe Islands.
Directorships and other offices: Union president and union board member.
Rúna Hentze
Elected by the employees
Year of birth 1966
Gender Female
Nationality Faroese
First time elected to the Board: 2021
Most recently re-elected: 2023
Term expires:
2026
Educational background: Financial education supplemented with different banking related courses.
Competencies:
Broad knowledge and experience within different aspects of Banking services. In-depth knowledge and experiences within Retail Banking
and funds
Principal occupation: Føroya Banki - Backoffice
Directorships and other offices: None
Turið F. Arge (CEO)
Year of birth 1982
Gender Female
Nationality Faroese
Year of joining the Executive Management: 2022
Educational background: Cand.merc.Aud, Aarhus Business School; Executive MBA, Henley Business School.
Principal occupation: CEO at P/F Føroya Banki
Board positions held that are relevant to banking
and insurance:
Board member of P/F Trygd, P/F NordikLív, P/F Skyn. Board member of BI Holding A/S, NFIT A/S and the Faroese Banking
organisation.
Executive board
Annual Report 2025
19
Annual Report 2025
20
Segments
Reference is made to the preceding Financial Review,
which provides an overview of the Group, including the
Bank at an overall level.
The Bank’s activities are divided into two main segments,
Personal Banking and Corporate Banking. Details about
these two segments are provided on the following pages.
The last page of the segment section sets out
performance of the Bank’s subsidiary Trygd.
Banking
The Bank’s net interest income was DKK 316m in 2025
compared to DKK 347m 2024, reflecting lower interest
margins during 2025 compared to 2024. Net fee and
commission income increased by DKK 10m to DKK 99m
in 2025 compared to DKK 90m in 2024, due to higher
income from securities trading and from brokerage
commission related to the transfer of the Group’s life
insurance products from the subsidiary NordikLív to LÍV.
Other operating income increased by 33% or DKK 12m
relative to 2024 to DKK 49m, mainly due to higher value
adjustments and dividends from the Bank’s sector
shares, the sale of the Bank’s IT-platform provider, SDC,
and from the sale of one of the Bank’s domicile
properties. As a result, the Bank’s operating income as a
whole fell slightly by DKK 9m year on year in 2025 to
DKK 464m. Operating costs increased by DKK 6m in
2025 compared to 2024, which was as expected and
mainly due to staff and IT costs. The cost/income ratio
was thus 55% for the year compared to 53% for the
previous year. The resulting profit before impairment
charges was DKK 208m in 2025 compared to DKK 223m
in 2024.
Føroya Banki maintains its through-the-cycle credit
policy. Due to the continued sound financial health of its
customers despite uncertain global economic conditions,
the Bank saw a net reversal of impairments of DKK 4m
in 2025 – a net reversal for the nineth year in a row. In
2024, the Bank reversed DKK 1m of previously impaired
loans. The resulting operating profit for the banking
segment in 2025 was DKK 212m, DKK 13m lower than
in 2024.
Investment portfolio earnings were DKK 89m in 2025,
down from DKK 123m in 2024 mainly due to lower
income from the Bank’s bonds portfolio and lower
interest income from the Bank’s liquidity holdings. As a
result, the Bank’s profit before tax was DKK 301m in
2025, down DKK 46m compared to 2024.
Loans and advances to customers grew by DKK 583m in
2025 or 6% to DKK 9,670m, and the portfolio of the
Bank’s brokered mortgage credit grew by DKK 83m or
3% to DKK 2,824m. In total, loans and mortgage credit
grew by 6% in 2025. Customer deposits were up by 9%
or DKK 949m to DKK 10,957m. The funds that the bank
manages on behalf of customers grew by 1.5% in 2025.
In total, the business volume grew by 7% in 2025
compared to 2024.
Adjusted Income statement, Banking
DKKm
2025 2024
Index
Q4 2025 Q3 2025
Index
Q2 2025 Q1 2025 Q4 2024
Net interest income 316 347 91 79 77 102 84 76 78
Net fee and commission income 99 90 111 27 25 107 24 24 23
Other operating income 49 37 133 8 8 99 22 11 9
Total operating income 464 473 98 114 110 103 129 111 110
Operating costs 256 250 102 64 67 96 62 63 67
Profit before impairment charges 208 223 93 50 43 114 67 48 44
Impairment charges, net -4 -1 371 -2 -9 28 2 5 -11
Operating profit 212 225 94 52 52 100 66 43 55
Investment portfolio earnings 89 123 73 18 18 103 28 25 29
Profit before tax 301 348 87 70 70 101 94 68 84
Loans and advances 9,670 9,086 106 9,670 9,600 101 9,697 9,272 9,086
Deposits and other debt 10,957 10,007 109 10,957 10,835 101 10,407 10,306 10,007
Mortgage credit 2,824 2,741 103 2,824 2,789 101 2,909 2,906 2,741
Operating costs/income, % 55 53 56 61 48 57 60
Number of FTE, end of period 173 177 98 173 173 100 171 174 177
Annual Report 2025
21
Personal Banking
Føroya Banki’s operating income from personal banking
customers fell by 8% in 2025. Net interest income was
down by DKK 29m to DKK 153m. Net fee and
commission income increased by DKK 6m to DKK 75m.
Other operating income was flat at DKK 29m. The
resulting operating income totalled DKK 256m compared
to DKK 280m in 2024.
Operating costs increased to DKK 211m in 2025 from
DKK 206m in 2024. As a result, profit before impairment
charges came in at DKK 45m compared to DKK 73m in
2024. Impairment charges were DKK 6m in 2025
compared to a reversal of DKK 11m in 2024. Investment
portfolio earnings amounted to DKK 47m compared to
DKK 65m in 2024. Profit before tax was thus DKK 86m
in 2025 compared to DKK 150m in 2024.
Direct lending to personal customers rose by DKK 274m,
i.e. 6%, to DKK 4,647m at year-end 2025. Brokered
mortgage credit increased by DKK 42m to DKK 2,217m
at year-end 2025 compared to DKK 2,175m at year-end
2024. Deposits from personal customers were down by
DKK 107m, i.e. 2%, over year-end 2024 to DKK 6,121m
at year-end 2025. In total, the segment’s business
volume grew by 2% in 2025 compared to 2024.
Adjusted Income statement, Personal banking
DKKm
2025 2024
Index
Q4 2025 Q3 2025
Index
Q2 2025 Q1 2025 Q4 2024
Net interest income 153 183 84 37 37 98 41 37 40
Net fee and commission income 75 69 109 20 19 107 18 18 18
Other operating income 29 29 100 4 5 76 13 6 6
Total operating income 256 280 92 61 62 99 72 61 64
Operating costs 211 206 103 52 57 92 51 52 55
Profit before impairment charges 45 73 61 9 5 175 22 10 9
Impairment charges, net 6 -11 57- 4 0 1004 -1 3 -2
Operating profit 39 85 46 4 4 99 23 7 10
Investment portfolio earnings 47 65 72 9 9 99 15 13 15
Profit before tax 86 150 57 14 14 99 38 20 26
Loans and advances 4,647 4,373 106 4,647 4,532 103 4,487 4,418 4,373
Deposits and other debt 6,121 6,228 98 6,121 6,108 100 6,720 6,505 6,228
Mortgage credit 2,217 2,175 102 2,217 2,203 101 2,181 2,169 2,175
Number of FTE, end of period 77 79 98 77 77 99 76 76 79
Annual Report 2025
22
Corporate Banking
The Group’s Corporate Banking segment saw net
interest income decrease to DKK 163m in 2025 from
DKK 164m in 2024 – i.e. the lower interest margins
during the year were offset by higher lending and by
decreased funding costs due to corporate deposits being
higher in 2025 than in 2024. Net fee and commission
income increased by DKK 4m to DKK 25m. Other
operating income more than doubled from DKK 8m in
2024 to DKK 20m in 2025, mainly due to higher value
adjustments and dividends from the Bank’s sector
shares, the sale of the Bank’s IT-platform provider, SDC,
and from the sale of one of the Bank’s domicile
properties. Total operating income was thus up 7% or
DKK 14m to DKK 208m in 2025 relative to 2024.
Operating costs increased by DKK 1m in 2025 to DKK
44m, resulting in profit before impairment charges of
DKK 163m, up DKK 13m compared to 2024.
Impairment charges were a reversal of DKK 10m in
2025, compared to charges of DKK 10m in 2024.
Investment portfolio earnings amounted to DKK 42m in
2025 compared to DKK 58m in 2024. The resulting profit
before tax was thus DKK 216m in 2025, DKK 18m higher
than in 2024.
The corporate lending portfolio increased by 7% during
the year and amounted to DKK 5,023m at 31 December
2025. The portfolio remains well diversified and is not
overly exposed to historically risky sectors. Corporate
deposits were up by DKK 1,056m, i.e. 28%, over year-
end 2024 to DKK 4,835m at year-end 2025. Brokered
mortgage credit rose by DKK 41m, i.e. 7%, to DKK 606m
at year-end 2025. In total, the segment’s business
volume grew by 13% in 2025 compared to 2024.
Adjusted Income statement, Corporate Banking
DKKm
2025 2024
Index
Q4 2025 Q3 2025
Index
Q2 2025 Q1 2025 Q4 2024
Net interest income 163 164 99 42 39 106 43 39 38
Net fee and commission income 25 21 117 7 6 110 6 6 6
Other operating income 20 8 249 4 3 138 8 4 2
Total operating income 208 194 107 53 49 108 57 49 46
Operating costs 44 44 102 12 10 115 11 11 11
Profit before impairment charges 163 150 109 41 38 106 46 38 35
Impairment charges, net -10 10 106- -6 -9 73 3 2 -10
Operating profit 173 67 259 47 47 100 43 36 45
Investment portfolio earnings 42 58 73 9 8 107 13 12 14
Profit before tax 216 198 109 56 56 101 56 47 58
Loans and advances 5,023 4,713 107 5,023 5,068 99 5,210 4,855 4,713
Deposits and other debt 4,835 3,779 128 4,835 4,726 102 3,687 3,802 3,779
Mortgage credit 606 565 107 606 585 104 728 736 565
Number of FTE, end of period 13 15 91 13 13 100 13 15 15
Annual Report 2025
23
Insurance
The Group’s insurance company, Trygd, reported
another year of growth in insurance premiums. Net
premiums grew by 6% in 2025 to DKK 165m due to price
increases and a continued inflow of new customers.
Claims can vary significantly from year to year, e.g. due
to Faroese weather conditions or an unusual number of
large claims. In 2025, claims were unusually low,
amounting to DKK 93m, a decrease of DKK 23m
compared to 2024.
Income from investment activities amounted to DKK 7m
in 2025 compared to DKK 11m in 2024. Operating costs
totalled DKK 28m in 2025, down DKK 1m compared to
2024. As a result, Trygd posted an all-time high profit
before tax of DKK 51m in 2025 compared to a profit
before tax of DKK 23m in 2024.
Trygd’s combined ratio decreased from 89 in 2024 to 76
in 2025.
Trygd is expected to pay a dividend of DKK 29.0m to
Føroya Banki for the 2025 financial year.
Trygd continues to grow its market share by offering
competitive prices and delivering superior customer
experience. Trygd expects to continue to attract new
customers and to grow premium income in 2026, as it
has done for the past several years whilst remaining
profitable.
Adjusted Income statement, Trygd
DKKm
2025 2024
Index
Q4 2025 Q3 2025
Index
Q2 2025 Q1 2025 Q4 2024
Premium income, net of reinsurance 165 156 106 42 42 100 42 40 38
Claims, net of reinsurance 93 114 81 22 25 87 20 27 32
Net insurance income 73 42 175 20 17 119 22 14 6
Net income from investment activities 7 11 64 2 4 49 2 0 2
Operating income 80 52 152 22 20 107 23 14 7
Operating costs 28 29 97 7 7 103 7 7 6
Profit before tax 51 23 221 15 14 109 17 7 1
Combined ratio 76 89 72 78 67 87 102
Claims ratio 56 73 52 59 48 66 85
Number of FTE, end of period 21 23 93 21 21 99 21 23 23
Annual Report 2025
24
Other activities
Skyn
The market has been relatively strong in 2025 compared
to the relatively subdued market in the previous three
years (2022-2024). House prices in the Faroe Islands
increased approx. 13% in 2025, and the number of
properties sold, with Skyn as broker, was up 23%
compared to 2024.
The Group’s estate agency, Skyn, performed well and
was involved in a total of 190 transactions in 2025
compared to 155 in 2024. Skyn recorded a net profit of
DKK 2.4m in 2025, considerably higher than the DKK
0.6m recorded in 2024.
Skyn is expected to pay a dividend of DKK 2.5m to
Føroya Banki for the 2025 financial year.
NordikLív
NordikLív is a life insurance company established in
2015 and wholly owned by Føroya Banki. The company
began operations in 2016 by providing regular life,
disability and critical illness insurance cover in the
Faroese market.
In 2025, premium income was DKK 14.7m compared to
DKK 21.8m in 2024, while net profit amounted to DKK
0.0m in 2025 compared to DKK 8.7m in 2024. The
decline in premium income originates from the transfer
of NordikLív’s life insurance products, as of 1 September
2025, to LÍV. Furthermore, compared to 2024, the claims
were relatively higher in 2025 resulting in a reduced net
profit.
In alignment with the bank's continuous focus on
operating as efficiently as possible, the bank reached an
agreement in 2024 with the life insurance company LÍV
in the Faroe Islands, under which the bank will broker life
insurance products for LÍV. We are pleased with the
agreement, and it will result in NordikLív being dissolved
as a separate company in 2026. The Group’s customers,
however, will continue to receive excellent advice and life
insurance products at competitive prices.
As of 1 September 2025, all NordikLív’s life insurance
products were transferred to the life insurance company
LÍV. Thus, at the end of 2025 no insurance risk remains
within NordikLív.
Annual Report 2025
25
Investor relations
Føroya Banki share performance
The closing price of Føroya Banki’s shares on Nasdaq
Copenhagen at 31 December 2025 was DKK 286.0
compared to a closing price of DKK 162.0 at 31
December 2024. This was an increase of 76.5%. Note
that Føroya Banki's total return (including dividends) in
2025 was 113.5% compared to a total return of 60.6%
for the Copenhagen Bank Index. The turnover in Føroya
Banki’s shares on Nasdaq Copenhagen was DKK 256m
in 2025 compared to DKK 233m in 2024. Føroya Banki´s
stock chart can be found on the Bank’s website
www.foroyabanki.com/sc
.
Key metrics - Føroya Banki stock
Performance of Føroya Banki shares vs. the OMX
Copenhagen Banks Index in 2020-2025. Both lines in the
graph illustrate price development including dividends
(total return):
Shareholder structure
At the time of publication of the Annual Report 2025, the
following shareholders had notified the relevant
authorities that they held 5% or more of the Bank’s
shares:
At 31 December 2025, Føroya Banki had approximately
9,500 shareholders. The Faroese government held
34.8% of the share capital, institutional and other
corporate investors held 49%, private investors held
16%, while the Bank held 0.22% as treasury shares. The
majority of shareholders are based in the Faroe Islands.
Dividends
Føroya Banki targets an ordinary dividend of 70% of net
profit and conducts share buy-backs to optimise its
capital structure.
The Board of Directors has been authorised to allow the
Bank to acquire up to 10% of the Bank’s nominal share
capital in the period until 1 March 2029. Føroya Banki´s
investor relations policy can be found on the Bank’s
website www.foroyabanki.com/Ir
Financial calendar for 2026
26 February 2026 Year-end Results 2025
26 March 2026 Annual General Meeting 2026
30 April 2026 First Quarter Results 2026
5 August 2026 Half-Year Results 2026
4 November 2026 Third Quarter Results 2026
2024 2025
Share price per share 162 286
T
otal market cap. in mDKK 1,555 2,746
Earnings per share 32.4 29.9
Dividend per share 8.3 36.5
Price/Book value per share 0.8 1.4
Price/Earnings per share 4.7 9.3
Largest shareholders:
Føroya Landsstýri (Faroese Government), Tórshavn 34.8%
Ruth Holding ApS, Hirtshals, Denmark 14.6%
G
TM Familie Holding ApS, Hirtshals, Denmark 10.4%
Sp/f RMV Holding, Hoyvík, Faroe Islands 5.1%
Country Nominal shareholdings
Faroe Islands 54%
Denmark 39%
Ireland 1%
Great Britain 1%
Other nationalities 5%
Annual Report 2025
26
Organisation and management
Corporate governance at Føroya Banki
The overall purpose of Føroya Banki’s corporate
governance policy is to ensure responsible corporate
management and to safeguard the interests of the
Bank’s shareholders, customers, and employees. Strong
corporate governance is about having clear and
systematic decision-making processes, thus providing
clarity about responsibilities, avoiding conflicts of
interest, and ensuring satisfactory internal control, risk
management and transparency. Commitment to Føroya
Banki’s mission and vision requires the integration of
sound corporate governance with the framework under
which the Bank is governed and managed.
Føroya Banki is a Faroese public limited company listed
on NASDAQ Copenhagen A/S. Corporate governance at
Føroya Banki follows generally adopted principles of
corporate governance. The external framework that
governs the Bank’s corporate governance approach
includes the rules of NASDAQ Copenhagen A/S,
relevant legislation and instructions and guidance issued
by the Danish Financial Supervisory Authority or other
legislative authorities, and the rules and principles of the
recommendations on Corporate Governance. For further
information about the Bank’s compliance with the
recommendations on Corporate Governance, see the
Bank’s Corporate Governance Report, which is available
at www.foroyabanki.com/cg.
General meetings
The general meeting is the Bank’s ultimate decision-
making authority. An annual general meeting must be
held within three months of the end of a financial year. In
2026, the meeting will be held on 26 March in Tórshavn,
Faroe Islands. The minutes of the meeting will be
available at
www.foroyabanki.com.
Voting rights
All shareholders have equal voting rights, and each
share carries one vote. However, no shareholder may,
neither in respect of his own shares nor when acting as
proxy for other shareholders, cast votes representing
more than 10% (ten per cent) of the total share capital,
regardless of the shareholding. Proxy votes given to the
Board of Directors are not subject to these restrictions.
Any resolution to amend the Articles of Association or to
wind up the Bank by voluntary liquidation or to adopt a
merger is subject to no less than two-thirds of the share
capital being represented at the general meeting and the
proposed resolution being adopted by two-thirds of the
votes cast and of the voting share capital represented at
the general meeting.
Any proposal to amend or revoke the quorum
requirement may be adopted by two-thirds of both the
votes cast and of the share capital represented at the
general meeting. For the purpose of voting on such
proposals, restrictions on voting rights and voting by
proxy do not apply.
The Bank’s Articles of Association are available at
www.foroyabanki.com/aa
Board of Directors
The Board currently comprises nine members, six of
whom were elected at the general meeting and three by
and among the employees. Board members elected at
the general meeting hold office for a period of two years.
Thus, half of the directors elected by the general meeting
are up for election every year. Directors are eligible for
re-election. As prescribed by statutory provisions on
employee representation in Faroese legislation,
members elected by and among the employees serve on
the Board of Directors for four-year terms, with the next
election to be held in 2026.
The Nomination Committee operates as a preparatory
committee for the Board of Directors with respect to the
nomination and appointment of candidates for the Board
of Directors and the Executive Board. Candidates for the
Board of Directors are nominated by the Board of
Directors or the shareholders and are elected by the
shareholders.
The primary duty of the Bank’s Board of Directors is to
determine the strategic framework for the Bank and its
activities. The Bank places emphasis on ensuring that
the Board of Directors possesses the necessary and
relevant experience and qualifications to adequately
perform its duties as a board of directors. Members of the
Board are subject to a performance evaluation, which
includes questionnaire, a personal dialogue with the
Chair and a plenary debate on the Board. The aim of the
evaluation is to ensure, among other things, that the
composition of the Board of Directors as well as the
special competencies of each Board member enable the
Board of Directors to perform its duties. As the Board of
Directors operates as a collegial body, its overall
competencies and experience are the sum of the
individual board members’ competencies and
experience. The composition of the Board of Directors is
Annual Report 2025
27
intended to ensure a stable and satisfactory
development of Føroya Banki for the benefit of its
shareholders, customers, employees, and other
stakeholders. The competencies of the Board of
Directors are described collectively in the competency
profile.
Diversity on the Board of Directors
The Bank has a policy for diversity on the Board of
Directors. The Board of Directors and its Nomination
Committee assessed the policy in June 2025 and found
no need for changes.
The intention of this policy is that the Board’s
composition should embrace diverse competences and
backgrounds, including diversity in professional identity,
work experience, gender, age etc.
The policy further lays down that recruitment of
candidates to serve as board members must focus on
ensuring that the candidates possess competences,
background, knowledge, and resources that are different
from those of the existing board members and
collectively match the competences required by the
Bank’s business model etc.
Compliance with the adopted policy on diversity on the
Board of Directors is a significant element of the annual
evaluation process.
The under-represented gender
The Bank has implemented a policy aimed at prompting
equal gender representation at Board level and in the
Bank’s other management levels. The Bank’s ambition is
to ensure a balanced gender representation. The Board
has adopted initiatives aimed at supporting equal
opportunities in recruitment, leadership development
and succession planning. As part of this policy, the Bank
on a regular basis monitors the actual gender division at
relevant management levels and on annual basis reports
on progresses and actions taken to support equal gender
representation. The Bank considers diversity an
essential element of sound governance and long-term
value creation and will continue to strengthen the
initiatives and frameworks supporting equal gender
representation across the group.
Relevant figures in accordance with Section 156 of the
Executive Order on Financial Reports for Credit
Institutions and Investment Firms etc are available on the
Bank's website www.foroyabanki.com/gf
.
Board of Directors
In 2025, the Board of Directors and its Nomination
Committee set a target figure of at least 40% for the
under-represented gender on the Board of Directors to
be met by 2028.
At the end of 2025 the under-represented gender on the
Board of Directors presented 16.67% (2024: 16.67%).
The Board of Directors will focus on various initiatives
aimed at meeting the target figure by 2028. These
comprise recruitment initiatives and initiatives aimed at
motivating candidates of the under-represented gender
to stand as candidates for the Board of Directors.
Other management levels
Under the statutory definition of “other management
levels”, the Bank’s other management levels are
members of the general management (reported to the
Danish Business Authority), employees placed at the
same management level, in organisational terms, as the
general management, and employees with staff
responsibilities reporting directly to the general
management or to employees placed at the same level,
in organisational terms, as the general management.
It is a goal of the policy that the Bank’s employees should
feel that equal career and management opportunities are
open to them, irrespective of gender. The policy is
adopted with the aim to increase the percentage of the
under-represented gender at the Bank’s other
management levels and also aims at creating a basis for
a more equal gender distribution at these management
levels. It is the Bank’s overall and long-term aim to
maintain an equal gender distribution at the bank’s other
management levels. The bank’s management follows up
on a regular basis on the developments with respect to
gender distribution at other management levels.
In 2022, the Board of Directors and its Nomination
Committee set a target figure of at least 40% for the
under-represented gender at the Bank’s other
management levels to be met by 2025.
At the end of 2025. the gender distribution at the Bank’s
other management levels was 49.0% women and 51.0%
men (2024: 50.0% women and 50.0% men). Hence,
equal gender distribution has been achieved at other
management levels.
Sound corporate culture
The Bank’s Board of Directors has adopted a policy for a
sound corporate culture containing a set of principles for
Annual Report 2025
28
the Bank’s and the employees’ actions, which
supplements the framework of the Bank’s code of
conduct.
The policy was most recently updated in April 2025 and
is available on the Bank's website
www.foroyabanki.com/scc
The Bank’s general management reports to the Board of
Directors on the Bank’s compliance with the policy and
the code of conduct. Through this reporting and
otherwise, the Board of Directors’ gains insight into
matters relating to the policy and the code of conduct.
The report of the chair of the Bank’s Board of Directors
to the annual general meeting on behalf of the Board
must cover the implementation of the corporate culture
policy and compliance with the policy.
Anti-money laundering, anti-terrorist financing, and
sanctions
Combating money laundering and terrorist financing is
basically a task for all employees in Føroya Banki, one
reason being that the Bank has a statutory obligation to
know all its customers, including to collect proper
documentation of identity and details of ownership
structures of legal persons.
The Bank must also have details of the individual
customer’s purpose of being a customer in the Bank, the
scope of the customer relationship and the origin of the
customer’s funds. This task is carried out by collecting
data, including by the individual customer advisers
and/or via customers’ self service solutions.
However, the Bank’s central anti-money laundering
department carries out the general work of combating
money-laundering and financing of terrorism and
continuously checks that the necessary information on
the individual customers’ identity and ownership is
registered. It also checks that the purpose and intended
scope of the customers’ relations with the Bank are
registered and updated.
In addition, the Bank must monitor customer transactions
on an ongoing basis. All of the Bank’s employees are
both entitled and required to report unusual/suspicious
transactions or activities to the anti-money laundering
department. The anti-money laundering department thus
supports the efforts of customer advisers and other
employees and is also responsible for digital/automated
monitoring of unusual/suspicious transactions or
activities and for manual follow-up on them.
The department works continuously to set up and adjust
the criteria for identifying transactions that are picked out
for further investigation by the department.
The anti-money laundering department also reports to
the Money Laundering Secretariat at the National
Special Crime Unit.
The Bank’s monitoring of customers includes a risk
assessment in which the Bank has divided the customers
into different risk categories. The risk assessment is
based, among other things, on the EU’s supranational
risk assessment.
In addition, the Bank’s employees regularly receive
training and are tested in combating money laundering
and financing of terrorism. Training is provided in the
following ways:
Basic modules must be completed by all
employees every two years. Training based on
case studies and bank-specific learning -
targeted at the employee’s job functions - is
also provided on a regular basis.
New employees must complete training in basic
modules within one month of their appointment.
Data ethics
The Bank’s Board of Directors has adopted a data ethics
policy which provides the framework for the Bank’s
ethical principles and conduct in relation to data. The
Board of Directors adopted the policy in December 2024,
and the policy was most recently reviewed in January
2026.
Section 154 of the Executive Order on Financial Reports
for Credit Institutions and Investment Firms etc. requires
undertakings which have a data ethics policy to
supplement the management’s review with a statement
on data ethics. The statement must contain information
on the undertaking’s work and policy on matters of data
ethics.
The Bank’s Board of Directors has prepared a statement,
which is available on the Bank's website at
www.foroyabanki.com/de
Tax policy
The Bank’s Board of Directors has adopted a tax policy
for the Group which provides the framework for the
group’s behaviour in relation to taxation matters. The
policy states the Group’s obligation to promote
transparency and compliance with tax legislation.
Annual Report 2025
29
Furthermore, the policy states that the Group only
engages in responsible and legitimate tax assessments
based on an open and honest dialogue with customers
and the authorities. In collaboration with the relevant
authorities the Group also participates in activities
related to prevention of tax evasion. The Board of
Directors adopted the policy in September 2024, and the
policy was most recently reviewed in September 2025.
The tax policy is available on the Bank's website at
www.foroyabanki.com/tp
Product approval and product management
The Bank has a policy for product approval and product
management to ensure that customers are offered
suitable products, including investment products and
investment services etc. If new products and services are
introduced which may result in significant risks, the
Bank’s Board of Directors has overall responsibility for
approving them.
The product approval and management of products and
services are structured so that the Bank’s other
management levels handle these matters on an ongoing
basis.
The other management levels recommend products and
services for review by the Bank’s compliance function.
New products and services are subject to approval by the
bank’s compliance function, risk management function,
and general management. The compliance and risk
management functions can always request that risks be
submitted to the board of directors for consideration.
At least annually, the compliance function reports to the
Board of Directors on the Bank’s investment products
and services based on reporting from the other
management level and the compliance function’s own
examinations during the year.
Complaints handling
In the event of disagreements between a customer and
the Bank, the Bank’s fundamental view is that they are
always best resolved through dialogue between the
customer and the adviser, possibly with the involvement
of the adviser’s line manager.
If agreement is not reached, the customer always has the
possibility of complaining to the Bank’s complaint’s
function. The complaints’ function is independent of the
departments serving customers and handles complaints
received and sends answers to the customer.
Remuneration
The Remuneration Committee operates as a preparatory
committee for the Board of Directors with respect to
remuneration issues. This duty includes proposals
regarding the Bank’s Remuneration Policy and
underlying instructions to be approved and adopted at
the general meeting.
The Bank’s remuneration policy reflects the Bank’s
objectives of good governance and supports the Bank’s
ability to recruit, develop and retain competent, high-
performing, and highly motivated employees in a
competitive market.
Remuneration for the Board of Directors is approved and
adopted at each year’s annual general meeting.
Members of the Board of Directors receive a fixed salary
only. They are not covered by incentive programmes and
do not receive variable or performance-based
remuneration or pension contributions.
The remuneration of the Executive Management is
determined by the Board of Directors. Remuneration in
line with market levels constitutes the overriding principle
for the remuneration of the Executive Management.
Remuneration for the Executive Management must be
consistent with and promote sound and effective risk
management and not encourage excessive risk-taking or
counteract the Bank’s long-term interests. Remuneration
of the Executive Management consists of a fixed salary
only and does not comprise any incentive programmes
or variable or performance-based remuneration.
Additional information on the remuneration of the Board
of Directors, the Executive Management and the
executive officers can be found in note 10. For further
information regarding the Bank’s remuneration policy,
see
www.foroyabanki.com/rp
Risk management
The Board of Directors always gives full attention to the
Bank’s various risks as well as the aggregated risk profile
and follows up on risks on a regular basis. Risk appetite
within the Bank is defined as the level and nature of risk
that the Bank is willing to take in order to pursue the
approved strategy on behalf of the shareholders and is
defined by constraints reflecting the views of
shareholders, debt holders, regulators and other
stakeholders. The Board of Directors is ultimately
responsible for the Group’s overall risk appetite and for
setting principles for how risk appetite is managed.
Annual Report 2025
30
The Group’s Risk Manager is responsible for the risk
management framework and processes, including
identifying, controlling and monitoring the Bank’s various
risks for the purpose of making risk assessments at both
individual and aggregated levels. For further information
on the Bank’s risk management, see the Group’s Risk
Management Report 2025 at
www.foroyabanki.com/rmr
Corporate responsibility
Complying with the law and adhering to international
principles for responsible business conduct is a
fundamental and integral part of Føroya Banki’s strategy.
We are driven by an ambition to create value for all our
stakeholders, to use our expertise to drive sustainable
progress and to have a positive impact on the societies
we are a part of. At Føroya Banki, we strive to build a
relationship-centric bank that places the customer at the
centre of the business, provides tailored financial advice
and makes the banking experience less complex. Our
commitment to conducting responsible business
revolves around a set of values consisting of “Teamwork,
Customer commitment and Enthusiasm”, which form the
backbone of our efforts to create sustainable and shared
value for the Group’s stakeholders. In addition to creating
economic value through responsible business conduct,
through the benefits that our products bring to our
customers, and through banking expertise, the Group
aims to create social value through community
involvement. As such, Føroya Banki’s approach is
centred on its customers, employees, and the local
community. It is our assertion that corporate
responsibility initiatives will yield the best results if there
is a natural connection between such activities and our
business strategy and core competences. Therefore, our
initiatives are strategically rooted in the Group’s vision,
strategy, and values.
Føroya Banki reports on corporate responsibility in the
2025 Corporate Responsibility Report, CRR, which has
been prepared in compliance with the Group’s
Sustainability Policy and the Danish FSA’s requirements
on corporate responsibility reporting. In response to the
upcoming stricter sustainability data management and
reporting requirements, the Group has made the
necessary preparations in 2025 for reporting.
The report is available at www.foroyabanki.com/crr
Annual Report 2025
31
Statement by the Management
The Board of Directors and the Executive Board (the
management) have today considered and approved the
annual report of P/F Føroya Banki for the financial year
2025.
The consolidated financial statements have been pre-
pared in accordance with the IFRS Accounting
Standards as adopted by the EU, and the Parent
Company’s financial statements have been prepared in
accordance with the Faroese Financial Business Act.
In our opinion, the consolidated financial statements and
the Parent Company’s financial statements give a true
and fair view of the Group’s and the Parent Company’s
assets, liabilities, equity and financial position at 31
December 2025 and of the results of the Group’s and the
Parent Company’s operations and the consolidated cash
flows for the financial year starting on 1 January and
ending on 31 December 2025. Moreover, in our opinion,
the management’s report includes a fair review of
developments in the Group’s and the Parent Company’s
operations and financial position and describes the
significant risks and uncertainty factors that may affect
the Group and the Parent Company.
In our opinion, the annual report of P/F Føroya Banki for
the financial year 1 January to 31 December
2025 identified as with the file name FB-2025-12-31-
en.zip has been prepared, in all material respects, in
compliance with the ESEF Regulation.
The management will submit the annual report to the
general meeting for approval.
Tórshavn, 26 February 2026
Executive Board
Turið F. Arge
CEO
Board of Directors
Birgir Durhuus Annfinn Vitalis Hansen Kristian Reinert Davidsen
Chair Vice Chair
Marjun Hanusardóttir Tom Ahrenst Árni Tór Rasmussen
Rúna Hentze Kenneth M. Samuelsen Alexandur Johansen
Annual Report 2025
32
Internal Auditors’ Report
Audit opinion
In our opinion, the Consolidated Financial Statements
give a true and fair view of the Group’s financial position
at 31 December 2025 and of the results of the Group’s
operations and cash flows for the financial year 1
January to 31 December 2025 in accordance with IFRS
Accounting Standards as adopted by the EU and further
requirements in the Faroese Financial Business Act.
Moreover, in our opinion, the Parent Company Financial
Statements give a true and fair view of the Parent
Company’s financial position at 31 December 2025 and
of the results of the Parent Company’s operations for the
financial year 1 January to 31 December 2025 in
accordance with the Faroese Financial Business Act and
the executive order on financial reports of credit
institutions etc. of the Danish FSA.
Our opinion is consistent with our Auditor’s Long-form
Report to the Audit Committee and the Board of
Directors.
Basis for opinion
We have audited the Consolidated Financial Statements
and the Parent Company Financial Statements of P/F
Føroya Banki for the financial year 1 January — 31
December 2025 comprising income statement and
statement of comprehensive income, balance sheet,
statement of changes in equity and notes, including
material accounting policy information and cash flow
statement.
We conducted our audit in accordance with the Danish
Financial Supervisory Authority’s executive order on
auditing financial enterprises etc. as well as financial
groups as applied in the Faroe Islands and in accordance
with international auditing standards on planning and
performing the audit work.
We planned and performed our audit to obtain
reasonable assurance as to whether the Consolidated
Financial Statements and the Parent Company’s
Financial Statements are free from material
misstatement. We participated in the audit of all material
and critical audit areas.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Statement on Management’s Review
Management is responsible for the Management’s
Review.
Our opinion on the Consolidated Financial Statements
and the Parent Company’s Financial Statements does
not cover the Management’s Review, and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the Consolidated Financial
Statements and the Parent Company’s Financial
Statements, our responsibility is to read the
Management’s Review and, in doing so, consider
whether the Management’s Review is materially
inconsistent with the Consolidated Financial Statements
or the Parent Company’s Financial Statements or our
knowledge obtained in the audit or otherwise appears to
be materially misstated.
Furthermore, it is our responsibility to consider whether
the Management’s Review provides the information
required under the Faroese Financial Business Act and
the executive order on financial reports of credit
institutions etc. of the Danish FSA.
Based on the work we have performed, in our view the
Management’s Review is in accordance with the
Consolidated Financial Statements and the Parent
Company’s Financial Statements and has been
prepared in accordance with the requirements of the
Faroese Financial Business Act and the executive order
on financial reports of credit institutions etc. of the Danish
FSA. We did not identify any material misstatements of
the Management’s Review.
Tórshavn, 26 February 2026
Arndis Poulsen
Chief Audit Executive, Føroya Banki
Annual Report 2025
33
Independent auditors’ reports
To the shareholders of P/F Føroya Banki
Report on the audit of the Financial Statements
Our opinion
In our opinion, the Consolidated Financial Statements give a true and fair view of the Group’s financial position at 31
December 2025 and of the results of the Group’s operations and cash flows for the financial year 1 January to 31
December 2025 in accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the
Faroese Financial Business Act.
Moreover, in our opinion, the Parent Company Financial Statements give a true and fair view of the Parent Company’s
financial position at 31 December 2025 and of the results of the Parent Company’s operations for the financial year 1
January to 31 December 2025 in accordance with the Faroese Financial Business Act.
Our opinion is consistent with our Auditor’s Long-form Report to the Audit Committee and the Board of Directors.
What we have audited
The Consolidated Financial Statements and the Parent Company Financial Statements of P/F Føroya Banki for the
financial year 1 January to 31 December 2025 comprise income statement and statement of comprehensive income,
balance sheet, statement of changes in equity and notes, including material accounting policy information for the Group
as well as for the Parent Company and cash flow statement for the Group. Collectively referred to as the “Financial
Statements”.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements
applicable in Faroe Islands. Our responsibilities under those standards and requirements are further described in the
Auditor’s responsibilities for the audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’
International Code of Ethics for Professional Accountants (IESBA Code) as applicable to audits of financial statements
of public interest entities, and the additional ethical requirements applicable in Denmark and Faroe Islands. We have
also fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.
To the best of our knowledge and belief, prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No
537/2014 were not provided.
Appointment
PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab were first appointed auditors of P/F Føroya Banki
on 29 March 2010 for the financial year 2010. We have been reappointed annually by shareholder resolution for a total
period of uninterrupted engagement of sixteen years including the financial year 2025. We were reappointed, following
a tending procedure, at the General Meeting on 17 August 2022.
Januar P/F Løggilt grannskoðanarvirki were first appointed auditors of P/F Føroya Banki on 26 March 2013 for the
financial year 2013. We have been reappointed annually by shareholder resolution and have acted as auditors for the
period except for the year 2022, for a total period of engagement of twelve years including the financial year 2025.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
Financial Statements for 2025. These matters were addressed in the context of our audit of the Financial Statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Annual Report 2025
34
Key audit matter
How our audit addressed the key audit
matter
Loan Impairment charges
Loans are measured at amortised cost, according to the
effective interest method, less impairment charges.
Loan impairment charges represent Management’s best
estimate of expected losses on loans at the balance
sheet date. Reference is made to the detailed description
of accounting policies in note 1.
The Group makes provisions for expected credit losses
both on an individual basis in terms of individual
provisions and on a model-based basis.
As a result of the geopolitical and macroeconomic
situation with the risk of economic slowdown,
Management has made a significant addition to loan
impairment charges by way of an additional accounting
estimate (”management overlays”). The consequences
of the geopolitical and macroeconomic situation for the
bank’s customers are largely undetermined and as a
result hereof there is an increased estimation uncertainty
related to the size of the provisions for expected losses
on loan.
We focused on loan impairment charges, as the
accounting estimate is by nature complex and influenced
by subjectivity and thus to a large extent associated with
estimation uncertainty.
The following areas are central to the calculation of loan
impairment charges:
■ Determination of credit classification.
■ Model-based impairment charges in stages 1
and 2, including Management’s determination of
model variables adapted to the Group’s loan portfolio.
■ The Group’s procedures to ensure
completeness of the registration of credit-impaired
loans (stage 3) or loans with significant increase in
credit risk (stage 2, underperforming).
■ Most significant assumptions and estimates
applied by Management in the calculations of
impairment charges, including principles for the
assessment of various outcomes of the customer’s
financial position (scenarios) and for the assessment
of collateral values of e.g. ships and real estate
included in the calculations of impairment.
■ Management’s assessment of expected credit
losses at the balance sheet date as a result of
possible changes in market conditions and which are
not included in the model-based calculations or
individually assessed impairment charges
(“management overlays”) including in particular the
consequences for the Groups customers of the
current geopolitical and macroeconomic situation.
Reference is made to note 1 of the Parent Company
Financial statements and the Consolidated Financial
Statements, ”Estimates and assumptions”, ”IFRS 9,
We performed risk assessment procedures with the
purpose of achieving an understanding of it-systems,
business procedures and relevant controls regarding
the calculation of provisions for expected credit losses
on loans.
In respect of controls, we assessed whether they were
designed and implemented effectively to address the
risk of material misstatement.
We reviewed and assessed the impairment charges
recognised in the income statement in 2025 and the
accumulated impairment charges recognised in the
balance sheet at 31 December 2025.
We assessed the applied impairment model prepared
by the data centre Netcompany Banking Service,
including division of responsibilities between the data
centre and the Group.
We assessed and tested the Group’s calculation of
impairment charges in stages 1 and 2, including
assessment of Management’s determination and
adaptation of model variables to the Group’s own
circumstances.
Our procedures included an assessment of the Group’s
methods applied for the calculation of expected credit
losses as well as the procedures designed, including
the involvement of the credit department and
Management, and internal controls established to
ensure that credit-impaired loans in stage 3 and in
stage 2, underperforming, are identified and recorded
on a timely basis.
We assessed and tested the principles applied by the
Group for the determination of impairment scenarios
and for the measurement of collateral values of e.g.
ships and real estate included in the calculations of
impairment of credit-impaired loans in stage 3 and in
stage 2, underperforming.
We tested a sample of credit-impaired loans in stage 3
and in stage 2, underperforming, by testing the
calculations of impairment charges and applied data to
underlying documentation.
We tested a sample of other loans by making our own
assessment of stage and credit classification. This
included a sample focusing on major loans, loans
within industries with generally increased risks within
certain industries particularly affected by the actual
macroeconomic situation.
We reviewed and challenged Management’s estimates
of expected credit losses not included in the
modelbased calculations or individually assessed
impairment charges based on our knowledge of the
portfolio, industry knowledge and knowledge of current
market conditions. Among other things, we had a
special focus on the Group’s calculation of the
management overlays to cover expected credit losses
Annual Report 2025
35
Financial Instruments” and “Impairment charges”, note
13, ”Credit risk management”, ”Changes to credit
risks” and ”Calculation of the expected credit loss” and
“Management applied judgements” as well as note 48,
”Risk Management”, addressing matters that may
affect loan impairment charges.
as a result of the current geopolitical and
macroeconomic situation.
We also assessed whether the factors that may have an
influence on provisions for expected losses on loans
have been appropriate disclosed.
Statement on Management’s Review
Management is responsible for Management’s Review.
Our opinion on the Financial Statements does not cover Management’s Review, and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the Financial Statements, our responsibility is to read Management’s Review and, in doing
so, consider whether Management’s Review is materially inconsistent with the Financial Statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated.
Moreover, we considered whether Management’s Review includes the disclosures required by the Faroese Financial
Business Act.
Based on the work we have performed, in our view, Management’s Review is in accordance with the Consolidated Financial
Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements
of the Faroese Financial Business Act. We did not identify any material misstatement in Management’s Review.
Management’s responsibilities for the Financial Statements
Management is responsible for the preparation of consolidated financial statements that give a true and fair view in
accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the Faroese and the Danish
Financial Business Act and for the preparation of parent company financial statements that give a true and fair view in
accordance with the Faroese Financial Business Act, and for such internal control as Management determines is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, Management is responsible for assessing the Group’s and the Parent Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless Management either intends to liquidate the Group or the Parent Company or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the
additional requirements applicable in the Faroe Islands will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.
As part of an audit in accordance with ISAs and the additional requirements applicable in the Faroe Islands, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the
Parent Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by Management.
• Conclude on the appropriateness of Management’s use of the going concern basis of accounting and based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
Annual Report 2025
36
doubt on the Group’s and the Parent Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Financial
Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group or
the Parent Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and
whether the Financial Statements represent the underlying transactions and events in a manner that gives a true and
fair view.
• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of
the entities or business units within the group as a basis for forming an opinion on the Consolidated Financial
Statements and the Parent Company Financial Statements. We are responsible for the direction, supervision and
review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence and, where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter.
Report on compliance with the ESEF Regulation
As part of our audit of the Financial Statements we performed procedures to express an opinion on whether the annual
report of P/F Føroya Banki for the financial year 1 January to 31 December 2025 with the filename FB-2025-12-31-en.zip
is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the
European Single Electronic Format (ESEF Regulation) which includes requirements related to the preparation of the annual
report in XHTML format and iXBRL tagging of the Consolidated Financial Statements including notes.
Management is responsible for preparing an annual report that complies with the ESEF Regulation. This responsibility
includes:
• The preparing of the annual report in XHTML format;
• The selection and application of appropriate iXBRL tags, including extensions to the ESEF taxonomy and the anchoring
thereof to elements in the taxonomy, for all financial information required to be tagged using judgement where
necessary;
• Ensuring consistency between iXBRL tagged data and the Consolidated Financial Statements presented in human-
readable format; and
• For such internal control as Management determines necessary to enable the preparation of an annual report that is
compliant with the ESEF Regulation.
Our responsibility is to obtain reasonable assurance on whether the annual report is prepared, in all material respects, in
compliance with the ESEF Regulation based on the evidence we have obtained, and to issue a report that includes our
opinion. The nature, timing and extent of procedures selected depend on the auditor’s judgement, including the assessment
of the risks of material departures from the requirements set out in the ESEF Regulation, whether due to fraud or error.
The procedures include:
• Testing whether the annual report is prepared in XHTML format;
• Obtaining an understanding of the company’s iXBRL tagging process and of internal control over the tagging process;
• Evaluating the completeness of the iXBRL tagging of the Consolidated Financial Statements including notes;
• Evaluating the appropriateness of the company’s use of iXBRL elements selected from the ESEF taxonomy and the
creation of extension elements where no suitable element in the ESEF taxonomy has been identified;
Annual Report 2025
37
• Evaluating the use of anchoring of extension elements to elements in the ESEF taxonomy; and
• Reconciling the iXBRL tagged data with the audited Consolidated Financial Statements.
In our opinion, the annual report of P/F Føroya Banki for the financial year 1 January to 31 December 2025 with the file
name FB-2025-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation.
Hellerup, 26 February 2026
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
Business registration no 33 77 12 31
Benny Voss
State Authorised Public Accountant
mne15009
Tórshavn, 26 February 2026
Januar P/F
Løggilt grannskoðanarvirki
Business registration no. 5821
Fróði Sivertsen
State Authorised Public Accountant
mne32257
Annual Report 2025
38
Annual Report 2025
39
Financial statement Føroya Banki
Contents
Income statement……................................................ 40
Statement of comprehensive income………………… 41
Balance sheet............................................................. 42
Statement of capital..................................................... 44
Capital and Solvency…………………………………….46
Cash flow statement.................................................... 47
Note 1.......................................................................... 48
Note 2.......................................................................... 61
Note 3.......................................................................... 64
Notes 4, 5, 6, 7.............................................................65
Notes 8, 9…................................................................ 66
Note 10........................................................................ 67
Notes 11, 12................................................................ 68
Note 13........................................................................ 69
Note 14….................................................................... 79
Notes 15, 16, 17, 18, 19, 20, 21, 22…......................... 80
Notes 23, 24, 25.......................................................... 81
Notes 26, 27…............................................................ 82
Notes 28, 29.................................................................83
Note 30…………………………………………………....84
Notes 31, 32, 33, 34, 35, 36,37.................................... 85
Notes 38, 39….............................................................86
Note 40 ........................................................................87
Notes 41, 42, 43.......................................................... 88
Notes 44, 45................................................................ 89
Note 46 ........................................................................90
Note 47 ........................................................................91
Note 48 ........................................................................92
Note 49……………………………………………….….105
Annual Report 2025
40
Income statement
Note DKK 1,000 2025 2024 2025 2024
3, 4 Interest income calculated using the effective interest method 511,975 588,141 543,536 628,559
3, 4 Other interest income 31,561 40,417
3, 5 Interest expenses 155,434 186,307 155,434 186,307
Net interest income 388,103 442,251 388,103 442,251
3 Dividends from shares and other investments 21,077 11,997 21,077 11,997
6 Fee and commission income 94,487 85,627 106,001 96,649
6 Fee and commissions paid 6,602 6,875 6,602 6,875
Net dividend, fee and commission income 108,961 90,748 120,475 101,770
Net interest and fee income 497,064 533,000 508,578 544,022
7 Insurance revenue 195,414 196,690
7, 10 Insurance service expenses 131,376 156,017
7 Net return on investments backing insurance liabilities 6,793 12,701
7 Net finance income or expense from insurance 846 322
7 Other expenses 5,622 5,948
7 Net insurance result 66,055 47,747 0 0
Interest and fee income and income from insurance activities, net 563,119 580,747 508,578 544,022
3, 8 Market value adjustments 34,785 45,343 34,785 45,343
9 Other operating income 14,836 9,694 5,644 2,614
10, 11 Staff costs and administrative expenses 256,533 248,369 247,441 239,470
26, 27, 28 Amortisation, depreciation and impairment charges 8,674 9,090 8,417 8,748
12 Other operating expenses 42 1,531 42 1,531
13 Impairment charges on loans and advances etc. -3,982 -1,072 -3,982 -1,072
23, 24 Income from investments accounted for under the equity method 4,404 4,609 48,990 33,016
Profit before tax 355,875 382,475 346,078 376,317
14 Tax 67,558 72,049 57,761 65,891
Net profit 288,317 310,427 288,317 310,427
Portion attributable to
Shareholders of Føroya Banki P/F 288,317 305,208 288,317 305,208
Owners of additional Tier 1 capital 0 5,218 0 5,218
Net profit 288,317 310,427 288,317 310,427
EPS Basic for the perdiod, DKK* 30.12 32.42 30.12 32.42
EPS Diluted for the perdiod, DKK* 30.12 32.42 30.12 32.42
*Based on average number of shares outstanding, see the specification in note 40.
Group
Føroya Banki
Annual Report 2025
41
Statement of comprehensive income - Føroya Banki
DKK 1,000 2025 2024 2025 2024
Net profit 288,317 310,427 288,317 310,427
Other comprehensive income
Items w hich w ill not subsequently be recycled to the income statement:
Revaluation of domicile property 0 0 0 0
Revalution of assets, subsidiaries 0 0 0 0
Total other comprehensive income 0 0 0 0
Total comprehensive income 288,317 310,427 288,317 310,427
Føroya Banki
Group
Annual Report 2025
42
Balance Sheet
Dec. 31 Dec. 31 Dec. 31 Dec. 31
Not e DKK 1,000 2025 2024 2025 2024
Assets
15 Cash in hand and demand deposits w ith central banks 3,249,492 2,696,305 3,236,393 2,695,918
16, 17 Amounts due from credit institutions and central banks 239,179 310,797 239,179 310,797
13, 18, 19 Loans and advances at fair value 285,267 319,297 285,267 319,297
13, 18, 19 Loans and advances at amortised cost 9,384,505 8,767,094 9,384,505 8,767,094
20 Bonds at fair value 1,106,209 1,757,200 900,434 1,559,697
21 Shares, etc. 280,011 285,845 170,731 188,358
22, 47 Assets under insurance contracts 3,320 4,786 0 0
23 Holdings in associates 21,216 18,563 21,216 18,563
24 Holdings in subsidiaries 0 0 180,020 145,434
25 Assets under pooled schemes and unit-linked investment contracts 85,154 61,610 85,154 58,055
26 Intangible assets 4,415 5,084 466 1,084
Total land and buildings 106,139 111,810 106,139 111,810
27 Domicile property 52,961 54,377 52,961 54,377
27 Domicile property (lease asset) 53,177 57,432 53,177 57,432
28 Other property, plant and equipment 13,172 15,008 11,737 13,067
Current tax assets 61,341 21,818 61,341 21,818
29 Deferred tax assets 11,665 11,253 11,557 11,172
30 Assets held for sale 2,207 2,207 2,207 2,207
31 Other assets 49,445 88,408 47,990 89,312
Prepayments 31,979 34,561 30,210 32,781
Total assets 14,934,717 14,511,644 14,774,546 14,346,463
Group
Føroya Banki
Annual Report 2025
43
Balance Sheet
Føroya Banki
Dec. 31 Dec. 31 Dec. 31 Dec. 31
Not e DKK 1,000 2025 2024 2025 2024
Shareholders' equity and liabilities
Liabilities other than provisions
32, 33 Amounts due to credit institutions and central banks 505,739 823,455 505,739 823,455
34, 35 Deposits and other debt 10,948,209 10,003,348 10,956,570 10,014,704
Deposits under pooled schemes and unit-linked investments contracts 85,154 61,610 85,154 58,055
38 Issued bonds at amortised cost 903,790 981,190 903,790 981,190
36, 47 Liabilities under insurance contracts 151,764 158,485 0 0
Current tax liabilities 67,942 73,613 58,140 67,770
37 Other liabilities 148,620 226,573 144,028 220,192
Deferred income 3,488 3,927 1,644 2,162
Total liabilities other than provisions 12,814,706 12,332,200 12,655,065 12,167,528
Provisions for liabilities
29 Provisions for deferred tax 530 508 0 0
13 Provisions for losses on guarantees etc 1,614 1,263 1,614 1,263
Provisions for other liabilities 2,624 1,846 2,624 1,846
Total provisions for liabilities 4,769 3,617 4,238 3,109
Subordinated debt
39 Subordinated debt 99,930 99,790 99,930 99,790
Total liabilities 12,919,405 12,435,607 12,759,234 12,270,426
Equity
Share capital 192,000 192,000 192,000 192,000
Reserve, Equity Method 0 0 16,891 0
Revaluation reserve 6,718 6,718 6,718 6,718
Retained earnings 1,614,595 1,527,319 1,597,704 1,527,319
Proposed dividends 202,000 350,000 202,000 350,000
Total equity 2,015,313 2,076,037 2,015,313 2,076,037
Total liabilities and equity 14,934,717 14,511,644 14,774,546 14,346,463
Group
Annual Report 2025
44
Statement of changes in equity - Føroya Banki Group
Additional
Share Revaluation Proposed Retained tier 1
DKK 1,000 capital Reserve dividends earnings Total capital Total
Shareholders' equity at January 1, 2025 192,000 6,718 350,000 1,527,319 2,076,037 0 2,076,037
Revaluation of assets, subsidiaries 0 0 0 0
Net profit 202,000 86,317 288,317 0 288,317
Total comprehensive income 0 202,000 86,317 288,317 0 288,317
Dividends paid -350,000 958 -349,042 -349,042
Shareholders' equity at Decem ber 31, 2025 192,000 6,718 202,000 1,614,595 2,015,313 0 2,015,313
Shareholders equity
Additional
Share Revaluation Proposed Retained tier 1
DKK 1,000 capital Reserve dividends earnings Total capital Total
192,000 7,948
80,000 1,570,662 1,850,609 151,532 2,002,141
-1,230 1,230 0 0
Shareholders' equity at January 1, 2024
Revaluation of assets, subsidiaries
Net profit 350,000 -44,792 305,208 5,218 310,427
-1,230 350,000 -43,562 305,208 5,218 310,427
0 0 -6,750 -6,750
0 0 0 -150,000 -150,000
Total comprehensive income
Paid interest on additional tier 1 capital
Redemption of additional tier 1 capital
Dividends paid -80,000 219 -79,781 -79,781
Shareholders' equity at Decem ber 31, 2024 192,000 6,718 350,000 1,527,319 2,076,037 0 2,076,037
Annual Report 2025
45
Statement of changes in equity - Føroya Banki P/F
Equity Additional
Share Revaluation method Proposed Retained tier 1
DKK 1,000 capital Reserve reserve dividends earnings Total capital Total
Shareholders' equity at January 1, 2025 192,000 6,718 0 350,000 1,527,319 2,076,037 0 2,076,037
Revaluation of assets, subsidiaries 0 0 0 0
Net profit 16,891 202,000 69,426 288,317 0 288,317
Total comprehensive income 0 16,891 202,000 69,426 288,317 0 288,317
Dividends paid -350,000 958 -349,042 -349,042
Shareholders' equity at Decem ber 31, 2025 192,000 6,718 16,891 202,000 1,597,704 2,015,313 0 2,015,313
Equity Additional
Share Revaluation method Proposed Retained tier 1
DKK 1,000 capital Reserve reserve dividends earnings Total capital Total
Shareholders' equity at January 1, 2024 192,000 7,948 0 80,000 1,570,662 1,850,609 151,532 2,002,141
Revaluation of assets, subsidiaries -1,230 1,230 0 0
Net profit 0 350,000 -44,792 305,208 5,218 310,427
Total comprehensive income -1,230 0 350,000 -43,562 305,208 5,218 310,427
Paid interest on additional tier 1 capital 0 0 -6,750 -6,750
Redemption of additional tier 1 capital 0 0 0 -150,000 -150,000
Dividends paid -80,000 219 -79,781 -79,781
Shareholders' equity at Decem ber 31, 2024 192,000 6,718 0 350,000 1,527,319 2,076,037 0 2,076,037
Shareholders equity
Annual Report 2025
46
Capital and Solvency - P/F Føroya BankiSolvency Dec. 31 Dec. 31DKK 1,000 2025 2024Tier 1 capital 1,799,971 1,712,027Total capital 1,899,901 1,811,817Risk-w eighted items not included in the trading portfolio 6,422,812 5,835,110Risk-w eighted items w ith market risk etc. 237,353 391,442Risk-w eighted items w ith operational risk 1,072,224 953,926Total risk-weighted items 7,732,389 7,180,478CET 1 capital ratio 23.3% 23.8%Tier 1 capital ratio 23.3% 23.8%Total capital ratio 24.6% 25.2%Total capital, incl. MREL capital, ratio 36.3% 36.3%Shareholders' equityShare capital 192,000 192,000Reserves 6,718 6,718Net profit 288,317 310,427Retained earnings, previous years 1,535,796 1,571,152Shareholders' equity, before deduction of holdings of own shares 2,022,831 2,080,296Deduction of ordinary dividend 202,000 217,000Deduction of extraordinary dividend 0 133,000Deduction of holdings of ow n shares 7,519 4,259Deduction of MLC regarding Non Performing Exposures 242 0Deduction of intangible assets 466 1,084Deduction of deferred tax assets 11,557 11,172Deduction regarding prudent valuation of financial instruments 1,077 1,754CET 1 capital 1,799,971 1,712,027Tier 1 capital 1,799,971 1,712,027Subordinated loan capital 99,930 99,790Total capital 1,899,901 1,811,817MREL capital 903,790 791,227Total capital, incl. MREL capital 2,803,691 2,603,044
The Føroya Banki Group holds a license to operate as a bank and is therefore subject to a capital requirement under the Faroese
Financial Business Act and to CRR. The Faroese provisions on capital requirements apply to both the Parent Company and the
Group. The capital requirement provisions stipulate a minimum capital of 8% of the identified risks. A detailed body of rules
determines the calculation of capital as w ell as risks (risk-w eighted items). The capital comprises CET 1 capital and subordinated
loan capital. The CET 1 capital corresponds to the carrying amount of equity, after deductions of holdings of ow n shares, tax
assets and other minor deductions.
Annual Report 2025
47
Cash flow statement - Føroya Banki Group
DKK 1,000 2025 2024
Cash flow from operations
Profit before tax 355,875 382,475
Amortisation and impairment charges for intangible assets 618 618
Depreciation and impairment charges of tangible assets 9,304 9,741
Impairment of loans and advances/guarantees -1,833 1,077
Paid tax -85,771 -78,956
Other non-cash operating items -59,123 -62,528
Total 219,071 252,427
Changes in operating capital
Change in loans at fair value 30,289 36,665
Change in loans at amortised cost -615,578 -233,816
Change in holding of bonds 669,748 -320,115
Change in holding of shares 15,407 7,076
Change in deposits 944,861 1,301,156
Due to credit institutions and central banks -260,573 -138,507
Change in other assets / liabilities -70,282 41,599
Assets/liabilities under insurance contracts -5,255 15,678
Prepayments 2,143 -18,178
Cash flow from operations 929,832 943,985
Cash flow from investing activities
Divestment of sector institution, net of cash 29,174 0
Dividends received 21,077 11,997
Acquisition of intangible assets -950 -5,000
Acquisition of tangible assets -2,154 -7,211
Sale of tangible assets 5,030 6,654
Cash flow from investing activities 52,177 6,439
Cash flow from financing activities
Change in loans from central banks and credit institutions -57,143 242,857
Issued bonds at amortised cost 250,000 0
Redemption of issued bonds at amortised cost -340,000 -150,000
Interest paid on additional tier 1 capital 0 -6,750
Payment of dividends -350,000 -80,000
Payment of dividends, ow n shares 958 219
Principal portion of lessee lease payments -4,255 -5,417
Cash flow from financing activities -500,439 909
Cash flow 481,570 951,333
Cash in hand and demand deposits w ith central banks, and due from
Credit institutions, etc. at the beginning of the year 3,007,102 2,055,769
Cash flow 481,570 951,333
Cash and due etc. 3,488,671 3,007,102
Cash and due etc.
Cash in hand and demand deposits w ith central banks 3,249,492 2,696,305
Due from credit institutions, etc. 239,179 310,797
Total 3,488,671 3,007,102
Annual Report 2025
48
Notes
Note 1
Accounting policies
Contents
1. Basis of preparation …………………………………….……...……..49
1) Estimates and assumptions ………….…..……..……..49
2) Adoption of new standards in 2025………………..….. 50
3) Changes in IFRSs not yet applied by Føroya Banki.….50
4) Consolidation……………………………………………. 51
5) Segment information …………………………………....51
6) Offsetting …………………………………………………51
2. Critical accounting policies ………………………………….……….52
1. Income statement ………………………………….….………52
1) Income criteria ………………………….……….……….52
2) Interest income and expenses …………….….………..52
3) Dividends on shares …………………….…….……...…52
4) Fees and commission income …………….….………..52
5) Fees and commission paid………………. .…....…….. 52
6) Net insurance result..........…………………………….. 52
7) Market value adjustments ……….….…………………..53
8) Other operating income ………………….…….……….53
9) Staff costs ……..…………………………….….………..53
10) Pension obligations …………………….…….………..53
11) Depreciation and impairment of property, plant and
equipment …………………...……………………………. 53
12) Other operating expenses …………………….……...53
13) Impairment charges on loans and advances etc....…53
14) Tax ………………………………….…………….……..53
2. Balance sheet - Assets ………………………………….…...54
1) Due from credit institutions and central banks .….……54
2) Financial instruments - General ……….………….…...54
3) Financial instruments - Classification ……….…….…..54
4) Assets under insurance contracts ….……………….…56
5) Holdings in associates …………………….………….…56
6) Holdings in subsidiaries ……………………….…….….57
7) Pooled schemes activities………………………………57
8) Intangible assets ……………………….…………...….. 57
9) Land and buildings ………………………….……….…..57
10) Other property, plant and equipment …………..……58
11) Assets held for sale ………………………….…….…..58
12) Other assets ………………………….…………….…..58
13) Prepayments……………………………………………58
3. Balance sheet - Liabilities, provisions and equity ……..…..58
1) Financial instruments - general …………….……….…58
2) Classification …………………………………….……....58
3) Due to credit institutions and central banks and deposits
measured at amortised cost……….………………..……..59
4) Trading portfolio measured at fair value ….…….……..59
5) Determination of fair value ………………….…….…….59
6) Liabilities under insurance contracts ………….….……59
7) Other liabilities ………………………………….….…….59
8) Provisions …………………………………….……….....60
9) Subordinated debt …………………………….….……..60
10) Own shares ………………………………….…….……60
11) Dividends ………………………………………….……60
4. Cash flow statement ……………………………….…….……60
3. Accounting Policies - P/F Føroya Banki.....…………….…….60
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1. Basis of preparation
The Føroya Banki Group presents its consolidated financial statements in accordance with IFRSs as adopted by EU and
issued by the International Accounting Standards Board (IASB). Furthermore, the consolidated financial statements
comply with the requirements for annual reports in the Faroese Financial Business Act and the executive order regarding
the application of IFRS standards in financial institutions which applies for the Faroes issued by the Danish FSA.
The preparation of the consolidated financial statements requires, in some cases, the use of estimates and assumptions
by management. The estimates are based on past experience and assumptions that management believes are fair and
reasonable but that are inherently uncertain and unpredictable. These estimates and the judgement behind them affect
the reported amounts of assets, liabilities and off-balance sheet items, as well as income and expenses in the financial
statements presented. Changes and effects from implementation of new standards and amendments are explained in the
following under the heading Adoption of new standards in 2025.
1) Estimates and assumptions
Estimates and assumptions of significance to the financial statements include the determination of:
A. Impairment charges of loans and advances
B. Fair value of domicile properties
C. Fair value of financial instruments
The assumptions may be incomplete or inaccurate, and unexpected future events or situations may occur. Such estimates
and assessments are therefore difficult to make and will always entail uncertainty, even under stable macroeconomic
conditions, when they involve transactions with customers and other counterparties.
A) Impairment charges of loans and advances
The Group makes impairment charges to account for impairment of loans and advances that occur after initial recognition.
Impairment charges are based on the expected credit loss model as further described under the section “Loans and
advances at amortised cost”.
In order to determine impairments on financial instruments as stipulated by IFRS 9, the Bank is required to make use of
estimations and assumptions. In particular, Føroya Banki is mandated to estimate future cash flows when assessing
significantly increased credit risks and loan-to-value when assessing impairments.
Føroya Banki’s expected credit loss model based on a series of variable inputs – requires a loss allowance to be
recognised on all credit exposures. Impairments within stage 1 and stage 2 which are not classified as weak engagements
are based purely on the output of the model, whereas impairments within the weaker part of stage 2 and stage 3 are
recognised based on a combination of individual assessment and model output.
The following components of the model are considered accounting estimations and assessments:
• Føroya Banki’s internal credit score system, which assigns PD values on a loan-by-loan basis and classifies
exposures into stages.
• Føroya Banki’s criteria to determine significant increases in credit risk, which would demand a transfer from one
stage of impairment to another.
• Model development, including input parameters and formulas.
• Determining macroeconomic scenarios and economic data input, as well as the effect of these on PD values,
EAD values and LGD values.
• Determining forward-looking microeconomic scenarios.
Note 13 provides details on the amounts recognized and note 48 also provides further details on impairment charges on
loans and advances.
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In addition to model-based impairment charges management applies judgement when determining the need for post-
model adjustments in order to reflect uncertainty of the future cash flows not covered by the model.
B) Fair value of domicile properties
The income-based approach is used to measure fair value of properties. For domicile properties the fair value is estimated
on the basis of various assumptions and a major parameter is the potential rental income. The potential rental income is
based on the Group’s best estimate of the future profit on ordinary operations and the required rate of return for each
individual property when taking into account such factors as location and maintenance. A number of these assumptions
and estimates have a major impact on the calculations and include such parameters as developments in rent, costs and
required rate of return. Any changes to these parameters as a result of changed market conditions will affect the expected
return, and thus the fair value of the domicile properties.
C) Fair value of financial instruments
The Group measures a number of financial instruments at fair value, including all derivative instruments as well as shares,
bonds and certain loans.
Assessments are made in connection with determining the fair value of financial instruments in the following areas:
• Choosing valuation method
• Determining when available listed prices do not reflect the fair value
• Calculating fair-value adjustments to provide for relevant risk factors, such as credit
• Model and liquidity risks
• Assessing which market parameters are to be taken into account
• Making estimates of future cash flows and return requirements for unlisted shares
The Group’s loans and advances are not traded in an active market. Therefore, there is no market price to determine fair
value of loans. The fair value has to be determined using a valuation technique, which estimates the market price between
qualified, willing and independent parties. The valuation technique has to include all the relevant elements such as credit
risk, market rates etc. Note 3 and note 13 provide details on the amounts recognised for loans measured at fair value.
As part of its day-to-day operations, the Group has acquired strategic equity investments. These shares are measured at
fair value based on the information available about trading in the relevant company’s equity investments. Details on the
amounts recognised are provided in note 21.
2) Adoption of new standards in 2025
On 1 January 2025, Føroya Banki implemented the following new and amended standards which are mandatory for
accounting periods beginning on or after 1 January 2025:
• IAS 21, Foreign exchange rates: The amendment clarifies the procedures relating to the assessment of whether
a currency is exchangeable into another currency, and when it is not, how to determine the exchange rate to use
and which disclosures to provide.
The amendment has not had any significant impact on the financial statements.
3) Changes in IFRSs not yet applied by Føroya Banki
The following new standards, amendments and interpretations issued and endorsed by EU are relevant for the Føroya
Banki Group:
Amendments to the IFRS 9 regarding Classification and Measurement of Financial Instruments comprising:
• Clarification of the requirements for the timing of recognition and derecognition of some financial assets and
liabilities, with a new exception for some financial liabilities settled through an electronic cash transfer system;
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• Clarification to and addition of further guidance for assessing whether a financial asset meets the solely payments
of principal and interest (SPPI) criterion which could among others be relevant for instruments with features linked
to the achievement of environment, social and governance (ESG) targets)
The amendment is mandatory for financial years beginning on or after 1 January 2026.
The amendment has will not have any significant impact on the financial statements.
The following new standards, amendments, and interpretations issued and not yet endorsed by EU are relevant for Føroya
Bank Group:
IFRS 18, Presentation and Disclosure in Financial Statements: This new standard replaces IAS 1 and it implements set
of new requirements for presentation and disclosures in the financial statements. The new standard requires the income
statement to be structured into five categories, while also introducing two new subtotals. Furthermore, the new term
“Management Performance Measures (MPM)” is introduced, which must be disclosed in the notes of the financial
statements. The new requirements for presentation and disclosures are applicable for all financial statements, including
consolidated financial statements, separate financial statements and interim financial statements.
The amendment will be effective for financial years beginning on or after 1 January 2027.
Management has not yet assessed the potential impact of this amendment.
4) Consolidation
The consolidated financial statements comprise the parent company, P/F Føroya Banki and its subsidiaries. Subsidiaries
are entities over which Føroya Banki has power, is exposed to variability in returns, and has the ability to use its power
to affect the return. Control is said to exist if P/F Føroya Banki directly or indirectly holds more than half of the voting rights
in an undertaking or otherwise has power to control management and operating policy decisions. Operating policy control
may be exercised through agreements about the undertaking’s activities.
The consolidated financial statements combine the financial statements of the parent and the individual subsidiaries in
accordance with the Group’s accounting policies, in which intragroup income and costs, shareholdings, balances and
dividends as well as realised and unrealised gains and losses on intragroup transactions have been eliminated.
Acquired subsidiaries are included from the date of acquisition.
The assets of acquired subsidiaries, including identifiable intangible assets, as well as liabilities and contingent liabilities,
are recognised at the date of acquisition at fair value in accordance with the acquisition method.
5) Segment information
The Group consists of a number of business units and resource and support functions. The business units are segmented
according to legislation, product and services characteristics. The information provided on operating segments is regularly
reviewed by the management making decisions about resources to be allocated to the segments and assessing their
performance, and for which discrete financial information is available. Amounts presented in the segment reporting are
recognised and measured in accordance with the Group’s significant accounting policies.
Segment revenue and expenses as well as segment assets and liabilities comprise the items that are directly attributable
to or reasonably allocable to a segment. Non-allocated items primarily comprise assets and liabilities, revenue and
expenses relating to the Group’s administrative functions as well as income taxes etc.
6) Offsetting
Amounts due to and from the Group are offset when the Group has a legally enforceable right to set off a recognised
amount and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
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2. Critical accounting policies
1. Income statement
1) Income criteria
Income and expenses are accrued over the periods to which they relate and are recognised in the Income Statement at
the amounts relevant to the accounting period.
2) Interest income and expenses
Interest income and expenses arising from interest-bearing financial instruments measured at amortised cost are
recognised in the income statement according to the effective interest method on the basis of the cost of the individual
financial instrument. Interest includes amortised amounts of fees that are an integral part of the effective yield on a
financial instrument, such as origination fees, and the amortisation of any other differences between cost price and
redemption price. For financial assets in stage 1 and 2 of the impairment model, interest income is determined on the
basis of the gross carrying amount. For financial assets in stage 3, interest income is determined based on the carrying
amount after impairment.
Interest income and expenses also include interest on financial instruments measured at fair value with the exception of
interest relating to assets and deposits under pooled schemes which are recognized under market-value adjustments.
The interests are recognised in the income statement according to the effective interest method on the basis of the cost
of the individual financial instrument.
Interest on loans and advances subject to impairment is recognised on the basis of the impaired value.
Interest expenses comprise interests on the groups leasing liabilities recognized as a consequence of the implementation
of IFRS 16 ‘Leases’.
Furthermore, interest income comprises income originated from liabilities and interest expenses comprise expenses
originated from assets.
3) Dividends on shares
Dividends on shares are recognised in the income statement on the date the Group is entitled to receive the dividend.
This will normally be when the dividend has been approved at the annual general meeting.
4) Fees and commission income
Fees and commission income comprises fees and commission income that is not included as part of the amortised cost
of a financial instrument. The income is accrued during the service period. The income includes fees from securities
dealing, money transmission services as well as guarantee commission. Income arising from the execution of a significant
act is recognized when the act is executed.
5) Fees and commissions paid
Fees and commission expenses comprises fees and commission expenses paid that are not included as part of the
amortised cost of a financial instrument. The costs include guarantee commissions and trading commissions.
6) Net insurance result
Insurance activities from the subsidiaries P/F Trygd (non-life insurance) and P/F NordikLív (life-insurance), are presented
in the income statement under the item Net insurance result and includes the following items:
• Insurance revenue - comprises gross premiums and change in gross provisions for unearned premiums.
• Insurance service expenses - comprises claims paid, change in gross provisions for claims, change in risk margin
and acquisition costs.
• Net return on investments backing insurance liabilities - comprises return on investments.
• Net finance income or expenses from insurance - comprises technical interest of reinsurance and interest and
value adjustments of provisions.
• Other expenses - comprises administrative expenses.
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7) Market value adjustments
Market value adjustments comprise all value adjustments of financial assets and liabilities that are measured at fair value
through profit or loss. Excluded are adjustments on loans and advances at fair value, recorded as fair value adjustments
under Impairment charges on loans and advances and provisions for guarantees etc. note 13.
8) Other operating income
Other operating income includes other income that is not ascribable to other income statement line items.
9) Staff costs
Salaries and other remuneration the Group expects to pay. Remuneration is recognized along with delivery of service
and is classified as staff costs. This item includes salaries, bonuses, holiday allowances, anniversary bonuses, pension
costs and other remuneration.
10) Pension obligations
The Group’s contributions to defined contribution plans are recognised in the income statement as they are earned by
the employees.
11) Depreciation and impairment of intangible assets, property, plant and equipment
Depreciation and write-downs comprise the depreciation and write-downs on intangible and tangible assets for the period.
Furthermore, depreciation of property comprises depreciations on the Groups holdings of leased assets.
12) Other operating expenses
Other operating expenses include other expenses that are not ascribable to other income statement line items.
13) Impairment charges on loans and advances etc.
Impairment charges on loans etc. includes impairment losses on and charges for loans and advances and amounts due
from credit institutions and other receivables involving a credit risk as well as provisions for guarantees and unused credit
facilities.
14) Tax
Faroese consolidated entities are not subject to compulsory joint taxation but can opt for joint taxation provided that certain
conditions are complied with. P/F Føroya Banki has opted for joint taxation with the subsidiary P/F Skyn. Corporation tax
on income subject to joint taxation is fully distributed on payment of joint taxation contributions between the consolidated
entities.
Tax for the year includes tax on taxable profit for the year, adjustment of deferred tax as well as adjustment of tax for
previous years. Tax for the year is recognised in the income statement as regards to the elements that can be attributed
to profit for the year and in other comprehensive income and directly in equity as regards to the elements that can be
attributed to items recognised in other comprehensive income and directly in equity respectively. Tax for the year is
calculated separately based on continuing and discontinued operations.
Current tax liabilities and current tax assets are recognised in the balance sheet as calculated tax on taxable profit for the
year, adjusted for tax on taxable profit of previous years.
Provisions for deferred tax or deferred tax assets are based on the balance sheet liability method and include temporary
differences between the carrying amounts and tax bases of the balance sheets of each consolidated entity as well as tax
loss carry forwards that are expected to be realised. Calculation of deferred tax is based on current tax law and tax rates
at the balance sheet date.
Deferred taxes are recognised in the balance sheet under the items “Deferred tax assets” and “Provisions for deferred
tax”.
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2. Balance sheet — Assets
1) Due from credit institutions and central banks
Amounts due from credit institutions and central banks comprise amounts due from other credit institutions and time
deposits with central banks and are measured at amortised cost, as described under Financial instruments / loans and
advances at amortised cost.
2) Financial instruments — General
Purchases and sales of financial instruments are recognised and measured at their fair value at the settlement date. The
fair value is usually the same as the transaction price. Changes in the value of financial instruments are recognised up to
the settlement date.
3) Financial instruments — Classification
The Group’s financial assets are at initial recognition divided into the following three categories:
• Loans and advances measured at amortised cost
• Trading portfolio measured at fair value
• Financial assets designated at fair value with value adjustments through profit and loss
3.1) Loans and advances measured at amortised cost
Loans and advances consist of conventional loans and advances disbursed directly to borrowers. Initial recognition of
amounts due from credit institutions and central banks as well as loans and advances are at fair value plus transaction
costs and less origination fees and other charges received.
Subsequently they are measured at amortised cost, according to the effective interest method, less any impairment
charges according to the requirements from IFRS 9.
The difference between the value at initial recognition and the nominal value is amortised over the term to maturity and
recognised under “Interest income”.
Payment on loans and advances from customers comprises the principal amount plus interests.
Impairment charges
Impairment charges on loans, financial guarantee contracts and loan commitments is based on a staged model under
which the impairment charge on instruments which have not been subject to a significant increase in credit risk is
determined at the credit loss from loss events expected to take place within the next 12 months. For Instruments with a
significant increase in credit risk since initial recognition and instruments which are credit impaired, the impairment charge
is the lifetime expected credit loss.
The method of determining whether the credit risk has increased significantly is mainly based on the probability of default
reflecting past events as well as current conditions and forecasts at the reporting date.
The method of forecasting at the reporting date is based on a distribution of the bank’s personal customers by geography
and of its corporate customers by industry. For each category, the bank considers the future forecast relative to the past
events on which the probability of default is based.
The method of calculating the expected credit loss in stage 1 and a part of stage 2 is primarily a model-based individual
assessment based on a probability of default, a loss in case of default and exposure at the default date. For large, weak
stage 2 customers/facilities and stage 3 customers/facilities, the calculation of impairment allowance is made using a
manual, individual assessment of the financial assets rather than a model-based calculation.
For exposures categorised as stage 1 or stage 2, the expected credit loss (ECL) is calculated as a function of the
probability of default (PD) * the expected exposure at default (EAD) * the expected loss given default (LGD). Where the
PD for exposures in stage 1 reflects the probability of default in the next 12-month period (PD12), the probability of default
over the entire life of the exposure is applied to exposures placed in stage 2 (PD Life).
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As regards the portion of stage 2 exposures consisting of the weakest exposures, the largest of these are reviewed
individually, and the average impairment ratio calculated for them is used to calculate the expected credit loss for the
weakest of the stage 2 exposures not individually reviewed.
As regards exposures in stage 3, the expected credit loss is calculated individually.
PD12 is calculated based on the Bank’s behavioural credit score methodology for exposures to retail customers and small
corporate customers, whereas the Bank’s accounting-based credit score model is applied to the Bank’s exposures to
large corporate customers.
PD Life is calculated based on PD12 but is adjusted for any identified annual migrations between various fixed PD12
stages. Furthermore, the calculated PD Life is adjusted for changes in a number of forward-looking factors, which as
regards the Bank’s Danish and Greenlandic exposures are based on information from, e.g., the Danish central Bank and
the Danish Economic Council, whereas factors of relevance to Faroese exposures are based on the current impairment
ratio relative to a historical average impairment ratio.
EAD is calculated as the actual amount of exposure with due consideration for non-executed loan commitments and
unutilised, executed loan commitments as well as any guarantees provided, which factors are calculated as a function of
predetermined coefficients.
LGD is calculated as the ratio between the historically identified loss rate for the portion of the exposures that are not
secured.
The expected life of an exposure is calculated, unless the circumstances surrounding the exposure in question dictate
otherwise, as the contractual maturity of the exposure in question.
All significant variables and calculations made are validated at least annually, primarily based on sample testing and, for
model-based variables, supplemented by back-testing and the use of statistical targets for explanatory values.
Since calculations are made in all stages of an expected credit loss, i.e. expectations as to the future, all statements and
calculations reflect the Bank’s best estimates and assessments as to future events. These estimates and assessments
may therefore result in the calculation of a higher or lower credit loss than the credit losses actually incurred. Please refer
to note 13 for further information.
Write-off policy
Pursuant to the credit policy, the Bank will secure as much collateral as possible when entering into exposures. It is Group
policy to write off, possibly on account, claims deemed to be lost, even if no collateral has been secured. The following
principles apply for writing off bad debts:
• For personal customers, write-off is made prior to or immediately in connection with the exposure being
transferred to the central debt collection department.
• For corporate customers, write-off will typically await the commencement or completion of active realisation.
• Non-performing loans where the interest rate has been reduced to zero are normally written off immediately.
The Bank will seek to collect all written-off exposures either through its debt collection department or through external
assistance. In certain customer relationships, an agreement will be made on partial repayment of the exposures, and
remaining exposures will be forfeited in connection with bankruptcy proceedings and agreements on debt rescheduling.
3.2) Trading portfolio measured at fair value
The trading portfolio includes financial assets acquired which the Group intends to sell or repurchase in the near term.
The trading portfolio also contains financial assets managed collectively for which a pattern of short-term profit taking
exists.
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Assets in the trading portfolio comprise the shares, bonds and derivatives with positive fair value held by the Group’s
trading departments.
At initial recognition, the trading portfolio is measured at fair value, excluding transaction costs. Subsequently, the portfolio
is measured at fair value and the value adjustments are recognised in the Income Statement within market value
adjustments.
Determination of fair value
The fair value of financial assets is measured on the basis of quoted market prices of financial instruments traded in active
markets. If an active market exists, fair value is based on the most recently observed market price at the balance sheet
date. If a financial instrument is quoted in a market that is not active, the Group bases its measurement on the most recent
transaction price. Adjustment is made for subsequent changes in market conditions, for instance by including transactions
in similar financial instruments that are assumed to be motivated by normal business considerations.
If no active market for standard and simple financial instruments exists, generally accepted valuation techniques rely on
market-based parameters for measuring fair value. The results of calculations made on the basis of valuation techniques
are often estimates because exact values cannot be determined from market observations. Consequently, additional
parameters, such as liquidity risk and counterparty risk, are sometimes used for measuring fair value.
Determination of fair value hierarchy
Fair value is determined according to the following order of priorities:
• Financial instruments valued based on quoted prices in an active market are recognised in the Quoted prices
category.
• Financial instruments valued substantially based on other observable input and illiquid mortgage bonds valued
by reference to the value of similar liquid bonds are recognised in the Observable input category.
• Other financial instruments are recognised in the non-observable input category. This category covers unlisted
shares and valuation relies on extrapolation of yield curves, correlations, or other model input of material
importance to valuation.
3.3) Financial assets designated at fair value with value adjustments through profit and loss
Financial assets designated at fair value through profit and loss comprise fixed-rate loans, loans capped and shares,
including sector shares, which are not a part of the trading portfolio.
The interest rate risk on these loans is eliminated or significantly reduced by entering into interest rate swaps. The market
value adjustment of these interest rate swaps generates immediate asymmetry in the financial statements if the fixed-rate
loans and loans capped were measured at amortised cost. To eliminate the inconsistency recognising the gains and
losses on the loans and related swaps the fixed rate loans and loans capped are measured at fair value with value
adjustments through profit and loss.
4) Assets under insurance contracts
Assets under insurance contracts comprise reinsurance assets with reduction of debt related to reinsurance. Reinsurance
assets are measured by initial recognition at fair value.
5) Holdings in associates
Associated undertakings are businesses, other than group undertakings, in which the Group has holdings and significant
influence but not control. The Group generally classifies undertakings as associated undertakings if P/F Føroya Banki
directly or indirectly holds 20 — 50% of the voting rights.
Holdings in associated undertakings are recognised at cost at the date of acquisition and are subsequently measured
according to the equity method. The proportionate share of the net profit or loss of the individual associate undertaking is
included under “Income from associated undertakings” and based on data from financial statements with balance sheet
dates that differ no more than three months from the balance sheet date of the Group.
The proportionate share of the profit and loss on transactions between associated and group undertakings is eliminated.
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57
Associates with negative net asset values are measured at DKK 0. Any legal or constructive obligation to cover the
negative balance of the undertakings is recognised in provisions. Any receivables from these under-takings are written-
down according to the impairment loss risk.
Profits on divested associates are calculated as the difference between the selling price and the book value inclusive of
any goodwill on the divested holdings. Reserves recognised within equity are reversed and recognised in the income
statement.
6) Holdings in subsidiaries
Subsidiaries are recognised according to the equity method in the Financial Statement of the Parent Company.
Consequently, the net profit of the Group and the Parent Company are identical. The accounting policy described to the
consolidated financial statements is therefore also valid for the parent company.
7) Pooled schemes activities
Assets under pooled schemes and connected deposits are recognised in separate balance sheet items. Market value
adjustments on pooled schemes and dividends to the participants are recognised in "Market value adjustments".
8) Intangible assets
Intangible assets consist of internally developed software. Developed software is amortised over its expected useful life,
usually four years, according to the straight-line method.
9) Land and buildings
On acquisition land and buildings are recognised at cost. The cost price includes the purchase price and costs directly
attributable to the purchase until the date when the asset is ready for use.
9.1) Domicile property
Domicile property is real property occupied by the Group’s administrative departments, branches and other service units.
Real property with both domicile and investment property elements is allocated proportionally to the two categories if the
elements are separately sellable. If that is not the case, such real property is classified as domicile property, unless the
Group occupies less than 10% of the total floorage.
Subsequently, domicile property is measured at a revalued amount corresponding to the fair value at the date of the
revaluation less depreciation and impairment. The fair value is calculated on the basis of current market data according
to an income-based model that includes the property’s estimated rental income if rented to a third party, operating
expenses, as well as management and maintenance. Maintenance costs are calculated on the basis of the condition of
the individual property, construction year, materials used, etc. Operating expenses are calculated on the basis of a
standard budget. The fair value of the property is determined based on the expected cash flow from operations and a rate
of return assessed for the individual property. The rate of return is determined on the basis on the location of the individual
property, potential use, the state of maintenance, quality, etc. Revaluations are made with sufficient regularity to ensure
that the carrying amount does not differ materially from the amount which would be determined using fair value at the
balance sheet date.
Depreciation is made on a straight-line basis over the expected useful life of 50 years, taking into account the expected
residual value at the expiry of the useful life.
At least once a year value adjustment according to revaluations are recognised in other comprehensive income.
Depreciation and impairments are recognised in the income statement under the item “Amortisation, depreciation on fixed
assets and impairment charges”. Impairments are only recognised in the income statement to the extent that it cannot be
offset in former period’s revaluations.
9.2) Leased domicile property
A right of use asset and a lease liability is recognised in the balance sheet upon commencement of a lease.
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On initial recognition, the right-of-use asset is measured at cost, corresponding to the value of the lease liability, adjusted
for prepaid lease payments, plus any initial direct costs and estimated costs for dismantling, removing and restoring, or
similar.
On subsequent recognition, the asset is measured at cost less any accumulated depreciation and impairment. The right-
of-use asset is depreciated over the shorter of the lease term and the useful life of the asset. Depreciation charges are
recognised in the income statement on a straight-line basis. The lease asset is presented in the balance sheet under the
item Domicile property.
10) Other property, plant and equipment
Other property, plant and equipment comprise equipment, vehicles, furniture and leasehold improvements and is
measured at cost less depreciation and impairment. Assets are depreciated according to the straight-line method over
their expected useful lives, which usually is three to ten years.
Other tangible assets are tested for impairment if indications of impairment exist. An impaired asset is written down to its
recoverable amount, which is the higher of its fair value less costs to sell and its value in use.
11) Assets held for sale
Assets held for sale include property and plant and equipment. Assets held for sale also include assets taken over under
non-performing loan agreements. Assets are classified as held for sale when the carrying amount is expected to be
recovered principally through a sale transaction within 12 months in accordance with a formal plan rather than through
continuing use. Assets or disposal groups held for sale are measured at the lower of carrying amount and fair value less
costs to sell. An asset is not depreciated or amortised from the time when it is classified as held for sale. Assets held for
sale not expected to be sold within 12 months on an active marked are reclassified to other items.
Assets held for sale are measured at the lower of carrying amount and fair value less costs to sell.
Impairment losses arising immediately before the initial classification of the asset as held for sale are recognised as
impairment losses. Impairment losses arising at initial classification of the asset as held for sale and gains or losses at
subsequent measurement at the lower of carrying amount and fair value less costs to sell are recognised in the income
statement under the items they concern.
12) Other assets
Other assets include interest and commissions due, derivatives with positive value and other amounts due.
13) Prepayments
Prepayments recorded as assets include costs incurred that relate to the next accounting period. These expenses are
measured at cost.
3. Balance sheet — Liabilities, provisions and equity
1) Financial instruments — General
Purchases and sales of financial instruments are recognised and measured at their fair value at the settlement date. The
fair value is usually the same as the transaction price. Changes in the value of financial instruments are recognised up to
the settlement date.
2) Classification
The Group’s financial liabilities are at initial recognition divided into the following three categories:
• Due to credit institutions and central banks, issued bonds and deposits measured at amortised cost
• Trading portfolio measured at fair value
• Other financial liabilities measured at cost
Annual Report 2025
59
3) Due to credit institutions and central banks, issued bonds and deposits measured at amortised cost
Initial recognition of amounts due to credit institutions and central banks, issued bonds and deposits is at fair value net of
transaction costs. On the step-up clause date due to credit institutions and due regarding Issued bonds it is the banks
policy to repay the debt, thus the step-up will not be effective.
Subsequently they are measured at amortised cost, according to the effective interest method, by which the difference
between net proceeds and nominal value is recognised in the income statement under the item “Interest expenses” over
the loan period.
The effective interest rate is calculated on the expected cash flows estimated at inception of the loan. Non closely related
embedded derivatives such as certain prepayment and extension options are separated from the loan treated as
freestanding derivatives.
4) Trading portfolio measured at fair value
Liabilities in the trading portfolio comprise derivatives with negative fair value held by the Group’s trading departments.
At initial recognition, the trading portfolio is measured at fair value, excluding transaction costs. Subsequently, the portfolio
is measured at fair value and the value adjustments are recognised under market value adjustments in the Income
Statement within market value adjustments.
5) Determination of fair value
The determination of the fair value is identical with the determination of the fair value of assets. Please refer to this section
under financial assets.
6) Liabilities under insurance contracts
Liabilities under insurance contracts consist of provisions for unearned premiums and claims provisions reduced with
receivables from insurance contracts from premiums and claims provisions.
The Group measures liabilities under insurance contracts using the Premium Allocation Approach (PAA).
Premium provisions are calculated according to a best estimate of the sum of expected payments, as a result of insurance
events arising after the balance sheet date, that are covered by agreed insurance contracts. Premium provisions include
future direct and indirect expenses for administration and claims processing of agreed insurance contracts. A premium
provision represents at least the part of the gross premium that corresponds to the part of the coverage period that comes
after the balance sheet date.
Claims provisions are calculated according to a best estimate of the sum of expected payments, as a result of insurance
events until the balance sheet date, in addition to the amounts already paid as a result of such events. Claims provisions
also include amounts the Group, according to a best estimate, expects to pay as direct and indirect costs in connection
with the settlement of the claims liabilities. Furthermore, the item includes provisions on outstanding claims i. e. Risk
margin on outstanding claims.
Claims provisions are discounted according to the expected settlement of the provisions on the basis of the discount rate
issued by EIOPA (European Insurance and Occupational Pensions Authority).
7) Other liabilities
This item includes sundry creditors, derivatives with negative market values and other liabilities. Wages and salaries,
payroll tax, social security contributions and compensated absences are recognised in the financial year in which the
associated service has been rendered by the Group’s employees. Costs relating to the Group’s long-term employee
benefits are accrued and follow the service rendered by the employees in question.
Pension contributions are paid into the employees’ pension plans on a continuing basis and are charged to the income
statement.
Annual Report 2025
60
On initial recognition, lease liabilities are measured at the present value of future lease payments discounted using an
incremental borrowing rate. On subsequent recognition, a lease liability is measured at amortised cost. Lease payments
include payments during the minimum lease period plus lease payments during extension periods when it is reasonably
certain that the option will be exercised. The lease liability is recognised under the item Other liabilities.
8) Provisions
Provisions include provisions for deferred tax, financial guarantees and other provisions for liabilities. Initial recognition of
financial guarantees is at fair value which is often equal to the guarantee premium received. Subsequent measurement
of financial guarantees is at the higher of the guarantee premium received amortised over the guarantee period and any
provisions made for credit losses. Such provisions are determined applying the same approach as for loans issued.
A provision for a guarantee or an onerous contract is recognised if claims for payment under the guarantee or contract
are probable and the liability can be measured reliably. Provisions are based on the management’s best estimates of the
size of the liabilities. Measurement of provisions includes discounting when significant.
Provisions for financial guarantees are made according to the requirements from IFRS 9.
9) Subordinated debt
Subordinated debt consists of liabilities in the form of subordinated loan capital which in case of the Group’s voluntary or
compulsory winding-up, will not be repaid until after the claims of its ordinary creditors have been met.
On the date of borrowing Subordinated debt is recognised at the proceeds received less directly attributable transaction
cost. Subsequently the subordinated debt is measured at amortised cost.
10) Own shares
Purchase and sales amounts and dividend regarding holdings of own shares are recognised directly in the equity under
the item “Retained earnings”. Profits and losses from sale are not included in the income statement.
11) Dividends
The Board of Directors’ proposal for dividends for the year submitted to the general meeting is included as a separate
reserve in shareholders’ equity. The dividends are recognised as a liability when the general meeting has adopted the
proposal.
4. Cash flow statement
The Group prepares its cash flow statement according to the indirect method. The statement is based on the pre-tax profit
for the year and shows the cash flows from operating, investing and financing activities and the increase or decrease in
cash and cash equivalents during the year.
Cash and cash equivalents consist of cash in hand and demand deposits with central banks and amounts due from credit
institutions and central banks with original maturities shorter than three months.
3. Accounting Policies - P/F Føroya Banki
Due to the listing on Copenhagen Stock exchange the bank is required to comply with accounting regulation equivalent
to the executive order on financial reports of credits institutions etc. of the Danish FSA. In 2024 the Danish FSA has
considered the Faroese order on financial reports of credit institutions etc. not to be sufficient equivalent. Therefore, the
bank complies both the Danish and the Faroese order on financial reports of credit institutions etc. for 2024 and 2025.
This change has mainly had effect on the Management review. The valuation principles are identical to the Group’s
valuation principles under the IFRS Accounting Standards. Investments in subsidiaries are recognised using the equity
method.
Annual Report 2025
61
Note 2
Operating segments
The Group consists of two business units and support functions. The Group’s activities are segmented into business units
according to legislative requirements and product and service characteristics. The Group’s business units are Banking and
Non-life insurance.
Banking comprises Personal Banking and Corporate Banking. Personal Banking comprises private customers in the Faroe
Islands and Greenland. Corporate Banking comprises corporate customers mainly in the Faroe Islands and in Greenland.
The corporate segment also comprises a few remaining corporate customers from Denmark.
Non-life insurance comprises the insurance company P/F TRYGD based The Faroe Islands. TRYGD is responsible for the
Group’s non-life insurance products. TRYGD target personal and corporate customers with a full range of property and
casualty products. TRYGD’s operations are handled by its own sales team and distributed through Group’s banking units.
Other covers expenses for the Group’s support functions and the real estate agency P/F Skyn and the life insurance
company NordikLív. These companies are very small and immaterial in an overall Group context. Overhead Costs are
allocated according to resource requirements. Liquidity balances are posted between the segments using an internal
required rate of return. Other costs are allocated according to deposit balances in each segment. Other comprises assets
not allocated to the business segments i. e. the Groups portfolio of bonds, shares and other assets. Income and expenses
related to the mentioned bonds, shares and other assets are included in Other.
All transactions between segments are settled on an arm’s-length basis.
Annual Report 2025
62
Note
2 Operating segments 2025, (DKK 1,000)
Non-life
Insurance
1
Elimination Group
Banking
Faroe Personal Corporate Othe r TotalIslandsTotalExternal interest income, Net 167,551 206,199 14,353 388,103 0 388,103Internal interest 22,126 -22,126 0 0 0Net interest income 189,677 184,073 14,353 388,103 0 388,103Net dividends and fee income 90,954 27,905 1,617 120,475 0 -11,514 108,961Net insurance result 0 0 56 56 51,448 14,551 66,055Other income 1,387 8,180 45,472 55,038 0 -1,014 54,024Total income 282,017 220,157 61,497 563,672 51,448 2,023 617,143Total operating expenses 78,186 18,980 166,061 263,227 0 2,023 265,249 of which depreciation and amortisation 922 0 7,752 8,674 0 8,674Profit before impairment charges on loans 203,832 201,177 -104,563 300,445 51,448 0 351,894Impairment charges 6,164 -10,327 181 -3,982 0 -3,982Profit before tax 197,667 211,504 -104,745 304,427 51,448 0 355,875Total assets 5,023,009 4,646,763 4,954,769 14,624,542 310,175 14,934,717 of which Loans and advances 4,646,763 5,023,009 9,669,773 9,669,773Total liabilities 6,121,316 4,835,254 1,793,198 12,749,768 169,637 12,919,405 of which Deposits 6,121,316 4,835,254 10,956,570 -8,361 10,948,209 of which Insurance liab ilities 7 151,757 151,7641) Please refer to the income statement for a break down of the net insurance result including significant insurance expences. Non-life 1Operating segments 2024, (DKK 1,000)BankingInsuranceElimination GroupFaroe Personal Corporate Other TotalIslandsTotalExternal interest income, Net 152,561 207,100 82,589 442,250 0 442,250Internal interest 61,693 -55,173 -6,520 1 1Net interest income 214,254 151,927 76,070 442,251 0 442,251Net dividends and fee income 79,349 22,168 253 101,770 0 -11,022 90,748Net insurance result 0 0 10,576 10,576 23,302 13,869 47,747Other income 4,273 7,499 48,889 60,660 0 -1,014 59,646Total income 297,876 181,594 135,787 615,257 23,302 1,833 640,393Total operating expenses 84,110 20,328 151,965 256,403 0 2,586 258,990 of which depreciation and amortisation 8,320 1,276 -506 9,090 0 9,090Profit before impairment charges on loans 213,766 161,266 -16,178 358,854 23,302 -753 381,403Impairment charges -8,702 9,975 -2,345 -1,072 0 -1,072Profit before tax 222,468 151,291 -13,833 359,926 23,302 -753 382,475Total assets 4,255,292 4,849,966 5,138,698 14,243,956 269,524 14,513,480 of which Loans and advances 4,373,075 4,713,317 9,086,392 9,086,392Total liabilities 6,231,919 3,782,785 2,251,574 12,266,278 171,165 12,437,443 of which Deposits 6,231,919 3,782,785 10,014,704 -11,356 10,003,348 of which Insurance liab ilities 2,690 155,795 158,4851) Please refer to the income statement for a break down of the net insurance result including significant insurance expences.
Annual Report 2025
63
Føroya Banki Group - Geografical revenue information
The geographical distribution of the Group's income and assets must be disclosed in accordance with IFRS and does not
reflect the management operating segments of the Group though the financial development in Greenland and Faroe Islands
are measured separately. Management assesses that the operating segments provide a more meaningful description of the
Group's activities.
Income from external customers are divided into activities related to the customers's domiciles. Assets include all non-current
assets, i.e. intangible assets, material assets, investment properties and holdings in associates.
Total incomeProfit before taxTaxFTEOperational segments, (DKK 1,000)202520242025 2024 2025 2024 2025 2024Faroe Islands, Banking, Other491,022 510,573234,458 267,829 44,271 50,691 163 166Faroe Islands, Insurance 66,055 47,747 66,055 47,747 9,269 4,125 21 23Greenland, Banking 60,066 82,072 55,362 66,899 14,018 17,233 17 18Total 617,143 640,393 355,875 382,475 67,558 72,049 201 207
Note Additions to tangible Additions to 2Geografical segments, (DKK 1,000)Total incomeNon current assetsassetsintangible assets(cont'd)20252024202520242025 2024 2025 2024Faroe Islands557,077558,320110,008115,708 272 1,616 -668 3,382Greenland 60,066 82,072 34,933 34,756 638 -2,173 0 0Total 617,143 640,393 144,942 150,464 910 -558 -668 3,382Investment portfolio ImpairmentsearningsGeografical segments, (DKK 1,000)2025202420252024Faroe Islands11,564-11,63639,189 49,952Greenland -15,546 10,563 0 0Total -3,982 -1,072 39,189 49,952
Annual Report 2025
64
Føroya Banki Group
Note
3 Net income, financial instruments 2025, (DKK 1,000) Interest Interest Ne t Market value
income
1
expenses interest adjustment Dividend Total
Financial instruments at amortised cost 511,975 155,434 356,541 356,541Financial instruments at fair value: Held for trading 14,605 0 14,605 34,548 21,077 70,2302,4 Loans and Advances Designated9,185 0 9,185 -3,741 0 5,4443 Derivatives7,771 7,771 3,978 11,749Financial instruments at fair value total 31,561 0 31,561 34,785 21,077 87,422Total net income from financial instruments 543,536 155,434 388,103 34,785 21,077 443,964Net income, financial instruments 2024Financial instruments at amortised cost 588,141 186,307 401,834 401,834Financial instruments at fair value: Held for trading 12,415 0 12,415 53,516 11,997 77,9282,4 Loans and Advances Designated11,913 0 11,913 7,463 0 19,3753 Derivatives16,090 16,090 -15,636 454Financial instruments at fair value Total 40,417 0 40,417 45,343 11,997 97,756Total net income from financial instruments 628,559 186,307 442,251 45,343 11,997 499,590
1
2
3
4
Interest income recognised on impaired financial assets amounts to DKK 3.2m (2024: DKK 4.2m)
Net gain/loss recognised on loans and advances designated amount to DKK 5.4m (2024 DKK 19.4m). Of w hich DKK 9.2m relate to interest income (2024 DKK
11.9m), and DKK -3.7m relate to Value adjustments (2024 DKK 7.5m).
Total value adjustments according to IFRS 7 on derivatives, amount to DKK 11.7m (2024 DKK 0.5m)
Value adjustments due to change in credit risk amount to DKK -1.2m (2024 DKK 2.3m)
Annual Report 2025
65
2025 2024 2025 2024Credit institutions and central banks 54,360 80,591 54,360 80,591Loans and advances 466,795 514,493 466,795 514,494Bonds 14,605 12,415 14,605 12,415Total derivatives of which: 7,771 16,090 7,771 16,090 Interest rate contracts 7,808 16,114 7,808 16,114Other interest income 4 4,969 4 4,969Total interest income 543,536 628,559 543,536 628,559
Credit institutions and central banks 22,864 31,054 22,864 31,054Deposits 84,476 95,523 84,476 95,523Issued bonds 42,989 56,370 42,989 56,370Subordinated debt 3,140 3,131 3,140 3,131Lease liabilities 1,971 2,075 1,971 2,075Other interest expenses -5 -1,846 -5 -1,846Total interest expenses 155,434 186,307 155,434 186,307
Fee and commission income Securities trading and custody accounts 17,671 13,658 17,671 13,658 Payment services fees 22,742 21,761 22,742 21,761 Loan commissions 5,120 4,876 5,120 4,876 Guarantee commissions 22,889 21,802 22,889 21,802 Other fees and commissions 26,065 23,529 37,579 34,551Total fee and commission income 94,487 85,627 106,001 96,649Fee and commissions paid Securities trading and custody accounts 6,602 6,875 6,602 6,875Net fee and commission income 87,884 78,752 99,399 89,774
Net insurance result, non-life insuranceInsurance revenue 180,694 174,910Insurance service expenses 116,496 143,151Net return on investments backing insurance liabilities 6,070 10,532Net finanse income or expense from insurance 846 322Other expenses 5,622 5,948Net insurance result, non-life insurance 65,492 36,665
Note
4 Interest income and premiums on forwards, (DKK 1,000)
5 Interest expenses, (DKK 1,000)
6 Net fee and commission income, (DKK 1,000)
7 Net insurance result, (DKK 1,000)
Group
P/F Føroya Banki
Annual Report 2025
66
Loans and advances -3,741 7,463 -3,741 7,463Bonds 15,625 32,174 15,625 32,174Shares 9,056 10,938 9,056 10,938Foreign exchange 9,867 10,404 9,867 10,404Total derivatives of which: 3,978 -15,636 3,978 -15,636 Currency contracts 1,989 934 1,989 934 Interest Swaps 1,989 -16,570 1,989 -16,570Other Obligations 0 0 0 0Assets linked to pooled schemes 5,614 8,664 5,614 8,664Deposits in pooled schemes -5,614 -8,664 -5,614 -8,664Total market value adjustments 34,785 45,343 34,785 45,343
Profit on sale of operating equipment 3,674 636 3,674 636Other income 10,238 8,097 32 2Operation of properties: Rental income 924 961 1,938 1,975 Operating expenses 0 0 0 0Total other operating income 14,836 9,694 5,644 2,614
8 Market value adjustments, (DKK 1,000)
9 Other operating income, (DKK 1,000)
Note7GroupP/F Føroya Banki(cont'd) 2025 2024 2025 2024Net insurance result, life insuranceInsurance revenue 14,720 21,780Insurance service expenses 14,879 12,866Net return on investments backing insurance liabilities 723 2,169Net insurance result, life insurance 563 11,083Net insurance result 66,055 47,747
Annual Report 2025
67
*) Detailed information of the remuneration of The Board of Directors, The Executive board and Other executives can be found
on the Bank's website www.foroyabanki.com/er as no individual remuneration is allowed to be presented in the annual report.
2025 2024 2025 2024Staff costs: Salaries 128,581 127,194 111,710 109,131 Pensions 19,020 18,250 16,394 15,717 Social security expenses 19,563 18,775 17,469 16,627Total staff costs 167,164 164,219 145,573 141,476
IT 67,384 63,621 63,325 56,296 Marketing etc 9,585 12,623 7,887 11,176 Education etc 3,287 3,558 2,752 2,599 Other expenses 52,644 37,279 27,904 27,924Total administrative expenses 132,901 117,082 101,868 97,994Total staff costs 167,164 164,219 145,573 141,476Total administrative expenses 132,901 117,082 101,868 97,994Staff and administrative costs incl. under the item "Insurance service expenses" -43,531 -32,933 0 0Total employee costs and administrative expenses 256,533 248,369 247,441 239,470
Note
10 Staff costs and administrative expenses, (DKK 1,000)
Administrative expenses:
Staff costs and administrative expenses for Trygd and NordikLív, are included in
the accounting item "Insurance service expenses". Severence pay in 2025 were
DKK 0m (2024: DKK 2.6m)
The number of shares in P/F Føroya Banki held by the Board of Directors and the
Executive Board at the end of 2025 totalled 129,343 and 6,135 respectively (end
of 2024: 127,048 and 6,135).
Remuneration of the Board of Directors and the Executive board consists of a
fixed monthly salary.
The Board of Directors totals 9 persons during 2025 (2024: 12 persons).
The Executive board totals 1 person during 2025 (2024: 1 person)
Other executives totals 8 persons during 2025 (2024: 8 persons)
Remuneration of Other executives consists of a fixed monthly salary.
Group
P/F Føroya Banki
Number of employeesAverage number of full-time employees in the period 204 208 174 177Board of Directors 2,490 2,400 2,490 2,400Executive remuneration *):Other executives 7,450 9,013 7,450 9,013Executive board
Annual Report 2025
68
Note
Other assurance engagements are performed by PricewaterhouseCoopers and
Januar. These engagements comprise other statements required by law such as
Mifid and MitID.
Tax and VAT advice are performed by PricewaterhouseCoopers. The advice
refers to payroll tax and income tax report.
Other services are performed by Januar. These services refer to advisory
services and riskassesment of the Banks internal produktion af IT-solutions.
The Guarantee Fund for Depositors and Investors 42 1,531 42 1,531Total operating expenses 42 1,531 42 1,531
12 Other operating expenses, (DKK 1,000)
11 Audit fees, (DKK 1,000)GroupP/F Føroya BankiFees to audit firms elected at the general meeting 1,729 1,556 1,369 1,234Total audit fees 1,729 1,556 1,369 1,234Total fees to the audit firms elected at the general meeting break down as follows: Statutory audit 1,386 1,345 1,055 1,054- of which PricewaterhouseCoopers 888 878 744 741- of which Januar 498 467 311 313Other assurance engagements 71 75 46 44- of which PricewaterhouseCoopers 46 44 46 44- of which Januar 25 31 0 0Tax and VAT advice 205 43 205 43- of which PricewaterhouseCoopers 205 43 205 43- of which Januar 0 0 0 0Other services 67 94 63 94- of which PricewaterhouseCoopers 0 0 0 0- of which Januar 67 94 63 94Total fees to the audit firms elected at the general meeting 1,729 1,556 1,369 1,234
Annual Report 2025
69
Note
13
Impairment charges on loans and advances and provisions for guarantees
etc., (DKK 1,000)
2025 2024 2025 2024Impairment charges and provisions at 1 January 179,881 182,751 179,881 182,751New and increased impairment charges and provisions 118,885 110,680 118,885 110,680Reversals of impairment charges and provisions 118,788 105,504 118,788 105,504Written-off, previously impaired 689 8,046 689 8,046Interest income on impaired loans 3,242 4,200 3,242 4,200Total impairment charges and provisions at 31 December 179,289 179,881 179,289 179,881
Impairment charges and provisions recognised in the income statementLoans and advances at amortised cost -2,658 -1,420 -2,658 -1,420Loans and advances at fair value -2,321 2,996 -2,321 2,996Guarantiees and loan commitments 997 -2,649 997 -2,649Assets held for sale 0 0 0 0Total individual impairment charges and provisions -3,982 -1,072 -3,982 -1,072
Stage 1 impairment chargesStage 1 impairment charges etc. at 1 January 78,972 76,219 78,972 76,219New and increased Stage 1 impairment charges 77,387 58,444 77,387 58,444Reversals, net of Stage 1 impairment charges 53,798 55,690 53,798 55,690Stage 1 impairment charges at 31 Decem ber 102,561 78,972 102,561 78,972Total net impact recognised in the income statement 23,589 2,754 23,589 2,754
Stage 2 impairment charges etc. at 1 January 32,571 38,196 32,571 38,196New and increased impairment charges 19,816 19,522 19,816 19,522Reversals, net of impairment charges 26,535 25,148 26,535 25,148Stage 2 impairment charges at 31 Decem ber 25,851 32,571 25,851 32,571Total net impact recognised in the income statement -6,720 -5,626 -6,720 -5,626
Weak Stage 2 impairment charges etc. at 1 January 6,331 7,278 6,331 7,278New and increased impairment charges 18,001 4,564 18,001 4,564Reversals, net of impairment charges 5,045 5,511 5,045 5,511Weak Stage 2 im pairment charges at 31 December 19,288 6,331 19,288 6,331Total net impact recognised in the income statement 12,957 -947 12,957 -947
Stage 2 impairment charges
Weak Stage 2
Group
P/F Føroya Banki
Annual Report 2025
70
(cont.d) 2025 2024 2025 2024Stage 3 impairment charges etc. at 1 January 60,452 56,854 60,452 56,854New and increased impairment charges 1,552 26,803 1,552 26,803Reversals of impairment charges 32,278 15,159 32,278 15,159Written-off, previously impaired 689 8,046 689 8,046Write-offs charged directly to the income statement 756 338 756 338Received on claims previously written off 1,593 2,386 1,593 2,386Interest income on impaired loans 3,242 4,200 3,242 4,200Stage 3 impairment charges at 31 Decem ber 29,037 60,452 29,037 60,452Total net impact recognised in the income statement -34,805 5,396 -34,805 5,396
Note
13 Stage 3 im pairm ent charges
Purchased credit-impaired assets included in stage 3 above
Purchased credit-impaired assets at 1 January 1,096 1,341 1,096 1,341Reversals of impairment charges 155 245 155 245Purchased credit-impaired assets at 31 December 941 1,096 941 1,096
Provisions for guarantees and undrawn credit linesIndividual provisions at 1 January 1,555 4,204 1,555 4,204New and increased provisions 2,129 1,347 2,129 1,347Reversals of provisions 1,132 3,996 1,132 3,996Provisions for guarantees etc at 31 December 2,552 1,555 2,552 1,555Total net impact recognised in the income statement 997 -2,649 997 -2,649
Stage 1 provisions 907 721 907 721Stage 2 provisions 602 270 602 270Weak Stage 2 provisions 0 0 0 0Stage 3 provisions 1,043 565 1,043 565Provisions for guarantees etc at 31 December 2,552 1,555 2,552 1,555
Provisions for guarantees and undrawn credit lines
Group
P/F Føroya Banki
Annual Report 2025
71
Note 13, (cont’d)
Credit risk management
The Bank manages credit risk in connection with the establishment of new exposures by making certain requirements in
respect of the customer’s ability to service loans, its general credit quality and by securing collateral in the asset(s) for
which a customer seeks financing. In addition, the Bank has defined specific geographical areas in which it wishes to
provide financing and a maximum proportion of its aggregate exposures to be allocated to corporate customers. As for
exposures to corporate customers, the Bank has established maximum limits for the size of the aggregate exposure to
each individual industry.
Credit risk movements are measured based on the Bank’s behavioural credit score model for personal and small
corporate customers and, as regards larger corporate customers, its accounting-based credit score model, both of which
gauge and indicate the probability of default of each individual exposure in the next 12-month period.
The behavioural credit score model for personal and small corporate customers primarily use the following parameters,
which are updated monthly:
• Gearing (total debt over total assets)
• Developments in the size and duration of overdrafts and arrears
• Average balances and credit transactions in transaction accounts, typically payroll and operating accounts
• Developments in debt
• Average liquid assets
• Changes in publicly available cyclical indicators
The accounting-based credit score model for larger corporate customers primarily use the following parameters, which
are updated on an annual or monthly basis:
• Development in certain predefined key ratios and metrics calculated based on the customer’s most recent
publicly available annual accounts
• Developments in the size and duration of overdrafts and arrears
• Changes in publicly available cyclical indicators
New customers, both personal and corporate, are categorised in accordance with the risk classification system provided
by the Danish FSA. The system is based on traditional credit assessment indicators such as wealth, income, disposable
income, etc. for personal customers and leverage, liquidity, solvency, etc. for corporate customers. The customers’ risk
classification is then converted into a probability of default. After a period of 6-12 months, the credit scoring model
described above will start assessing the customer’s credit worthiness. As per the Group’s risk classification system,
customers are assigned a credit score on a scale from 1-11. A score of 1 is given to customers with the lowest PD values
and a score of 11 is given to customers in default.
As regards retail customers and small business customers, developments in credit risks for existing exposures are
monitored based on a behavioural credit scoring model that, on a monthly basis, calculates and assigns to each exposure
a behavioural score expressing the probability of default of each relevant customer within the next 12-month period. See
the section “Changes to credit risks” below. Based on developments in the behavioural credit score, a number of signals
are generated to the relationship manager, the credit department and the credit controllers. In case an adverse
development is identified, the relationship manager must take action vis-à-vis the customer concerned. For large
corporate customers, an accounting-based credit score is calculated monthly, however primarily based on developments
in the corporate customer’s financial situation, as reported in the customer’s annual financial statements, adjusted for
monthly developments in the customer’s overdrafts and arrears, if any, as well as publicly available cyclical indicators.
Based on the calculated accounting-based credit score and information otherwise available regarding large corporate
customers, the Bank reviews the exposure at least once a year to establish whether or not to continue or discontinue the
exposure, including the terms for continuing or discontinuing the exposure.
Annual Report 2025
72
Note 13, (cont’d)
In order to support the credit management effort, default signals are generated on a daily basis to the customer adviser
and, based on certain thresholds, also to the credit controllers. Furthermore, various reports on developments in credit
risks, at both customer and portfolio level, are prepared and distributed on a monthly and quarterly basis.
Further, and as part of the quarterly impairment test all large exposures, existing exposures increased more than certain
thresholds amounts and other exposures chosen against other predefined criteria are reviewed not only to determine the
need for impairment, but also to determine whether the assigned risk classification is correct and whether risk mitigating
actions must be taken. The bank also aims to obtain and review periodic accounts from its corporate customers as part
of its ongoing credit risk management.
To ensure compliance with the Bank’s defined requirements in respect of a customer’s ability to service a loan and its
general credit quality as well as the requirement for collateral for security, the Bank uses a credit granting hierarchy
according to which only customers deemed highly able to service their loans and demonstrating a high credit quality may
be granted loans in the Bank’s retail and commercial banking departments, whereas all other exposures, including
exposures to all new corporate customers, must be recommended and granted either by the Bank’s credit department,
the credit committee or, as regards the largest exposures, by the Bank’s Board of Directors.
To balance future earnings with the credit risks and ensure that the Bank’s profitability targets are met, an expected risk-
adjusted return is calculated for each customer relationship at the time of establishing an exposure. Any deviation from
the Bank’s predefined profitability targets must be approved according to a clearly defined hierarchy.
Changes to credit risks
To ensure that sufficient and timely impairment charges and provisions are recognised to cover expected credit losses
on the Bank’s exposures which, on initial recognition, are measured at amortised cost or fair value and on financial
guarantees and loan commitments, movements in the credit risk relating to all these exposures are monitored on a
monthly and quarterly basis.
Credit risk movements are measured on the basis of the Bank’s behavioural credit score model and, as regards to large
corporate customers, its accounting-based credit score model.
Based on the estimated probability of default in the next 12-month period, each exposure is placed in one of three stages:
Stage 1 reflects that no significant increase in credit risk has been identified, stage 2 reflects a significant increase in
credit risk and stage 3 reflects credit-impairment of the exposure in question. Exposures are placed in either stage 1 or
stage 2 on the basis of their estimated probability of default, meaning that all exposures are initially placed in stage 1,
while the following scenarios require a stage 2 classification as a minimum:
• A 100% increase in the probability of default for the expected remaining term to maturity and a 0.5 percentage
point increase when the probability of default was below 1% on initial recognition.
• A 100% increase in the probability of default for the expected term to maturity or a 2.0 percentage point increase
when the probability of default was 1% or higher on initial recognition.
Stage 3 classifications are for pre-selected exposures for which an individual review has revealed indications of an
increased risk of impairment. In such reviews, the following events are generally deemed to reflect impairment of an
exposure:
• Significant financial difficulty of the borrower
• Breach of contract by the borrower, such as a default or past due event
• The Bank or other lenders granting concessions to the borrower for reasons relating to the borrower’s financial
difficulty that the Bank or lenders would not otherwise consider
• The borrower is likely to enter bankruptcy or become subject to other financial reconstruction
• Disappearance of an active market for that financial asset because of financial difficulties
• Purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses.
Annual Report 2025
73
Note 13, (cont’d)
Calculation of the expected credit loss (need for impairment write-down or provisioning)
For exposures categorised as stage 1 or stage 2, the expected credit loss (ECL) is calculated as a function of the
probability of default (PD) * the expected exposure at default (EAD) * the expected loss given default (LGD). Where the
PD for exposures in stage 1 reflects the probability of default in the next 12-month period (PD12), the probability of default
over the entire life of the exposure is applied to exposures placed in stage 2 (PDLife).
As regards the portion of stage 2 exposures consisting of the weakest exposures, the largest of these are reviewed
individually, and the average impairment ratio calculated for these exposures is used to inform the expected credit loss
for the weakest of the stage 2 exposures not individually reviewed.
As regards exposures in stage 3, the expected credit loss is calculated individually.
PD12 is calculated based on the Bank’s behavioural credit score methodology for exposures to retail customers and small
business customers, whereas the Bank’s accounting-based credit score model is applied to the Bank’s exposures to large
corporate customers.
PDLife is calculated based on PD12, but is adjusted for any identified annual migrations between various fixed PD12
stages. Furthermore, the calculated PDLife is adjusted for changes in a number of forward-looking factors, which as
regards the Bank’s Danish and Greenlandic exposures are based on information from, e.g., the Danish central Bank and
the Danish Economic Council, whereas factors of relevance to Faroese exposures are based on the current impairment
ratio relative to a historical average impairment ratio.
EAD is calculated as the actual amount of exposure with due consideration for non-executed loan commitments and
unutilised, executed loan commitments as well as any guarantees provided, which factors are calculated as a function of
predetermined coefficients.
LGD is calculated as the ratio between the historically identified loss rate for the portion of the exposures that are not
secured.
The expected useful life of an exposure is calculated as the expected maturity of the exposure in question.
All significant variables and calculations made are validated at least annually, primarily based on sample testing and, for
model-based variables, supplemented by back-testing and the use of statistical targets for explanatory values.
As the expected credit loss, especially for exposures categorised as stage 1 or 2, primarily are based on historical
information, the Executive Management and the Board of Directors may add a discretionary increase in impairments to
cover credit losses expected not to be covered by the calculations described above, e.g. due to an expected or emerging
economic crises in one or more sectors and/or in one or more geographic locations.
Since calculations and discretionary management estimates are made in all stages of an expected credit loss, i.e.
expectations as to the future, all statements and calculations reflect the Bank’s best estimates and assessments as to
future events. These estimates and assessments may therefore result in the calculation of a higher or lower credit loss
than the credit losses actually incurred.
Management applied judgements
Management applies judgement when determining the need for post-model adjustments. At the end of 2025, the post-
model adjustments amounted to DKK 116.5m (2024: DKK 101.5m). The post-model adjustments fall into two categories.
Category 1 relates to expected losses, which are difficult to calculate due to a changing world. The reasoning behind the
post-model adjustments in this category in 2025 were based on a variety of factors such as cyber threats to Faroese and
Greenlandic customers and infrastructure, geopolitical uncertainty more broadly, uncertainties regarding the real estate
market in Greenland and uncertainty in certain Faroese business sectors. For each of the factors, the bank’s assessment
is that the forward-looking risks associated with each are not covered by the model output. The management provision
for category 1 is DKK 101.5m.
Annual Report 2025
74
Note 13, (cont’d)
Category 2 includes management provision due to errors and omissions in the calculation of expected losses. The bank
acknowledges that factors such as insufficient registration of defaults, lack of follow-up on customers in financial difficulty,
errors in impairment methodology or calculations as well as errors in the registration of collateral values can result in the
bank’s calculated impairments being underestimated. The management provision for category 2 is DKK 15m.
In determining the need and extent of a management judgement related to the factors laid out above, the Bank has, as
both the Faroese and Greenlandic economies are small and open, based its judgement on a general detoriation of the
credit quality throughout all sectors and segments with additional add-ons on property and tourism related segments.
In note 48 (Risk Management) information on the split of the management judgement of DKK 116.5m between the stages
and between Corporate and Personal is included.
Annual Report 2025
75
Note
13
(cont'd)
1) Gross exposure comprises of loans and advances, guarantees and drawing rights.
Net exposure 2025 vs. balance sheet
Credit institutions and central banks 3,582
Loans and advances 9,670
Guarantees 844
Unused credit facilities 2,224
Net exposure, total
16,319
Expected Credit Net Exposure Deducted 131 Dec. 2025, (DKKm)Gross ExposureLossNet ExposureCollateralStage 1 2 3 1 2 3 1 2 3 1 2 3Public authorities1,166 0 0 1 0 0 1,165 0 0 1,144 0 0Corporate sector:Fisheries, agriculture, hunting and forestry714 187 18 12 0 10 701 187 8 55 0 5Industry and raw material extraction732 105 6 9 0 2 724 105 4 411 2 0Energy supply273 0 0 2 0 0 270 0 0 217 0 0Building and construction510 51 0 13 9 0 497 42 0 260 13 0Trade418 104 0 6 1 1 412 103 -1 255 8 0Transport, hotels and restaurants904 179 6 8 5 0 897 174 6 168 33 0Information and communications15 7 1 0 0 0 15 7 1 12 0 1Financing and insurance66 6 1 0 1 1 66 5 0 48 2 0Real property1,725 198 3 36 5 2 1,689 193 1 311 37 0Other industries131 125 4 0 3 2 131 122 2 54 61 2Total corporate sector5,488 962 39 86 24 18 5,402 937 20 1,790 157 8Retail customers4,572 628 61 15 21 12 4,557 607 49 548 88 12Total11,226 1,590 100 101 46 30 11,124 1,544 70 3,482 245 20Credit institutions and central banks3,584 0 0 2 0 0 3,582 0 0 3,582 0 0Total14,809 1,590 100 103 46 30 14,706 1,544 70 7,063 245 20Faroe Islands 13,175 1,180 71 63 24 20 13,112 1,156 51 6,421 96 8Greenland 1,635 410 29 41 22 10 1,594 388 19 642 149 12Total 14,809 1,590 100 103 46 30 14,706 1,544 70 7,063 245 20
Annual Report 2025
76
Note
13
(cont'd)
1) Gross exposure comprises of loans and advances, guarantees and drawing rights.
Net exposure 2024 vs. balance sheet
Credit institutions and central banks
3,007
Loans and advances 9,086
Guarantees 775
Unused credit facilities 2,093
Net exposure, total
14,962
Expected Credit Net Exposure Deducted 131 Dec. 2024, (DKKm)Gross ExposureLossNet ExposureCollateralStage 1 2 3 1 2 3 1 2 3 1 2 3Public authorities 1,221 0 0 1 0 0 1,220 0 0 1,052 0 0Corporate sector:Fisheries, agriculture, hunting and forestry454 232 26 11 0 11 443 232 15 7 1 2Industry and raw material extraction479 54 37 5 0 2 474 54 35 166 2 10Energy supply431 0 0 6 0 0 425 0 0 288 0 0Building and construction488 70 17 5 7 0 483 62 17 246 19 1Trade419 50 28 6 3 0 413 48 28 148 5 1Transport, hotels and restaurants718 24 165 3 1 1 715 23 164 280 2 28Information and communications7 0 2 0 0 1 7 0 1 3 0 0Financing and insurance99 4 1 1 0 1 99 4 0 51 0 0Real property1,366 49 219 30 5 27 1,336 44 192 271 4 6Other industries147 179 4 0 5 2 146 174 2 44 104 1Total corporate sector4,607 663 499 66 22 45 4,542 641 453 1,503 136 48Retail customers4,218 537 228 11 18 16 4,207 520 212 491 56 21Total10,046 1,200 727 78 39 61 9,968 1,161 666 3,046 192 69Credit institutions and central banks3,169 0 0 2 0 0 3,167 0 0 3,167 0 0Total13,215 1,200 727 80 39 61 13,136 1,161 666 6,213 192 69Faroe Islands 11,286 894 457 49 23 22 11,237 871 435 5,403 54 29Greenland 1,930 306 270 31 16 39 1,899 289 231 810 138 40Total 13,215 1,200 727 80 39 61 13,136 1,161 666 6,213 192 69
Annual Report 2025
77
Note
13
(cont'd)
1) Gross exposure comprises of loans and advances, guarantees and drawing rights.
1) Gross exposure comprises of loans and advances, guarantees and drawing rights.
Expected Credit Net Exposure Deducted 131 Dec. 2025, (DKKm)Gross ExposureLossNet ExposureCollateralStage 1 2 3 1 2 3 1 2 3 1 2 3Rating category1 6,263 0 17 0 6,246 0 5,184 02 2,604 3 7 0 2,597 3 427 03 1,819 48 25 0 1,793 48 445 34 1,333 120 15 2 1,318 118 356 675 1,513 155 15 1 1,498 154 302 126 820 92 15 1 805 91 283 167 300 268 6 9 294 259 46 438 95 163 2 4 93 159 18 149 47 113 1 7 46 105 3 1710 16 626 1 21 15 605 1 7311 0 0 100 0 0 30 0 0 70 0 0 20Total 14,809 1,590 100 103 46 30 14,706 1,544 70 7,063 245 20
Expected Credit Net Exposure Deducted 131 Dec. 2024, (DKKm)Gross ExposureLossNet ExposureCollateralStage 1 2 3 1 2 3 1 2 3 1 2 3Rating category1 4,813 0 8 0 4,804 0 4,185 02 2,398 0 9 2,389 0 8193 1,830 52 13 1 1,817 51 328 54 1,443 11 3 0 1,441 11 335 15 1,278 100 18 1 1,261 99 134 106 864 239 22 5 842 233 192 1047 253 297 2 12 251 285 33 478 271 171 1 8 270 163 183 99 51 95 1 6 49 88 3 1110 14 236 2 6 12 230 1 511 727 0 61 666 69Total 13,215 1,200 727 80 39 61 13,136 1,161 666 6,213 192 69
Annual Report 2025
78
DKKm Stage 1 Stage 2 Stage 3 TotalImpairment charges at 1. January 2025 80 39 61 180Transferred to stage 1 during the period 12 -11 -1 0Transferred to stage 2 during the period -2 25 -24 0Transferred to stage 3 during the period -1 -2 2 0ECL on new assets 52 5 0 57ECL on assets derecognised -8 -9 -5 -22Impact of net remeasurement of ECL -30 -2 -2 -34Write offs 0 0 -1 -1Impairment charges at 31. December 2025 103 46 30 179DKKm Stage 1 Stage 2 Stage 3 TotalGross carrying amount at 1. January 2025 13,215 1,200 727 15,142Transferred to stage 1 during the period 424 -249 -176 0Transferred to stage 2 during the period -474 885 -411 0Transferred to stage 3 during the period -4 -7 11 0New assets 4,498 121 5 4,624Assets derecognised -1,487 -312 -41 -1,840Other changes -1,363 -49 -16 -1,428Gross carrying amount at 31. December 2025 14,809 1,590 100 16,499DKKm Stage 1 Stage 2 Stage 3 TotalImpairment charges at 1. January 2024 77 48 58 183Transferred to stage 1 during the period 20 -14 -6 0Transferred to stage 2 during the period -2 2 0 0Transferred to stage 3 during the period -6 -5 11 0ECL on new assets 19 7 0 26ECL on assets derecognised -19 -4 -9 -33Impact of net remeasurement of ECL -10 6 16 12Write offs 0 0 -8 -8Impairment charges at 31. December 2024 80 39 61 180DKKm Stage 1 Stage 2 Stage 3 TotalGross carrying amount at 1. January 2024 11,929 1,694 473 14,096Transferred to stage 1 during the period 715 -663 -51 0Transferred to stage 2 during the period -468 489 -21 0Transferred to stage 3 during the period -258 -164 423 0New assets 2,134 81 11 2,227Assets derecognised -1,300 -146 -27 -1,472Other changes 463 -90 -82 291Gross carrying amount at 31. December 2024 13,215 1,200 727 15,142
Note
13
(cont'd)
Annual Report 2025
79
Note
14 T
ax, (DKK 1,000)
2025 2024 2025 2024Tax on profit for the year 67,558 72,049 57,761 65,891Total tax 67,558 72,049 57,761 65,891Tax on profit for the yearProfit before tax 355,875 382,475 346,078 376,317Current tax charge 68,169 73,403 58,145 67,701Change in deferred tax -611 -1,354 -384 -1,810Adjustment of prior-year tax charges 0 0 0 0Total 67,558 72,049 57,761 65,891Effective tax rateFaroese tax rate 18.0% 18.0% 18.0% 18.0%Deviation in foreign entities tax compared to Faroese tax rate 1.6% 1.5% 1.7% 1.5%Non-taxable income and non-deductible expenses -0.6% -0.7% -3.0% -2.0%Tax on profit for the year 19.0% 18.8% 16.7% 17.5%Adjustment on prior-year tax charges 0.0% 0.0% 0.0% 0.0%Effective tax rate 19.0% 18.8% 16.7% 17.5%
Group
P/F Føroya Banki
Annual Report 2025
80
2025 2024 2025 2024Cash in hand 78,266 55,161 65,167 54,774Demand deposits with central banks 3,171,226 2,641,144 3,171,226 2,641,144Total 3,249,492 2,696,305 3,236,393 2,695,918
Note
15 Cash in hand and demand deposits with central banks, (DKK 1,000)
16
Due from credit institutions and central banks specified by institution,
(DKK 1,000)Credit instistutions 239,179 310,797 239,179 310,797Central banks 0 0 0 0Total 239,179 310,797 239,179 310,797
17
Due from credit institutions and central banks specified by maturity,
(DKK 1,000)
On demand 239,179 310,797 239,179 310,797Total 239,179 310,797 239,179 310,797
Public authorities 8% 11% 8% 11%Corporate sector: Fisheries, agriculture, hunting and forestry 8% 6% 8% 6% Industry and raw material extraction 7% 5% 7% 5% Energy supply 1% 3% 1% 3% Building and construction 2% 2% 2% 2% Trade 3% 3% 3% 3% Transport, hotels and restaurants 8% 6% 8% 6% Information and communications 0% 0% 0% 0% Financing and insurance 0% 1% 0% 1% Real property 13% 12% 13% 12% Other industries 2% 3% 2% 3%Total corporate sector 44% 41% 44% 41%Retail customers 48% 48% 48% 48%Total 100% 100% 100% 100%
On demand 155,872 535,706 155,872 535,7063 months and below 272,348 258,428 272,348 258,4283 months to 1 year 1,019,569 802,752 1,019,569 802,752Over 1 year to 5 years 2,458,619 2,280,595 2,458,619 2,280,595Over 5 years 5,763,365 5,208,911 5,763,365 5,208,911Total loans and advances 9,669,773 9,086,392 9,669,773 9,086,392
20 Bonds at fair value, (DKK 1,000)Mortgage credit bonds 1,006,660 1,255,075 819,752 1,084,380Government bonds 99,550 502,125 80,683 475,317Bonds at fair value 1,106,209 1,757,200 900,434 1,559,697
Shares/unit trust certificates listed on the Copenhagen Stock Exchange 109,641 97,906 361 418Shares/unit trust certificates listed on other stock exchanges 0 0 0 0Other shares at fair value 170,370 187,940 170,370 187,940Total shares etc. 280,011 285,845 170,731 188,358
Non-life insuranceReinsurers' share of claims provisions 4,375 6,622Receivables from insurance contracts and reinsurers 3,319 3,003Debt related to reinsurance and receivables from policyholders move to liabilities -4,373 -4,839Total non-life insurance 3,320 4,786Maturity within 12 months 3,320 4,786
18 Loans and advances specified by sectors, (DKK 1,000)
19 Loans and advances specified by maturity, (DKK 1,000)
All bonds form part of the Group's trading portfolio
21 Shares etc., (DKK 1,000)
22 Assets under insurance contracts, (DKK 1,000)
Group
P/F Føroya Banki
Annual Report 2025
81
Note
The information disclosed is extracted from the companies' most recent annual report (2024).
23 Holdings in associates, (DKK 1,000)GroupP/F Føroya Banki2025 2024 2025 2024Cost at 1 January 8,845 8,845 8,845 8,845Cost at 31 December 8,845 8,845 8,845 8,845Revaluations at 1 January 9,719 6,036 9,719 6,036Share of profit 4,404 4,609 4,404 4,609Dividends 1,751 927 1,751 927Revaluations at 31 Decem ber 12,371 9,719 12,371 9,719Carrying amount at 31 Decem ber 21,216 18,563 21,216 18,563The Groups Ne t Total Total share of Holdings in associates 2025 IncomeprofitassetsliabilitiesTotal equity Ow nership %equityP/F Elektr o n 66,705 12,827 97,117 35,185 61,800 34% 21,216Holdings in associates 2024P/F Elektr o n 62,307 13,426 76,162 22,090 54,072 34% 18,563
24 Holdings in subsidiaries, (DKK 1,000)
Group
P/F Føroya Banki
2025 2024 2025 2024Cost at 1 January 144,000 144,000Cost at 31 December 144,000 144,000Revaluations at 1 January 1,434 -11,446Correction to previous years 0 -27Share of profit 44,586 28,407Dividends 10,000 15,500Revaluations at 31 December 36,020 1,434Carrying amount at 31 December 180,020 145,434Shareholders' Share capital equity for the Profit/loss for Holdings in subsidiaries 2025 Ownership %end of yearyearthe yearP/F Trygd 100% 40,000 140,539 42,179P/F Skyn 100% 1,000 7,415 2,361P/F NordikLív 100% 30,000 32,067 46The information disclosed is extracted from the companies' annual reports 2025. S ae odes Share capital equity for the Profit/loss for Holdings in subsidiaries 2024 Ownership %end of yearyearthe yearP/F Trygd 100% 40,000 98,359 19,177P/F Skyn 100% 1,000 6,054 558P/F NordikLív 100% 30,000 41,021 8,672
The information disclosed is extracted from the companies' annual reports 2024.
2025 2024 2025 2024Assets: Cash deposits 764 265 764 265 Bonds 26,012 21,230 26,012 20,089 Shares 58,378 39,984 58,378 37,616 Other assets 0 130 0 84Total assets 85,154 61,610 85,154 58,055Total liabilities 85,154 61,610 85,154 58,055
25 Assets under pooled schemes and unit-linked investment contracts, (DKK 1,000)
Group; Assets under pooled schemes and unit-linked investment contracts consist of Assets under pooled schemes DKK 85,1m (2024 DKK 58,1m) and Unit-
Linked investment contracts DKK 0m (2024 DKK 3.5m)
Group
P/F Føroya Banki
Annual Report 2025
82
2025 2024 2025 2024Cost at 1 January 8,319 3,319 3,319 3,319Additions 950 5,000 0 0Disposals 0 0 0 0Reclassification to Assets in disposal groups classified as held for sale 0 0 0 0Cost at 31 Decem ber 9,269 8,319 3,319 3,319Depreciation and impairment charges at 1 January 3,236 1,618 2,236 1,618Depreciation charges during the year 1,618 1,618 618 618Fair value at 31 December 4,854 3,236 2,854 2,236Carrying amount at 31 December 4,415 5,084 466 1,084
Not e
26 Intangible assets, (DKK 1,000)
Depreciation period is 4-5 years. Additions to the intangible assets refer to acquired IT systems during the year.
27 Domicile property, (DKK 1,000)
2025 2024 2025 2024Cost at 1 January 56,924 63,259 56,924 61,214Additions 238 393 238 393Reclassification to held for sale 0 2,352 0 2,352Disposals 1,437 4,376 1,437 2,330Cost at 31 Decem ber 55,725 56,924 55,725 56,924Adjustments at 1 January -2,547 -1,110 -2,547 -2,375Depreciation charges during the year 404 482 404 450Reversal of depreciation charges on disposals classified as held for sale 0 145 0 145Revaluations recognised in other comprehensive income 0 -1,500 0 0Reversal of revaluations on disposals during the year 187 400 187 134Adjustments at 31 December -2,763 -2,547 -2,763 -2,547Carrying amount at 31 December 52,961 54,377 52,961 54,377
Cost at 1 January 81,743 81,542 81,743 81,542Additions 0 201 0 201Cost at 31 Decem ber 81,743 81,743 81,743 81,743Adjustments at 1 January -24,311 -19,949 -24,311 -19,949Depreciation charges during the year 4,255 4,361 4,255 4,361Adjustments at 31 December -28,566 -24,311 -28,566 -24,311Carrying amount at 31 December 53,177 57,432 53,177 57,432Total land and buildings 106,139 111,810 106,139 111,810
Lease assets
Leases
Domicile property
Group
P/F Føroya Banki
Leasing agreements comprise the Bank’s domicile property, including the Bank’s headquarter in Tórshavn and branches in the Faroe Islands.
The notice period for terminating the lease agreements ranges from three months to 15 years. The leasing agreement regarding the Bank’s
headquarter includes an option for the lessee to extend the lease period by five years. Property w here the Bank holds short term leases but
intends and has the option to extend the contract is included in the calculation of Bank’s leasing assets and obligations.
Leasing liabilities amounting DKK 60.9m are recognised w ithin the balance sheet item Other liabilities. In the 2024 annual report the leasing
liabilities w ere reported to be DKK 64.4m. The Group has included the option to extend the lease period of the headquarter w ith 5 years thus
added DKK 17.0m to the leasing assets and leasing liabilities. Interests amounting DKK 2.0m due to leasing obligations are charged to the
income statement as Interest expense. Depreciation of leasing assets amounting DKK 4.3m are recognised under the item Depreciation and
impairment charges in the income statement. The annual payment in respect of the leasingliabilities is DKK 5.5m. The banks estimated
borrow ing rate used in the caluculation of the leasing assets and leasing liabilities is 3-5%.
Tangible assets include domicile property of DKK 53.0m (2024: DKK 54.4m). Carrying amount at 31 December if the property had not been
revalued is DKK 52.1m (2024: DKK 52.2m). The fair value is assessed by the group’s internal valuers at least once a year on 31th December
on the basis of an income based approach. Valuations rely substantially on non-observable input, i.e. level 3 measures. Valuations are
based on cash flow estimates and on the required rate of return calculated for each property that reflects the price at w hich the property
can be exchanged betw een know ledgeable, w illing parties under current market conditions. The cash flow estimates are determined on the
basis of the market rent for each property. On the Faroe Islands the rent ranges from DKK 600-950 pr. m2 and ind Greenland the rent ranges
from DKK 1,800-2,400 pr. m2. The required rate of return on a property is determined on the basis of its location, type, possible uses, layout
and condition. At the end of 2025, the fair value of domicile property w as DKK 58.2m (2024: DKK 61.4m). The required rate of return is
ranged betw een 7.0%-10.6% (2024: 7.0-10.9%). The depreciation period is 50 years. A decrease in rental rates of DKK 100 pr m2 w ould
reduce fair value at end of 2025 by DKK 3.1m. An increase in the required rate of return of 1.0 percentage point, w ould reduce fair value at
the end of 2025 by DKK 5.9 m.
Group
P/F Føroya Banki
Annual Report 2025
83
Not e
The depreciation period is 3-10 years.
28 Other property, plant and equipment, (DKK 1,000)GroupP/F Føroya Banki2025 2024 2025 2024Cost at 1 January 48,222 42,375 40,560 34,496Adjustment previous years -11 0 0 0Additions 1,916 6,819 1,916 6,819Disposals 287 972 287 754Cost at 31 Decem ber 49,840 48,222 42,189 40,560Depreciation and impairment charges at 1 January 33,214 29,994 27,493 24,634Depreciation charges during the year 3,628 3,898 3,133 3,319Reversals of depreciation and impairment charges 174 678 174 460Depreciation and im pairment charges at 31 December 36,668 33,214 30,452 27,493Carrying amount at 31 December 13,172 15,008 11,737 13,067
2025 2024Deferred tax assets 11,665 11,253Deferred tax liabilities 530 508Deferred tax, net 11,134 10,745Change in deferred tax Included in Included inprofit for sharholders'2025 At 1 Jan. the year equity At 31 Dec.Intangible assets -915 111 0 -804Tangible assets excl lease assets -968 -363 0 -1,330Lease assets 1,259 134 1,393Provisions for obligations 10,558 569 11,127Other 811 -63 0 748Total 10,745 389 0 11,134
2024Intangible assets -306 -609 0 -915Tangible assets excl lease assets -2,372 1,405 0 -968Lease assets 1,075 184 1,259Provisions for obligations 10,169 389 10,558Other 825 -14 0 811Total 9,391 1,354 0 10,745
29 Deferred tax, (DKK 1,000)
Group
29 Deferred tax, (DKK 1,000)
2025 2024
Deferred tax assets 11,557 11,172
Deferred tax, net 11,557 11,172
Recognised in Recognised in
Change in deferred tax profit for the shareholders'
2025 At 1 Jan. year equity At 31 Dec.
Intangible assets -195 111 0 -84
Tangible assets excl lease assets -1,066 -410 0 -1,476
Lease assets 1,259 134 1,393
Loans and advances etc 10,558 560 0 11,118
Other 617 -12 0 605
Total 11,172 384 0 11,557
2024
Intangible assets -306 111 0 -195
Tangible assets excl lease assets -2,178 1,112 0 -1,066
Lease assets 1,075 184 1,259
Loans and advances etc 10,169 389 0 10,558
Other 602 15 0 617
Total 9,362 1,810 0 11,172
P/F Føroya Banki
Annual Report 2025
84
2025 2024 2025 2024Total purchase price at 1 January 2,207 0 2,207 0Reclassification from domicile properties 0 2,207 0 2,207Disposals 0 0 0 0Total purchase price at 31 December 2,207 2,207 2,207 2,207Impairment at 1 January 0 0 0 0 Impairment charges for the year 0 0 0 0 Reversal of impairment on disposals and write offs during the year 0 0 0 0Impairment at 31 December 0 0 0 0Total assets held for sale at 31 December 2,207 2,207 2,207 2,207Specification of assets held for saleReal property taken over in connection with non-performing loans 0 0 0 0Domicile property for sale 2,207 2,207 2,207 2,207Total 2,207 2,207 2,207 2,207
Note
30 Assets held for sale, (DKK 1,000)
Group
The item "Assets held for sale" comprises reclassified domicile property in Greenland.
Profit on the sale of real property and tangible assets taken over in connection with non-performing loans is recognised under the item "Other
operating income". The Group's real estate agency is responsible for selling the real property.
P/F Føroya Banki
The Group's policy is to dispose off the assets as quickly as possible.
Annual Report 2025
85
32 Due to credit institutions and central banksspecified by institution, (DKK 1,000)Due to central banks 34,311 26,975 34,311 26,975Due to credit institutions 471,429 796,480 471,429 796,480Total 505,739 823,455 505,739 823,455
specified by maturity, (DKK 1,000)On demand 34,311 45,634 34,311 45,6343 months to 1 year 0 250,000 0 250,000Over 1 year to 5 years 171,429 228,250 171,429 228,250Over 5 years 300,000 299,571 300,000 299,571Total 505,739 823,455 505,739 823,455
34 Deposits specified by type, (DKK 1,000)On demand 7,251,328 6,699,897 7,259,689 6,711,253At notice 1,230,841 1,064,009 1,230,841 1,064,009Time deposits 1,765,802 1,608,318 1,765,802 1,608,318Special deposits 700,238 631,124 700,238 631,124Total deposits 10,948,209 10,003,348 10,956,570 10,014,704
On demand 7,345,928 6,747,297 7,354,289 6,758,6533 months and below 1,519,096 1,049,660 1,519,096 1,049,6603 months to 1 year 1,472,035 1,676,047 1,472,035 1,676,047Over 1 year to 5 years 112,281 69,131 112,281 69,131Over 5 years 498,870 461,213 498,870 461,213Total deposits 10,948,209 10,003,348 10,956,570 10,014,704
Non-life insurance Liability for remaining coverage 57,541 56,239 Liability for incurred claims 94,216 99,556Total 151,757 155,795
Life insurance Life insurance provisions 7 2,690Total provisions for insurance contracts 7 2,690Total 151,764 158,485
Registration and remortgaging guarantees 56,732 30,715Other guarantees 134,696 138,865Total 191,428 169,581
Sundry creditors 31,535 39,775 26,943 33,394Accrued interest and commission 18,706 33,590 18,706 33,590Derivatives with negative value 13,316 30,272 13,316 30,272Accrued staff expenses 22,209 23,115 22,209 23,115Lease liabilities 60,916 64,424 60,916 64,424Other obligations 1,937 35,396 1,937 35,396Total 148,620 226,573 144,028 220,192
Note
33 Due to credit institutions and central banks
35 Deposits specified by maturity, (DKK 1,000)
36 Liabilities under insurance contracts, (DKK 1,000)
The confidence level used to determine the risk adjustment is 99.5%.
Guarantees
Insurance liabilities comprise liabilities as defined by IFRS 17.
37 Other liabilities, (DKK 1,000)
31 Other assets, (DKK 1,000)GroupP/F Føroya Banki2025 2024 2025 2024Interest and commission due 38,712 45,609 35,512 44,196Derivatives with positive fair value 20,733 23,248 20,733 23,248Other amounts due -10,000 19,551 -8,255 21,867Total 49,445 88,408 47,990 89,312
Annual Report 2025
86
Note
38 Issued bonds, (DKK 1,000)
39 Subordinated capital, (DKK 1,000)Year of Step-up Redemption Currency Borrower Principal Interest rateissueMaturityclauseprice2025 2024Subordinated capital DKK P/F Føroya Banki 100,000 2.970% 2021 24-06-2031 No 100 99,930 99,790At 31 Decem ber 100,000 99,930 99,790Of which fair value adjustment 0 0
Subordinated capital is included in the Banks Total capital according the Faroese Financial Business Act and to CRR.
The subordinated capital can not be converted into share capital. Early redemption of subordinated debt must be approved by the Danish FSA. In the event of Føroya Bankis voluntary
or compulsory w inding-up, this liability w ill not be repaid until claims of ordinary creditors have been met. Subordinated debt is valued at amortised cost.
Step-up Currency Principal Interest rateclauseRemarks Recieved Maturity 2025 2024Issued bond DK0030523469 DKK 190,000 CIBOR3 + 1,5% 10-03-2023 10-03-2025 0 189,963Issued bond DK0030529664 DKK 200,000 CIBOR3 + 2,25% 22-11-2023 22-11-2028 199,326 199,014Issued bond DK0030551676 DKK 250,000 CIBOR6 + 2,35% 18-06-2025 18-12-2031 248,797 0Issued bond DK0030529151 DKK 250,000 CIBOR12 + 3,09% 02-12-2023 02-12-2030 249,141 248,673Issued bond DK0030490271 DKK 150,000 2.345% Yes Tier 3 capital, called 18-06-2021 18-06-2026 0 149,859Issued bond DK0030506530 SEK 300,000 STIBOR3 + 1,80% Tier 3 capital / Hedged 31-03-2022 31-03-2027 206,525 193,681At 31 Decem ber 903,790 981,190Total repayment of principal and interest amounts to approximately DKK 1.409m (2024: DKK 1,132m)
Interest rate:
Subordinated capital
Principal (not hedged)
100m
Until 26.6.2026 From 27.6.2026
2.970% CIBOR 3M + 2,97%
Annual Report 2025
87
Note
40 P
/F Føroya Banki Shares, (DKK 1,000) 2025 2024
The share capital is made up of shares of a nominal value of DKK 20 each. All shares carry the same rights. Thus
there is only one class of shares.
Issued shares at 1 January, numbers in 1,0009,600 9,600Reduction of share capital 0 0Issued shares at end of period9,600 9,600Shares outstanding at end of period 9,574 9,574Group's average holding of ow n shares during the period26 26Average shares outstanding9,574 9,574Number Number Value ValueHolding of own shares2025 2024 2025 2024Investment portfolio26,289 26,289 7,519 4,259Trading portfolio0 0 0 0Total26,289 26,289 7,519 4,259Investment Trading Total Totalportfolio portfolio 2025 2024Holding at 1 January4,259 0 4,259 4,325Acquisition of ow n shares0 0 0 0Reduction of ow n shares0 0 0 0Sale of ow n shares0 0 0 0Value adjustment3,260 0 3,260 -66Holding at 31 December7,519 0 7,519 4,259
Average number of shares outstanding:
Net profit288,317 310,427Average number of shares outstanding9,574 9,574Number of dilutive shares issued0 0Average number of shares outstanding, including shares diluted9,574 9,574Earnings per share, DKK30.1 32.4Diluted net profit for the period per share30.1 32.4
Annual Report 2025
88
Not e
41 Contingent liabilities, (DKK 1,000)
2025 2024 2025 2024The Group uses a variety of loan-related financial instruments to meet the financial requirements of its customers. These include loan commitments and other credit facilities, guarantees and instruments that are not recognised on the balance sheet. Guarantees and loan commitments are subject to the expected credit loss impairment model in IFRS 9. Guarantees related to insurance contracts in IFRS 17 are presented in note 36.GuaranteesFinancial guarantees 196,594 177,076 196,594 177,076Mortgage finance guarantees 321,593 317,108 321,593 317,108Registration and remortgaging guarantees 68,039 44,175 124,771 74,890Other guarantees 66,707 67,381 201,403 206,247Total guarantees 652,932 605,741 844,360 775,321
42 Assets deposited as collateral, (DKK 1,000)
In addition, the Group has granted credit facilities related to credit cards and overdraft facilities that can be terminated at short notice. At the
end of 2025, such unused credit facilities amounted to DKK 2.2bn (2024: DKK 2.1bn). Furthermore the Group has granted irrevocable loan
commitments amounting to DKK 80m (2024: DKK 80m).
If the Group decides to terminate the agreement w ith the Bank's main IT provider NBS, the group is obliged to pay DKK 95m, i.e. the estimated
revenue over the next 2.5 years to NBS for IT-services.
The bank has entered in an ongoing tax dispute w ith the Danish tax authorities regarding the sale of the bank's Danish activities in 2021. At
present the contingent liability could have a negative effect on the Group's equity of up to approx. DKK 30m.
At the end of 2025 the Group had deposited cash at a total market value of DKK 12.0m (2024: DKK 20.7m) in connection w ith negative
market value of derivatives.
Group
P/F Føroya Banki
At the end of 2025 the Group had deposited bonds at a total market value of DKK 30.9m (2024: DKK 27.0m) w ith Danmarks Nationalbank (the
Danish Central Bank) primarily in connection w ith cash deposits.
43 Related parties, (DKK 1,000)
Related parties w ith significant influence are shareholders w ith holdings exceeding 20% of P/F Føroya Banki share capital. The shareholder is the Ministry of Finance of the Faroe Islands
and is the only party w ith significant influence.
Transactions w ith related parties are settled on an arm's-length basis and recognised in the financial statements according to the same accouting policy as for similar transactions w ith
unrelated parties.
In 2025 interest rates on credit facilities granted to associated undertakings w ere betw een 5.00%-12.18% (2024: 5.45%-12.63%).
The Board of Directors and Executive Board columns list the personal facilities, deposits, etc., held by members of the Board of Directors and the Executive Board and their deposits, etc.,
held by members of the Board of Directors and the Executive Board and their dependants and facilities w ith businesses in w hich these parties have a controlling or significant interest.
P/F Føroya Banki acts as the bank of a number of its related parties. Payment services, trading in securities and other instruments, investment and placement of surplus liquidity,
endow ment policies and provision of short-term and long-term financing are the primary services provided by the Bank.
Shares in P/F Føroya Banki may be registered by name. The management's report lists related parties' holdings of Føroya Banki shares (5% or more of share capital) on the basis of the
most recent reporting of holdingt to the Bank.
In 2025 interest rates on credit facilities granted to members of the Board of Directors and the Executive Board w ere betw een 2.15%-22.33% (2024: 2.85%-22.78%). Note 10 specifies the
remuneration and note 44 specif ies shareholdings of the management.
Parties with
Associated
Board of
significant influenceundertakingsDirectorsExecutive Board2025 2024 2025 2024 2025 2024 2025 2024AssetsLoans 4,330 4,567 2,034 2,038 14,672 13,884 6,434 6,582Total 4,330 4,567 2,034 2,038 14,672 13,884 6,434 6,582LiabilitiesDeposits 820,399 533,284 14,472 13,257 100,079 82,903 2,998 2,341Total 820,399 533,284 14,472 13,257 100,079 82,903 2,998 2,341Off-balance sheet itemsGuarantees issued 9,000 9,000 350 374Guarantees and collateral received 3,990 3,990 1,700 19,990 22,510 6,984 7,180Income StatementInterest income 3,769 2,788 146 212 630 956 303 329Interest expense 2,345 3,528 0 2 182 262 30 37Fee income 891 872 28 29 482 592 10 9Total 2,315 133 175 239 930 1,286 283 301
Annual Report 2025
89
Holdings of the Board of Directors and the Executive Board Beginning of 2025 Additions Disposals End of 2025Board of directorsBirger Durhuus 2,936 2,936Annfinn Vitalis Hansen 5,119 5,119Árni Tór Rasmussen 115,218 115,218Kristian Reinert Davidsen 107 107Marjun Hanusardóttir 181 181Tom Ahrenst 0 0Kenneth M. Samuelsen 2,494 2,494Alexandur Johansen 200 2,295 2,495Rúna Hentze 793 793Total 127,048 2,295 0 129,343Executive BoardTurið F. Arge 6,135 6,135Total 6,135 0 0 6,135
Note
44 P/F Føroya Banki shares held by the Board of Directors and the Executive Board
45 Financial instruments at fair value, (DKK 1,000)
2025 Quoted Observable N
on-observable
Financial assets and liabilities at fair value prices input input Total
Financial assets held for tradingBonds at fair value 1,025,527 80,683 1,106,209Shares, etc. 109,641 109,641Derivatives w ith positive fair value 20,733 20,733Total 1,135,168 101,416 1,236,584Financial assets designated at fair valueLoans and advances at fair value 285,267 285,267Shares, etc. 169,023 1,347 170,370Total 169,023 286,614 455,637Finansial assets at fair value 1,135,168 270,439 286,614 1,692,222Financial liabilities held for tradingDerivatives w ith negative fair value 13,316 13,316Total 13,316 13,3162024 Quoted Observable Non-observableFinancial assets and liabilities at fair value prices input input TotalFinancial assets held for tradingBonds at fair value 1,423,534 333,666 1,757,200Shares, etc. 97,906 97,906Derivatives w ith positive fair value 23,248 23,248Total 1,521,440 356,913 1,878,353Financial assets designated at fair valueLoans and advances at fair value 319,297 319,297Shares, etc. 186,513 1,347 187,860Total 186,513 320,644 507,157Finansial assets at fair value 1,521,440 543,426 320,644 2,385,510Financial liabilities held for tradingDerivatives w ith negative fair value 30,272 30,272Total 30,272 30,272
The fair value is the amount for w hich a financial asset can be exchanged betw een know ledgeable, w illing and independent parties. If an active market exists, the Group uses a
quoted price. If a financial instrument is quoted in a market that is not active, the Group bases its valuation on the most recent transaction price. Adjustment is made for
subsequent changes in market conditions, for instance, by including transactions in similar financial instruments that are assumed to be motivated by normal business
considerations. For a number of financial assets and liabilities, no market exists. In such cases, the Group uses recent transactions in similar instruments and discounted cash
flow s or other generally accepted estimation and valuation techniques based on market conditions at the balance sheet date to calculate an estimated value.
Unlisted shares recognised at fair value comprises unlisted shares w ho are not included in the Group’s trading portf olio. Unlisted shares, other than Sector shares, are
recognised at fair value and are measured in accordance w ith shareholders agreements and using generally accepted estimations and valuation techniques. The valuation of
unlisted shares is based substantially on non-observable input. Sector chares are recogniced at fair value using price-fixing-agreements according to the articles of
association.
Annual Report 2025
90
Note
45
(cont'd)
Financial instruments at amortised cost Carrying Carryingamount Fair value amount Fair value2025 2025 2024 2024Financial assetsCash in hand and demand deposits w ith central banks 3,249,492 3,249,492 2,696,305 2,696,305Due from credit institutions and central banks 239,179 239,179 310,797 310,797Loans and advances at amortised cost 9,384,505 9,384,505 8,767,094 8,767,094Assets under insurance contracts 3,320 3,320 4,786 4,786Total 12,876,497 12,876,497 11,778,982 11,778,982Financial liabilitiesDue to credit institutions and central banks 505,739 505,739 823,455 823,455Deposits and other debt 10,948,209 10,948,209 10,003,348 10,003,348Deposits under pooled schemes 85,154 85,154 61,610 61,610Issued bonds at amortised cost 903,790 903,790 981,190 975,824Liabilities under insurance contracts 151,764 151,764 158,485 158,485Subordinated debt 99,930 99,435 99,790 98,472Total 12,694,587 12,694,092 12,127,877 12,121,193
Financial instruments at amortised cost
Financial instruments valued on the basis of quoted prices in an active market are recognised in the Quoted prices category. Financial instruments valued substantially on the
basis of other observable input are recognised in the Observable input category. The category also covers derivatives valued on the basis of observable yield curves or
exchange rates. Furthermore the category covers sector shares w ith price-fixing-agreements according to the articles of association. Other financial assets are recognised in
the Non-observable input. This category covers unlisted shares, loans and advances at fair value and domicile property (se note 27 for further information on Domicile
At 31 December 2025 financial assets valued on the basis of non-observable input comprised unlisted shares and loans and advances of DKK 286.6m (2024: DKK 320.6m). In
2025, the Group recognised unrealised value adjustments of unlisted shares and loans and advances valued on the basis of non-observable input in the amount of DKK -3.7m
(2024: DKK 7.5m) and realised value adjustments of DKK 0.0m (2024: DKK 0.0m). Unlisted shares had a value adjustment of DKK 0.0m (2024: DKK 0.0m). A 10% increase or
decrease in fair value of unlisted shares and loans and advances w ould amount to DKK 0.0m (2024: DKK 0.0m) due to the fully hedged loans and advances measured at fair
value.
Cash and demand deposits w ith central banks, Loans and advances, Deposits etc. at amortised cost are measured at non-observable input, i.e. level 3 measures. Subordinated
debt and Issued bonds are measured at observable input, i.e. level 2 measures.
Value adjustments of unlisted shares and loans and advances at fair value are recognised under the item "Market value adjustments" in the income statement.
2025 2024Financial instruments at fair value valued on the basis of non-observable inputFair value at 1 January320,644 349,847Value adjustments through profit or loss-3,741 7,463Acquisitions0 0Disposals30,289 36,665Fair value at 31 December286,614 320,644
The vast majority of amounts due to the Group, loans, advances, and deposits may not be assigned w ithout the consent of customers, and an active market does not exist for
such financial instruments. Consequently, the Group bases its fair value estimates on data show ing changes in market conditions after the initial recognition of the individual
instruments, and thus affecting the price that w ould have been fixed if the terms had been agreed at the balance sheet data. Other people may make other estimates. The Group
discloses information about the fair value of financial instruments at amortised cost on the basis of the follow ing assumtions:
* for many of the Group’s deposits and loans, the interest rate is linked to developments in the market interest rate
* the fair value assessment of loans is assessed based on an informed estimate that the Bank in general regulates the loan terms in accordance w ith the prevailing market
conditions
* the recognised impairment charges are expected to correspond to the day-to-day regulation of the specific credit risk, based on an estimation of the Bank’s total individual and
collective impairment charges
* the fair value assessment of fixed interest deposits is booked on the basis of the market interest rate on the balance sheet day
* the subordinated dept and issued bonds w ith fixed interest rates is estimated at fair value using the marketrate on the balance sheet date for these instruments.
46 Group holdings and undertakings, (DKK 1,000)
Share capital
Functional
currency
Net profit
Shareholders'
equity
Share
capital %
P/F Føroya Banki 192,000 DKK 288,317 2,015,313 100%Insurance companiesP/F Trygd 40,000 DKK 42,179 140,539 100%P/F NordikLív 30,000 DKK 46 32,067 100%Real estate agencyP/F Sky n 1,000 DKK 2,361 7,415 100%
Annual Report 2025
91
Note
47 Reconciliations of changes in insurance liabilities, (DKK 1,000)
Non-life Life Total Non-life Life TotalUnearned premium provisions 59,268 0 59,268 57,506 0 57,506Outstanding claims provisions 94,736 7 94,743 101,762 2,690 104,452Receivables from policyholders and debt related to direct insurance -2,247 0 -2,247 -3,473 0 -3,473Liabilities under insurance contracts, year-end 151,757 7 151,764 155,795 2,690 158,485
Provisions for claims, net of reinsurance are discounted with the risk-free interest rate from EIOPA . The interest rate is 2.23% (2024: 2.37).
Unearned premium provisionsBeginning of year 57,506 0 57,506 55,218 0 55,218Premiums received 183,655 15,081 198,736 178,293 22,594 200,887Premiums recognised as income -181,892 -15,081 -196,973 -176,004 -22,594 -198,599Unearned premium provisions, year-end 59,268 0 59,268 57,506 0 57,506
The confidence level used to determine the risk adjustment is 99.5% (2024: 99.5%).
Outstanding claims provisionsBeginning of year 101,762 2,690 104,452 83,417 4,218 87,636Claims paid regarding current year -48,991 -10,502 -59,493 -54,841 -5,671 -60,512Claims paid regarding previous years -37,105 -2,682 -39,787 -34,020 -1,444 -35,464Change in claims regarding current year 73,831 10,502 84,333 93,588 5,586 99,174Change in claims regarding previous years 5,239 0 5,239 13,619 0 13,619Outstanding claims provisions, year-end 94,736 7 94,743 101,762 2,690 104,45220252024Reconciliations of changes in insurance assetsNon-life Life Total Non-life Life TotalReinsurers' share of premium provisions 0 0 0 0 0 0Reinsurers' share of claims provisions 4,375 0 4,375 6,622 0 6,622Receivables from insurance contracts and reinsurers 3,319 0 3,319 3,003 0 3,003Debt related to reinsurance and receivables from policyholders move to liabilities -4,373 0 -4,373 -4,839 0 -4,839Reinsurers' share of insurance contracts, year-end 3,320 0 3,320 4,786 0 4,786Reinsurers' share of premium provisionsBeginning of year 0 0 0 0 0 0Premiums ceded -16,510 -361 -16,871 -19,956 -821 -20,777Payments to reinsurers 16,510 361 16,871 19,956 821 20,777Reinsurers' share of premium provisions, year-end 0 0 0 0 0 0Reinsurers' share of claims provisionsBeginning of year 6,622 0 6,622 3,275 0 3,275Claims ceded 0 0 0 6,318 0 6,318Payments received from reinsurers -2,247 0 -2,247 -2,971 0 -2,971Reinsurers' share of claims provisions, year-end 4,375 0 4,375 6,622 0 6,622
2025
2024
Annual Report 2025
92
Note 48 – Risk Management
The Føroya Banki Group is exposed to several risks,
which it manages at different organizational levels. The
categories of risks are as follows:
• Credit risk: Risk of loss because of counterparties
failing to meet their payment obligations to the
Group
• Market risk: Risk of loss because of changes in the
fair value of the Group’s assets or liabilities due to
changes in market conditions
• Liquidity risk: Risk of loss because of a
disproportionate increase in financing costs, the
Group possibly being prevented from entering into
new activities due to a lack of financing or in
extreme cases being unable to pay its dues as a
result of a lack of financing
• Operational risk: Risk of loss because of
inadequate or faulty internal procedures, human
errors or system errors, or because of external
events, including legal risks
• Insurance risk: All types of risk in the non-life
insurance company Trygd and the life insurance
company NordikLív, including market risk, life
insurance risk, business risk and operational risk
The Risk Management Report 2025 contains further
information about the Group’s approach to risk
management.
Capital Management
P/F Føroya Banki is a licensed financial services provider
and must therefore comply with the capital requirements
of the Faroese Financial Business Act. Faroese as well
as Danish capital adequacy rules are based on the CRD
IV requirements stipulated in the regulation (EU) No
575/2013 of the European parliament and of the Council
of 26 June 2013.
The capital adequacy rules call for a minimum capital
level of 8% of risk-weighted assets plus any additional
capital needed. Detailed rules regulate the calculation of
capital and risk-weighted assets. Capital comprises core
capital, hybrid core capital and subordinated debt. Core
capital largely corresponds to the carrying amount of
shareholders’ equity less proposed dividends, deferred
tax assets etc. The solvency presentation in the section
Statement of Capital in P/F Føroya Banki shows the
difference between the carrying amount of shareholders’
equity and the core capital. Note 38 and 39 to the
financial statements show P/F Føroya Banki’s issued
bonds and subordinated debt. At year-end 2025, the
Bank’s CET 1 capital, Core capital, Total capital and
Total capital, incl. MREL capital, ratios were 23.3%,
23.3%, 24.6% and 36.3%, respectively. At the end of
2024, the Bank’s CET 1 capital, Core capital, Total
capital and Total capital, incl. MREL capital, ratios were
23.8%, 23.8%, 25.2% and 36.3%, respectively.
Credit risk
The Group’s credit exposure consists of selected on and
off-balance sheet items, including loans and advances,
credit facilities, unused credit facilities and guarantees.
The figures below are before deduction of impairments.
Specification of impairments is shown in table 8 and 9.
Credit exposure in relation to lending activities includes
items with credit risk that form part of the core banking
operations.
Exposure in relation to trading and investment activities
includes items with credit risk that form part of the Bank’s
trading-related activities, including derivatives. For
details see the section “Market risk”.
The Group extends credit based on each individual
customer’s financial position, which is reviewed regularly
to assess whether the basis for granting credit facilities
has changed. Each facility must reasonably match the
customer’s credit quality and financial position.
Furthermore, the customer must be able to demonstrate,
with all probability, his/her ability to repay the debt. The
Group exercises caution when granting credit facilities to
businesses and individuals when there is an indication
that it will be practically difficult for the Group to maintain
contact with the customer. The Group is particularly
careful when granting credit facilities to businesses in
troubled or cyclical industries.
Annual Report 2025
93
Credit exposure
The credit exposure generated by lending activities
comprises items subject to credit risk that form part of the
Group’s core banking business. Credit exposures
include loans and advances, unused credits and
guarantees. The credit exposure generated by trading
and investment activities comprises items subject to
credit risk that form part of the Group’s trading activities,
including derivatives. The following tables list separate
information for each of the two portfolios.
Credit exposure relating to lending activities
Table 1 breaks down the Group’s credit exposure in its
core banking activities by segment and business sector.
Exposures include loans and advances, credits, unused
credits and guarantees.
Exposures to the fisheries sector were DKK 620m at the
end of 2025. This represents 4.8% of total exposures.
Property administration DKK 1,926m representing
14.9% of total exposures, and DKK 225m was related to
the aquaculture industry. This represents 1.7% of total
exposures. No single industry except property
administration exceeded 10% of total exposures.
Credit exposure broken down by geographical area
The Bank’s loans are mainly granted to domestic
customers in the Faroe Islands and Greenland. Table 2
provides a geographical breakdown of total exposures.
Classification of customers
The Group monitors exposures regularly to identify signs
of weakness in customer earnings and liquidity as early
as possible. The processes of assigning and updating
classifications based on new information about
customers form part of the Group’s credit procedures.
Risk exposure concentrationsTable 120252024DKKm In % DKKm In %Public authorities 1,166 9.0% 1,221 10.2%Corporate sector:Agriculture and farming, others 74 0.6% 22 0.2%Aquaculture 225 1.7% 163 1.4%Fisheries 620 4.8% 527 4.4%Manufacturing industries, etc. 844 6.5% 569 4.8%Energy and utilities 273 2.1% 431 3.6%Building and construction, etc 561 4.3% 575 4.8%Trade 522 4.0% 498 4.2%Transport, mail and telecommunications 895 6.9% 794 6.6%Hotels and restaurants 194 1.5% 112 0.9%Information and communication 24 0.2% 10 0.1%Property administration, etc. 1,926 14.9% 1,635 13.7%Financing and insurance 72 0.6% 104 0.9%Other industries 260 2.0% 330 2.8%Total corporate sector 6,488 50.2% 5,769 48.2%Personal customers 5,261 40.7% 4,983 41.6%Total 12,915 100.0% 11,973 100.0%Credit institutions and central banks 3,584 3,169 Total incl. credit institutions and central banks 16,499 15,142 Credit exposure by geographical areaTable 2(DKKm)20252024Loans / Unused Loans / Unused Exposures in%CreditsGuaranteescreditsExposures in%CreditsGuaranteescreditsFaroe Islands 10,843 84% 8,793 484 1,566 9,469 79% 7,749 393 1,326Greenland 2,072 16% 1,051 362 659 2,504 21% 1,514 349 641Total 12,915 100% 9,844 846 2,225 11,973 100% 9,263 743 1,967
Annual Report 2025
94
The classification of customers is performed in
connection to the quarterly impairment testing of the loan
portfolio. All customers that meet a small number of
objective criteria are classified in this exercise. The
classification is also used as a means of determining the
Bank’s solvency requirement. The classification
categories are as follows:
• 3 and 2a — Portfolio without weakness
• 2b15 and 2b30 - Portfolio with some weakness
• 2c — Portfolio with significant weakness
• 1 — Portfolio with impairment/provision (OEI)
As shown in table 3, more than 99% of total exposures
are individually classified.
For further information on impaired portfolios, see table
8.
Concentration risk
In its credit risk management, the Group identifies
concentration ratios that may pose a risk to its credit
portfolio.
Under CRR (EU) nr. 575/2013 § 395, exposure to a
single customer or a group of related customers, after
deduction of particularly secure claims, may not exceed
25% of the Total capital. The Group submits quarterly
reports to the Danish FSA on its compliance with these
rules. In 2025, none of the Group’s exposures exceeded
these limits.
The Group’s overall target is for no industry to make up
more than 10% of the Group’s total exposure, see table
1, except for the industry group “Trade” and “Property
administration, etc.” which may be up to 15%. In addition,
the Group’s long-term target is for no single exposure (on
a Group basis) to make up more than 10% of the Group’s
Total capital. In exceptional cases, exposures may be
above 10%, but only for customers of a very high credit
quality, and where the Group has acceptable collateral.
At the end of 2025 the Group has no customer with an
exposure exceeding 10% of the Total capital.
Quality of loan portfolio excl. financial institutions 2025Table 3TotalPortfolio without weakness (3, 2a) Exposure in DKKm 8,534Portfolio with some weakness (2b) Exposure in DKKm 3,685Exposure in DKKm 414Portfolio with significant weakness (2c)Unsecured 58Exposure in DKKm 206Portfolio with OEIUnsecured 57Impairments/provisions 32Portfolio without individual classification Exposure in DKKm 76Total Exposure in DKKm 12,915Quality of loan portfolio excl. financial institutions 2024TotalPortfolio without weakness (3, 2a) Exposure in DKKm 7,588Portfolio with some weakness (2b) Exposure in DKKm 3,436Exposure in DKKm 323Portfolio with significant weakness (2c)Unsecured 10Exposure in DKKm 419Portfolio with OEIUnsecured 90Impairments/provisions 59Portfolio without individual classification Exposure in DKKm 207Total Exposure in DKKm 11,973
Annual Report 2025
95
Collateral
The Group applies various instruments available to
reducing the risk on individual transactions, including
collateral in the form of tangible assets, netting
agreements and guarantees. The most important
instruments that can be used to reduce risk are charges
on tangible and intangible assets, guarantees and
netting agreements under derivative master agreements,
as further described in the section Liquidity risk.
Collateral provided to the Group.
Table 4 shows collateral for exposures excluding
exposures with impairment or past due exposures.
Collateral amounts to DKK 9,058m. The types of
collateral most frequently provided are real estate (86%),
ships/ aircraft (11%) and motor vehicles (2%) (see table
5) in addition to guarantees provided by owners or, in the
Faroese market, by floating charge.
The Group regularly assesses the value of collateral
provided in terms of risk management. It calculates the
value as the price that would be obtained in a forced sale
less deductions reflecting selling costs and the period
during which the asset will be up for sale. To allow for the
uncertainty associated with calculating the value of
collateral received, the Group reduces such value by way
of haircuts. For real estate for residential purposes,
haircuts reflect the expected costs of a forced sale and a
margin of safety. This haircut is 20% of the estimated
market value. In general, collateral for loans to public
authorities is not taken if there is no mortgage in real
estate. For unlisted securities, third-party guarantees
(excluding guarantees from public authorities and
banks), collateral in movables and floating charges, the
haircut is 100%.
Table 4 shows the Bank’s total credit exposure and the
collateral for the loans granted divided into personal,
corporate and the public sector. Unsecured exposures
accounted for 13% of personal exposures and 32% of
corporate exposures at the end of 2025. Most of the
Bank’s exposure is granted against collateral in real
estate.
Credit exposure and collateral 2025 Table 4Personal Corporate Personal & (DKKm)customerssectorcorporatePublic TotalExposure 5,261 6,488 11,749 1,166 12,915Loans, advances & guarantees 5,056 4,796 9,853 837 10,690Collateral 4,604 4,432 9,036 21 9,058*Hereof collateral for exposures with OEI 61 89 150 0 150Impairments 48 128 177 1 177Unsecured (of exposures) 695 2,079 2,774 1,145 3,918Unsecured (loans, advances and guarantees) 604 1,145 1,749 816 2,565Unsecured ratio 13% 32% 24% 98% 30%Unsecured ratio, loans and advances 12% 24% 18% 97% 24%
Credit exposure and collateral 2024
Personal Corporate Personal & (DKKm)customerssectorcorporatePublic TotalExposure 4,983 5,769 10,752 1,221 11,973Loans, advances & guarantees 4,767 4,223 8,990 1,016 10,005Collateral 4,408 3,959 8,367 169 8,536*Hereof collateral for exposures with OEI 94 236 330 0 330Impairments 44 133 177 1 178Unsecured (of exposures) 612 1,817 2,429 1,053 3,482Unsecured (loans, advances and guarantees) 517 768 1,285 864 2,149Unsecured ratio 12% 31% 23% 86% 29%Unsecured ratio, loans and advances 11% 18% 14% 85% 21%
Annual Report 2025
96
As shown in table 6, DKK 2m is more than 90 days past
due. The Group tests the entire loan portfolio for
impairment charges four times per year. The Group’s
impairments reflect the expected credit loss impairment
model in IFRS 9 and Executive Order on Financial
Reports for Credit Institutions and Investment Firms, etc.
as valid in the Faroe Islands. The expected credit loss is
calculated for all individual facilities as a function of the
probability of default (PD), the exposure at default (EAD)
and the loss given default (LGD). All expected credit loss
impairments are allocated to individual exposures. For all
exposures with objective indication of being subject to an
impairment in creditworthiness, stage 3 exposures as
well as certain other weak exposures, the Group
determines the expected credit losses individually.
The Group determines the individual impairment charge
by calculating the difference between the carrying
amount and the present value of the estimated future
cash flow from the asset, including the realisation value
of collateral, in three weighted scenarios – the base
case, positive and negative scenario. Loans and
advances where the Group has not determined an
individual impairment charge, the expected credit loss is
calculated in accordance with the function described
above and then impaired.
As the expected credit loss, especially for exposures
categorised as stage 1 or 2, primarily are based on
historical information, the Executive Management and
the Board of Directors may add a discretionary increase
in impairments to cover credit losses expected not to be
covered by the calculations described above, e.g. due to
an expected or emerging economic crisis in one or more
sectors and/or in one or more geographic locations.
Table 8 provides a breakdown of individual impairments,
stage 3, and statistical based impairments, stage 1 and
2 including DKK 116.5m impaired at the Executive
Management’s discretion. Table 9 shows a breakdown
of the mentioned DKK 116.5m impaired. The impairment
at the Executive Management's discretion is applied to
CollateralTable 520252024Cars 2% 2%Real Estate 86% 87%Aircrafts & Ships 11% 10%Other 2% 2%Total 100% 100%Distribution of past due amountTable 620252024 Total Total balance balance Past due Past due > with past Past due Past due > with past (DKKm) Exposure total90 days due Exposure total90 days due Portfolio without weakness (3, 2a)8,534 11 0 1,190 7,588 179 0 1,319Portfolio with some weakness (2b, 2b)3,685 14 0 9483,436 12 0 1,011Portfolio with significant weakness (2c)414 2 0 162323 1 0 79Portfolio with OEI206 4 2 54419 5 2 230Portfolio without individual classification76 0 0 3 207 1 0 8Total12,915 30 2 2,357 11,973 198 2 2,646Past due in % of exposure0.2% 0.0% 1.7% 0.0%Loans and advances specified by maturityTable 7(DKKm) 20252024On demand 156 5363 months and below 272 2583 months to 1 year 1,019 803Over 1 year to 5 years 2,458 2,281Over 5 years 5,764 5,209Total 9,670 9,086
Annual Report 2025
97
the unsecured parts of stage 1 and stage 2 exposures,
as exposures in stage 2w and 3 are estimated either
individually or by setting the impairment equal to the
unsecured part of the exposure.
A further breakdown by maturity of loans and advances
can be found in table 7. There are no aggregated data
on the collateral behind matured loans and advances.
Market Risk
Organisation
The Bank has established a Market committee to monitor
the financial markets and continuously update its view on
the financial markets. The Market committee meets
quarterly to discuss the outlook for the financial markets
and make an update containing a recommendation on
prices and possible changes in investment products to
the management. Participants in the Market committee
are the CEO, the CFO, the CIO, the Financial Manager,
the Risk Manager and Treasury. The management
decisions are communicated throughout the organization
and form the basis for all advice provided to customers.
Definition
The Group defines market risk as the risks taken in
relation to price fluctuations in the financial markets.
Several types of risk may arise, and the Bank manages
and monitors these risks carefully.
Føroya Banki’s market risks are
• Interest rate risk: risk of loss caused by a upward
change in interest rates
• Exchange rate risk: risk of loss from positions in
foreign currency when exchange rates change
• Equity market risk: risk of loss from falling equity
values
Specification of individual and statistic impairments
Table 8
20252024DKKm Loans grossImpairmentsDKKm Loans grossImpairmentsIndividual impairments: Individual impairments:Faroe Islands 70 19 Faroe Islands 200 21Greenland 21 10 Greenland 190 38Total 91 29 Total 390 59Statistic impairments: Statistic impairments:Faroe Islands 8,723 84 Faroe Islands 7,549 70Greenland 1,030 61 Greenland 1,324 48Total 9,753 146 Total 8,873 119Distribution of impairments at the Executive Management's Table 9discretion2025(DKKm)Country / Stage 1 2 2w 3 TotalFaroe Islands 57.4 11.7 0.0 0.0 69.1Greenland 38.8 8.5 0.0 0.0 47.4Total 96.2 20.3 0.0 0.0 116.52024(DKKm)Country / Stage 1 2 2w 3 TotalFaroe Islands 44.7 17.2 0.0 0.0 62.0Greenland 29.7 9.8 0.0 0.0 39.5Total 74.4 27.0 0.0 0.0 101.5
Annual Report 2025
98
Policy and responsibility
The Group’s market risk management relates to the
Group’s assets, liabilities and off-balance-sheet items.
The Board of Directors defines the overall policies / limits
for the Group’s market risk exposures, including the
overall risk limits. The limits on market risks are set with
consideration of the risk they imply, and how they match
the Group’s strategic plans.
Control and management
The stringent exchange rate risk policies support the
Group’s investment policy of mainly holding listed Danish
government and mortgage bonds. The Finance
Department monitors, controls and reports market risk to
the Board of Directors and the Executive Board on a daily
and monthly basis.
Market risk
Table 10 shows the likely after-tax effects on the Bank’s
share capital from likely market changes.
• All equity prices fall by 10%
• All currencies change by 10% (EUR by 2,25%)
• Foreign exchange risk
• Upwards parallel shift of the yield curve of 100 bp
The calculations show the potential losses for the Group
deriving from market volatility.
Interest rate risk
The Group’s policy is to invest some of its excess liquidity
in LCR compliant bonds. Therefore, Føroya Banki holds
a large portfolio of bonds, and most of the Group’s
interest rate risk stems from this portfolio.
The Group’s interest rate risk is calculated according to
the requirements of the Danish FSA. The interest rate
risk is defined as the effects of a one percentage point
parallel shift of the yield curve. Føroya Banki offers fixed
rate loans to corporate customers. The interest rate risk
from these loans is hedged with interest rate swaps on a
one-to-one basis. Table 11 shows the Group’s overall
interest rate risk measured as the expected loss on
interest rate positions that would result from parallel
upward shift of the yield curve.
Reporting of Market riskBoard of DirectorsMonthly Overview of - Interest risk - Exchange risk - Equity market risk - Liquidity risk - Deposits Executive BoardMonthly Overview of - Interest risk - Exchange risk - Equity market risk - Liquidity risk - DepositsDaily Overview of - Funding risk - Deposits - Liquidity risk
Implementing
Likely after tax effects from changes in markets valueTable 10 % of Core % of Core Change 2025Capital 2024Capital Equity risk DKKm (+/-) 10% 22 1.2% 23 1.3%Exchange risk DKKm (+/-) EUR 2.25% 0 0.0% 0 0.0%Exchange risk DKKm (+/-) Other currencies 10% 1 0.0% 1 0.0%Exchange risk, Total 1 0.0% 1 0.0%Interest rate risk DKKm (parallel shift) 100 bp 8 0.4% 16 0.9%Market Risk ManagementLevel Board of Directors Executive Board CFO Financial Manager Markets TreasuryStrategicDefines the overall market riskTacticalDelegating risk authorities Managing the Bank's to relevant divisionsmarket riskOperationalControlling & Reporting Monitoring Trading
Annual Report 2025
99
Exchange rate risk
Føroya Banki’s base currency is DKK and assets and
liabilities in other currencies therefore imply an extra risk
as they may vary in value over time relative to DKK.
Føroya Banki’s core business as a commercial bank
makes it necessary to have access to foreign currencies
and to hold positions in the most common currencies.
Given the uncertainty of currency fluctuations, Føroya
Banki´s policy is to maintain a low currency risk. The
Group’s exchange rate risk mainly stems from customer
loans / deposits in foreign currency. The exchange rate
risk on the issued bonds of SEK 300m are effectively
hedged using a matching cross currency swap.
Equity market risk
Føroya Banki’s stringent risk policy restricts equity
positions to listed and liquid shares and shares related to
the Danish banking sector. The Group occasionally
holds unlisted shares, for example in connection with
taking over and reselling collateral from defaulted loans.
The Group has acquired holdings in a number of unlisted
banking related companies. These are mainly
investments in companies providing financial
infrastructure and financial services to the Bank. For
some of these investments, Føroya Banki’s holding is
rebalanced yearly according to the business volume
generated by the Bank to the company in question.
Liquidity Risk
Definition
• Liquidity risk is defined as the risk of loss resulting
from
• Increased funding costs
• A lack of funding of new activities
• A lack of funding to meet the Group’s commitments
The Board of Directors has defined the Bank’s liquidity
limits for the daily operational level and for budgeting
plans. The Danish FSA has designated Føroya Banki as
a systematically important financial institution (SIFI).
With a liquidity coverage ratio (LCR) of 306.4 % at 31.
December 2025 and a Net Stable Funding Ratio (NSFR)
of 160,6% Føroya Banki’s liquidity position remains
robust.
Control and management
Liquidity risk is a fundamental part of the Group’s
business strategy. The Group’s liquidity is monitored and
managed by the Finance Department daily in
accordance with the limits set by the Board of Directors
and reported to the Executive Board by the Finance
Department. A liquidity report with stress tests is
submitted to the Executive Board and the Group Risk
Committee monthly. Markets has the operational
responsibility for investment of liquidity, while Finance
Department is responsible for monitoring, controlling and
reporting on liquidity. The Group has implemented
contingency plans to ensure that it is ready to respond to
unfavorable liquidity conditions.
Operational liquidity risk
The objective of the Group’s operational liquidity risk
management is to ensure that the Group always has
sufficient liquidity to handle customer transactions and
changes in liquidity. Føroya Banki complies with LCR
requirements and therefore closely monitors the bond
portfolio with regards to holding sufficient LCR
compliable bonds.
Liquidity stress testing
Føroya Banki has incorporated a liquidity stress testing
model based on LCR. This model is used at least
monthly to forecast developments in the Bank’s liquidity
Interest rate risk before tax broken down by Table 11currency(DKKm)20252024DKK 10 20SEK 0 0EUR 0 0Total 10 20
Foreign exchange positionTable 12(DKKm)20252024Assets in foreign currency18 14Liabilities and equity in foreign 0 0currencyExchange rate indicator 1 18 14Exchange rate indicator 2 0 0
Equity riskTable 13(DKKm)20252024Share/unit trust certificates listed on 110 98the Copenhagen Stock ExchangeOther shares at fair value based on the 170 188fair-value optionTotal 280 286
Exposures related to trading Table 14and investment activities(DKKm) 20252024Bonds at fair value 1,106 1,757 Derivatives with positive fair value 21 23 Equity 280 286 Total 1,407 2,066
Annual Report 2025
100
on a 1-12-month horizon. The test is based on the
business-as-usual situation and in a stressed version
with outflows from undrawn committed facilities and
other stress measures. If the target is not met, the
Executive Board must implement a contingency plan.
Furthermore, the Group reports internally on a daily basis
the development of the LCR-ratio.
Twelve-month liquidity
The Bank’s 12-month funding requirements are based
on projections for 2025 and takes the market outlook into
account.
Structural liquidity risk
Deposits are generally considered a secure source of
funding. Deposits are generally short term, but their
historical stability enables Føroya Banki to grant
customer loans with much longer terms e.g. 25 years to
fund residential housing. It is crucial for any bank to
handle such maturity mismatch and associated risk, and
therefore it is essential to have a reputation as a safe
bank for deposits. Table 15 shows assets and liabilities
including interests by a maturity structure. To minimize
liquidity risk, Føroya Banki’s policy is to have strong
liquidity from different funding sources.
Funding sources
The Group monitors its funding mix to make sure that
there is a satisfactory diversification between deposits,
equity, tier 1 capital and loans from the financial markets.
Collateral provided by the Group
As customarily used by financial market participants
Føroya Banki has entered into standard CSA
agreements with other banks. These agreements
commit both parties to provide and daily adjust collateral
for negative market values. The bank with negative value
exposure receives collateral. Thereby reducing
counterparty risk to daily market fluctuations of
derivatives and pledged amount. Because of these
agreements Føroya Banki at yearend 2025 had pledged
cash deposits valued at DKK 12.0m under these
agreements. Føroya Banki also provides collateral to the
Danish central bank to give the Bank access to the
intraday draft facility with the central bank as part of the
Danish clearing services for securities. At yearend 2025,
this collateral amounted to DKK 30.9m.
Liquidity ManagementBoard of Directors Executive Board CFO Financial manager TreasuryObjectiveDefines the objectives for liquidity policiesTacticalSufficient and well PlanningProviding background diversified fundingmaterialsOperationalControlling & Monitoring Establish contactReporting
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101
Insurance Risk
Insurance risk in the Group consists of non-life and life
risks. The Group has a non-life insurance company,
Trygd and a life insurance company, NordikLív.
Risk exposure for an insurance company can be defined
as a contingency event, chain of events or bad
management which can by itself, or by accumulation,
seriously affect the annual results of the insurer and in
extreme cases make it unable to meet its liabilities. Risks
for an insurance operation are typically categorized as
insurance risk and market risk. Among other risks are
currency exchange risk, liquidity risk, counterpart and
concentration risk and operational risk.
Careful and prudent risk management forms an integral
part of any insurance operations. The nature of
insurance is to deal with unknown future incidents
resulting in a payment obligation. An important part of
managing insurance risk is reinsurance. The Group must
protect itself against dramatic fluctuations in technical
results by entering into agreements on reinsurance so
that the risk of the Group having to pay claims from its
own funds is reasonable in relation to the risks assumed,
their composition and the company’s equity. This is done
with statistical spread of risks and accumulation of funds,
Remaining maturity, incl. interests Table 15(DKK 1,000) Without fixed 2025 0-1 months 1-3 months 3-12 months More than 1 year maturity Total Cash in hand and demand deposits with central banks 3,253,825 3,253,825Due from Credit institution 239,498 239,498Loans and advances 155,872 274,457 1,049,190 11,186,739 0 12,666,259Bonds 400,254 726,065 1,126,319Shares 280,011 280,011Derivatives 20,733 20,733Other Assets 26,903 33,524 61,341 11,665 133,433Total assets 3,696,831 307,981 1,510,786 11,924,469 280,011 17,720,0782025 Due to credit institutions and central banks 35,544 10,292 496,157 541,993Deposits 7,345,928 1,520,854 1,478,425 639,085 10,984,291Issued bonds 8,012 1,017,820 1,025,832Other liabilities 15,253 50,549 90,065 155,868Lease liabilities 457 914 4,111 71,239 76,720Provisions for liabilities 2,624 2,624Subordinated debt 104,427 104,427Total 7,397,182 1,580,328 1,582,893 2,331,352 12,891,754Off-balance sheet itemsFinancial Guarantees 177,076 177,076Other commitments 428,665 428,665Total 605,741 605,741Remaining maturity, incl. interests(DKK 1,000) Without fixed 2024 0-1 months 1-3 months 3-12 months More than 1 year maturity Total Cash in hand and demand deposits with central banks 2,702,147 2,702,147Due from Credit institution 311,470 311,470Loans and advances 535,706 260,765 829,974 10,625,143 0 12,251,588Bonds 670,662 918,128 1,588,789Shares 285,845 285,845Derivatives 23,248 23,248Other Assets 65,160 34,561 21,818 11,253 132,792Total assets 3,637,731 295,326 1,522,454 11,554,524 285,845 17,295,8802024 Due to credit institutions and central banks 45,732 256,360 606,306 908,399Deposits 6,747,297 1,051,489 1,686,995 568,302 10,054,082Issued bonds 191,283 944,177 1,135,459Other liabilities 65,668 73,365 96,728 235,761Lease liabilities 452 904 4,069 76,879 82,304Provisions for liabilities 1,846 1,846Subordinated debt 104,281 104,281Total 6,859,150 1,317,040 2,044,152 2,301,789 12,522,132Off-balance sheet itemsFinancial Guarantees 177,076 177,076Other commitments 428,665 428,665Total 605,741 605,741
Annual Report 2025
102
quantified by statistical methods, to meet these
obligations.
The Group has defined internal procedures to minimize
the possible loss regarding insurance liabilities. The
insurance companies evaluate their insurance risk on a
regular basis for the purpose of optimizing the risk profile.
Risk management also involves holding a well-
diversified insurance portfolio. The insurance portfolio of
Trygd is well diversified in personal and commercial lines
(see table 17).
Insurance risk
The insurance companies cover the insurance liabilities
through a portfolio of securities and investment assets
exposed to market risk.
The insurance companies have invested in investment
securities and cash and cash equivalents in the effort to
balance the exposure to market and currency risk (see
table 18).
Capital requirements
The effects on Føroya Banki’s solvency, due to the
ownership of the insurance companies Trygd and
NordikLív, are considered low. According to CRR the risk
weighted assets have increased DKK 432m. The
negative effect on the Total capital ratio is 1.5% points.
Likely effects from changes in Table 16markets value(DKKm) Change 2025 2024Equity risk (+/-) 10% 10.9 6.7Exchange risk (+/-) in euro 2.25% 0 0Exchange risk (+/-) other currency 10% 0 0Interest rate risk (parallel shift) - Trygd 100 bp 5.9 5.3Interest rate risk (parallel shift) Total 100 bp 6.0 6.5Distribution of Trygd's Table 17portfolio2025 2024Commercial lines 35.0% 35.2%Personal lines 65.0% 64.8%
Financial assets linked to insurance risk in Table 18Trygd(DKK 1,000) 2025 2024Listed securities on stock exchange 284,557 250,788Accounts receivable (total technical provisions) 4,375 6,622Cash and cash equivalents 13,129 4,243Total 302,060 261,652
Run-off gains/losses in TrygdTable 19(DKKm)Sector 2025 2024 2023 2022 2021Industry 2.24 1.44 -1.15 3.31 -0.01Private 2.49 2.56 0.19 -0.42 -0.06Accidents 0.68 -1.05 3.17 -3.55 -10.62Automobile 2.02 -2.79 -4.49 -2.79 1.45Total 7.43 0.17 -2.27 -3.46 -9.24
Annual Report 2025
103
Trygd non-life insurance
The Board of Directors and Executive Management of
Trygd must ensure that the company has an adequate
capital base and internal procedures for risk
measurement and risk management to assess the
necessary capital base applying a spread appropriate to
cover Trygd’s risks.
To meet these requirements Trygd´s policies and
procedures are regularly updated. Risk management at
Trygd is based on several policies, business procedures
and risk assessments which are reviewed and must be
approved by the Board of Directors annually.
The size of provisions for claims is based on individual
assessments of the final costs of individual claims,
supplemented with at least annual statistical analyses.
The company´s acceptance policy is based on a full
customer relationship, which is expected to contribute to
the overall profitability of the Group. In relation to
acceptance of corporate insurance products, the Board
of Directors has approved a separate acceptance policy,
Contractual maturity for the insurance segmentTable 20(DKK 1,000)No stated 2025On demand 0-12 months 1-5 years Over 5 yearsmaturityTotalAssetsSecurities 284,557 284,557Reinsurance assets 4,375 4,375Accounts receivables 4,029 4,029Restricted cashCash and cash equivalents 13,129 13,129Total financial assets 297,685 8,404 306,089LiabilitiesTechnical provision 155,497 155,497Account payable 19,237 19,237Total financial liabilities 174,734 174,734Assets - liabilities 297,685 -166,330 131,355Contractual maturity for the insurance segment(DKK 1,000)No stated 2024On demand 0-12 months 1-5 years Over 5 yearsmaturityTotalAssetsSecurities 250,788 250,788Reinsurance assets 6,622 6,622Accounts receivables 3,473 3,473Restricted cashCash and cash equivalents 4,243 4,243Total financial assets 255,030 10,095 265,125LiabilitiesTechnical provision 159,268 159,268Account payable 15,020 15,020Total financial liabilities 174,288 174,288Assets - liabilities 255,030 -164,193 90,837
Annual Report 2025
104
which is implemented in the handling process of the
corporate department.
Reinsurance is an important aspect of managing
insurance risk. The Group must protect itself against
dramatic fluctuations in technical results by entering into
agreements on reinsurance to make the risk of the Group
having to pay claims from its own funds reasonable in
relation to the size of the risk assumed, the risk
composition and Trygd´s equity.
Trygd has organised a reinsurance program which
ensures that e.g. large natural disasters and significant
individual claims do not compromise Trygd´s ability to
meet its obligations. For large natural disasters, the total
cost to Trygd in 2026 would amount to a maximum of
DKK 10m in addition to reinstatement costs. The
reinsurance program is reviewed once a year and
approved by the Board of Directors. Trygd uses
reputable reinsurance companies with strong ratings (A-
class ratings at least on S&P or equivalent) and financial
positions.
Trygd’s Claims Department is responsible for handling
all claims and only claims employees deal with claims
matters or advise claimants in specific claim cases.
Technical provisions to cover future payments for claims
arising are calculated using appropriate and generally
recognised methods. Insurance provisions are made to
cover the future risk based on experience from previous
and similar claims. These are updated on a yearly basis
taking realized costs of claims into account and the
Claims Department is continuously updating and
monitoring the claim provisions. These methods and
analyses are subject to the natural uncertainty inherent
in estimating future payments, both in terms of size and
date of payment.
Trygd has performed a sensitivity analysis regarding
insurance conditions illustrated in table 21 below.
Trygd’s investment policy is restrictive and Trygd holds
mainly government bonds and Danish mortgaged
backed bonds limiting the primary financial risk to interest
rate risk. However, a limited portion of the funds can be
placed in shares through equity funds. There is no
exchange rate risk, as all investments are based in DKK.
Trygd has invested in investment securities and cash
and cash equivalents in the effort to balance the
exposure to market and currency risk.
NordikLív — Life insurance
In the bank's continuous focus on operating as efficiently
as possible, the bank reached an agreement in 2024 with
the life insurance company LÍV in the Faroe Islands,
where the bank will broker life insurance products for LÍV.
We are pleased with the agreement, and it will result in
NordikLív being dissolved as a separate company in
2026. The Group’s customers, however, will continue to
receive excellent advice and life insurance products at
competitive prices.
As of 1 September 2025, all NordikLív’s life insurance
products are transferred to the life insurance company
LÍV. Thus, at the end of 2025 no insurance risk remains
within NordikLív.
Sensitivity analysis Table 21DKK 1,000 2025 2024Effect of change in:Combined ratio (1 percentage point) +/- 1,819 +/- 1,760- Commercial 637 620- Private 1,182 1,140
Annual Report 2025
105
Note
49
1
Highlights, ratios and key figures, five year summary - Føroya Banki GroupDKK 1,000 2025 2024Index 25 / 242023 2022 2021Net interest income 388,103 442,251 88 419,461 274,334 268,580Dividends from shares and other investments 21,077 11,997 176 6,115 6,475 3,429Net fee and commision income 87,884 78,752 112 81,680 88,113 79,360Net interest and fee income 497,064 533,000 93 507,257 368,922 351,370Net insurance result 66,055 47,747 138 45,925 34,133 33,895Interest and fee income and income from insurance activities, net563,119 580,747 97 553,182 403,056 385,264Market value adjustments 34,785 45,343 77 54,614 -25,611 4,391Other operating income 14,836 9,694 153 9,294 7,472 11,009Staff cost and administrative expenses 256,533 248,369 103 243,670 225,642 232,567Impairment charges on loans and advances etc. -3,982 -1,072 371 -10,043 -46,629 -76,561Net profit continuing operations 288,317 310,427 93 307,533 164,407 193,356Net profit discontinued operations 0 0 0 0 78,983Net profit 288,317 310,427 93 307,533 164,407 272,340Loans and advances 9,669,773 9,086,392 106 8,882,855 8,083,343 7,624,093Bonds at fair value 1,106,209 1,757,200 63 1,396,516 1,591,453 1,880,565Intangible assets 4,415 5,084 87 1,702 2,402 2,684Assets held for sale 2,207 2,207 0 24,200 0Total assets 14,934,717 14,511,644 103 12,944,835 12,167,073 11,789,746Amounts due to credit institutions and central banks 505,739 823,455 61 719,105 858,172 838,608Issued bonds at amortised cost 903,790 981,190 92 986,134 547,584 348,938Deposits and other debt 10,948,209 10,003,348 109 8,702,192 8,335,662 7,899,659Total shareholders' equity 2,015,313 2,076,037 97 1,850,609 1,798,857 2,035,853Ratios and key figuresDec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 312025 2024 2023 2022 2021SolvencyTotal capital, incl. MREL capital, ratio, % 36.3 36.3 41.1 29.7 29.6Total capital ratio, % 24.6 25.2 29.4 24.8 27.5Tier 1 capital ratio, % 23.3 23.8 28.0 23.5 26.0CET 1 capital 23.3 23.8 25.8 21.4 23.8RWA, DKK mill 7,732 7,180 6,819 7,195 6,841ProfitabilityReturn on shareholders' equity before tax, % 17.4 19.5 20.7 10.8 11.1Return on shareholders' equity after tax, % 14.1 15.8 16.9 8.6 12.6Income / Cost ratio 2.4 2.5 2.6 2.0 2.5Cost / income, % (excl. value adjustm. and impairments) 45.5 43.5 44.7 56.0 60.4Return on assets 1.9 2.1 2.4 1.4 2.3Market risknterest rate risk, % 0.6 1.2 0.8 1.0 -0.4Foreign exchange position, % 1.0 0.8 0.6 0.7 0.8Foreign exchange risk, % 0.0 0.0 0.0 0.0 0.0LiquidityLoans and advances plus impairment charges as % ofdeposits 89.9 92.6 104.1 99.2 99.5Net Stable Funding Ratio (NSFR), % 160.6 154.5 151.8Liquidity Coverage Ratio (LCR), % 306.4 337.4 228.2 225.2 191.4Credit riskLarge exposures as % of capital base 0.0 13.6 22.0 26.1 25.9Impairment and provisioning ratio, % 1.7 1.8 1.8 1.9 2.6Write-off and impairments ratio, % 0.0 0.0 -0.1 -0.5 -0.8Growth on loans and advances, % 6.4 2.3 9.9 6.0 0.2Gearing of loans and advances, % 4.8 4.4 4.8 4.5 3.7SharesEarnings per share after tax, DKK 30.1 32.4 32.1 17.2 28.5Book value per share, DKK 210.5 216.8 193.3 187.7 212.7Proposed dividend per share DKK 21.0 36.5 8.3 26.0 40.2Market price per share, DKK 286.0 162.0 164.5 136.0 140.5Market price / earnings per share DKK 9.5 5.0 5.1 7.9 4.9Market price / book value per share DKK 1.4 0.7 0.9 0.7 0.7OtherNumber of full-time employees, end of period 201 207 207 200 195
I
1) Regarding the implementation of IFRS 17 the highlights in 2021 have not been corrected.
Annual Report 2025
106
Note
49
Highlights, ratios and key figures, five year summary - P/F Føroya Banki
(cont'd)
DKK 1,000 2025 2024Index 25 / 242023 2022 2021Net interest income 388,103 442,251 88 419,462 274,639 267,718Dividends from shares and other investments 21,077 11,997 176 6,115 6,475 3,429Net fee and commision income 99,399 89,774 111 92,181 101,775 91,754Net interest and fee income 508,578 544,022 93 517,759 382,889 362,900Market value adjustments 34,785 45,343 77 54,614 -25,611 6,813Other operating income 5,644 2,614 216 2,201 2,452 4,968Staff cost and administrative expenses 247,441 239,470 103 234,956 219,350 211,855Depreciation and impairment of property, plant and equipment 8,417 8,748 96 7,236 3,331 6,088Impairment charges on loans and advances etc. -3,982 -1,072 371 -10,043 -46,629 -76,561Income from associated and subsidiary undertakings 48,990 33,016 148 32,614 20,752 5,094Net profit continuing operations 288,317 310,427 93 307,533 164,407 193,356Net profit discontinued operations 0 0 0 0 78,983Net profit 288,317 310,427 93 307,533 164,407 272,340Loans and advances 9,669,773 9,086,392 106 8,882,855 8,083,343 7,624,093Bonds at fair value 900,434 1,559,697 58 1,217,642 1,449,713 1,683,517Intangible assets 466 1,084 43 1,702 2,402 2,684Assets held for sale 2,207 2,207 0 24,200 0Total assets 14,774,546 14,346,463 103 12,796,250 12,056,877 11,674,564Amounts due to credit institutions and central banks 505,739 823,455 61 719,105 858,172 838,608Issued bonds at amortised cost 903,790 981,190 92 986,134 547,584 348,938Deposits and other debt 10,956,570 10,014,704 109 8,709,586 8,351,065 7,914,185Total shareholders' equity 2,015,313 2,076,037 97 1,850,609 1,798,857 2,035,853
Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 312025 2024 2023 2022 2021SolvencyTotal capital, incl. MREL capital, ratio, % 36.3 36.3 41.1 29.7 29.6Total capital ratio, % 24.6 25.2 29.4 24.8 27.5Tier 1 capital ratio, % 23.3 23.8 28.0 23.5 26.0CET 1 capital 23.3 23.8 25.8 21.4 23.8RWA, DKK mill 7,732 7,180 6,819 7,195 6,841ProfitabilityReturn on shareholders' equity before tax, % 16.9 19.2 20.5 10.6 11.0Return on shareholders' equity after tax, % 14.1 15.8 16.9 8.6 12.6Income / Cost ratio 2.4 2.5 2.6 2.1 2.7Cost / income, % (excl. value adjustm. and impairments) 45.4 43.1 44.2 55.1 58.7Return on assets 2.0 2.2 2.4 1.4 2.3Market riskInterest rate risk, % 0.2 0.8 0.5 0.9 0.5Foreign exchange position, % 1.0 0.8 0.6 0.7 0.8Foreign exchange risk, % 0.0 0.0 0.0 0.0 0.0LiquidityLoans and advances plus impairment charges as % of deposits 89.9 92.5 104.0 99.0 99.3Liquidity Coverage Ratio (LCR), % 306.4 337.4 228.2 225.2 191.4Net Stable Funding Ratio (NSFR), % 160.6 154.5 151.8Credit riskLarge exposures as % of capital base 0.0 13.6 22.0 26.1 25.9Impairment and provisioning ratio, % 1.7 1.8 1.8 1.9 2.6Write-off and impairments ratio, % 0.0 0.0 -0.1 -0.5 -0.8Growth on loans and advances, % 6.4 2.3 9.9 6.0 0.2Gearing of loans and advances 4.8 4.4 4.8 4.5 3.7SharesEarnings per share after tax, DKK 30.1 32.4 32.1 17.2 28.5Book value per share, DKK 210.5 216.8 193.3 187.7 212.7Proposed dividend per share DKK 21.0 36.5 8.3 26.0 40.2Market price per share, DKK 286.0 162.0 164.5 136.0 140.5Market price / earnings per share DKK 9.5 5.0 5.1 7.9 4.9Market price / book value per share DKK 1.4 0.7 0.9 0.7 0.7OtherNumber of full-time employees, end of period 173 177 176 169 164
Ratios and key figures
Annual Report 2025
107
Definitions of key financial ratios
Key financial ratio
Earnings per share (DKK)
Diluted earnings per share (DKK)
Return on average shareholders’ equity (%)
Net profit for the year divided by average shareholders’
equity during the year.
Cost/income ratio (%)
Income/cost ratio (%)
Solvency ratio
Core (tier 1) capital ratio
Core (tier 1) capital
Hybrid core capital
Total capital
Supplementary capital
Risk-weighted assets
Dividend per share (DKK)
Share price at December 31
Book value per share (DKK)
Number of full-time-equivalent staff at December 31
Definition
Net profit for the year divided by the average number of
shares outstanding during the year.
Net profit for the year divided by the average number of
shares outstanding during the year, including the dilutive
effect of share options and conditional shares granted as
share-based payments.
Net profit for the year divided by average shareholders’
equity during the year.
Operating expenses divided by total income (excl. value
adjustments and impairments).
Operating expenses divided by total income.
Total income divided by operating expenses.
Total capital, less statutory deductions, divided by risk-
weighted assets.
Core (tier 1) capital, including hybrid core capital, less
statutory deductions, divided by risk-weighted assets.
Core (tier 1) capital consists primarily of paid-up share
capital, plus retained earnings, less intangible assets.
Hybrid core capital consists of loans that form part of
core (tier 1) capital. This means that hybrid core capital
is used for covering losses if shareholders’ equity is lost.
The total capital consists of shareholders’ equity and
supplementary capital, less certain deductions, such as
deduction for goodwill.
Supplementary capital may not account for more than
half of the total capital. Supplementary capital consists of
subordinated loan capital that fulfils certain
requirements. For example, if the Group defaults on its
payment obligations, lenders cannot claim early
redemption of the loan capital.
Total risk-weighted assets and off-balance-sheet items
for credit risk, market risk and operational risk as
calculated in accordance with the Danish FSA’s rules on
capital adequacy as applied in the Faroe Islands.
Proposed dividend for the year divided by the number of
shares in issue at the end of the year.
Closing price of Føroya Banki shares at the end of the
year.
Shareholders’ equity at December 31 divided by the
number of shares in issue at the end of the year.
Number of full-time-equivalent staff (part-time staff
translated into full-time staff) at the end of the year.
Contact details
Contact details
Head Office
P/F Føroya Banki
Oknarvegur 5
P.O. Box 3048
FO-110 Tórshavn
Faroe Islands
Phone: +298 330 330
E-mail: kundi@bankin.fo
www.foroyabanki.fo
P/F skr. nr. 10, Tórshavn
SWIFT: FIFB FOTX
Føroya Banki is a limited liability
company incorporated and
domiciled in the Faroe Islands.
The company is listed on
Nasdaq Copenhagen.
IR contact
Arnhold Olsen
E-mail: ao@bankin.fo
Tel. +298 330 330
Branches
Faroe Islands – Føroya Banki
Tórshavn
Oknarvegur 5
100 Tórshavn
Phone: +298 330 330
Miðvágur
Jatnavegur 26
370 Miðvágur
Phone: +298 330 330
Klaksvík
Við Sandin 12
700 Klaksvík
Phone: +298 330 330
Saltangará
Heiðavegur 13
600 Saltangará
Phone: +298 330 330
Tvøroyri
Sjógøta 2
800 Tvøroyri
Phone: +298 330 330
Customer Service
Oknarvegur 5
100 Tórshavn
Phone: +298 330 330
Corporate Banking
Oknarvegur 5
100 Tórshavn
Phone: +298 330 330
Markets
Oknarvegur 5
100 Tórshavn
Phone: +298 330 330
Ungdómsbankin
Oknarvegur 5
100 Tórshavn
Phone: +298 330 330
Greenland - Bankivik
Personal Banking
Qullilerfik 2
3900 Nuuk
Phone: +299 34 79 00
Corporate Banking
Qullilerfik 2
3900 Nuuk
Phone: +299 34 79 00
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