Iceland Observer: Higher Prices, Steady Banks, and a Fisheries Boost

MarketVector™ Iceland Global Index (MVISLG) Returns:

1W: 0.84% 1M: 5.89% 1Y: 13.30% Inception 12/31/20: 50.37%

Corporate & Market News

Landsbankinn Delivers Solid 2025 Results

Landsbankinn reported a 2025 net profit of ISK 38.0 billion, slightly higher year over year. Return on equity reached 11.6%, and the board plans to distribute approximately ISK 19 billion, or 50% of earnings, as dividends. Management cited strong credit quality across household and corporate loan books.

SUND NYC On-Site

SUND is hosting an investor on-site event in New York City at the coming flagship location in Brooklyn. This will be a small, focused gathering designed for conversation and connection.

Renewable Energy & Industry

Capelin Quota Sharply Increased

Marine researchers raised the recommended capelin catch for the 2025/26 season to 197,000 tonnes, more than four times the initial estimate. The revised quota could generate ISK 35–40 billion in export revenue, providing a meaningful boost to seafood exporters and coastal economies after two weak seasons.

Policy & Central Bank

Inflation Pressures Put Focus on February Rate Decision

With inflation accelerating above target, attention has shifted to the Central Bank’s February 4 policy meeting. Markets expect rates to remain unchanged at 7.25%, as policymakers continue to emphasize the need for sustained disinflation before easing.

Economic Indicators

Inflation Jumps to 16-Month High

Iceland’s annual inflation rose to 5.2% in January, up from 4.5% in December, marking the highest level in 16 months. The increase was driven by new vehicle levies and higher food prices, pushing inflation well above the Central Bank’s 4% target ceiling.

Trade Deficit Narrows

December’s trade deficit improved to ISK 40.4 billion, down from ISK 45.9 billion a year earlier. Despite the monthly improvement, full-year imports continued to outpace exports, underscoring persistent external imbalances.

Greenland

Greenland Draws Clear Lines in U.S. Talks

Greenland’s foreign minister said discussions with U.S. officials are ongoing, but emphasized that Greenland’s “red lines” on sovereignty and control are non-negotiable. The comments reflect a more confident diplomatic posture as Greenland navigates growing U.S. strategic interest while asserting greater autonomy in decision-making.

King Frederik X Strengthens Greenland Ties Amid Rising Attention

Denmark’s King Frederik X has gained notable goodwill in Greenland, driven by long-standing cultural connections and visible engagement with local communities. His upcoming visit is widely viewed as a stabilizing signal at a time when international attention on Greenland’s strategic and resource importance continues to intensify.