High leverage ratios and strong capital. Stable franchise and market position Ample liquidity buffers despite recent deposit outflows. Domestic economy limits diversification opportunities. Uncertainty related to eventual sale or IPO and change of ownership. The positive outlook on Islandsbanki hf reflects S&P Global Ratings' expectation that the bank's risk-adjusted capital (RAC) ratio will remain sustainably above 15%, even while the bank prepares for an eventual sale or IPO over the next two years. However, we note that this scenario is only our base case, and uncertainty around the sales process, ownership, and capitalization remains. We could upgrade the bank if we see strong continued economic development in Iceland, if future capital levels exceed our current expectations, or if we become
