Strong capital with high leverage ratios. Stable franchise equally split between retail and corporates. 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 Arion reflects S&P Global Ratings' expectations of extraordinary dividends and capital optimization as the bank prepares for an eventual sale or IPO over the next two years. We could raise the rating if we see strong continued economic development in Iceland or if future capital levels exceed our current expectations. We would not expect a two-notch upgrade over the next two years, given the relatively concentrated and volatile nature of Iceland's economy. We could revise the outlook to stable
