Jyske Bank Stock

Hi, everyone, and thank you for joining us on Jyske Bank's conference call for the financial results for the second quarter of 2026. I am Simon Hagbart from Investor Relations. With me, I have Jyske Bank's CEO, Lars Morch; and CFO, Birger Nielsen. Lars and Birger will walk you through our prepared remarks. Afterwards, we will open up for questions. I will now hand over to Lars.

Thanks a lot, Simon, and thanks a lot for calling in. Earnings per share increased 12% year-on-year in Q2. That is a result of business momentum and positive markets, cost control and share buybacks. We've also seen an accelerating mortgage growth, not the least due to new successful product launches, and we see that we are taking market share in this area at the moment. We continue to see the benefits of increasingly customer satisfaction over the last couple of years. And we have again won best in private banking for the 11th consecutive year. But we're also seeing improvements in -- across the bank. And it's also worth noting here that we are improving in the C&I area and in -- among institutional clients and have the best rating in that area that we've had ever.

Thank you, Lars. And going further on, until the -- looking into the numbers and figures for Q2. We've had a very supportive environment in Q2, strong quality of our customer base. We've seen slightly higher interest rates and money market rates, and we've seen good activity and risk gone in the quarter. So that all led to a satisfactory result for Q2. We saw a rebound of earnings per share from DKK 17 in Q1 due to the market turbulence back in March, now back to DKK 22 in Q2, the highest earnings per share in Q2 ever in an ordinary quarter. In the P&L, the NII is almost on par with last year. up 2% quarter-over-quarter. And the fee demonstrated -- the fee income demonstrated another good quarter on activity, 6% up over the year.

We've kept a tight cost base and exclusive of one-offs, we are at index 99 or 1% down from last year, so fully on track. Value adjustments saw a strong performance due to significant spread tightening of Danish mortgage bonds and loan impairment charges ended at 0 basis points. Looking at the strategic metrics, our return on tangible equity was well above our 10% threshold for '28 and the cost/income ratio at 47%, also above our long-term target of below 50%. On the right-hand side, you can see the volume numbers, and they all showed an upward trend in the quarter. Asset under management significantly up 9%, supported by both private individuals as well as institutional customers. Deposits grew 1%, bank lending grew 1%, mortgage lending 1% and leasing 2% up in the quarter. So a steady performance in all areas in the quarter.

Looking at the expectations for this year, we are well on track to deliver the DKK 71 to DKK 85, which we announced for the full year, and our expectations are unchanged as we speak. We have an earnings per share in the first half of DKK 39, actually the same level as we had in the first half of last year.

And looking at mortgage lending, we've seen that, that has doubled since the acquisition of BRFkredit back in 2014. But probably more interesting to the right-hand side, you can see that our growth continues, and we are, at the moment, gaining market share on the personal banking side and holding our position on the CIE and corporate side. The personal customer product that we've launched last quarter has come off to a flying start. It's a very, very popular product, both among existing clients and among external new-to-the-bank clients. It's the first product that really mixes the benefits from the bank-funded loans to -- with the benefit from the mortgage loans from the traditional mortgage institutions. So you have both benefits.

To the left-hand side here, you can see some of the flexibility that we've built into the loan. This means that we are acquiring new to the bank customers to a larger extent that we've done recently. And this is contributing to the trend that we've had in the last 2 years, where our customer outflow has been smaller and our inflow has been larger so that we have a net positive inflow of personal clients, not due to this product, but helped also by this product. Another positive is our customer satisfaction when it comes to private banking customers. We have now for the 11th consecutive year, been rated best among the banks here. And contrary to the past, it seems as if we are now capitalizing on this to a larger extent in terms of net inflow of new clients to the bank.

And if we look at the AUM development over the course of several quarters and years, you can see a significant uplift in our asset under management. And specifically here in Q2, we grew 9%, which was a result of inflow of both retail clients, but also institutional clients and certainly very good supported by inflow of private banking customers. And if we look at the development, the long-term development from end '18 to the second quarter of '26, we've actually been able to deliver a per annum growth of average-wise 12% over that period.

Then looking into net interest income in the P&L. It's an important turning point for us here in Q2 after several quarters of a drop in NII due to the development in interest rates. We have seen the first hike from the Danish Central Bank here on the 12th of June with 25 basis points and market rates and forward rates have been trending upwards for some time now. And if we look at the 2% growth in the quarter, it's driven by higher market rates, as I talked about, but also higher volumes, as I also referred to earlier. And -- but the strongest contributor is certainly deposit margins, which has been trending upwards over the last couple of quarters. And the development in market rates and Central Bank interest rates are supportive also for higher NII going into Q3, where we'll get the full effect from the rate hike here in June.

Our customers, in general, are in good shape. And I think we see that clearly also when we look at the share of Stage 3 exposures that is at a record low level for the bank. So we are seeing that the customers are generally in very good shape and that they are now to the lowest extent that we've seen ever at a Stage 3. So another positive in a world with a bit of uncertainty. We've had an extra eye on the agri industry, and we've seen no negatives on our book so far.

Thank you, Birger, and thank you, Lars. We'll now open up for questions. [Operator Instructions]

First question in line comes from Asbjorn Mork from Danske Bank.

So basically, 3 questions from my side. One on your NII sensitivity with the rising rate environment, what do you expect in terms of deposit betas? And what do you have sort of as an assumption in your NII sensitivity, let's say, for the 25 basis points we already got and for an additional 25 basis points?

Yes. The NII sensitivity is around DKK 700 million for 100 basis points, as we stated a few quarters ago, and that still applies.

Yes. But what is the -- what do you expect in terms of your ability to improve deposit margins on not passing on higher rates to your deposit base? And what is sort of implied in that sensitivity?

In the short term, as you saw here back in June, we saw no significant reactions from market participants. And that could also be the case in the next round if we saw another rate hike here in September. Going on from there, of course, it's more uncertain.

So would you expect -- so if you take the DKK 700 million, would you expect that to be fading over the next 100 basis points, it's going to be a bigger sensitivity for the first 25 to 50 basis points, and then you'll have to pass on more for the deposit side?

That would be an expected outcome, yes.

Okay. Fair enough. Then on your guidance for net profit for the year. So basically, you delivered DKK 2.4 billion already in the first half of the year, rising rates, strong AUM growth. It seems like you are entering at least the upper end or high end of the range, if not exceeding it at some point. Normally, you've used the half year report to revise your guidance if you've sort of been on a trajectory towards the higher end. You have -- you decided not to do so this time around. Is there any reason for this? You don't think you're entering the high end of the range?

I think, first and foremost, there is no particular reason as to why we don't make any changes now. It's driven by the fact that the DKK 71 to DKK 85 interval is still relevant for us when we do a projection for the last 2 quarters of the year. And if we look at what happened in Q2, we saw another quarter of a strong performance on trading income, and it is uncertain as to whether we can just replicate that. So some caution is relevant and to put in on that line. But in general, yes, we will probably end in the upper half of the range.

Okay. Fair enough. And I guess the average trading for the first 2 quarters of this year is not that far off from what you have guided as a normal.

That's correct. That's fully correct. But the decrease in margins on mortgage bonds in the second quarter was very significant.

Of course. Yes. Okay. And then a final question from my side. You mentioned the new mortgage product. But when I look at market shares and volume growth, it seems like you might be losing a bit of market share in the corporate banking market. So what are you seeing there in terms of your client momentum and competition, et cetera? Is it fair to assume that you're losing a bit of market share?

Yes, it's fair to assume. I think that's a historical issue in the sense that we saw heavily increased competition more or less suddenly creeping in a bit more than a year ago. And I think some players in the market were very focused on volume. And we made a decision at that point in time that especially when it comes to CIE at low margins, we would accept not to be cheapest on all of those. So we decided to stick to our good clients, keep them in-house, and we basically lost no clients. We have received the same number of clients as we have lost, but not participate aggressively on, in particular, new CIE lending. I think it came a little bit as a surprise for us how heavy the price -- especially the price competition was at a certain point in time.

When I'm looking at the flow at the moment, I think we are back to normal. I think the bank is standing in a very strong position in terms of acquiring new business clients also. But it was a decision on the one hand, not to participate too much on price and credit standards. And then I think we accept that in certain areas, we could lose a little bit of the market growth or not take the market growth. But I think we are well positioned to get back volume-wise on track here again, at least what I'm seeing from the front book at the moment.

But that intensified competition, was that sort of in anticipation of lower risk weights -- systemic risk weights for CRE? Hence, that was just basically in advance? Or should we expect another round of increased competition now that we have seen the actual risk buffer coming down?

Yes. We are seeing a little bit less competition or aggressiveness in the competition now than we did a year ago. And we can see that we can do well volume-wise and quality-wise without going to extreme low prices. If it was -- I think it's a fair assumption that it might have to do with the potential changes to the capital. You might be right on that. It can also be volume targets or other decisions that I don't know of. But it was clearly visible when we were looking at this in our credit committees and saw the cases coming in that like-for-like credits suddenly were priced quite a bit lower. And we then decided on balance, we do not need low ROE CIE business to a large extent. We need good clients, and we need long-term relationships. And as I said, I think when looking at the front book, it actually looks okay.

Next question comes from Martin Birk from SEB.

I hope you can hear me. I guess, Lars, I'm sure just before this call, you took a stroll through your credit department. And in order to prepare yourself for a couple of Q3 questions now that we are 2 months into Q3. Given everything that has happened over the summer with the short-term rates coming up somewhat, do you still -- do you see Q3 so far as a continuation of Q2?

So you're talking about it from a credit perspective?

Well, credit and, of course, volume perspective.

Yes. Starting with the credit perspective, I think our Head of Credit is still looking tanned after the summer vacation and is not getting paid. He is in good shape, and we think our book is in good shape. And I also think it's fair to say that looking at the area where we could be a little bit concerned, Danish Agro, which is underweight in our book, and we basically don't see our customers being under pressure. So we don't need to extend extra credits or anything like that at the moment. So they've been, in general, cautious the last couple of years, and they are in good shape. So I think our credit department is in good shape. I think they're happy and pleased with what they're seeing. And I don't think they are extremely concerned about a little bit of interest hike potentially in September.

On the front book, I don't think that will change a lot either. I think we'll keep on growing in the personal banking area where we have strong momentum. And I think the momentum is building in the personal -- or in the business and corporate area also. So I'm not too concerned about those interest hikes.

Okay. All right. And then just maybe keeping a tradition at bay, you are not concerned about your credit book at all. You also talked to that you're not concerned about the big exposure that you have in your balance sheet still and you report zero loan losses and still you maintain your management judgment roughly at 34 basis points. Do you have any feeling to when that will turn?

I think we are well provisioned. I think what I answered here was how the book is looking at the moment. I think some of the provisions we've done, we've done on potentially longer-term issues related to international economy and so on. We have not seen that materialize yet. And that means we get closer a decision on what to do with this. So at the moment, the book seems in good shape from all what I hear and see, but we have money to cover the potential risks. If they do not materialize, we will obviously communicate what we do.

And closer to take a decision, does that mean full year results? Or is it a '27, '28 thing? Or how do you see it when you look out of the front window today?

Yes. Some of it could be earlier and some of it could be later. It depends on what the reservations are done for. But we need to look at it at a yearly basis, they are done at different times during the year or the reservations are made.

Okay. And then maybe a question for Birger and coming back to NII. Birger, could you -- in your head, could you please help us walk through the NII bridge going into Q3? I assume there's going to be a day effect and then what else -- how much is going to come from money market rates and central bank rates going into Q3?

Yes. I think that question may be even more relevant for Simon. Simon, can you help us walk through your [indiscernible] into Q3?

Yes. So you're quite right, Martin. We'll see a day effect of approximately DKK 14 million. And then depending on your assumption on the short-term interest rates, say, 3-month CIBOR increases 25 basis points. Then based on our interest rate sensitivity, then that could probably entail that we'll see an increase of more than DKK 50 million Q-on-Q for the day effect and the change in interest rates. And then on top of that, of course, we could have a lag effect from repricing of bonds with semiannual interest rate resetting and then hopefully, also some continued volume growth.

Okay. And the plus DKK 50 million from higher rates, what kind of betas does that assume?

We use our normal assumptions in that area. So that would -- that has historically entailed a deposit beta of approximately 50.5%.

Okay. All right. And then perhaps a last question on NII. I'm still curious to hear your thoughts on it. NII growth according to consensus is set to be up next year by 3.5%. The year after that, it's only set to be up by 1.1% on my numbers, especially pricing in the forward curve, I'm looking at a number which is closer to -- which is just shy of DKK 10 billion. How do you view your current consensus NII run rate?

Yes, I agree with the -- what I think you're insinuating that maybe there could be potential on the upside. I'm not sure all estimates currently are reflecting the current forward rates. I doubt that. And also hopefully, we'll be able to grow the volumes also somewhat over the coming years. So yes, we'll have to see.

The next question in line comes from Alexander Vilstrup-Jorgensen from DNB Carnegie.

I have a few. So if we start with the bank lending growth figures in Q2, you delivered 2% quarterly growth or 2.3% year-over-year. So it's an improvement from the recent trend. So should we view this as a new normal for Jyske Bank? Or was Q2 somewhat of an outlier?

Yes, it's always a little bit difficult to say exactly how the numbers look. But what we can see for now and also I think I alluded to in my answer to Asbjorn, we see that the business side is in good shape. And we think that they will contribute a bit more than they did last year. Then we have the effect of some of the mortgage loans coming from bank-funded loans to mortgage loans. That will obviously take the bank lending a bit down. But all together, I'm slightly positive towards our momentum on the business side also compared to the market.

Okay. I also see that you managed to improve your customer satisfaction ratings. To what extent do you see this as a driver of future lending growth going forward? And would you be comfortable seeing bank lending growth at around the current level in the coming quarters?

Yes. We follow the customer satisfaction fairly close, not in order to win different medals and so on, but in order to improve the way that we service our clients. And I think it actually supports the flow of business. We will realize if we don't answer the phone, if we are too slow. And if the tone is not good enough and so on, faster than following it through these tools. So for us, it's a management tool to ensure that we deliver a good product to our clients. And if you deliver faster and a good product, then hopefully, we will sell more. We will not reduce prices to next to nothing to win medals here or doing other things that does not make sense from a business perspective. So we actually go about this in a way that is focused on the business we deliver and the potential business that the customers can give us. And I think the underlying improvements that we have had during the last couple of years has supported also the momentum shift for us.

There's a lot of positivity within the organization. And I've been around lately to a number of different areas in the bank, also geographically. And there's such a positive attitude everywhere and such a big belief in we have the right products. We have the organization is in great shape, and we'll do good. So we are following this customer satisfaction because we think it matters in terms of turning business possibilities into business.

Okay. How do you see the competitive environment developing across both retail and corporate banking? Should we expect pressure on lending margins from here? Or do we see pricing discipline improving?

I think we've seen quite a bit of pricing competition during the last year, maybe 5 quarters. I think it has settled somewhat on the level that we've seen now for the last quarter. And we see less of those cases where we are looking at it and saying they're pricing this or they are doing this just to get the volume. We're seeing less of that panicking to get business in. And we are seeing, in general, rational behavior in terms of pricing and also, I think, credit standards. That has been affected to a lesser extent than pricing during the last year, but we also see much less of that in our credit committee. So we believe that it has settled somewhat and Asbjorn could have a good point in that some of the pricing was done on expected changes to capital.

Okay. Maybe just one last question. If we just touch upon your core expenses. So what about the potential scale benefits from Bankdata as Group AL migrates to Bankdata over the next year? How should we think about the potential benefits for Jyske Bank?

You should -- the benefits we will get when the migration is done and when it's done, we have a smaller share to pay. And the overall budget in Bank does not really increase significantly by getting new volume in, which means that our like-for-like costs will fall somewhere around 17%, at least that was our initial calculations. We've not done new calculations on this. So that kind of benefit we will get from '28 and forward. I think we've seen a little bit of benefits potentially already for routing some of the trading from the new combined AL via Bankdata that was formerly on the other platform, but that's minor, minor, if anything. But the benefits we'll see later.

Next question in line comes from Johan Ekblom from UBS.

I just wanted to touch a little bit on the cost side. I mean we saw better-than-expected cost development and you're talking about kind of seeing declining underlying year-on-year costs. Can you talk us through what is driving that improvement? I think last quarter, you made a point about kind of embedding AI in your organization. I'm guessing it's too early for AI to be the driver of that. But what's driving cost savings now? Should we expect to see declining costs going forward? And then just to come back on the Bankdata question, the 17% reduction, is that on your overall IT expense? Or is it on -- or what's the basis that we should apply that to?

Yes. If we look at the cost management in the group to start, I think if you go back in history, I think we've tried to keep a tight cost base quarter-by-quarter over several years now, and that still applies, of course. When we look into what has happened lately and especially in Q2, yes, there was an uplift from low levels in Q1, but that was driven by some IT costs slightly up, negotiated wage increases and then some rental costs going up. But the overall aim for the group is to try to mitigate to the extent possible inflation in the cost base. And I think that is what we are aiming for. And if you deduct one-offs here in Q2, you end up 1% down but it's also fair to say that if you replicate Q2, which was a very tight cost quarter, still you may be -- we may end up a bit too low longer term.

So overall, cost management is intact, flattish cost to the extent possible, but don't take Q2 as a sole replicate for the coming quarters. And when that said, still, bear in mind that we also have formally articulated that if we saw some business potential, we would certainly like to invest and AI could be one of these areas where we could see potential for investments and of course, to reap further benefits going forward. And asking about the AI activities. AI is certainly on the agenda, is being prioritized, and we have put into place some very strong activities in the group, but the main chunk of benefits is still to be seen.

I think it's fair, Birger, to say that cost is under control. And as you're also alluding to, we are doing some defined extra projects that we are putting on top of our strategy related to AI and digital platform. And I think what Birger is also saying here is that we want to make sure that we have room to do those investments if they make sense. And I think you're also right, Johan, in stating that the cost savings that we are seeing now is not AI related. They are normal cost savings. On the AI side, I would say that the savings that we have is probably approximately the same as we're investing into the areas. So that's probably close to net zero at the moment. Then I'd like to add also that Birger and his team has been working the last couple of years to get a new kind of cost discipline into the bank where we are focused on the total amount of cost that management at a certain level in the group can influence.

And normally, in the bank, there's a heavy focus on the number of FTEs, which is for good reasons because that's important and a big part of the cost base. But sometimes you forget the other costs. And we've seen inflation in the other costs in the market in general. And I also think we see it with other banks. And I think we've been able to mitigate that by the new ways of managing costs internally, and I think that would also be effective going forward. So we'll keep a tight eye on the cost here, but we'll also make sure that we have what it takes to make good decisions on investments.

And just maybe a quick follow-up. I mean if I look at the distribution of costs between the divisions, it looks like the mortgage business had a very large underlying cost increase. Is that just an allocation of expenses? Or is there anything going on in the bigger projects or anything there?

Yes. There is nothing in particular related to that. It's internal matters of distributing costs.

And next question in line comes from Mathias Nielsen from Nordea.

And most of my questions have already been asked, but maybe just a bit of clarification on the quite solid growth both on bank lending, mortgage lending and bank deposits this quarter. Like what is it that all of a sudden is working for you? Like last quarter wasn't that fantastic? And how much of that growth is led by new clients, like new people coming into the bank compared to how much is just more business with existing clients? If you could give a bit of flavor on that, that would be all for me.

Yes. I think what is working now is that we've been managing to change the organization a couple of years ago into the 2 main business units, and we've been working on getting the entire value chain to work across the bank. And the organization in general have a year ago or something like that, started to believe in this. And when you get around, there's a so much positivity and so much belief in that we have the right position, the products, the decision power and so on in the bank so that the self-confidence is at a very, very high level at the moment, which is, I think, very good.

Then on the new clients, we have seen that with the new products that we've introduced and with the marketing that we've done earlier in particular earlier in the year and with the digital marketing that we are building the digital sales, we are building also we see that we are getting increasingly good leads. And we get that from employees where we get a lot extra applicants compared to what we did just 2 years ago. I think it was 60% up per job last year, and it's some 30% up again on that this year. We see exactly the same on the customer side that we get more good leads coming in from the marketing and the work that is being done and from the new product. So in the new products here, I'll not give you the exact figure, but the number of totally new to the group clients is quite a bit higher than what we're usually seeing.

Okay. So it is actually new customers actually driving a big chunk of the growth this quarter. Is that how...

We have a net positive development on personal clients.

Yes. Perfect. And then like maybe if I can add one more, given that next quarter would be halfway into your strategy period. And if I look into how you're performing on the numbers today and compare that to your targets, like with midway strategy, would that be a good time for you to update your targets to something that is a bit more ambitious than the existing target? Or how should we think about that?

Sorry, when did you suggest, Mathias, I didn't get that.

So next quarter, I guess next quarter will probably be something in the midst of this strategy period and with the run rate you're doing or performing at the moment, like should we expect you to, at some point, maybe next quarter already to update your target? Or how should we think about that given that it looks a bit ambitious compared to your performance now?

You should expect that we are keeping on focusing on this, but also that we would like to have fairly safe ground -- be fairly safe ground when we do an update. And so far, our communication is that we do it by the end of strategy. But obviously, we are following the performance. And we're also looking into some of the key things that we would like to be able to communicate to you guys when we at a point in time, adjust our targets and that has to do with projected capital levels and so on.

Thank you, Mathias. It seems that there are no further questions on line. Thank you for participating in today's conference call. Please do not hesitate to contact us if you have any further questions. We appreciate your interest in Jyske Bank. Wish a nice day.

Hi, everyone. Thank you for joining us on Eke Bank's conference call for the financial results for the first quarter of 2026. This is Simon Hagbart from Investor Relations speaking. With me, I have Jyske Bank's CEO, Lars Morch; and CFO, Birger Nielsen. Lars and Birger will walk you through our prepared remarks. Afterwards, we will open up for questions. I will now hand over to Lars.

Thank you, Simon, and I would also like to welcome you to our conference call for the first quarter of 2026. We made a solid start to 2026, delivering earnings per share of DKK 17. Results were impacted by challenging financial markets, but our underlying performance continued to show good progress supported by high activity disciplined cost management and strong credit quality, while we maintained a clear focus on customers, customer relationships and strategy execution. Credit quality remained very solid in the quarter. Loan impairment charges were at a low level, while we prudently built significant post-model adjustment buffers in response to elevated geopolitical uncertainty.

The Danish economy remains fundamentally sound and our customers' financial situation is generally robust, although geopolitical uncertainty is elevated. Our capital position also remains robust. At the end of the quarter, our CET1 ratio stood at 15.9% adjusted for expected payouts. This is well above our target level of 15%. Finally, we continue to make progress on our strategic priorities, including AI. Over the recent years, we've established a solid foundation. And in 2026, our focus is on scaling solutions that have already demonstrated value across advisory services, customer interaction and internal processes. Overall, we've ended the 2026 in a healthy position, well equipped to navigate the current environment while continuing to build long-term value.

With that, I'll let you Birger walk through our financial results.

Thank you, Lars. And the footprint in Q1 is solid, a very solid underlying performance. As we heard, business volumes are up, activity levels are good. We see strong credit quality, and we have had a disciplined cost management. So we are fully on track with the development in the group. If you look at the left-hand side, you can see our earnings per share is at DKK 17 and exclusive of value adjustments and the investment portfolio, there was a growth of earnings per share of 4% over the year, so steady going.

Looking in the middle, net profit of DKK 1,049 million in the quarter and looking at the NII, it is flattish quarter-over-quarter from the lending and deposit activities. And as fully expected, we see a drop due to the tax-related one-offs in Q4. Net fee and commission income on a steadily upward trend, driven by asset management activities and especially pension and insurance activities. And the core expenses are flattish year-over-year. So we've been able to offset the inflation trend via our cost initiatives. And if we look at employee costs, they are only up 1% despite salary increases of around 2.5%, driven by lower FTEs of around 1% over the year. On the right-hand side, asset under management dropped 1% or DKK 3 billion in the quarter, but that still includes net inflow of new customers even in the latest quarter in Q1 of '26.

Deposits has shown an upward trend and has been lifted by 5% over the last 2 quarters. We've seen inflow of money market deposits, but also from personal customers. And finally, the lending is trending upwards steadily quarter-by-quarter. Mortgage -- the mortgage book is up 1%. Bank loans are down 1%, primarily driven by lower exposures from volatile public entities, but also due to transfer of bank loans to the mortgage balance.

Looking at our outlook for '26, it's unchanged. We still believe to deliver within the range of DKK 71 to DKK as we announced after the release of the annual reports for '25.

Thank you, Birger. If we take a look at the personal customer momentum, we still have a strong and improved momentum on the mortgage loans. And we see again a quarter where we are growing and with even higher growth than the preceding quarters. We have a good momentum here. We have a solid product portfolio, good pricing and an organization that is strong in handling personal customers. So we're happy that we've seen this turnaround, and we are happy to see it stick.

Also, we are happy about the momentum that we have in the pension insurance commissions, you see the green line on your right-hand side here, that is the growth that we've seen in the pension and insurance commission since 2021. And we see that it now is 13% of the net fee and commission income in the first quarter of 2026. And you see the combined growth here in net fee and commission income in the black line. So a strong development in general in net fee and commission income and in particular, in pension and insurance commissions. Simon?

And then on value adjustments, which were at a quite low level in the first quarter of 2026. This was primarily driven by spread widening of callable Danish mortgage bonds as well as negative returns on bank shares, partly reversing the strong development we saw in 2025. We saw a limited negative contribution from asset and liability management in Q1 However, this impact was significantly lower than historically given the level of rate movements in the quarter, reflecting the fact that we have reduced interest rate sensitivity of value adjustments.

It is also worth noting that bank shares can still lead to some volatility from time to time, but they have historically generated attractive returns, particularly given their relatively low capital consumption. Additionally, we might add that we have seen some degree of reversal so far in Q2. Most importantly, the underlying contribution driven by customer activity remains strong and stable in Q1.

Thank you, Simon. As mentioned by Birger, we have had a strong development also in our credit quality, and we see the general quality has not weakened, quite the contrary, if we look at our own numbers. On the other hand, we've also seen an increased risk of inflation and oil price increases that could come into the economy. So even though we basically see a strengthened book, we feel it's prudent to put aside another DKK 160 million for post-model adjustments to cover the potential risks.

And looking at the geopolitical uncertainty and the Iranian war that has led to higher oil prices and potentially higher inflation, we now see that the market expects higher policy rates around 2 to 3 rate hikes during the next quarters. And it has also lifted the forward curve, as you can see in the graph, slightly below 1% in '26, but also higher levels in '26 and '27 and in '28. So in the market's perception now, there is some permanent effect expected long term on inflation. And talking about the interest rates and sensitivity, we have based this graph on our reflections and experiences over the last several years. And year 1 is now expected to deliver DKK 700 million of uplift due to a 100 basis points parallel shift of interest rates and the long-term effect is another DKK 200 million due to the lag effect from higher returns from the fixed rate hedging instruments.

And then we thought it was relevant to give you a view of where we are in terms of implementing benefits from AI. Today, we have the stage of pilots and proof of concepts where we've already seen tangible use cases, including handling of customer requests, AI-generated company profiles and automated task trades. The next step is scaling what works, deploying these solutions more broadly to support productivity, efficiency, more consistent customer interactions across the bank. And by 2028, our ambition is to move beyond individual tasks with AI embedded across the end-to-end workflows and enabling more proactive data-driven customer advice.

Thank you, Lars, and thank you, Birger. We will now open up for questions.

[Operator Instructions] And the first question in line comes from Martin Birk from SEB. I think your line is mute. You should be able to unmute it now, Martin.

Yes, I think so. I hope you can hear me. First question goes on your guidance. What kind of interest rates do you have in there? And what would it take for you to include rate hikes in your guidance?

I think it's fair to assume that we haven't changed dramatically on our overall guidance from the start of the year, but it is fair to say that interest rate expectations have gone up, and there are also expectations for some policy rate hikes in Denmark if things pan out as the market currently assumes. Consensus is currently at DKK 8.8 billion for the year. And I think if you were to include the upcoming rate hikes, you would probably end up somewhere above that.

Okay. And what are your expectations for the first 25 bps because they're going to generate you significantly more NII than...

I think we updated interest rate sensitivity reflects the current level of interest rates. So that would also -- but I mean, that is a full percentage point. So I get your point that the first 25 basis points could potentially have a slightly larger effect.

Okay. So you basically need to see the guidance upgrades -- or sorry, the rate hikes before you're willing to include it?

It could be that it didn't change or it is possible for us to have that in the current interval of DKK 4.3 billion to DKK 5.1 billion. So it's not necessarily something that is going to lead to a guidance upgrade.

Okay. All right. Then next question comes back to loan losses. There was another big Nordic bank out reversing its management judgment in entirety in connection with this Q1 reporting season. Lars, you mentioned that credit quality has never been stronger and still you add to your management judgment. Any thoughts on that?

Yes. Thank you, Martin. Not to the first part regarding another bank. But regarding our own figures, what I said was our credit quality is strong on individual customers, we have reversals this quarter. And we see in our numbers that, generally speaking, our book is a little bit stronger by the end of Q1 than it was by the end of last year. So that's 100% correct, understood.

On the other hand, we also see potential risks, oil price increases, transportation cost increases, interest rate level changes that could impact part of our book. It's not that we've seen any particular customer or any industries at the moment being hit by this, but simple calculations on the impact on economy means that it is likely that, that can lead to some level of increased losses in the banks. So you're right, we're standing here with, on the one hand, strong credit quality on our current customer base and by the end of the first quarter. On the other hand, there are some uncertainties, and we've decided to take provisions for that.

Okay. But Lars, do you think it's a fair observation to say that every time you see new risks, you add to this buffer. But when you see risk off, you don't really bring it down either.

Yes, not 100% fair maybe because if you look at the level of the buffer, it has been more or less the same for several years, but you've seen ups and downs. So we have been reversing also from this one.

And you don't think a fair question is why isn't this half of what you have right now?

Yes, I think it's a fair question, absolutely. And I understand the question, and you could have long discussions about what would be the right level of post-model adjustments. Let me say it this way, we felt that there were increased risk related to oil price and interest rates. And we think that we are at a very comfortable level now.

Okay. Then maybe a last question from my side. Would you make up the smoke coming out of the peace pipe from Finance Denmark last night?

Yes. I was just pleased with the message and think that Finance Denmark is doing a very good job. And just happy to see that there was a joint statement on these matters here.

And why do you think this has become such a big topic in local media?

I don't know.

Thank you Martin. Next question in line comes from Mathias Nielsen from Nordea.

So the first one, like now you put a slide on AI. I would say like if I were to be a bit critical, like there's not much numbers on that slide. So how much is the potential? Is there any structural reasons why Jyske Bank shouldn't be able to get the same out of it in relative terms as some of the other Nordic banks that have been now putting numbers on this? Do you see any structural fix there? That would be my first question.

I think combined, we'll probably have the same possibilities. They have some strengths in some areas, and we have strength in other areas, I believe. I think some of their strengths is probably the share size of the company, which probably makes it a little bit easier to get started, in terms of the resources that you can put into it. On the other hand, I think fast follower on this one in a much smaller and simpler organization, we should be able to keep up. We're doing quite a lot in this area and has actually been working for a couple of years on building teams, testing out, making sure we have technology, making sure that we have got rates also in place. So I think that we're keeping up quite well at the moment. And I think in terms of implementation, I don't see why we should be long behind.

Okay. So just to clarify, you see yourself as a fast follower. Was that the wording that you put on AI?

That was the question on AI.

Yes. And Mathias, maybe to put a couple of more words on this. And there will probably be banks that get this right roughly, and there will be banks who are very late to the party. We think that our best opportunity is to be well equipped in terms of competencies, technology and so on and follow our own test cases and understand what is going on around the globe in terms of utilizing AI. And I think no bank can be first at everything, but you could be first or one of the first ones to really prove that it works.

So that's basically how we see it. There are some test cases that we've chosen not to take, and that is because we think that this might actually be difficult to annoy the customers too much for the very small gains. Then let's see when some get it right and let's get it in here also without the cost of developing stuff that doesn't work and reinventing it and so on. So we actually think that we'll be part of the first half year, which is the banks that will succeed in this.

Yes. That was a great clarification on that one. So the next question is a bit on the -- this was another quarter with beats on the costs, but also another quarter where like bank lending growth was on the unimpressive side. How do you see the risk of you like cutting too much on the cost side and that actually leading to subdued growth? I guess, like when I look out of the window, like at least 2 of your peers and also relatively large peers are undergoing mergers at the moment, which should normally like leave some business up for grasp a bit more than normally maybe. So I was a bit surprised to see that the bank lending growth is still subdued. So do you have any comments around like cost versus growth and growth in general?

Yes. I think Jyske Bank needs to be in great shape now, midterm, long term. And we cannot afford to have too high a cost base in doing this. Also the competition aided by AI, you need to be able to have a lean and mean organization. And I think within the cost targets so far, we've been able to do also a lot of improvements internally, getting strong profiles in. So it's not just going down underlying with cost a couple of percentage a year. It's actually the change process is larger. And I feel that we are well equipped within the organization to fight with the resources that we have.

Then in terms of the subdued lending development here, I think that was what you called it. I think combined, we have growth between bank and mortgage lending, we tilt towards the mortgage lending side in our growth. If you then look at the bank side, which I believe is the one that you're pointing at here, there are a couple of factors at play here. One of them is that when we acquired Handelsbanken, we got a lot of bank lending loans in for mortgages, and these are gradually moving to mortgage lending. Then in Q1, we've seen a subdued development when it came to public institutions, public sector customers, which we have a large share of. And it's not that we've been losing the customers. They have just been utilizing the credit facilities to a lesser extent.

And then I think there's maybe one last thing, and that is we've probably been on the conservative side in terms of our credit processes and our lending here. Time will tell if that was a good move or we've been slightly too conservative. We still have to wait and see. We feel that we're very competitive in the market, and we feel that we're increasingly competitive. We are standing strong in personal banking at the moment in private banking, where we're also growing in C&I, whereas the SME business is a little bit at a standstill, not losing customers, not really winning customers at the same time. And I think that is where we've also been a bit conservative. So we're sticking to our strong customers, basically not losing a lot of customers, getting in a little bit of new customers, but not with large growth. We are very comfortable with the quality that we have now. And I also think in terms of pipeline, without promising you, I think it looks a little bit better than it has looked for some time now. So I think we have the machine that we could turn a little bit up here.

Sure. Then my last question, it's on the current environment, like when you talk to your clients in the different segments, like what is the appetite for new lending and investments given the geopolitical uncertainty that we face at the moment? Is there any reflections from those meetings that you could share with us?

Yes. I think in general, hopes and optimism is not too bad around the corporate customers. And looking at the personal customers, you see they buy new houses and flats to a large extent. And there's -- I think and maybe also hope a little bit that there are an increased number of customers who would take a new look at their growth and development plans and investment plans altogether because they cannot sit and wait for 5 years. So basically, they would have to find some of the most attractive plans and probably we will see some lending on the back of this. I think we have more or less only good customer meetings at the moment. And we hope and I saw one of the Nordic banks was also saying that they also think that there's a little bit of increased need for investments.

And next question comes from Alexander Vilstrup-Jørgensen from DNB Carnegie.

If we just continue with the discussion of ordinary bank loans, when do you expect the offloading of mortgage-like bank loans to stop?

It depends. But what we have still is approximately DKK 20 billion of the Handelsbanken loans that are migrating still to mortgage loans. On the other hand, we also have a bank-funded product that is growing a bit. And so I don't see a massive change here going forward. And I don't see that, that would stick as a theme that we would discuss at great length in a year or 2.

Okay. So what about your new mortgage loans [Indiscernible]? How much do you expect it to add to future growth?

I was just in one of our branches this morning when we announced our results internally and had a 10-minutes chat to the people in the branch. And they have their hands over the head because basically, what they're saying is this is by far the best product in the market. It combines some of the positives of a bank-funded loan with the flexibility and so on. And on the other hand, it has strengthened the model of a mortgage company loan. So it's a really, really strong offering and our team is extremely motivated. I would like to see 1 or 2 months of data and customers flowing in to see how much it changes, but it's certainly a positive.

Okay. I was wondering, could you comment a bit more on your fixed rate hedging instruments I would just like to understand how you expect your hedge to impact net interest income going forward? What kind of assumptions do you pencil in?

Well, if you look at the portfolio of fixed rate instruments, we hedge the interest rate risk in the banking book and the maturity is approximately 3 years. And so there's a lag effect both when interest rates go up and when interest rates fall before you can take advantage of a normal interest rate curve where you can add to the portfolio assets that give higher returns than your funding cost. And so I think that's the reason why you see a lag effect from this on top of the year 1 effect immediately of DKK 700 million.

Okay. If we just turn back to AI, how do you see AI automation allowing for further cost reductions?

Well, we think that by 2028, we will have it implemented in a number of our most important and most time and cost-consuming workflows across the bank. We felt it's a little bit too early to give you figures because we want to be fairly firm on the figures that we give you. So it's a little bit too early to give you a figure. I would rather say that I think we have the foundation for doing a job among the banks that is doing the best jobs on this. I think we have enough resources to handle this. And I think on the other hand, we don't have a complexity that makes it too difficult for us.

But we're also working on our data quality that should enable this. We are working on our organization and setup to make it easier to benefit from the technology. There will be a time where these things need to be tested before we put them in large-scale production. So I think it's a little bit too early to say what exact figure that we get out of this. But for certain things we will be more competitive, we'll be faster in responding to customers. And certainly, we'll be able to take out cost.

And it seems as if there are no further questions in line. So we would like to thank you for participating in today's conference call. A recording of the call will be made available on our IR website in the coming days. Please do not hesitate to contact us. If you have further questions, we appreciate your interest in Jyske Bank and wish you a nice day.

Hi, everyone. Thank you for joining us on Jyske Bank's conference call for the financial results for 2025. This is Simon Hagbart from Investor Relations speaking. With me, I have Jyske Bank's CEO, Lars Morch; and CFO, Birger Nielsen. Lars and Birger will walk you through our prepared remarks. Afterwards, we will open up for questions. I will now hand over to Lars.

Thank you, Simon. And I would also like to thank everybody for joining this conference call today. We closed 2025 on a strong note, delivering results above our previously guided ranges and growing EPS a full 18% year-on-year in Q4. This performance supported an upgrade of our outlook as well as our preannounced results for '25 in January.

This morning, we published the full set of results for '25, including full details on strong capital position and updated capital targets. We now target a CET1 ratio of approximately 15% and a total capital ratio around 20%. This is at the lower end of our previous capital targets despite a systemic buffer of 0.9 percentage points. On the back of this, we have announced our largest capital distribution so far of DKK 4.5 billion in total, an increase of 20% year-on-year.

We also provided our outlook for '26. We expect earnings per share in the range of DKK 71 to DKK 85, reflecting more normal levels of loan impairment charges and value adjustments following a favorable '25. We expect to continue to see positive core operating trends in '26. We are gaining personal customers in target segments, increasing our mortgage market share and have seen a healthy development with particularly larger corporates with high levels of customer satisfaction in all segments.

The Danish economy is likely to show a balanced trajectory with a stable rate outlook as we maintain a solid credit quality with significant buffers in place. Overall, we ended '26 in a healthy position, and we are well placed to further build on our momentum. With that, let me hand over to Birger for a walk-through of our financial results.

Thank you, Lars. And as you may well know, the PL numbers and some of the balance sheet numbers were released back in the mid-January. And as Lars alluded to, the macro environment is actually relatively stable. Average long-term growth around 2% is expected. Inflation is under control. We have a high and steady employment and house prices are still on the rise, expectedly 3% during '26. And on top of that, the geopolitical uncertainty, of course, has and still can have some impact on the demand for credit facilities.

Looking at the chart, a few comments. For '25 in total, the return on tangible equity was 11.9% and a cost/income ratio at 48%, better than our projections for '28, and there are several reasons to that. One is that the decrease in interest rates was 0.25 percentage points lower than expected. And value adjustments were very strong in '25, now the third consecutive year with a significant spread tightening with highly rated liquid Danish bonds.

And thirdly, cost of risk was 0 for the second year in a row. And finally, we upgraded our expectations after Q3 and again, when we released the numbers in January. As you also can see, the EPS was in total DKK 85 in '25 with a strong end to the year, both in Q3 and Q4 with DKK 23 in those quarters. And looking at the right-hand side of the graph or the slide, you can see that AUM is still on the rise, Q-o-Q, a 2% rise, driven both by positive markets and net inflow of customers.

And on the lending side, Q-o-Q, you can see that mortgages was up 1%, driven by private individuals and bank lending was up a couple of percent, both -- primarily driven by corporates despite the transfer of loans of mortgage-like loans to the balance sheet of Jyske Realkredit. And when it comes to leasing, it was a bit more muted during the course of Q4. Deposits finally on an upward trend again, both driven by private individuals as well as time deposits from corporates. So a decent development in balances at the end of the year.

The outlook for this year, DKK 71 to DKK 85, DKK 4.3 billion to DKK 5.1 billion after tax. The core income line was very steady from '24 to '25, and we expect a lower level in '26, primarily driven by value adjustments. Core income -- sorry, core expenses is also expected to be slightly lower in '26. We will see a lower level of one-offs, and we will also do some cost initiatives that will outpace both inflation and wage inflation during the course of the year.

Loan impairment charges. We expect an expense in '26, although a low one. We see significant post-model adjustments of DKK 1.7 billion here by year-end. We have, in the last 10 years seen 0 basis points average-wise in impairments. We have low write-offs also in Q4 and the Stage 3 part of the total portfolio is down from 1.1% end of '24 to now 0.9% end of '25. Net profit, I have referred to that. And finally, capital targets around 15% and 20%. I'll return to that in just a minute. And finally, also to mention that we don't see any further significant impact from upcoming regulation, primarily the output floor from CRR 3 given the current risk weights. Lars?.

Yes. Thanks a lot, Birger. A bit of a busy slide, I'm afraid here, but let's see if we can follow the logic. Moving from the left-hand side here, we have the results or the outcomes, the financial targets that you know from our strategy. And in the middle, you have the priorities, the activities that we do to make sure that we deliver on the left-hand side. And on the right-hand side, you have the specific, more detailed examples of the deliveries that we have managed to -- the things that we managed to deliver in '25.

So taking a look at the middle here, you see the ambition that we want to increase the quality of the service that we deliver, but also we want to increase the quantity of the meetings and the interactions that we have with the clients. In order to support that, we have the activities on the right-hand side here, and I'll just mention a couple of them.

First, on the personal customer part, automated data collection for credit processing that ensures higher quality and obviously also higher speed. More digital solutions that make saving and investment easier, again, potential for more and at the same time, higher quality customer experience. New AI assistance and copilot for advisers, streamlining workflows, supporting meeting preparations and making things easier inside.

On the business and corporate side, automated price setting, data collection and guarantee creation, faster customer responses should be ensured that way also. New meeting concept for larger customers, making sure that we have a tighter link between the objectives and the financial solutions. We also have an upgraded risk management tool that can enhance the quality of the service that we give to our clients and the value of the advice linking the business strategy with the interest rate risks and financing risks altogether.

So this is basically just showing that we are steaming forward in order to deliver on the right-hand side here to support that we see the clients more often and that we deliver more value to the clients when we meet. And obviously, then again, is able to deliver on the left-hand side here the financial targets and the volume targets here.

Yes. And looking at the net interest income, you can see the uplift in '22 and '23 was, of course, driven by the merger with Handelsbanken Denmark and PFA Bank. And for the quarter, we saw an increase of NII of 1%. And if we include a one-off of net interest income of DKK 38 million related to tax matters, it is more or less a flattish development from Q3 to Q4. During '26, we hope to see an increase, of course, very much dependent on the volume development during the course of the year.

On the personal customer side of the business, we've been under pressure in terms of volume and in terms of customer satisfaction for some years from approximately 2020 up until late '24. Now we have a number of consecutive quarters where we are building on the higher customer satisfaction and building more volume, which is part of the aims that we had in the strategy. The change have come a little bit faster than we anticipated, but we are pleased to see that we are building momentum here.

We have, as of today, announced some price changes on our mortgage products. These are changes that will ensure that we are also going forward, competitive both in short-term loans and in the 30-year mortgage loans and a couple of the loans in between. We see a limited financial impact on the results in '26 and fully phased in, this will be approximately on the low end of DKK 100 million, not taking into account the dynamic effects, which obviously, if we are not competitive, will also have an impact on the volumes that we are able to write going forward. So altogether, we think we are still very competitive. And at the same time, it will not have very significant financial implications for the group.

We have seen higher activity levels during '25 and also during the fourth quarter. Net interest -- net fee income was up a full 11% in '25. And actually, if we merge the last 5 years, up 45%, of course, inclusive of the acquisitions we've made. I have mentioned several times during the course of '25 that there are several factors behind this, but just to replicate again and mention again, markets have been favorable.

New customers have entered, and we have done more business with existing customers. And also very importantly, that the turnover in the housing market is more or less normalized after a period with low turnover. And of course, together with our momentum in the segment for mortgages for private individuals has lifted the total income. So the fee uplift, as you see here on the chart, is driven by higher number of transactions and higher volumes.

Costs are expected to decrease in '26. The underlying costs were moderate in '25. And if we look at Q4 in isolation, the underlying increase was around 2%, where inflation and salary increases were partly offset by 2% lower FTEs in Q4 of this year versus '24. The strategy going forward, as we also mentioned back in the autumn of '24 was -- is a CI level below 50% and to the extent possible, stable costs. We saw one-off costs in '25, especially related to the expansion of Bankdata and going into '26, as we say, lower costs from the level of DKK 6.6 billion in '25.

But be aware that when we announced the strategy in the autumn of '24, we talked about a level around DKK 6.5 billion. And also be aware that we, of course, together with some efficiency initiatives, we also have initiated a marketing campaign with a new corporate visual identity that will take place during the course of this year.

Moving onto capital. We have finalized the latest share buyback program here by the end of January, DKK 2.25 billion with an average price of DKK 680. And now we are heading for a record-setting capital distribution in '26, where we expect to distribute 84% of the result after tax to shareholders, split between DKK 1.5 billion in dividend, which will be proposed to the AGM here in March and DKK 3 billion in buybacks.

And we have engaged with Bank of America to execute the program. And the program will start as of today and end by January '27 at the latest. Then finally, looking into capital targets. We have now changed a bit the outlook and expectations for the level of CET1 and the capital ratio. Now we are talking about around 15% and around 20%, and that includes the systemic risk buffer of 0.9%.

We know that the Systemic Risk Council has recommended a reduction in that risk buffer. It is yet to be decided by the government and the implications will be of a minor extent if that were to be implemented here during '26. But overall, you can see that we have a 16.1% CET1 ratio by end year, well above the target of around 15%. And if we then include the reservations for expected payouts, they actually consume 1.4% in total. So 17.5% is actually the buildup for future need of capital. And we will, of course, during the course of the year, reserve for buybacks and dividends quarter-by-quarter.

Thank you, Birger, and thank you, Lars. We'll now open up for questions. [Operator Instructions] And the first question in line comes from Mathias Nielsen from Nordea.

And congratulations on the strong end to '25. If we start on a very high-level note, like it looks like you're ahead of the plans that you set out in the strategy a bit more than a year ago. Can you maybe say a bit about it, is that just things happening faster than you expected? Or is it also the potential for more that has actually been a bit bigger than what you initially expected, if I start there.

Yes. Good question, Mathias, Lars here. I think it's a combination of internal matters and the market. So if you look at the market, that has been a little bit more gentle than we anticipated when we launched the strategy by the end of '24. And we've seen interest rates at a different level than what we anticipated. So we have had some help basically.

But we also see that internally, we are able to move a bit faster than we anticipated on some of the initiatives. It's still early days. There's a lot of work still in the strategy on our platform, on IT and so on. But so far, we are definitely on plan. And hopefully, we will be a little bit ahead of plan when we move further into '26.

That was very clear. And then maybe a bit of a nerdy question, but bear with me. So this Bank Data one-off cost, like you seem to be the only bank so far that is taking a one-off cost. Can you maybe explain like a bit of the dynamics like why you're taking it? Is it something that we should expect then to be a tailwind in the coming years because you revaluation -- have revaluation gains? How should we think about it just [indiscernible] went out with taking the write-down?

Yes, I can start and then Birger, if you want to add. I think it's clear with the agreement that is between Bankdata and Jyske Bank and being finalized and the integration that is being prepared that there are 2 different alleys you could take as a bank here. We've decided to take the alley that we've normally taken in Jyske Bank, which is a bit on the conservative side. I've noticed that some of our -- some of the other banks on Bankdata or at least I've seen one bank doing it differently so far, which is fully understandable because that's also possible to handle it this way.

The thing is Bankdata has a fairly strong balance sheet, and that can potentially give -- and we think that's the base case, so we think that's very possible, give Bankdata the possibility to handle the cost of this integration within that balance sheet. And then from '28 and forward, we'll get an even stronger Bankdata with more volume on this, and then it will be able to handle the cost basically that we have getting Arbejdernes Landsbank and [ Vestjysk Bank ] on board.

We have taken a more cautious route on this, which is, as I said, in line with how Jyske Bank have handled these kind of things in the past and in agreement with our external auditors who acknowledge that both ways can be -- it can be done both ways, but also support this as the right one for Jyske Bank to take.

And maybe just to extend a bit, when we talk with the auditors and when we look at the regulation in Denmark, the cost -- we know there is a cost to be paid as a member of Bankdata. We know -- we don't know the timing, and we don't know the amount. It's uncertain, but it's then a normal procedure actually to be careful and to book the cost after a best estimate in the quarter where you get the knowledge.

But you're right, Mathias. There is obviously a possibility of that not showing to be needed.

And then would it then come back in one go? Or would it be like over the years, like what is the dynamics if it shows -- it turns out that Bankdata can handle this by themselves. How would that work like from an accounting perspective in Jyske Bank?

Well, there are -- of course, there are bills to be paid over the next couple of years with the migration costs and other costs related to the agreement with Sydbank. And of course, when those bills are up for payment, things will be settled also relative also in our books, of course.

Okay. Maybe the last question, and then I'll jump in the queue. So when I listen to the comments on hope to see the NII coming up and guide down on cost, like isn't it difficult to see the bottom of the guidance range unless loan losses spike? Is there any broad comments you can make on like what's the assumption of the top and the bottom of the guidance that could help us understand like how you would even in a quite negative scenario end at the bottom of the range?

Yes. well, we usually use the DKK 800 million as an interval. So that's sort of the base case, but that's not to say that it's not related somehow to the numbers. So what we do is usually we look at the volatility of value adjustment and investment portfolio earnings, and we also set in some scenarios related to loan impairment charges as those are the most volatile components of our P&L. So that is how we come up with the interval. And I agree that if we are to end up at the lower end of the interval that would mean materially higher loan impairment charges than what we've seen in recent years, but also lower value adjustments likely. And next in line is Alexander Vilstrup-J rgensen from DNB Carnegie.

So I have 2 questions. First, on core expenses. One of your peers recently flagged lower IT costs driven by economies of scale on the Bankdata platform. So I was just wondering if you could elaborate on your own expectations for cost savings at Bankdata and maybe also include the timing and magnitude of any potential reductions.

Yes. Thanks a lot, Alexander. I saw that, too, and I could follow his calculations. I think it was Ringkj bing that was out yesterday saying that we add volume to Bankdata, meaning that the expense will come down 17% like-for-like. I also saw that he then added that, that can come as a cost saving or it can come as further investments into digitalization if it makes sense.

We are trying to run a tight ship on Bankdata. So obviously, we'll see if we can get some of it as cost savings and then we'll see what is needed in potential investments. I think it's safe to say that this is now the cheapest and we also believe the best data platform in the country and gaining volume is going to take cost down, but it's also going to make it more resilient in terms of what is needed going forward to ensure a strong digital platform, both in terms of functionality for clients, but also in making sure that it's a resilient, strong platform. So he's right. John is right. 17% is what we've calculated so far that could be taken out of the cost of Bankdata for us also.

I also have a question regarding your ordinary bank loans. So to me, volumes for ordinary bank loans seems a tad down compared to last year. Is there any reason behind this? Shouldn't your volumes for ordinary bank loans increased as a result of your improved customer satisfaction ratings?

Not necessarily because we have still some of our Handelsbanken customers that came from bank loans and are generally moving towards mortgage loans on our Realkredit setup. So that's the underlying trend here. That's what is...

Thank you, Alexander. So next in line is Martin Birk from SEB.

Yes. Just 2 small questions from my side. First of all, the -- I guess first question goes on the price initiatives you took this morning in light of, I assume, peers also moving. How far are you willing to go? Is this only going to be a front book market share? Or should we also see the back book eventually getting the benefit without having to refinance?

That's my first question. Then second question, coming back to capital and perhaps also less or more resiliency in stress test and a 15% CET1 target, how does that position you for future payouts?

Well, let me take the first one, Birger, and you can take the second one. The first one, thanks a lot, Martin, on the pricing on mortgages. We don't know where the competition is going to take the price level here. I think for us, a part of the reason why we make the decision it's a front book that we adjust is that when prices were adjusted upwards last time in the cycle, we did not really increase the prices on the back book in that scenario, which would then be a totally different way we would handle it if we lower the prices.

Then on our book, a lot of them are short loans, which means that they will be refinanced within a year. And we do not reduce prices on these ones. So that would be basically for free if we did it. And they can then move on to either the same product or on to one of the other new attractive products here. So I think now we have a very strong portfolio of loans, both the bank balance loans, but also the loans on the mortgage balance sheet. And we have them with the short interest rate, we have them with medium and we have them with long.

So we have a strong portfolio when we meet the clients, and I think we are priced to compete on this one. Without this meaning that we will necessarily see a big drop in the income here because our clients will be moving from another competitively priced product for instance, the F1s to the longer interest rate products, which, again, will also be competitively priced.

So basically, we'll be following what is going on in the market. We think the reason why we've been winning market share is not because of generally the prices, it's because of the service model that we have and the turnaround that we have seen in number of volumes or in number of loans and in volumes on personal mortgages that has been done without us changing the price. And we've seen competitors moving down on price before us, and we've been able to keep that up. We'll be -- we'll ensure that we have a good product and an attractive price, but we think we are also driving the volume with having a good service model and being fast basically.

Yes. And then to the second question regarding the capital distribution and resilience in stress test, you're quite right that given some of the shifts we made in our model landscape and model setup recently, we are more resilient now to downturn and stress than we were formerly, especially because some of the segments are now managed under the foundation IRB setup versus an advanced IRB setup.

And that, of course, leads us to a potential, larger buffer. And before giving any guidance in the market, we, of course, need to have a dialogue with the FSA regarding their full and their acknowledgment of the new setup that we have, and that will happen in the coming months, quarters. But you're quite right that there is a potential for a larger buffer. When we then look at the distribution and the split between dividends and buybacks, you have now heard us say that we have launched the largest buyback program of DKK 3 billion in the market. And of course, there is a limitation when it comes to liquidity in the stock in general. So going forward and if buffer will be extended, we, of course, need to adhere to the split between these 2 elements of distribution of capital.

Okay. But I guess the means of distribution that can always be changed?

The split, of course, is up for a debate and especially if liquidity in the market is a limiting factor.

And next question in line comes from Asbj rn M rk from Danske Bank.

Most of them have already been answered. But I have basically more of a strategic pricing question, Lars. Maybe it goes to you, but it's more like now you're lowering the prices on mortgages. I, of course, am fully aware of how your competitors have reacted and hence, it seems like more of a reaction to that. But I'm just trying to understand the rationale here because you had the lowest prices for a decade. And you also alluded to it, and you were not -- I mean you're basically losing market shares for many years.

Now that trend has changed over the last year or so, but obviously not due to prices. So just wondering, do you actually believe that the price is the sort of decisive factor for clients? Secondly, since you're cutting mainly in the interest only and in the high LTV areas, how does this price reaction sort of go hand-in-hand with your strategy of growing in the more affluent areas as well on the private side?

Yes. Thanks a lot. Good questions here. I think some of the history that you're describing here is not 100% right because Jyske was actually winning market shares back in time on the mortgages. And Jyske was winning up until 2019 and a number of things with changes to the organizational structure and service models in relation to clients, pricing of other products meant that Jyske was losing out, and that was what you saw in the graph here.

So -- and with that, I'm basically saying that price is an important factor, not the only factor and probably not the most important factor, but you need to be priced fairly competitive. I think we, in all honesty, we're more competitively priced on the short end here with the loans with refinancing often than with the longer. And we want to be competitive in both end of the scale here to support the clients and also to have a portfolio development that we would like to see in the bank.

So what will happen here is probably that will go from one competitively priced product to another competitively priced products in a little bit larger scale than what we've seen before. Then you could also say that these are changes, directional changes that it was our plan to do in terms of making sure that we have attractive product price on -- across the different products here.

Now we are doing that as tactical changes also, but it fits within our strategy. We still have a strategy relating to our portfolio of products, which is also about making sure that we have differentiating products. And we'll be able to, I think, launch new stuff within the not too far distance that will make us even more competitive, not from a price competitiveness only but also from a product competitiveness part.

So I think it's one factor. It needs to be right, but it's certainly not the only one. I have to say I'm fairly impressed with the organization being able to turn around the development without using the price basically as a differentiator during the last couple of years. If we've not changed some of the prices now, it would have been a negative differentiator. I think we are moving in with the pack here and being more competitive or being very competitive on selective products.

That's very clear. Then if I may, on the sort of the competitive landscape and the consolidation that we've seen in the last 5 quarters. Have you seen any reaction in the market from Nykredit Spar Nord or changed behavior for that matter or from the AL Sydbank? And what should we sort of expect to be the Jyske Bank response, not in terms of M&A, but more in terms of product launches or more aggressive behavior or something? Is there something out there we should expect from you given the -- all the turmoil in the market?

Yes. I think if you look at our situation at the moment, we have the organization in place. We have no major projects going on. Obviously, we have the eyes on the possibilities in the market, and we have the muscles to also take advantage of some of these opportunities here. What we've seen so far is predominantly a number of employees, the number of people applying for jobs is increasing quite a bit, but we will not go down the different tracks that some of our competitors are doing and taking major teams from retail.

We don't believe in that strategy. We think we are scalable with what we have today. And if we are adding, it will be select employees in select geographies and not the teams of 8 or 10 spread across the country here. So you do not see that kind of -- we don't envisage that we'll have this kind of aggressive behavior on this. We've also seen that we've been gaining some customers, not very, very significant, but some and more during the last couple of months due to customers that thought, well, then that might actually be the reason why I'm looking for a new bank. And then I believe the next part will be when they migrate the banks. It's very difficult at that point in time because you'll be extremely busy internally and the focus on clients can be a little bit less. So maybe we'll also have an uptake at that point in time of new clients.

Next question in line comes from Namita Samtani from Barclays.

The first one on the net interest income. Did I hear you say that you hope it goes up year-on-year versus 2025? And my second question, how do you see competition and pricing on the bank lending side?

Yes. So maybe I'll start on the net interest income year-over-year. So we haven't provided exact guidance for 2026 versus 2025. What we said was basically we expect Q1 2026 to be the low point, and that is due to Q4 having a one-off positive impact of DKK 38 million, and there will also be 2 fewer interest -- days of interest in Q1. So underlying, we believe we have seen a trough in terms of NII, but we need to go into Q1 to see the actual trough and then we'll expect to grow from there. Whether that's enough to keep NII stable year-on-year, I think consensus is for a slight decline, and I get how you could end up there.

Looking at the competitive landscape, I think for bank lending, I think it's fair to say that there is ample liquidity and capital still within the banks. So that leads us to a relatively fierce competitive situation in '25. which also actually was the case if you go back in '24. But it seems to us that there has been even more competitive -- there's more competitiveness in the market now than there was 1 year ago.

And you need to couple that with what I said initially that the demand for credit facilities may be a bit subdued due to the geopolitical uncertainty around Denmark because if you look at Denmark in isolation, we are still on a good footing when it comes to the economic development.

So there are no further questions in line. And with that, we would like to thank you for participating in today's conference call. A recording of the call will be made available on our IR website in the coming days. Please do not hesitate to contact us if you have further questions, and we appreciate your interest in Jyske Bank and wish you a nice day.

Hi, everyone. Thank you for joining us on Jyske Bank's conference call for the financial results for the third quarter of 2025. This is Simon Hagbart from Investor Relations speaking. With me, I have Jyske Bank's CEO, Lars Morch; and CFO, Birger Nielsen. Lars and Birger will walk you through our prepared remarks. Afterwards, we will open up for questions. I will now hand over to Lars.

Thank you, Simon. I would also like to welcome you to our conference call for Q3 2025. I know that our figures have been awaited with somewhat less anticipation than normally. And in that light, I'm extra pleased that you've decided to spend time with us here.

We've had a strong 2025 so far, reaching our highest earnings per share for the first 3 quarters of the year. This builds on the positive momentum from recent quarters with earnings per share growing 7% year-on-year in Q3 despite the backdrop of significantly lower short-term interest rates. Based on this positive development, we've upgraded our earnings outlook for 2025, now targeting a net profit of between DKK 4.9 billion and DKK 5.3 billion.

We're also making progress on key initiatives with focused cost management while improving both personal business and corporate customer satisfaction significantly. Higher customer satisfaction affects customer flows and the number of personal private banking and business clients have improved during the last year. The outlook is for a balanced development for the Danish economy and a stabilization of short-term interest rates.

Additionally, credit quality remains very solid with a continued low level of loan losses and a significant post-model adjustments in place in order to mitigate potential repercussions of the elevated geopolitical uncertainty. Overall, our results puts us in a healthy position as we look to further strengthen our momentum.

With that, let me hand over to you, Birger, for a walk-through of our financial results.

Thank you, Lars. And as you can see, the strongest quarter we've delivered in the last 7 quarters was here in Q3 with an earnings per share of DKK 23 and simultaneously with lower short-term interest rates, as already mentioned. If I look at Jyske Bank at a glance here, return on tangible equity, 12%, well above the 10% mark in the long term. Cost-income ratio well below 50% and cost of risk, just around 0 basis points actually for several quarters now in a row.

And the CET1 ratio at 16.2%, a small dip from Q2 due to higher market risk, operational risk and credit risk, the latter due to higher mortgage lending and property lending. And so inclusive of a reservation for capital distribution of 71%, we end up at 16.2% this quarter, still well above our long-term targets.

If you look at the bottom in the middle, you can see that the P&L statement demonstrates that the NII line is now only dropping 1% from Q2 to Q3. So actually a bit more stable now than we have seen in the former quarters. The fee and commission income continuously grow and remains strong, both over the quarter and over the year. We still see strong value adjustments. Cost is under control, and we deliver, as we say, as we mentioned, DKK 1.455 billion net profit in the quarter.

At the right-hand side, you can see that business volumes is somewhat -- well, it differs a bit because the AUM is on the rise, steadily going quarter-by-quarter, whereas property lending is also rising steadily on a quarterly basis around 1% and bank lending is a bit more subdued with a drop of 1% here in the quarter. Deposits stable going from Q2 to Q3.

Looking at the expectations, we lifted our expectations on the 9th of October and 2025 actually could end up being the second strongest year in history. And we now expect DKK 77 to DKK 84 per share. And we also adjust our expectations for core expenses where we now state that they will be approximately stable in '24 versus '25 due to slightly lower cost here after Q3 relative to last year.

Moving on to the AUM development. As I said, steady going. We have seen net inflow of customers and positive financial markets again this quarter, leading to a 2% lift quarter-over-quarter, 7% over the year, and that is inclusive of the market setback we saw back in Q1 of this year.

Looking at the underlying deposit base, we have been able over the last year also to grow the stable part of deposits with now 5% higher level here in Q3 versus last year, which is more in line with our market share. And now more than 90% of our deposit base is what is characterized as stable deposits. If we take a glance at the Danish economy, we are operating in a Danish economy that is very resilient, strong labor market, historically high employment, stable inflation. And actually, we have, since 2019, outpaced the EU growth. And if you take the layoffs in Novo as an example, it is less than 0.2% of Danish employment. So we are in a very steady environment and also despite the geopolitical uncertainty that we still see around us.

Moving on to short-term interest rates. We now expect no further rate cuts from the ECB. And our net interest income expects to bottom out within the next couple of quarters. And the reason for that is primarily due to some bond issuances, both liquidity and capital issuances here also in Q3. And of course, if we look into and when we look into '26, much depends upon the volume development in that year.

When we see on the next slide, the development in value adjustments, you can see that over several years, we have been able to actually lift the level of value adjustments in average to a level around DKK 900 million per annum. And that actually includes the sharpest interest rate increase in decades in '22, '23, but also the sharpest -- a very sharp rebound in '24, '25. And if we look at the composition of the value adjustments, approximately 80% is customer-driven and the rest is placing of excess liquidity and our sector shares that are needed to support our business.

Moving on to costs. As you can see, since the acquisition of Handelsbanken Denmark and PFA Bank, we have had very steady costs. The costs are actually down 2% year-over-year in the last 4 quarters, but the underlying, we see an increase of below 1% adjusted for one-offs -- we still, of course, see inflation present in all areas of the group. Wage agreements are up 2.5%. And please bear in mind that Q3 was a slim quarter when we look at cost, and we expect slightly higher Q4 numbers. And therefore, we state now that '25 is expected to be approximately at the same level as '24.

Then moving to the last slide I will comment upon now is our credit quality. And actually, the story is very much the same as we have seen in former quarters, a very stable portfolio. Stage 3 exposures are up from -- or sorry, are down from 1.2% to 1.0% over the year. Stage 1 exposures, the very strong part of the portfolio has grown from 95% to 95.8% over the year and management estimates or post-model adjustments are at DKK 1.9 billion, unchanged from Q2. And still, we see a very low level of write-offs. So all in all, a very strong portfolio, low impairments and very low write-offs in the book. And I think that concludes our initial remarks.

And we will now open up for questions. The first one in line comes from the line of Mathias Nielsen from Nordea.

So on the first one, I know you can't comment much on the -- or you probably won't comment much on the AL Sydbank merger. However, I find it quite interesting that if memory serves me right, you actually had an acquisition of Handelsbanken, which was on the BEC platform versus you being on the bank data platform. So I guess you have some run rate cost comparison, like how does that look like when you acquired Handelsbanken, the BEC run rate cost, how does that look compared to the Bankdata run rate cost when you take it from a high-level perspective?

Yes. Mathias, Lars here. And thanks a lot for your question. As you rightly say, there are things that I can comment on and things that would not be appropriate for me to comment on. The situation with Handelsbanken was a situation where we got quite a bit of synergies of moving it to Bankdata. And in our view, Bankdata is a very strong suitable platform for the business model that we have with quite a bit of business and SME clients and the markets operation. So we actually had quite a bit of synergies moving in that direction.

Okay. That was my first question. And then the second question on the capital distribution side, like you seem to be a bit overcapitalized. Some would argue probably, especially among the equity investors. So when thinking about capital distribution for this year, is there anything holding you back from a 100% payout ratio? Is there anything on timing of buyback applications, something like that, that could hold you below 100%, let's say, 90% or something like that. Is there anything we should -- any details that we need to keep in mind when looking at such things?

Yes, that's a very good question, a very appropriate question to ask. I'm happy that our capital buildup is strong at the moment. We stick to our plan of 30% cash payout and the rest within our possibilities and still keeping a strong capital position, we will have share buybacks. The share buybacks will normally be done based on an application to the FSA quite a bit earlier than the yearly result. And for that reason, it's not possible for us to apply based on the full year result. So that could hold us back.

Okay. In terms of Q3, is that included or now it's almost getting too detailed. But like given the strong result on trading income, I think it's probably relevant to ask if, if we should assume the Q3 results to be reflected in the application or we should assume that will be not reflected in the application that you may have said or may not have said?

It's difficult for us to get into a lot more details on this one here, Mathias, because we're doing our application according to the rules here, and that's quite a bit earlier than the yearly result.

Okay. And then the last question that I have on cost. You also highlight that Q3 was a slip quarter on cost and now maybe a bit less on the year-on-year improvement versus last year in Q4. What should we think about '26? Is it fair to assume that you can keep this stable cost trend into '26? Or is there anything that we should be particularly aware of? I guess you had some one-off related to the new premises that we can easily take out of next year. So how should we think about it?

Yes. Thank you very much, Mathias. The cost base in '25 will approximately be the same level as '24, all inclusive that, i.e., one-off items as well. And you're quite right that there were some one-off items both in '22, '23, '24 and also this year that will run off and not be part of the equation in '26. We have said that we will try to the extent possible to keep cost as flattish as possible given the market conditions according to our strategy, and that still applies. But also, please be aware that we have inflation pressure present, as I said before, in all areas of the group that still applies, and we expect that also to be the case in '26.

Next question in line comes from the line of Martin Birk from SEB.

Lars, you also happen to be the -- you also happen to sit at the Board in Bankdata. And if Jyske Bank manages to bring AL Bank and Investors to Bankdata, would revenues in Bankdata still need to be DKK 2 billion?

I think if we get more -- or if we get benefit of more volume at the Bankdata, we would be able to run that more efficiently. There's not a lot of extra cost adding an extra bank to...

Okay. And revenues will also need to be DKK 2 billion if we assume that -- or if we play with the scenario that Jyske Bank is going to BEC...

I think the cost of running a bank is divided -- on an IT platform is divided into development and running the bank basically. And the development will not change a lot and a lot of the run the bank will be on JN data and for the individual bank.

Next question comes from the line of Namita Samtani from Barclays.

My first one, the commercial real estate systemic risk buffer, like the decrease in the proposal, how much of an impact would that be for you?

Yes. We see -- you're quite right, there is a relief in the CRE buffer. They have lifted the LTV ban that is excluded from the extra fee and payment. It is a small relief relative to the full exposure or the full payment that we have today and the buffer we have to reserve today.

So we expect a small relief in Q4. And then also be aware that we also in the slide deck mentioned that we could see a slight inflation in the real numbers in Q4 because when we implement new models, there is an initial conservative attitude from us and the FSA, because when we implement a new model, there are still some reservations that will gradually be taken off, but only gradually due to dialogues with the FSA on formal occasions. So there could be a slight inflation in the real numbers despite the relief from the CRE buffer in Q4.

Okay. And then my second question, you said net interest income will trough in the next couple of quarters and that's because there's some bond issuances. But what are these exactly? And what's the quantum of the headwind? And why is it that volume growth cannot offset these?

Yes. So we did some issuances in Q4 -- sorry, in Q3, which we'll see the full quarter effect from in Q4. It's not going to be a material headwind, but I can't remember the exact figure. We did a Tier 2 issuance of EUR 500 million. And on top of that, we also recently did a nonpreferred senior issuance of EUR 100 million. I can come back to you with the specific figures if you would like that, Namita.

That's helpful. And my final question, the AL Sydbank merger. I just wondered what your thoughts were on how this impacts the wider Danish banking market. Do you have any initial thoughts, like is this positive? Is this negative and particularly on corporate? Because when I read the press release, they were very specific on being competitive in the corporate space?

Yes. Thanks a lot for that question. I think it's fairly neutral from Jyske Bank perspective in the sense that it is a personal customer bank going together with an SME bank and a smaller local bank, 3 banks going together. It doesn't really change a lot from our perspective in the market space because basically, in cities today, we are up against 3 banks that will be 1 bank going forward.

They are -- each of them good and strong in their own areas, but we don't see a lot of new things being added in terms of capabilities or volume when it comes to the business and corporate side here. So I think it's fairly neutral from our perspective looking at the market space. We are standing with a very strong value proposition and we'll by far, still be altogether a bigger bank lending-wise in the corporate and business space.

Sorry, just one small question. Given that these 3 banks will be quite busy merging together, if there's any attrition, are you ready to take on any clients from that space?

Yes, we are running a relationship bank that we want to see solid also going forward. If there are possibilities in the market and it's on our acquisition list, the business clients who would like to talk to us, we will talk to them, obviously, no matter if they come from the one or the other bank. So we are open for business, obviously, with strong and good clients.

Next question comes from Asbjørn from Danske Bank.

A little bit on the same topic of the last question. If I look at your strategy from last year, basically a year ago, you basically emphasized midsized businesses and selective large corporate and institutional clients as a main focus area in the new strategy period. And I guess that made a lot of sense when you were the sort of the only real alternative to the 2 largest banks in the Danish market.

I guess the market has changed quite a lot. I do appreciate your comment, Lars, on AL being more retail, but one of the things that at least Sydbank is saying is that they will double their balance sheet. They will be able to underwrite full lines. I have the same arguments for Nykredit after they acquired Spar Nord. So at least there's something from the competitor point of view that seems to indicate that the 3-bank market has become a 5-bank market. So I was just wondering if you see any changed behavior from Spar Nord -- sorry, from Nykredit at this stage? And if you have seen or will -- or if you anticipate sort of a changed behavior from Sydbank on the back of this?

I think they're all strong competitors today. And I think from the Nykredit perspective, we don't see a change here. So far, it's also early days. But I think Nykredit had a big and strong balance sheet also prior to this acquisition. And I don't think it changes a lot from their perspective, they were able to underwrite big credits before and normally. And I don't know the internal policies within Nykredit, obviously, -- but I think they were able to underwrite credits of a size that where you normally have a single name concentration cap in most banks. That's at least what we see across banks when we do underwrite credits for larger companies that there's a limit to how big you want a single name credit no matter how big your balance sheet is.

And then in terms of Sydbank, it will be early days. They would have a little bit bigger balance sheet. They don't have mortgage products inside in-house now, which is basically where the other banks have been growing in volumes. That is when they're able to do a combined advisory combined bank products and mortgage products. That's a feature in the Danish market. And even the very large companies, they prefer to have a balance here with those products.

All right. Then if I look at the sector statistics, it seems like there's still quite good credit demand in the corporate space. I do acknowledge that Q-over-Q bank lending on the corporate space is down slightly, and I guess your numbers reflect some of the same. But if you could just touch a little bit upon or shed some light on where the corporate demand is derived from? Is it within the larger corporates? Is it within SMEs? Are you beginning to see changed demand across or any sort of impact from the German package, et cetera, anything that started to move?

We've seen a remarkably stable business and corporate segment within our bank during the last year. If we look at the market, we would see quite a bit of the growth in terms of numbers comes from major mergers and acquisitions among the very largest businesses and some bridge financing and so on, which is normally not the territory of our bank.

When it comes to the SMEs, fairly stable development here and not a lot of extra credit volume this year. We are in a very stable situation. We just calculated recently that with the churn rate that we've seen lately, it means that our customers on average, the SME customers on average will stay with us 45 years. Obviously, we don't know that for sure. But if you look at the raw figures now and you do the math, then that would imply that the customers will stay with us.

Just if I may follow up, you said that the demand is from the largest corporates. Isn't that the area that you wanted to tap into a year ago? Or is it a little bit of a more of a niche market?

It's a little bit more of a niche market. So what we do is some different products and financing for some of the very largest companies, including the very largest in the country here also. But if you have the biggest cross-border companies and they do bridge financing on major acquisitions, we are part of that to a limited extent and predominantly where we have a relationship with the customer.

Next question comes from Martin Birk from SEB.

Maybe I'll just follow up on my Bankdata questions before. Lars, can you please help me unpack the toolbox? So what kind of levers can you pull in order to make the Bankdata offering attractive for the part of Al Sydbank that is not already on Bankdata today beyond, of course, having the best product in the market.

Yes. I can to some extent, but I also think that you would appreciate that this is coming down to a negotiation. And I think if we play out all our cards here, that would be wrong. So allow me to comment on this a little bit, but not in great detail. So there's a pure quality that they would obviously consider of the IT solutions. And basically, I don't think there are weak data platforms out there. So it's strong platforms that they are considering.

From our perspective, we think that the one that we are on is, in particular, strong when it comes to business and corporate clients. And we think the setup is strong when it comes to supporting the markets business which is part of our business and some other banks business also. We think we are in a very good development within Bankdata, and that has accelerated within the last year or 2 and that the cooperation on a daily basis is strong. And then I think what we can do is, obviously, we can discuss the future plans of the platform here to make sure that, what we come with is the most compelling offer. There's also something that is related to speed. So when can we do the migration, I think that will be of great importance to AL Sydbank. And there's a number of quality things that we can do.

Okay. As -- in your position as CEO of Jyske Bank and also sitting at the Board and the Bankdata, would you like to see that Bankdata and BEC merged?

I think what we have discussed across the industry many times is what is the right number of data platforms. On the one hand, you would probably want more than 1, do you want 2 or 3? That's up for debate. What we will do is what makes sense, both short and longer term, and we will not be the last one who would wish to do mergers of platforms. But I don't envisage any of that within the next year or 2. But there's a number of things that need to be right before that is potentially done. We've been one of the banks who are not against that in the past, and that will also be the future. For now, we are very pleased with the platform that we're on. We believe that, that's the strongest platform for us. And I'm confident that we'll be in a good position also a year and 2 down the road.

Okay. So if we go back to my first question about the DKK 2 billion in revenues, and we assume that, and sort of try to play on your stance of being a pro-merger. Do you think that if you move all the banks to Bankdata and you completely write off the BEC system just as a theoretical thing, do you think that you could still run Bankdata at around DKK 2.5 billion in revenues once everything is migrated and done and dusted? Is that a fair way of seeing it? So basically, your IT cost would to Bankdata would be half.

Yes. I don't want to comment on if it would be half or if it would be 60%, but it would be quite a bit lower. I think the thing that has been holding back banks from doing this in the past is the transition and the cost of the transition. There's no doubt that there will be major synergies for all banks if that was done on the little bit longer term. What has also made us hesitate is that there's quite a bit of pressure on bringing new things to the market and not the least also working on the stability and the resilience of the IT platforms. So you have a number of tasks that each of the platforms are doing at the moment that you need to do in order to be confident that you have a resilient and strong platform. And you cannot postpone that for 4, 5 years while you do a merger of these platforms. And that is what, to a large extent, is complicating this.

And next question comes from Asbjørn Mørk from Danske Bank.

Yes. It was actually a little bit on the same topic as Martin, but let me ask you a little bit differently then. So Lars, if you look at the complexity of merging Bankdata and BEC, just trying to grasp a bit here how complex that task will be, what kind of cost it would involve? Because I guess -- now Sydbank it seems want to play out Bankdata and BEC and see who will offer the best terms. And I guess losing this bank is going to be devastating for whatever IT platform that will lose.

But I guess there's also a winners curse here in terms of offering to attractive terms. So do you think that the exit cost that Sydbank or AL would have to pay, would that cover the sort of extra cost if you were to do a full integration of the 2 IT systems? Is that -- do you have any sort of view on that?

I think the cost will probably be bigger for a full integration, but the benefit -- and the benefit will come later.

How much bigger do you think?

It depends on the model. It's a philosophical question because those negotiations aren't ongoing. But it's a philosophical question, and it's also based on the decision that will be made. There's no doubt that the cheapest way of doing it would be to decide on one of the IT platforms and migrate the banks on the other platform onto that platform.

Many times, I think when you have negotiations like that, every platform would like to come with 50% or their share of subsystems, and that would be extremely expensive and that will be complicated. So it also depends on model.

But if you were to, let's say, migrate BEC into Bankdata, just migrate the banks onto that, would that be covered by what that cost do you think?

I think I should respond differently. I think any cost that the banks would have doing this upfront, there will be savings coming in the fairly near future that will pay this off fairly soon. So that will not be a 10-year thing.

And considering the scalability that you just answered on one of the previous questions, I guess, at the end of the day, for Bankdata to lose should bank would be an unacceptable outcome.

That's certainly not the outcome that we would anticipate, but there will be a number of different possibilities should that occur. And please remember, no matter if some of the banks are leaving BEC or Bankdata here, there will be a payment at least 2.5 years and probably longer into the future and some of the payment will be even larger than running as the systems do today.

So there will be quite a payment, and there will be quite some time to do -- to consider your options and make a deal. I find quite a bit of comfort in the fact that I think our platform is very strong also compared to the alternatives out there. So I'm fairly certain that Bankdata, the one way or the other would be part of the future setup here.

All right. And then final question from my side. If I sort of look at the 2 major deals we've seen in the market the last year, I guess if you're a smaller bank in Denmark, you will all else equal, be a little bit less sure about your mortgage provider. And I guess this deal also -- the deal on Monday, I guess, shows that there is still uncertainties relating to IT that you -- that's basically out of your control. Do you see any sort of changed behavior from the smaller banks in terms of sort of being a bit more unsure about the future and wanting to sort of secure their own destiny, so to speak?

Yes. I think quite a number of them, if not all, are considering to have a plan B. And I think most of them are discussing that heavily. And probably we will see some moves also in the next couple of years here.

And that also goes for a mortgage provider?

It could. It could.

And next question comes from Martin Birk from SEB.

Yes. And sorry for my curiosity Lars. Now that we have you here, I might as well just give you a couple of more questions. Do you think that coming back to the Bankdata questions, do you think that once this AL Sydbank deal is done and dusted, you will, for the first time, have a defined big brother and a defined little brother in the Danish banking IT space. Do you think that increases the probabilities of the 2 going together?

Of the 2 platforms?

Yes. Hasn't that been -- I mean, hasn't that always been the problem that BEC and Bankdata have simply in the past, been too equal in terms of size. And all of a sudden, you do have a defined little brother now and you will, in the future, also have a defined sort of big brother.

Yes. I think there are 3 platforms out there. And I think if you look at the past, there have been -- you're normally a fairly direct person, Martin, you would say there's been a number of excuses for not merging the platform. So we would say that there's been a number of different reasons that, that has not been done. There are also reasons for not doing it now, not the least because from a regulatory compliance and resilience perspective, there's a number -- there's a big number of investments in all of the platforms now to make sure to live up to future requirements. And you don't want to jeopardize that you're able to live up to that. So I think that's the biggest hurdle here if discussions were to occur.

Okay. All right. I guess we will continue our talks on these data platforms for the foreseeable future.

Yes. Maybe there's a solution one day.

Thank you, Martin. It seems as if there are no further questions in line. We would like to thank you for participating in today's conference call. A recording of the call will be made available on our IR website in the coming days. Please do not hesitate to contact us if you have any further questions. We appreciate your interest in Jyske Bank and wish you a nice day.

Hi, everyone. Thank you for joining us on Jyske Bank's conference call for the financial results for the second quarter of 2025. This is Simon Hagbart from Investor Relations speaking. With me, I have Jyske Bank's CEO, Lars Morch; and CFO, Birger Nielsen. Lars and Birger will walk you through our prepared remarks. Afterwards, we'll open up for questions.

I'll now hand over to Lars.

Thank you, Simon, and welcome to all of you on this call. Much appreciated that you're taking the time to dial-in. We have had another solid quarter of 2025, building upon the positive momentum from recent quarters and growing earnings per share compared to the year before despite the significantly lower short-term interest rates. On the back of the positive development in the first half of the year, we are now targeting the upper end of our outlook for 2025. We continue to improve customer satisfaction in all areas.

In Q2, our private banking customer satisfaction was the highest in Denmark for the 10th consecutive year. Additionally, the satisfaction of corporate and business clients with 20-plus employees is also the highest and personal customer satisfaction is showing a very strong momentum, already reaching our 2028 target level with a top 3 position. The latter is a major progress compared to where we were a couple of years ago. The improved customer satisfaction has underpinned mortgage financing for personal clients, which reached the highest growth rates in several years as we continue to gain market share.

Additionally, assets under management have been resilient, reaching a new all-time high amid turbulent markets supported by healthy net inflows. Meanwhile, our credit quality remains solid. We booked reversals in Q2 while slightly increasing our post-model adjustments and reducing our stage 3 exposures. Lastly, our capital position improved further in the quarter following a very strong capital build, leaving significant excess capital versus our capital targets.

With that, let me hand over to you, Birger, for a walk-through of our financial results.

Thank you, Lars. And I would like just to start off with a little -- a kind of a busy slide, but nevertheless, an overall solid footprint in Q2 with good momentum in the group. Looking at the ratios, return on tangible equity, 11.5% and 11.3% for the first half. Cost income slightly above 50%, 51% here in Q2, but 49% for the first half. And looking at cost of risk, we saw reversals in the second quarter of 2 basis points. Earnings per share, steady going at DKK 20 in the quarter and the CET1 ratio stood at 16.3% during Q2, up from 15.7% in Q1, underpinned by lower risk. Looking at the left-hand side at the bottom, you can see that the earnings per share, DKK 20 return in Q2 is very much similar to what we've seen in the last 5 quarters, so 6 consecutive quarters with a steady earnings per share return.

Looking at the P&L at a glance. The NII was as expected due to lower policy rates. We still see solid fee income in the second quarter. Financial markets were positive due to the spread tightening and looking at the core expenses, they were on track, exclusive of one-offs due to the location shifts here in Copenhagen.

And finally, small reversals on impairments, underpinning solid quality in the credit book. And finally, net profit up 2% in the quarter to DKK 1.3 billion. At the right-hand side, you can see that volumes, as Lars said, AUM up in the second quarter after the turbulence and volatility we saw back in March in Q1. Mortgage, the mortgage book is up, driven by both personal and corporate customers by 1% in the quarter, whereas bank lending is more steady going.

Then moving on to the outlook. We have updated outlook for '25 given the performance we saw here in the first 2 quarters. And now we expect net profit to reach the upper or very upper end of DKK 3.8 billion to DKK 4.6 billion. And of course, that also applies to the earnings per share expectations, which now is in the upper end of the DKK 60 to DKK 73 interval.

Handing over to Lars and a few remarks on customer satisfaction.

Yes. When we look at the corporate clients and business clients in Jyske Bank, we have seen quite a development during the last couple of years. We came from a fairly solid #3 in the Danish market. During the integration process, when we integrated Handelsbanken into our operation, we saw a decline in customer satisfaction, which you normally do during those kind of processes due to the time consuming nature. Now time is back to fully concentrate on the day once they're in. And on top of that, a big number of different initiatives have strengthened the development so that we are now in a much stronger position than we were prior to the integration of Handelsbanken. For companies with 20 employees or more we are now, according to [indiscernible] #1 in Denmark.

Moving to the personal customer satisfaction. More or less the same picture, our starting point was a little bit weaker back in 2023. And we saw the same impact during the years that followed. And again, here, time is freed to the [indiscernible] and on top of that, a number of targeted initiatives, boot camps and a reorganization means that we are now back and we are actually back in a stronger position than we would have anticipated already now.

Moving to private banking. We've been in terms of customer satisfaction ranked #1 for 10 consecutive years. For now, we have the largest gap that we have ever had to #2 in the market. Obviously, this is important when it comes to retaining clients but it's also important in terms of building momentum with the clients that we have. And turning to the momentum, we can see that the development in asset under management as Birger alluded to, has been strong for quite a long time. We have seen that investments we saw a generally positive after a little bit more turbulent first half of the year.

We've seen strong inflow during also the second quarter here, predominantly from private banking customers and from personal banking customers a little bit more mixed on the institutional clients. But generally speaking, a strong inflow here. Again, on the lending to personal clients, mortgage lending, we've had 17 consecutive quarters with no growth. And now we've had 5 quarters with growth. And as you've seen -- as you can see here on the right-hand side, momentum has been building during the last couple of quarters. We connect this to a large extent to the higher customer satisfaction.

Yes. And then looking at the deposit margin. You can see a slide here which demonstrates that we saw this uplift in the 3 months carve rate from '22 until end '23 and then the reversal from a peak around 400 basis points down to now close to 200. And in the meantime, of course, as you look, you can see the light green showing the implied deposit margin, we have done our utmost, of course, to take advantage of the situation in the market. We have lifted the margin in the period until end '23. And then afterwards, we have tried to mitigate the negative implications from lower policy rates on our margin.

And just to demonstrate, we took off the interest rates on transaction accounts for private individuals back in April. So now it's a 0% account -- savings account for private individuals were reduced to both a quarter for amounts below DKK 0.5 million and 0.5 percentage therefore, amounts above DKK 0.5 million. On the corporate businesses, we also reduced margins or interest rates and deposits, transaction accounts to 0 in April. So we have done -- and on top of that, we have reduced the preferential rates. So we have done a lot of things in order to mitigate the implications from lower policy rates. And that, of course, brings us into a position where the ability to withstand further cuts will gradually become more limited as especially savings rates are close to 0, as you understand from my words here.

Turning then to the competitive landscape. We have shown this before, and I will not spend much time on it, but just rephrase what we have said before that after the agreement now or 15% tariff for European exports to the U.S. We still expect after this investigation done by the Danish National Bank back some months ago that the short-term effect would be fully manageable and the longer-term effects will be small, very small since trade patterns gradually, we shift. And so they will have very limited impact on Danish economy and therefore also on our customer base.

Then turning to the credit quality. It's the same message that we have told you several quarters now. We have a solid credit book. We have seen small reverse in Q2, where impaired customers have migrated to slightly better grades, and that has been the main trigger for the reversal here in Q2. And secondly, looking at post model adjustments, they are steady from Q1 to Q2, but up shy of DKK 100 million since the end of last year. And if I look at the write-offs, as you can see on the graph, they're very low here in the first half, 1 basis points. So as we see it now, there are no less over from former nonperforming loans in the book.

And finally, if I look at the Stage 3 exposures, those which are mostly impaired in our book, they are now down to 1% of total exposures from 1.2% a year ago and 1.1% a quarter ago. So all in all, a very solid performance so far and also a solid outlook for the rest for the year. Turning to capital. The EBA stress test in -- during the summer demonstrated our solid capital position. But on top of that, we have relatively high risk weights in our books. And looking at the Q2 numbers, they also underpinned the same conclusion with a level of 16.3% CET1 ratio up from 15.7% in Q1 and also, as you can see on the graph, slightly lower risk in the second quarter of this year.

And after the implementation of [ CRR 3 ] by first of January of this year. And given the current risk weights, we see no further significant impact from upcoming regulations, going forward. So we expect the target for the CET1 level to be at the lower end of 15% to 17% and that's the reason why we -- as we speak, pursue buybacks, we have a [ DKK 2.40 billion ] program up and running. We have bought back, as we speak, DKK 1 billion of those and on top of this, we will add another approximately 30% in dividend.

Yes, over to you, Simon.

Thank you, Lars. Thank you, Birger. We will now open up for questions.

[Operator Instructions] First question in line comes from the line of Mathias Nielsen from Nordea.

Thank you very much. I hope you can hear me now. I have 3 questions. One on guide, one on capital and one on lending growth. But if you take them one by one, I think it's going to be easier for you. So the first one on guidance, like looking at the guidance and comparing that to where consents were ahead of the Q2 numbers, it actually seems like you imply that consensus should come down for the second half of '25. Is that also how you see it? And related to this, we also hear a couple of peers being slightly more bearish about the Q-on-Q development on NII for Q3 compared to what we saw in Q2. Is that also how we should think about it for you? Or how should we think about that for you?

We are looking at the updated outlook for '25. I think we stand on, as we said, strong credit quality, decent [ fee ] development mitigated lower policy rates and positive financial market, as I mentioned. So those elements are all in good shape, and we have demonstrated that in Q1 and Q2. Moving into Q3 and Q4, as you said, yes, it's clear that there is more pressure now on NII. Then if we go back a few quarters since we have lowered the internal rates, deposit margins, et cetera. The deposit raised to a degree where we have used a lot of the tools that we have at hand. And so if you look at transaction accounts now at 0 and savings accounts up to 0.5 percentage point, of course, there is limited room to mitigate further movements on the policy rates if that were to happen in the second half of this year.

And of course, you still have geopolitical uncertainty and we still need to be confirmed in a strong activity also in the second half of this year, we have seen a very decent development, both on the investment side, but also on mortgages in Q1 and Q2. But of course, we need to see that also be replicated in the third and fourth quarter.

And if I could just add, Mathias. I think our guidance is now higher than it was yesterday. And we are confident with the new guidance, which is in the very upper end of the interval that we had yesterday. So I see no reason for you to look that differently at this. And then secondly, I think the things that we know now and the things that we can control ourselves when it comes to asset quality and initiatives, we are also confident on having those in place.

Great. On the capital side then like you say that the target is still at the low end of the 15% to 17% and that eventually mean that you need to pay out quite a lot over the coming period. So how should we think about that? Is it possible to go above 100% payout ratio? Or would you rather do it gradually where you reduce the capital over a number of years. So how should we think about that? What is your preferences from a strategic point of view?

What we've communicated thus far, is that we have a policy of paying out in cash dividend of 30% -- the result of the previous year. And on top of that, we'll pay out by buying back shares, so that we stay within the capital limits that we also have communicated of 15%. We have not communicated anything in relation to if that potentially could be above 100%, we would have to communicate on that a little bit later. But it stands clear and firm that 30% cash dividend, on top of that, we'll do share buybacks to the extent possible and within capital ambitions.

Okay. Then the last question on lending growth on bank lending looks a tad soft this quarter also in the light of that your customer satisfaction is actually coming up. So is it because customers are more price conscious? Or how should we think about the development on lending growth, if you just can go...

We should decompose it. So if you look at our lending across bank and mortgage lending, we have a positive development. It's the mortgage lending that is driving the development during the last year. And if you look at the reasons there are different reasons, looking at the personal client customer base, when we acquired Handelsbanken, most of their lending was basically bank-funded lending. And as they get new loans, they tend to migrate towards mortgage loans than traditional Danish mortgage loans instead. So there's a natural tendency of moving out of bank-funded products into mortgage -- the [ price ] of the mortgage institution. So that's what happens within the personal customer space.

Within the business customer space, we are not concerned with the development here in terms of volumes. What we see is we have a high customer satisfaction and improving. We see that the midsized customers, they stay with us with the churn rate that we have had the last year between 40 and 50 years. That's obviously a theoretical view. But basically, that's the low level of churn that we have.

Then what we've seen is a couple of industries, utility and financial institutions, we've not basically been losing customers, but a limited number of the largest ones is using our balance sheet a little bit less than they did a year ago, and -- or they did 2 quarters ago. And if you include also public institutions that more than explains the small decrease that we have had in the bank lending part. So it's not a loss of clients or a loss of future potential here. It's mainly a couple of industries that is cyclical, and is a little bit down at the moment in terms of their usage of our balance sheet. And on the personal customer basis, it's a migration towards mortgage lending instead.

Next question comes from the line of Asbjørn Mørk from Danske Bank.

Sorry for coming back to net interest income. I just didn't really get the answer that you gave to Mathias earlier. Just looking at the sort of sequential move and the actual NII for Q2. If I look at your sort of lending deposit split on the banking side, it's the highest since Q4 '23, and if I look at your administration margin in the mortgage business, it's a record high. So I guess it's really the other NII that is causing sort of the decline which obviously makes sense considering the market -- money market rates movement.

But I guess if we look at the money market rate movement in Q3, obviously quite flat, but obviously it went down quite a lot during Q2. So just trying to understand what is sort of the impact going into Q3 Q-over-Q from this move all else equal, assuming that money market rates stay sort of where they are right now, just trying to understand the bridge into Q3 and how we should look at that versus also Q4 would be very helpful.

Yes. You are fully correct, Asbjørn. So what you saw -- basically, what we tried to allude to was the fact that we have been able to retain our deposit margin in the first half of the year to a very large extent. So what's been driving the negative development in NII has been other NII and that's likely to persist and what we were basically just saying that now we have not emptied our toolbox, but we have less tools going forward if rates continue to decline. So in terms of the deposit margin that we would expect a larger pressure in Q3 than we saw in Q2 and in Q1 given that we can't -- or we don't expect to lower the transaction accounts, for example, to below zero, so we basically have increased risk on our deposit margin.

In terms of the sequential move, we saw a negative development of DKK 30 million in Q1 that was partly -- we saw a positive effect from CRE repricing on the mortgage side in that quarter. And then in Q2 we saw a negative of DKK 34 million, so slightly more. But back then, we were -- yes, pricing transaction accounts down and also savings accounts, and we were reducing preferential deposit rates. So we would expect if rates continue to decline in Q3 versus Q2, we would expect a larger sequential drawdown than the DKK 34 million.

Simon, just sorry, just to clarify. Also, as I mentioned, we did change the accounts for transactions, both for private and corporate in April. So of course, there is also a full quarter effect in Q3 from lowering these rates for person and corporate clients.

But is that assuming an incremental rate cut from the ECB? Or is it just assuming flat rates, policy rate from here?

But this was merely just to state the fact that we did make some changes and that had its impact from April. And so we'll have a full quarter effect on -- in our margin book, in Q3 -- for both private as well as corporates.

I just want more on the flow risk. So the more than DKK 34 million drop in Q3, was that assuming a real cut or not?

That's assuming the way forward rates. Currently, I see a small decline in the 3-month CIBOR rate. But it's also taking into account the fact that we have seen half a year where rates have been continuing to decline in the first half of the year. And our bond portfolio, part of that is semiannual interest rate resetting. So that part of the portfolio should have -- of course, then you could always -- whether it actually has an impact on bonds, specifically, that depends whether we lend it out as bank loan or we place it in bonds. But like-for-like the rate on our bond portfolio should go down in July, given the half year of semiannual interest rate resetting.

But is it then fair to assume if we -- I mean, the money market is pricing 94% likelihood that the ECB will not cut rates in September. So we assume that they are right, and we don't get a cut. Is it fair to assume that NII would pick up -- pickup in Q4?

I think it's difficult to -- I mean, if you -- it depends how the short -- but if rates just were flat from Q2, I can't see why we shouldn't be able -- if we saw some growth on the balance sheet at least, and that's not outweighed by margin pressure, then I agree that should be the case. But I would maintain that we still expect NII to bottom out at the beginning of 2026.

Okay. Fair enough. Then on your -- on the AUM, you mentioned that you see quite nice growth from retail and private banking and less from the institutional side. Could you comment on how your margin is developing within the Asset Management business, so growing AUM 7%? What should we -- how should we think about the asset management income base?

Yes. Sorry, the income base of Asset Management?

Exactly. So -- the margin -- the nominal margin that you make from the AUM?

Yes, in Q2 versus...

Yes, or just going forward, but let's start with Q2 if this continues how we should model it?

Yes. So I think overall, some margin pressure is likely to remain. I think that's been the case for several years, and that's likely to continue to some extent. The quarter movements are usually a bit -- I mean, Q2, you have some yearly fees that are paid in Q2 and Q4. So there will be some swings from quarter-to-quarter, but I think the overall trend is likely to be some margin pressure.

Okay. Fair enough. Then...

On the other side, Simon, I think the development that we are seeing now, which is, as Asbjorn, correctly states, predominantly from our private banking customers and private personal individuals that helps and where we see mix development is on the institutional where you normally have a lower income per AUM. So that helps us, the mix.

Okay. That makes sense. Just final question, a little bit back to the first question from Mathias on the guidance. I get your point on NII coming down in Q3. But if I look at your -- the beat that you made today versus consensus, it's almost DKK 200 million. It's including DKK 60 million of one-off costs. I'm just trying to struggle -- I'm just struggling to see how you can sort of maintain the guidance, why you're not lifting the upper end? Is there something you're seeing or are you're just being conservative?

What I tried to state before was that with what we can see and what we can control when it comes to asset quality and what we see so far, we don't see any negatives that's going to impact the second quarter apart from what you just discussed in terms of interest rate levels, so it is an uncertainty, and you can call it conservative or how you would look at this. But I think we are confident with what we are saying today, which is very close to the 4.6%.

Next question in line comes from Jacob Hesslevik from SEB.

So the first question is also on fees and assets under management. It developed quite nicely until end of June. But given the poor performance from Novo Nordisk, that's to name a few of the blue-chip names in the Danish market, how is the sentiment for Danish retail investors right now? And could we potentially see a backlash in the AUM development already in Q3?

Retail clients are buying Novo Nordisk shares to an extent that we've not seen before. But I think underlying to your question, obviously, these are 2 of the household names for Danish investors, and that could impact the sentiment and willingness to invest. So far, we've not seen that. We are seeing that our private banking customers and personal client customers, they have not dramatically changed their view and they basically behave as they did before, and they're buying up some of the Novo shares as in general the case across Denmark.

And if I look at the split between what is market driven and what is net inflow of new funds from customers in the first and especially the second quarter of this year, we are still on a very strong momentum in gaining new customers and funds. So I think that could be a very strong defense against what you alluded to here.

We could see that more clients opt to have the bank playing a bigger role in helping them doing the investments because the clients that have had advice from the bank would tend to have less of single shares and they would tend to come through this turmoil better. So there's also a business opportunity from our side.

So you see this as an opportunity to maybe get back some clients move to [indiscernible], for example, by giving advice, et cetera?

Yes. And some of our own clients that have decided to a large extent, to invest themselves. That's also an opportunity here.

Interesting. Then also, could you help me understand what drove the increase in the post model adjustments this quarter, in my world, interest rates are coming down, GDP growth for 2026 looks strong and unemployment is low in Denmark. So the increase can't be macro driven, in my view, at least, so what caused it? And I find it a bit silly when you had reversals in this quarter as well to increase your buffers?

Yes. Well, that's a good question. If you look at the first half, we saw an increase in our post-model adjustment of shy of DKK 100 million, as I mentioned, due to the fact that we in Q1 of this year, lifted our macroeconomic buffer because of uncertainty due to geopolitical uncertainty. In the second quarter of this year, there's been a shift in, I think, DKK 6 million or DKK 7 million, so we are moving around the DKK 1.9 billion mark in the second half. What has driven the change and reverse of impairments in the second half has been individual impairments. So the post-model adjustment was very steady going in the second quarter of this year.

I fully understand the reason for asking the question in terms of how we have to deal with this. It's 2 different methodologies. So on where we do the reversals here is basically on single clients where we put aside money for potential future losses and where we see that the clients come out better than anticipated. The post-model adjustments is, to a large extent, math on the entire portfolio.

Yes. That's clear. But could you also give me any guidance on when we should expect these overlays to be released? Is it over the next 18 months? Or is it closer to the next 36 months?

If you look at it in a historic context, we have -- we built up the post model adjustments post COVID back in 2020 from DKK 600 million to DKK 1.6 billion and then up to, well, close to DKK 2 billion. And then you -- I have seen a few swings afterwards. And I have mentioned before, and I still think it fully applies that we can see some dynamics in these numbers. And you're right that if we put on a specific PMA charge or buffer, we need to see it move in one or another direction within typically 12 months.

So yes, there will be some swings to the buffers, which also has been the case because if you go back and look at our quarterly and the annual reporting, you can see that the buffers have shifted from different macro elements to process elements, et cetera. And of course, that still applies. If you ask me, if we could see a much lower level of PMAs, yes, we can see a lower level but much lower back to the level of pre-COVID is not what we expect within the coming few years.

And I think this is maybe a little bit Denmark specific here. So I think with the way that those cost model adjustment rules are implemented and dealt within the banks you would tend to see that the bank hold a little bit more on that line than in some other countries.

Next question comes from Namita Samtani from Barclays.

My first question, I just wanted your thoughts on Nykredit and Spar Nord. It's just that Nykredit had results last week, and they talked about gaining mortgage market share and they're yet to offer all the discounts to Spar Nord customers. I just wondered if that worried, you -- and how does your proposition compare? And are you able to compete?

Yes, good question. I'm confident that we can compete in this. Basically, nothing has changed apart from them having a task of integrating 2 banks on top of running the banks here and obviously, they will be successful in doing that. But the discounts that they have on their mortgages Spar Nord has had in the past also. So that's probably not going to change. And we are confident that we can compete with this, and we are doing it to a large extent already today.

And then just on the Novo Nordisk. Can I ask a question in a different way. Just from a perspective of the company actually impacts Denmark's GDP quite a lot, and I guess jobs as well. So from a top-down perspective, do you see that there's like a potential headwind, more for like lending, et cetera?

Not really. Obviously, if there's a meltdown in Novo Nordisk it will have an impact on the GDP. It will have an impact on certain geographies in Denmark. And one of the geographies where they have the headquarters, one of the geographies where usually strong. So that could potentially have an impact. But what we're looking at is a company that still earns quite a lot of money that still have new products released just yesterday, again, which holds significant promise for the future. So we've seen a growth in the company during the last couple of years, and we saw a projected growth. And the latter the projected growth is probably not going to happen. If what is a base case now and what the company has communicated is how it's going to develop, this will still be a large and strong company in Denmark.

If they should scale down, there's a lot of competence within one of the industries where Denmark in general is the strongest, and we believe that most of the people would be able to find new jobs. So -- and then on the new geographies where they are building new plants, is basically not Jyske Bank land through a large extent. So where the new investments are being done, families are moved to and so on, we don't have a lot of business. So we have it around Copenhagen where the job market is strong altogether, but we don't have it in [indiscernible] where they're building factories.

That's helpful. And just last question. The lending margins on bank lending, I think they're quite a lot better than I was expecting or compared to how CIBOR moved. I just wondered why that was the case?

Yes. We have a bit of a lag effect on some bank lending rates, that was the case on the way up, if you just compare it to a short like a CIBOR 3-month rate, we saw a significant margin pressure by bank lending margin pressure. And that's the reverse as rates come down, some of those fixed rate elements help in increasing versus CIBOR 3-month rate, at least the lending margin. Other than that, I think we haven't been very explicit in terms of what we are doing in terms of lending rates because they -- but you can see at least on the private client, it's a question of -- yes, there is a bit of a lag effect and also maybe we didn't fully pass through on the way up, and that's why we are not fully passing through the rate cuts on the way down.

Next question comes from Mathias Nielsen from Nordea.

I just had one follow-up question on the capital. If I heard you right, you said you were about to apply for the buyback given the time that it takes to get those awarded, should we then expect the buyback to be announced prior to the Q4 '25 results in February? Or how should we think about that?

Well, a good question. hopefully, you didn't hear me saying that we were applying because there's nothing that I can actually talk about. And so I can't give you any clear answer to whether we are in a process or not. But please bear in mind that we have a program now that is running until the end of January next year. And we have said formally that we want to be very predictable here to set of a program that is running throughout the normal calendar year, more or less. And I think that is what you can expect from us going forward.

So, for now, Mathias, we'll just be positive about the fact that we believe that it seems as if there will be room for buybacks.

Sure, sure. But like on that, I didn't really get the point on that. So like last year, you are quite clear saying like we should not expect anything more than once annually, and that should be in connection with the Q4 results or somewhere around that? Is that still the approach? How should I understand that?

So that is the guidance that we're also getting from the FSA that they would like banks in general to deal with this once a year and have a [indiscernible] in our position, probably a fairly substantial program and they would deal with that once a year. So we would stick to what we have communicated on that.

Sure. And then a technical one on that maybe. So like if, let's say, I'm not knowing if you are applying now or when you will apply, but let's say that you apply in a couple of weeks, would that then be based on what the actual CET1 ratio was at the end of Q2? Or would that be at based on an adjusted CET1 ratio based on your expectations for the remainder of the year? How is that in the process of...

Yes. The normal process is rather straightforward because you have to build on your actual numbers whenever you apply anything with the Danish FSA. So if we were to apply, as you say in a couple of weeks, that would be probably be based on our existing Q2 numbers. And then we will do a stress test as they require a harsh one and demonstrate to the extent what is the room for buybacks in a 3 years stress period.

Thank you, Mathias. It seems as if there are no further questions in line. We would like to thank you for participating in today's conference call. A recording of the call will be made available on our IR website in the coming days. Please do not hesitate to contact us if you have further questions. We appreciate your interest in Jyske Bank and wish you a nice day.