Svenska Handelsbanken A Stock

Good morning, everyone, and welcome to this presentation of Handelsbanken's results for the second quarter and the first half of 2026. The second quarter was yet another solid quarter for the bank. Operating profit was SEK 6.7 billion and the ROE, almost 13% (sic) [ 12.8% ]. We saw business growth with lending, deposits and assets under management growing in the quarter. Both NII and expenses were stable and fee and commission grew to close to all-time high. Mainly thanks to continued strong progress in our savings business. Income reached SEK 13.5 billion and with expenses of SEK 6 billion, the cost income ratio was 44%.

Asset quality remains solid, and the credit loss ratio was 0. And as always, the financial position of the bank was robust. After deducting -- deduction of anticipated dividends for the first half year of SEK 4.77 per share, equivalent to 82% of the profits for the period, the CET1 ratio was 250 basis points above the regulatory minimum. In other words, within the target range of 100 to 300 basis points above the regulatory minimum. We see over and over again in customer satisfaction surveys that customers attribute a great value to our way of supporting them. As long as there is a clear customer demand for our relationship-driven model, we will continue to strive at further strengthening our capacities in the branches even more.

Just like we always have done over the -- our 155-year old -- year history. Handelsbanken operates with a business model that some might consider quite unique today. We believe in being close to customers and in long-term relationships with strong, creditworthy customers. But Handelsbanken's model is not only customer relationship oriented. It's also run with a prudent risk appetite and always with a long-term focus. This model has generated very stable shareholder value over time regardless of external factors such as financial crisis or different types of macro or geopolitical disruptions.

The shareholders' equity per share plus dividends has over time grown by, on average, 14% to 15% per year and the stability in this growth is equally as important as the growth itself. The stability is also related to where we have chosen to operate. Our home markets are situated in the Northwest part of Europe, in democratic countries with stable political systems and where rule of law applies. Countries which also have traits of cultural similarities and shared values. These are also countries where we have recognized a very large scope of potential customers for a bank with our model. And where we can stand out in our offering and services.

And importantly, the cash flow from our customers are also stemming from stable Western European economies. Simply put markets where the bank can grow profitability with stability over time. Now if we'll take a closer look at the recent business development in our 4 home markets. All the home markets recorded improved numbers and overall business growth. Starting with Sweden, accounting for 75% of the operating profits in the home markets. In Sweden, we are the biggest lender combined in the market. Loan volumes have been relatively flat over the past year. Household mortgage lending has grown, but the corporate lending volumes have been slightly down.

When we look at the corporate business in Sweden, we would have been more happy if we had seen a pickup on the lending side. But at the same time, there are a few reasons why we remain optimistic about the corporate business going forward. First, as part of the bank's everyday managing of risk in housekeeping of the loan portfolios, some corporate customers are not on our books anymore. This means that the inflow of new customers, corporate customers were not visible in the aggregate volume development. Secondly, the interaction and dialogue with corporate customers have picked up materially over the spring. Increased customer activity has many times been a leading indicator of forthcoming customer demands for loans and other services from the bank.

Thirdly, other business volumes with corporates, namely deposits and assets under management have shown a positive development. Deposits overall are up in Sweden. But the key outlier when it comes to growth is seen in the savings business, which I'll come back to you more on that shortly. Operating profits in Sweden grew by 4% in the quarter. The cost to income ratio improved to 34% and the profitability increased to 16.3%. Now in the U.K., which accounts for 13% of the profits in the home -- of our markets, we have, for the past 1.5 years, seen a constant consistent growth in both our household and corporate lending. Deposits have been fairly stable, while the asset under management are increasing, as you can see in the slide.

U.K. is the market where we stand out the most in customer satisfaction, which forms a solid base to build profitable growth from over time. Operating profit grew by 11% in the quarter. The cost-to-income ratio improved to 61% and the profitability increased to 12%. In Norway, which accounts for 9% of the profits in our home markets, we stated 2 years ago that we needed to see a better balance between deposits, savings and lending. Over the past year, the lending volumes have dropped, mainly due to increased low-margin competition, while deposits have increased. But the key improvement in Norway is seen in the savings business. Over the past 2 years, the market share of the net inflows into mutual funds in Norway has been materially above the market share of the outstanding volumes. The operating profit increased in the quarter by 18%. The cost-to-income ratio dropped to 45% and the profitability improved to 11%.

And finally, the Netherlands, which accounts for 3% of the profits in the home markets. And just like in the U.K., the distance to peers in terms of customer satisfaction is particularly large. Lending growth has been very strong, up 10% compared to last year. Deposit volumes are slightly up. And also here, we have a trend now for numerous quarters with strong growth in asset under management. Operating profit increased by 13% in the quarter, the cost-to-income ratio dropped to 54% and the profitability increased to 11%. I'm having a bit of a trouble with the slides here. So now if we look at the group financials of Q2 compared to Q1, the ROE amounted to 13% and the cost-to-income ratio was 14 -- 44%, sorry. NII was largely unchanged and down 1% adjusted for the currency effects. Fee and commission grew by 2%, mainly driven by increased assets under management.

The customer-driven NFT continued to be stable, amounting to around SEK 500 million in the quarter. But in the NFT occasionally, there can be some swings relating to market valuation effects on instruments used to hedge, risk in the funding and liquidity management. However, the market values of these derivative contracts pulled to par over time, meaning that the NFT swings are temporary. In this quarter, we saw such negative valuation effects leading to NFT dropping to SEK 116 million in the quarter. Other income dropped, but there was -- that was entirely explained by the one-off VAT regain of SEK 1.1 billion in the previous quarter. Adjusted for the currency effects and the VAT regain total income dropped by 2%. Expenses were unchanged adjusted for Oktogonen and currency effects.

Credit losses amounted to SEK 30 million, which was equal to a credit loss ratio of 0%. Regulatory fees increased by 11% due to a booking in Q2 for mandatory interest-free deposits at the Central Bank, covering the next 12 months. All in all, the underlying operating profits decreased by 6%, primarily due to the NFT line. Adjusted for the temporary drop in NFT, the underlying operating profit was actually up a touch. Now if we switch over and look at the first half of the year to the same period last year. ROE again amounted to 13% and the cost income ratio was 42%. NII declined by 10% and 9% adjusted for currency effects. The decline was related to lower margins in the wake of lower short-term market rates. Net fee and commission income, on the other hand, increased by 8% adjusted for FX effects.

The key driver was, again, the savings business and the strong inflows and positive market developments. And all in all, total income dropped by 4% on an underlying basis. The expenses were up by 1% despite the annual salary revision that comes into force on January 1 each year, general cost inflation and increased spend in IT development. The credit loss ratio was 1 basis point compared to net credit loss reversals last year. And the regulatory fees were up this year due to the aforementioned mandatory interest-free deposit at the Central Bank. So underlying operating profit was down 10%, explained by the drop in NII. All the other income lines were -- and expenses developed very positively.

Now if we move over to and take a closer look at the NII development for this quarter compared to the previous quarter. As I mentioned earlier, the NII was flat over the quarter. It's a positive note that volume growth is now again starting to filter through into the sequential NII development. Increased lending and deposit volume contributed with SEK 90 million or 1% to the NII in this quarter. The net of margin and funding, however, affected negatively by SEK 249 million. And the main reasons for the decline is dividend -- sorry, the main reason for decline is divided into 3 parts. In Norway, there is a mandatory notice period of 8 weeks before customer rates can be raised. This lag effect affected NII by around SEK 40 million to NII in the quarter. This effect reverses when there is a quarter with flat rates.

The remainder of the decline around SEK 200 million can roughly be explained by 2 relatively equal parts. First, market rates increased and resulted in funding costs increasing more than interest rates on certain assets such as central bank deposits. There was also an element of lag effect in the sense that repricing of some customer rates come later than the increase of the funding cost for the bank. Secondly, the bank paid out a record high dividend to shareholders of SEK 35 billion at the end of the previous quarter. This means less interest rate generating liquid assets for the second quarter for the bank. Moving on, the day count effect due to 1 more day in the quarter and the currency effects due to a weaker krona on average, contributed together with SEK 156 million. Other effects were minor.

Now the next slide shows the net fee and commission income reached -- how it reached the second quarter with the highest level so far in the quarter and was up 9% compared to last year. The bulk of fee and commission relates to the savings business, especially in the mutual funds business. The positive effects from the strong net inflows into AUM as well as positive market developments, increased the savings related fees by 14% compared to last year. Other fees were stable. Again, we would like to highlight the consistency in the organic growth of the savings business in this bank. The bank's market share of outstanding mutual funds volumes in Sweden is 12%. But over the past decade, the bank has attracted 27% of all net inflows into the market.

And for the first 6 months of 2026, 46% of the net inflows into the Swedish mutual funds market went into Handelsbanken's funds. Over time, these strong net inflows have added significant number -- a customer -- sorry, AUM. Over the past decade, the bank has seen accumulated net inflows of almost SEK 320 billion, significantly outpacing peers. The success comes not only from an appreciated offering and strong performance in the funds over the years, but also the bank's distribution capacity where advisers are close to and have a deep relationship with the customers, parallel to an appreciated offering and distribution in our digital channels. Now over to the expenses. As mentioned previously, costs are down compared to last year. While staff costs are down marginally and other expenses are down more despite the pickup in the IT development spend.

As new technology emerge, such as in the field of AI, it's essential for the bank to embrace the opportunities as we do. The bank invests roughly SEK 3.3 billion to SEK 3.5 billion per year in IT development. In Q2, the IT development spend was 6% higher compared to last quarter -- same quarter sorry last year. As we continuously invest in new IT development, we also continuously roll out new tools in the bank, supporting our advisers in creating business opportunities, enhancing customer experience and to be able to work more efficiently. Within the very broad space of AI, there is no doubt that there is an abundance of opportunities arising. Today, the bank has several AI initiatives in play, spanning from facilitating simple tasks relating to administration to more advanced fields such as AML and transaction monitoring and of course, code assistance.

At current, the investments in AI tech fits within the current run rate of our IT spending. Next slide shows our asset quality and credit losses. And over the past decades, credit losses have been very low, which they should be in a bank with Handelsbanken's risk appetite. And the difference compared to peers really shows in the volatile times when there is an economic downturn. The average quarterly credit losses since 2019 has been SEK 3 million per quarter, equal to 0%. And that includes not only the outbreak of the pandemic, but also sharp swings in policy rates and inflation, the disruptions of the supply chain following geopolitical uncertainties, with the wars in Ukraine and the Middle East, et cetera, et cetera. Still more or less no credit losses, underlying the strength of the bank's asset quality.

The bank is in a very solid financial position. Credit risks, funding risks, liquidity risks and market-related risks are prudently managed and the capital position is very strong. After an anticipated dividend for the first 6 months of the year of SEK 9.4 billion corresponding to SEK 4.77 per share and the 82% of the earnings generated, the CET1 ratio was 250 basis points above the regulatory requirement. The bank is thereby within the range -- target range of 100 to 300 basis points above the regulatory requirement. The strong financial position creates trust and confidence as well as a prerequisite for continued stable and profitable growth. The bank's exceptional position as one of the world's most stable banks was again confirmed by the leading rating agencies during this -- the first half of this year.

In Q2, Moody's also raised their baseline credit assessment rating of the bank to the highest level A1. This is a level shared with only a handful of banks globally. No other privately owned bank in the world has a higher combined corporate rating by Fitch, Moody's and Standard & Poor's. This is achieved by our long-term connected, long-term customer-oriented business model, combined with the low risk tolerance and a very strong financial position. Finally, to wrap up. Q2 was yet another solid quarter for the bank with an ROE of 13%. Business volumes are growing overall, NII was stable and fee and commission grew driven by continued strong development in the savings business. Costs are under control and asset quality remains very strong.

The capital position is solid, enabling the bank to anticipate healthy dividends equaling 82% of the earnings in the first half of this year. We have satisfied customers in the bank this quarter confirmed by our first position on the savings side in the Kantar Prospera annual survey among institutional asset managers. With those final remarks, we now take a short break before moving into the Q&A session. Thank you so much.

[Break]

Hello, everyone, and welcome back. This is Peter Grabe, Head of Investor Relations speaking. And with me for this Q&A session are Michael Green, CEO; and Marten Bjurman, CFO. As always, we would like -- we would appreciate if you would ask one question at a time in order to make sure that everyone has a chance to ask their questions. Follow-up questions are, of course, warmly welcomed afterwards. With that said, operator, could we have the first question, please?

[Operator Instructions] And your first question comes from the line of Gulnara Saitkulova from Morgan Stanley.

Could you remind us of your strategy for driving growth and profitability in the market outside Sweden. Because looking at your returns on allocated capital across your geographic footprint. Sweden delivered return on capital of 16.3% in Q2, while returns on capital in the U.K. were below 12% and in Norway and Netherlands at 10.9%. What are the key levers to improve profitability in this lower return markets while maintaining competitive positioning? And more broadly, how do these differences in returns on capital influence your capital allocation decisions across the group and are you comfortable continuing to allocate capital to markets that are generating materially lower returns than Sweden?

Yes. This is Marten speaking. Thank you for the question. I think I want to start with U.K. And obviously, we have a quarter where we are really happy with the outcome. We see growing volumes both in the mortgage space and also in the corporate space with the pace that we are super happy with. And overall speaking, generally speaking, in the U.K., we have a huge potential. As Michael said earlier on, we have a second to none customer satisfaction level in the U.K. and we are slowly but surely growing into our portfolio in terms of costs, i.e., as volumes grow, you will see key figures in that market, and hence, only by that.

Not only that, we are also deploying multiple solutions to the branch office network in the U.K. to provide efficiency gains that are needed. So you should look at U.K. as we are growing into the cost [ costume ] over time as volume will increase, and they do. So for U.K., we are super happy for the moment. The Netherlands is -- we are even more happy with that if you look at the Netherlands stand-alone in terms of growth pace, albeit they are super small in the group, of course. We see -- if you look at them stand-alone again, we are relatively -- I couldn't be more happy with the pace. I think if you zoom in on the corporate lending book, we have doubled that in 6 or so years, which is fantastic, of course, but still they are relatively small.

Also, they need to work on their efficiencies in terms of reducing manual processes in the branch office network and so on. Norway is a different matter, as you know. We have a significant pressure in terms of competition in the Norwegian market and we've had so for some time. We are not alone in this, of course, and we see margins in our book decreasing, and we see that amongst our peers as well. But that being said, if you look around a little bit in the Norwegian business, not only looking at the lending and you look at the other parts, we are really happy with what we have accomplished in Norway as well in terms of the growth of assets under management, what they are doing, keeping their costs under control, and also now we see the deposits are increasing a bit, and we need that quota to be a little bit better going forward.

All in all, I would say, remember that we are super long term in what we do. And in all these 3 markets, we see potential for our model working with our decentralized model. So all in all, we are happy even though at some point in time, 1 country might lag behind a little bit. But over time, we are happy.

[Operator Instructions] the question comes from the line of Jacob Hesslevik from SEB.

My question is on the margin headwind of SEK 122 million on the NII in Sweden. You mentioned some repricing lag. So is it on the corporate you see the margin pressure? Or is it on retail? And how confident are you given the competitive dynamics we currently see in Sweden that you will be able to pass through the high funding cost and regain those margins?

We -- thank you for the question. We see margin pressure, both on the mortgage side and also on the corporate side in Sweden. So it's both. And I don't want to guide any further, as you know in terms of what we see ahead for the coming periods. We can just conclude that in Sweden as of now, we see the competition, obviously, that has an impact on the margins.

[Operator Instructions] We will now take the next question. And the question comes from the line of Andreas Hakansson from Nordea.

So coming back to Gulnara's question on the International division, it's in 2 parts, but it's the same topic, really. I just wonder why have you reduced your capital allocation to the division so much in the quarter? I see that what's left in the central units used to be SEK 19 billion in Q1 and it's now SEK 55 billion in Q2. And then, of course, that helped the ROE on the divisional basis. But then also, I struggle to understand why now said that you do 12% return on equity in the U.K., but that's, of course, with a fictional tax rate of around 20%, while you actually paid 28%. So why don't you report your division with the tax rate that actually pay there, those both related to the same topic?

Yes. Thank you, Andreas, for the question. And you should bear in mind that we had a dividend paid out in Q1. So in terms of allocated capital, that obviously had an effect first and foremost. And on the tax question that you had, yes, you can always debate on how we allocate internal costs, for example, taxes, for example. And if you want to have in your calculation in profitability measures for the U.K., another tax rate, please go ahead, but then you need to deduct that from somewhere else in the group because otherwise, the figures won't add up group-wise, I guess.

So all in all, I guess, again, bear in mind that U.K. is a market where we are super confident that our model is really fit for purpose in terms of growth. And bear in mind also that we are super long term in what we do.

But just to understand, I don't need to deduct it on a group level because the taxes you pay in the U.K., of course, paid on a group level. Right?

No, I'd say that if you have the group figures in front of you, then -- and you allocate more taxes to the U.K., then you need to deduct it somewhere else.

Yes, but not on a group level. I can deduct it from other.

In Sweden?

Yes, in Sweden, but that's in that division, I just right to understand the U.K. compared to the group level. Okay. Let's leave it at that.

Your next question comes from the line of Magnus Andersson from ABG Sundal Collier.

Just following up there on Norway. I mean, it hasn't really changed that much since the autumn of '21 when you announced the divestments of Denmark and Finland. I think even Denmark, if I remember correctly, was even more profitable than you are in Norway right now. And it is, as you said, a super competitive environment with DNB supported by the state. Nordea will probably tell us tomorrow that it looks awful and you have the Norwegian savings bank being super strong in the regional areas. So I mean, perhaps this change is probably asset management in the savings business to some extent, but it's not nearly enough.

And yes, your long term, you've been there for, I think, 40 years or so at the beginning of the '90s. But is any time now, Michael? I mean, since you became the CEO, you addressed the cost base to start with. Secondly, you reduced the capital position, manage it down to within the range. Is it time for a strategic view of your geographical footprint? And the same, I mean, on the U.K. yes, you want to grow into the current cost base, but are we seeing volumes are growing and you tapped into the broker channel, but it's not much happening to NII really despite the recent rate trajectory.

So looking forward, if -- I mean, you might continue to grow, but if rates in the U.K. progress in line with expectations, I guess, is going to be quite tough for a number of years also going forward. But primarily, Norway seems like you should basically sell it and distribute cash to shareholders. Why shouldn't you? You've been waiting for a very long time for that business to turn around?

Yes. So -- thank you, Magnus, for your questions and remarks. When it comes to the strategic kind of footprint in the bank, that's always a topic that we debate and discuss. And you're quite -- of course, quite right with the -- given the history now from my 2, 2.5 years that we've managed to take -- bring down cost and efficiency, and we've also bring down -- with that, also been able to pay out and take -- bring down the equity in the bank, which is a -- of course, we're looking to which markets we are in and which -- where we should be. I think we are in a good place within these 4 home markets.

In Norway, if you compare it to Denmark, I was not involved in the Danish decision. But I -- there were so many things, both in Denmark and Finland I needed to invest in, so the decision was to divest. In this case, Norway has a very strong offering to the market. We are -- we have already invested in technology and digital solution for customers, and we have also taken down cost there. So I think -- and we now manage to swing a bit on the P&L when it comes to where we get the cash flow from customers to more asset management and capital light in all that.

So I think actually, for now, absolutely, we will stay in Norway -- and I think we will continue to strive hard in the U.K. and the Netherlands is there as well, and they're growing quite good. You can always debate whether you look short term or long term, I think -- my view is that we have a strong business case in all of these countries long term, and we will absolutely work very hard to make that happen. And to be able to grow with scale and do that without increasing cost in these countries, and I'm very hopeful that we will do that over time, Magnus.

Yes. Okay. It will be interesting to follow.

And just to add, sorry, you could also argue, if we don't have anything right now, of course, on the table, obviously not. But we look into also, can we increase the growth in these countries by other things like buying and purchasing thing. We haven't any discussion about that right now, but we think about that too as well.

But that's very interesting because then it sounds like you have a different view than the previous at least recent management teams, as you missed 2 opportunities, recent opportunities in Norway, for example, where you want to grow, you missed Sbanken, and I don't think you even looked at it and you missed the Danske's business, although you were you were actually bidding for Focus Bank back in the beginning of 2000's, but now I don't think you were even looking for it. So would you say that you have a different view that something has changed here compared to previously.

You also got numerous questions in the past about why you haven't pursued any inorganic growth measures in the U.K.

I don't think I have a different view and I would not actually review on my predecessors. I just say that the opposite of selling, as you did mentioned, is, of course, to grow. And there, we always look into if there is something that we could add on. But we don't have anything at the table right now. And my main focus is, of course, to grow organically. That's how we run the bank. But if we have an opportunity that fits us, we'll look into that. That's -- it's nothing new actually.

Your next question today comes from the line of Sofie Peterzens from Goldman Sachs.

Here is Sofie from Goldman Sachs. So my question would be on net interest income. You kind of flagged that there was around SEK 250 million kind of drag in net interest income this quarter, which was partly from the funding cost and partly on less income on the cash positions and then you had also -- it also included the Norway notice period impact. Just wondering if any of those impacts or if we should expect any of those impacts to kind of reverse in coming quarters? Or it was really more that you had this drag and then it's kind of steady state going forward.

So if you could just elaborate a little bit if there is anything that will reverse in coming quarters? And similarly, on the SEK 350 million hit that you saw in the trading line from your hedging in the ALM book. Should we expect any reversal in coming quarters?

Thank you, Sofie. Yes, starting with the SEK 249 million on the NII. I think it's correct to say that the notice period, obviously will pass. And -- so that was a Q2 effect only. If we have market rates on a certain level and policy rates at another level and they stay that way, then obviously, our cash position that we have on Central Bank accounts that will stay as is in terms of the spread. So that is not a one-off. And the dividend is paid out. We are obviously making money each quarter, but the dividend is paid out.

So I think it's a little bit of both in terms of the NII swings that we went through earlier on. On the NFT line, where we have valuation effects on derivatives, we have super clear evidence that over time, they will that effect if you isolate that effect on that line, that will be 0, that is 0 on a quarterly basis average. This quarter, it's not, obviously. So that is a temporary effect for sure.

And maybe just on the derivatives position. Like how would you say that the position is like? Is it in the money or out of the money? Or like I assume second -- or first quarter, it wasn't at 0. So how should we think like overall that the position -- are you going to 0 or in the money or out of the money, like the reverse, if you see what I mean?

I see what you mean, Sofie, but I will not comment on that. It's one of those topics where I cannot comment. It's a lot of moving parts and so many factors that weigh in. All I can say that is what I just said that it will sometimes swing a little bit in the quarters. But if you have a 12-month perspective or even longer, then this is really nothing.

Okay. But maybe putting it differently, did you see any positive mark-to-market impact in the first quarter or Q4 from this derivative position?

Sofie, I think I stick to what I just said. Thank you.

Our next question today comes from the line of Shrey Srivastava from Citi.

It's a follow-up again on some questions other than have asked on the business mix, just that. Let's take the 4 countries that you have right now and assuming that you're happy with your presence there. Your criteria to my mind, is stable countries typically with lower debt-to-GDP ratios where you think you have a competitive advantage or where you can grow the tax. Is there any country that you were looking at where you would potentially look to expand because the fundamental issue with investors for you has not been the cost, it's not been the asset quality, it's been the growth profile. So I wonder if at a management level. You have looked at country expansion to sort of solve that issue?

The quick answer for that is not at the moment. But on a longer term, we always look into how to grow. But right now, we're happy as we are.

Your next question today comes from the line of Namita Samtani from Barclays.

I was just wondering why you didn't take the opportunity to reduce the 250 bps management buffer this quarter on the CET1. I also noticed there's a 30 bps tailwind from the sovereign exposure. So any thoughts there would be helpful.

No, it's just a formal decision from our point of view that it would take a lot for us to change that in the quarter within the year, such as this one in Q2. So we are still at 250 obviously, and we are happy with that for now.

Your next question today comes from the line of Riccardo Rovere from Mediobanca.

I have just one, which relates to Slide 4, where you show business growth in all the markets the lending in that chart in Sweden, which is 75% of your business, which makes all the rest of the discussions a bit irrelevant, is flat in 1 year. Now don't get me wrong. I mean Sweden is not Czech Republic, it's not Hungary, it's not Poland, but the country is growing kind of 3%, 3.5%, you're flat, which means that in real terms, you are actually down in a year. Can you elaborate why you're down in real terms or flat in nominal terms when the rest of the country is actually moving up a bit, at least a bit. Is it a deliberate decision. Can you elaborate on that, please?

Yes. Thank you for the question. It's a fairly relevant one because you say -- as you say, Riccardo, that it's obviously relevant for the group in terms of the volume that we have in Sweden. So if you look at our performance in terms of lending growth in Sweden over longer periods of time, then you will see that sometimes we are a little bit above the market, and sometimes we are lagging behind the market. And it's quite correct. What you state that as of now and since a couple of quarters, we have been lagging behind the growth in the Swedish market. If the question is if we are happy with that, the answer is obviously no. We would have liked to see other figures. What is comforting is what Michael alluded to earlier on that we see activity levels out in the branch office network that are really, really high.

And we have seen also effects of that in the deposit side, and we have also seen streams from the corporate into asset management. So -- but obviously, we would like to have seen that activity materialize into lending as well. And also bear in mind that over time, we have also connections in our corporate lending book that are not fit for us anymore for various reasons. And then we exit them. So bear in mind that this is a net figure as well that is not -- so the underlying figure is that we have attracted new customers, but we have also obviously customers that have left the book.

Fine. But your risk cost is 0. It's not the time maybe to if I may say, to take on board some extra risk because even if the cost of risk goes up to 5 basis points, that probably would be worth doing it instead of having 0 risk cost, whatever happens on this planet and having the loan book going nowhere when the rest of the world is moving. Don't you think it's time maybe to take a little bit more risk on board given that you are starting from 0.

So how it works in this bank is that the branches are actively chasing business locally within the corporate and private market, of course. And they choose where they find it the most attractive for our shareholders over time to do the lending. It's not that the CEO of the bank actually steers exactly how the risk should be taken in the bank. That's not how it works. We manage the portfolio very carefully. And I think in general, I mean, banking is about lending out money and then getting them back. That's the foundation of banking. It's not how much you lose, not for us.

And there can be so many different ways of do banking. This is the way we do it. We don't like losing money. We want to have it back. We do business with very highly rated customers and profitability business with these guys, and then they pay back when they don't need the money anymore. That's how we run the bank. And that's how we should look at us. When it comes to taking more risk, we take the proper risk in all of our home markets, in all of our branches, and they choose who -- where they want to do business, and I support that.

We will now take our final question for today. And the final question comes from the line of Jacob Kruse from Bernstein.

Just it was similar to the last question. But could I ask, so you're mostly a real estate lender, both on the corporate and the retail side. And over the last decade, the number of floors put in which I guess has made the risk-based approach to lending a little bit different. So have you adjusted in the branches, I guess, the lending standards to reflect that very low-risk lending and slightly higher risk lending carry the same capital charge?

And also, if I look at your commission income, as a bank. It seems like the type of business you do generate relatively low commission income compared to your peers. And I guess all of these things kind of contribute to your lower than peer ROE situation. So I know you let the branches run it, but do you think given where you sit in terms of profitability that you may need to rethink a bit here, how you're running the bank?

Yes. Okay. Let me start from the back end of that question. Obviously, yes, we are looking into increasing the capital-light income, which will have an effect on the ROE figure obviously. And as you have seen, we have put some efforts into growing our savings business, i.e., the assets under management for quite some time. And yes, it takes time to move those figures we are moving in the right direction in terms of increasing that in -- actually in all 4 home markets for the quarter. Obviously, we are helped with the market swings also a little bit. But if you deduct that, we see healthy inflows at least in 3 out of 4 home markets this quarter.

So yes, we are constantly looking into how to increase our profitability. That's our job, right? So yes. But again, we run a decentralized bank we are into meeting our customers and take a broader look at their needs and the needs from them in the future as well. So -- and out of that, we are building the business from a profitability standpoint, Michael.

Yes. And I just want to add that if you look -- of course, you're right, if you look at the balance sheet where we have the majority -- the vast majority of our exposures towards the real estate part of the bank -- of the sector. But when you visit a branch in Handelsbanken most of the work that they do with -- in their business is not with the few real estate corporates. It's the huge amount of SMEs and mid-corps that they work with every day, we would not lend as much as a real estate company to do because that's part of their balance sheet.

And working with these SMEs, there's so much opportunity to do more than just lending. You do you do business with the owner family. You do business on the asset management side. You do payments, you do a lot of stuff that really brings on return on equity in these SMEs and mid corps. And that's what they put most of their time in the bank. So it's how you measure it. If you measure just on the balance sheet, yes, that's very heavy on that side. If you measure on workload and business opportunities and the workflow they do, that's more into these regular kind of business, not the real estate corporates.

And just on the risk weight floors, do they filter into the sort of -- because I guess your attitude has been that you don't have low losses. And as you said, you want your money back, but the regulatory environment changed quite a lot in terms of the capital charge that you're exposed to and thereby the ROEs.

Now I think the way you should see it is that the bank is faced with higher capital requirements for a product that's obviously cost that the bank has to take somehow. But how we allocate those costs within the bank is nothing that we disclose in particular. So -- and I don't think that you necessarily should put the 2 together, the capital requirement to the credit losses. I think they are 2 separate items really.

I will now hand the call back to Peter Grabe for closing remarks.

Yes, thank you very much for all the questions and for your participation. And as always, if you have any follow-ups, you know where to find us in the IR department. And with those words, again, thank you very much, and we wish you all a very nice summer. Thank you.

Good morning, and welcome to this presentation of Handelsbanken's results for the first quarter of 2026. We can conclude that the bank reported yet another solid quarter. Operating profit increased by 9% compared to Q4 and the ROE amounted to 14%. The main income lines, NII and fee and commissions were stable. While the lending growth in Sweden was held back a bit by a general slow Swedish economic growth, it was again very encouraging to see that the lending growth trend in the U.K. and the Netherlands continued both on the household and on the corporate side. This has now been a consistent trend for more than a year.

The savings business continued to perform well with market shares of net inflows into mutual funds far exceeding the market share in our books in both Sweden and in Norway. Cost efficiency is always a top priority in the bank. And again, we saw expenses declining. The net asset quality remained very strong with more or less insignificant credit losses once again. The capital remains robust. The anticipated dividends for the quarter earnings were increased a bit in order to calibrate the CET1 ratio to 17.2% or 250 basis points above the regulatory requirement compared to the 285 basis points in the previous quarter. The anticipated dividends amounted to SEK 2.93 per share or 91% of the earnings generated in the quarter. When we look at the longer-term value creation for our shareholders, this solid Q1 report fits well into the picture of the bank's resilient business model. As illustrated in this graph, the growth in equity per share plus dividends has not only been consistently stable over the past decade, but also growing with an average of 14% per year.

And if zooming in on the past 5 years, the average growth rate has been even higher at 15%. And not to forget, this has been achieved in a decade, which includes everything from negative interest rates, Brexit, a pandemic, war then in the Ukraine, inflation and interest rate spikes, stresses in the real estate sectors, et cetera, et cetera. This is what we strive at always generating for our shareholders and also what the shareholders should expect from a bank like us. This stability is, of course, not achieved by coincidence and not just of our way of working. It's a result of the chosen markets and geographies. Our four home markets share the following common traits. They are all stable democracies with large economies, rule of law applies and the political and regulatory landscape are stable. It also helps if there are culture similarities and shares of values.

Not only the assets, but also the cash flow from our customers are stemming from stable Western European economies. In such markets, the Handelsbanken model has a chance to stand out with a unique offering and a higher customer satisfaction than our peers. It is, of course, also essential that there are large bases of potential customers with the right risk profile and that we have a demand -- and have a demand for our offering, hence, offering material scope for long-term profitable growth at a suitable risk level in stable markets. And just to add a small remark, given the recent themes into the financial markets, we have no exposures to private credit.

Before going into the financials for the first quarter, just some comments on the recent business development in these four home markets. Starting with Sweden, which accounts for 76% of the profits in our home markets. Handelsbanken is the largest lender in Sweden when summing up household and corporate lending. It's therefore fairly natural that the soft general economic growth in Sweden translates into fairly flat lending volumes in the past quarters. Deposits are growing somewhat, but the key growth is seen -- clearly seen in the savings business, where we consistently for the 1.5 decade, have seen market share of net inflows into our mutual funds far exceeding the market share of our outstanding volume by more than 2x. In the U.K., we had a long period after Brexit with declining lending volumes, mainly due to customer amortizations exceeding new lending.

Since more than a year, the trend has clearly shifted to a consistent lending growth quarter-by-quarter on both the household and the corporate side. Also, deposits have increased over the past years as well as the savings business. The U.K. is a market where the customer satisfaction really stands out the most when comparing with our peers in the market. In Norway, we stated 2 years ago that we needed to see a better balance between lending, deposits and savings, and the situation has improved since. While lending volume have dropped over the past year, mainly due to intense competition, growth has been seen in deposits and in particular, in the savings business. Over the past 2 years, the market share of the net flows into mutual funds in Norway has been more than 2x the market share of the outstanding volumes. This means that we are deepening the relationships with existing customers and adding new customers, which bodes for improved profitability over time.

And finally, the Netherlands. Just like in the U.K., the distance to peers in terms of customer satisfaction is particularly large. Lending growth has been very strong, as you can see in deposit -- and despite the drop in deposit last year, the longer trend has also been positive. And what is even more positive is that we now see also -- we now also register a sound growth in the savings business with steady growing assets under management.

Now if we look closer at the financials of the fourth quarter compared to the previous quarter -- the first quarter, sorry. ROE amounted to 14% and the CE -- cost/income ratio was 39.5%. In Q1, a VAT refund of SEK 1.1 billion was booked. An adjusted basis, the ROE was 11.7% and the cost/income ratio 42.8%. Operating profit increased by 9%, but declined on an underlying basis by 3%. NII and fee and commission were marginally down, headwinds mainly related to day count effects and FX. Income increased by 3%, but declining by 3% on an underlying basis. Credit losses amounted to SEK 35 million or 1 basis point. Regulatory fees decreased as the previous quarter included a booking of a charge for the interest-free deposits at the Central Bank.

Now if we switch over and look at the quarter compared to Q1 last year. NII declined by 13% and 10% adjusted for currency effects. The decline is related to lower margins in the wake of lower short-term market rates. Net fee and commission income, on the other hand, increased by 7% adjusted for FX effect. The key driver was again the savings business and strong inflows and positive market developments. All in all, total income dropped by 6% on an underlying basis. Underlying expenses dropped by 1% despite the annual salary revision that comes into force on January 1 each year and also the general cost inflation. Last year, we had a net credit loss reverses and the regulatory fees were flat year-on-year. All in all, the underlying operating profit was down by 12%.

Now if we take a closer look at the NII development compared to the previous quarter, we see that NII dropped by 1%. Volume growth contributed with SEK 20 million in the quarter due to lagging effects on interest margins from lower short-term market rates in the previous quarter, the net of margins and funding contributed negatively by SEK 67 million. Deposit guarantee fees were lower this quarter, the decline being explained by fees being elevated last quarter as the final bill for that year was received and paid. The day count effect due to 2 less days in the quarter and the currency effects due to a stronger krona on average has created some headwind, as you can see.

Net fee and commission income dropped slightly in the quarter. The bulk of fee and commissions related to the savings business, especially in the mutual funds business. The positive effect on fees from the strong net inflows were, however, offset in Q1 by a negative day count effect as well as negative mix effects with an increased share of the AUM asset under management in lower fee funds. Other fees were seasonally down. The high market share of net inflows into mutual funds have added significant customer asset under management under -- to the bank over time. As illustrated in this slide, the bank has now accumulated net inflows into Swedish mutual funds at almost 2x the run up over the past decade. This success comes not only from appreciated offering and strong performance in the funds over the years, but also the bank's distribution capacity where advisers are close to and have deep relationship with our customers parallel to an appreciated offering and distribution in our digital channels.

Now over to the expenses. A trend of increased cost was broken in 2024. And since then, the expenses have trended down despite annual salary revisions and general cost inflation. The bank is now in a good position in regards to cost efficiency. As illustrated in Q1 when costs continued down on both quarter-on-quarter and year-on-year, it's deeply rooted in our culture and among our employees to always look at new ways of becoming even more efficient.

Next slide show our asset quality and credit losses. Over the past decades, credit losses have been very low, which they should be in the bank with our risk appetite. Since the outbreak of the pandemic in 2020, the sum of all credit losses has been SEK 50 million or on an average, SEK 2 million per quarter. And that includes the period from the pandemic, sharp savings -- sharp swings in policy rates and inflation, the disruption of supply chains following years -- following the war in the Ukraine and Middle East, et cetera, et cetera. Still more or less no credit losses.

If we compare the credit losses to our closest peers, the bank also stands out over the decade. In particular, in volatile times, difference in underlying asset quality has shown. In Q1, the credit loss ratio was 1 basis point. Perhaps needless to say, asset quality remains very strong. The bank is in a very solid financial position. Credit risks, funding risks, liquidity risks and market-related risks are prudently managed and the capital position is strong. The anticipated dividend in the quarter of SEK 2.93 per share equals to 91% of the earnings in Q1 and is yet another step to gradually adjust the capital position in the bank. The CET1 ratio now stands at 250 basis points above the regulatory minimum compared to the 285 basis points in the previous quarter.

The bank should, however, always be considered one of the most trustworthy and stable counterparts in the industry. This is also the view by the lending rating agencies who rate the bank the highest among comparable rates globally. And this view was again confirmed and further enforced last evening by Moody's, who upgraded the bank's baseline credit assessment rating to A1 from A2. This put the bank in a very exclusive group of only a handful of privately owned banks globally with the highest BCA rating by Moody's. Finally, to wrap up, Q1 was a solid quarter with increased operating profit and ROE, although including a positive contribution from a one-off VAT refund.

Q1 NII and fee and commissions were stable and costs declined. We see lending now growing consistently in the U.K. and the Netherlands and also in the savings business broadly over the markets. Our way of doing bank is appreciated by customers where they experience close relationship with us, and it's also seen in the external surveys in all of our well-chosen home -- stable home markets. Asset quality remains just as strong as it should for a bank with our risk appetite and the capital position is very strong, and we took another step down in the target range by anticipated dividend equaling to 91% of the earnings in the quarter. Finally, I'm also happy for our shareholders that has seen share price reached an all-time high during the quarter. And with those final remarks, we now take a short break before moving into the Q&A session. Thank you.

[Break]

Hello, everyone, and welcome back. This is Peter Grabe, Head of Investor Relations speaking. And with me, I have Michael Green, CEO; and Marten Bjurman, CFO. As always, we would like to emphasize that we appreciate that if you ask one question at a time in order to make sure that everyone gets a chance to ask their questions. With those words, operator, could we have the first question, please?

[Operator Instructions] And your first question today comes from the line of Magnus Andersson from ABG Sundal Collier.

I was just wondering regarding the -- in total, SEK 6 billion in AT1 capital you issued late in Q1 '26, whether the main reason was to be able to go down further in your management buffer or if you expect the higher volume growth going forward or a combination of both? And related to that, also, if you could confirm that the coupon will be taken directly in other comprehensive income rather than in NII...

Magnus, this is Marten speaking. Yes, I had a little bit of a difficulty hearing your first part of your question, Magnus. But I assume that you talked about the AT1 that was issued late in the quarter and booked in Q2. And it's fair what you said, it's correct what you say that this is an equity instrument. It will be booked in the equity and the interest rate, if I may call it that, the coupon, that will be booked also in the equity, yes.

Okay. And also the reason for it that you have your next call in March 2027 of USD 500 million. What was the main reason for doing this now? Was it to be able to go down the management buffer volume growth? Or...

Well, there are various components into that equation, Magnus. But obviously, we didn't have a full box of the AT1, if I may call it that. This provides flexibility to the bank. And as you know, the 2 outstanding AT1s, they are in U.S. dollar. This one is in Swedish krona. So yes, it's -- and then we take it from there. We'll see. But the main reason is that it provides flexibility for the future.

Your next question today comes from the line of Markus Sandgren from Kepler Cheuvreux.

I was thinking about you, Michael, you mentioned that you're going down gradually in terms of capital buffers. Can you give some guidance on -- I know that the Board is deciding what you will pay out. But since you have gradually reduced this buffer in your accrual of dividends, where are we heading within the range, please?

Yes. This is Michael speaking. I don't think you should read that much into the adjustment this quarter. But it's -- the bank is in a position where we are running the bank very operationally strong and we have a cost -- the cost in place and all that. So we have gradually come down in our target range. And when we look at the world outside and we compare what's going on there with how our customers behave in terms of risk, we don't see anything that really sticks out. So our customers, they are in very good shape. And the risk we allocate for is taken care of in our internal risk models. So I don't see the need for having SEK 285 million now. So we will -- we just take it down to SEK 250 million. And then as you just said, we decide where to go when we come into the -- what we anticipate now for the year, and then we take the decision in the Board for how we recommend the -- for the shareholders to -- on the dividend side when we come into the Q4 report.

Yes, so I understand. But what do you mean by that, you shouldn't read too much into that you change it because you do change it because you think it looks good. So there must be some message in that.

Because it looks good.

So but let me underline a little bit also. Again, I think bear in mind where we're coming from. We have -- we're coming from SREP plus 5% or 6% and then we took it gradually down, as you know. And we felt the need to guide a little bit to say that reinforce that the message that, yes, we have this interval, it is set, and we are slowly moving into that. Now as we are within the interval, we don't feel the need to guide that much further on a quarterly basis. So you shouldn't expect us to draw the line anywhere within the range. Now we are in the range, it feels great.

Your next question today comes from the line of Gulnara Saitkulova from Morgan Stanley.

On your cost outlook, please, could you walk us through the key moving parts in your cost base for the next 3 quarters that we should be aware of, specifically, where do you see flexibility for further cost reductions versus what could be the areas of additional cost pressure? You previously mentioned that you have completed the centralized cost-cutting program, but do you expect more efficiencies to come through from elsewhere, for example, from the local branches? And if you look at your headcount, it's down 1% quarter-on-quarter. Do you expect any further reductions in the number of employees to come through? And how should we think about your Oktogonen contributions going forward?

Okay. Well, maybe my answer will be a little bit disappointing to you because we will not guide on the costs going forward. But it's very true what you say. We have that initiative behind us now. We have no plans of broadcasting yet another of those initiatives. But rather, we are staying very true to our culture, our model where every employee within the bank is extremely cost cautious and very sensitive to increases in costs. And this quarter was extremely successful when it comes to cost as well. It was even to me, a little bit surprising actually. But again, I think that you shouldn't expect it to go further down. We are at a level now where we are extremely confident that we can run the bank the way we want. We have resources to spend and invest where we want to spend and invest. And -- but this model is extremely decentralized. We will not interfere with our home markets. We will not interfere with our branch office managers. So ultimately, they decide. So therefore, we cannot guide any further.

And what about the headcount?

Headcount number is basically the same, maybe a little bit boring answer. But still, if a home country wants to expand in terms of number of employees, they are free to do so if they have good reasons to do it. So I don't foresee any big shifts either upwards or downwards in terms of full-time employees.

And just to add on, when Marten says we -- the decision-making for resources, both in headcounts and other cost initiatives that they could happen throughout branch networks and product or whatever. It's not that we don't guide and we don't steer, but we follow them closely. So it's a very sharp following up in terms of cost efficiency and the returns on the investment we do. So it's not do as you like. It's do what you think is necessary, and we will keep a very close track on what's going on.

Your next question today comes from the line of Andreas Hakansson from SEB.

So a little bit of a follow-up here on costs. I mean you've been reducing cost continuously now for, it feels like 8 quarters roughly. And I mean, when we speak to quite a few banks, they see that there's a lot of IT investments relating to AI and whatnot. And when we speak locally and we hear people gossiping or talking, it doesn't sound like you are clearly ahead of the pack in terms of those investments. So is it a risk that you have underinvested now over the last years because a lot of the savings have come from IT, if nothing else?

The short answer is no, I don't think so. I think it's more of a matter of how you're running your development within the IT space. We were heavily dependent on consultants for a very long time. We have now -- we are now at another place in terms of that mix between employees and consultants. So that's one thing.

But the other thing is that we are running our IT development in another way now. We have much more control, generally speaking. In terms of AI, are we lagging behind? Are we the first mover? I don't think it's in our nature to be the first mover in terms of trying out different AI solutions. That being said, though, I'm extremely confident that we have navigated through these challenges and opportunities the right way so far. It's a broad area. It opens up a lot of opportunities, not only for the bank, but also for our customers. We're following it closely. We have quite a number of initiatives that are all the way from ideas to fully implemented and up and running successfully. So it's a broad range of initiatives. So I'm not worried for that matter.

So as a CFO, it's not that you want more resources, but Michael thinks you need to slow it down still? Or what's the balance between you?

No, no. We don't -- the balance is very good between my CFO and myself. So -- but just for the record, I totally embrace the technology and the development of that, and that's a very wide area, and we invest largely in things that we need -- that we see could fit well into our customers and also for ourselves in terms of efficiency reporting, whatever. So I'm very interested in that, and we have a quite good pace actually. So I don't really have the feeling that you described in your first question that we lag. I don't think we lag. I think we do it in a very balanced way in the way we see it from my perspective.

Your next question comes from the line of Shrey Srivastava from Citi.

My first is actually on the positive side, you've got the second consecutive strong quarter for loan volumes in the U.K. What is the profile of the new customers you're attracting versus the U.K. incumbent? Has it materially changed versus your existing customer profile?

Thank you. No, no, it hasn't changed. It's basically the same. It's the corporate lending growth that you see in U.K. is very pleasing and the trend is continuing. So very pleased with that, generally speaking. In terms of our customers, it's no new mix of customers. We are very true to our model in terms of providing financing to businesses that we understand that have strong cash flows, a strong repayment capacity and all that. So no, the short answer is no. We don't have any new features into our model in providing financing to our customers.

Right. And my second one is, can you explain this 50 basis points negative impact on the CET1 ratio from other factors, including claims on investment banking settlements and rounding on? I don't believe it's ever been called out before explicitly. So I'm wondering why it was so large this quarter?

Well, it is large this quarter due to natural reasons because I think that, that business where this derives from is typically slowing down in Q4. So when you compare the 2 quarters, this looks quite hefty. But it's not. I think if you take this level, it could be a natural level for the coming quarters. And I think you touched upon it in your question where it comes from. This is coming from the market making in the capital market side of the bank. So this is really short-term claims. These are coming from market making and deals that are between settlement date and trade date basically. So very short-term claims on our customers, majority in the fixed income space.

Okay. So this was a bit larger than you'd expect given the seasonality if you look versus the past few years?

No. I mean, this portion that I just explained is maybe 1/3. The other 2/3 are so many items in so many parts. So it must be considered a regular quarterly volatility, many, many smaller items in that. So I'm not surprised where we are. But again, you have to compare with a regular quarter. And in this case, Q4 might not be that one.

Your next question comes from the line of Namita Samtani from Barclays.

I just wondered, it's just another quarter where Nordea is growing its Swedish corporate lending by 4% quarter-on-quarter and Handelsbanken volumes are flattish. So I just wondered why you're allowing another bank to take market share from you so much so that you're not even growing the Swedish lending book in the quarter? And just a follow-up to that. I just also wondered why there's appetite to grow in commercial real estate in the U.K. and Norway, but not in Sweden just based on how you grew this quarter. Are the competitive dynamics different in Sweden versus Norway and the U.K.

Yes. So the -- first of all, we don't allow competitors to take business from us. We compete every day and you win and you lose some. In our -- from my perspective, the volumes that we've seen leaving the bank has mainly -- or absolutely the vast majority is -- it goes to the capital market side. So it's not that any other bank is competing with us, and we do not have the capacity to compete that. So that's how it is. And I'm not going to comment on Nordea's growth. That's -- I don't know what they do there.

But I think growing the lending book, it comes -- when you have market shares like we do in Sweden, you tend to grow, as we've said before, in line with the real economy growth in this country. If you want to grow more over time, you need to be very aware of pricing and risk, and we are conservative in that sense. So we follow our customers. If they invest, we will grow with them. And we will gladly compete and take business from our competitors. But in general, we grow in Sweden with our very, very strong corporates and private individuals. And if you look at the market right now when it comes to corporates, what we see from our perspective when we talk to our customers is that they are a bit reluctant now to invest both when it comes to investing in factories and production, but also invest in real estate right now.

So it's a bit on a standstill due to the uncertainty in the surroundings. And when it comes to the private individuals in Sweden, we see a small pickup when it comes to buying new houses, and we have quite a strong inflow when it comes to that market, when it comes to the transition market when they buy houses. So we don't see a problem with this. We -- in Sweden, we follow our customers when they grow and when they're not growing. When it comes to the -- as you probably noticed in the U.K. and the Netherlands, we have the opposite. We have a quite strong growth there because the market share we have is quite low. And that's what you should expect, and that's what I'm expecting with high ambition in these countries.

Sorry, could you just comment a bit on the differences in the commercial real estate U.K. and Norway versus Sweden? Is it more competitive in Sweden?

No, I think there are competition everywhere we are because we're very strong and transparent countries with strong competitors. So I don't think any -- there is any difference there.

Your next question today comes from the line of Sofie Peterzens from Goldman Sachs.

Here is Sofie from Goldman Sachs. I was just wondering how we should think about the net interest income in the other division, given that it was up 41%, I think, quarter-on-quarter. Could you just comment on kind of what's the normalized run rate? Are there any headwinds or tailwinds we should kind of be mindful of? And also, I know you don't guide on rate sensitivity, but if you could just help us kind of think about how we should model potentially higher rates in Sweden and also elsewhere in Europe, what the kind of moving parts are?

Yes. A number of questions there. And the sensitivity to policy rates, yes, obviously, when we have -- as we had in this quarter, policy rates turned down late in the previous quarter, we will have an effect. And generally speaking, as you know, we benefit from higher rates rather than lower. So -- but in the meantime, we have lag effects that you know of when these rates are cut. And it varies a little bit between countries. But yes, generally speaking, we should expect now that, okay, policy rates were expected to go down further in U.K. and in Norway. Now we don't -- we're not so sure anymore. Some say flat, some say even a little bit of a pickup. Obviously, we will have an impact of that. It will take a little bit of time to bleed through that effect through the books as with all banks, I guess. So that's where we are, and we don't guide any further than that.

But in terms of the other division, like -- yes, do you have any guidance on how we should think about the contribution from there because it's very difficult to model on a quarterly basis, plus 40%. So is there any way we could kind of think about how to think about the kind of volatility in this division going forward?

Yes. This is Peter speaking. You can say that there are mainly two reasons. One is within the treasury department where actually both of these two items are within the treasury department. And it goes up and down in between quarters and it's connected to what's allocated to the different segments. On a group basis, everything, of course, nets out. But occasionally, you allocate out more from Central Treasury and sometimes you allocate out slightly less. And then furthermore, it's also a result of the -- of what you generate in our liquidity portfolio, i.e., the returns on the assets we have in the liquidity portfolio, which means that it can go up and down somewhat in between quarters. But I think overall, you should see it as more of relating to components that generally are sort of intertwined with the allocations out to the respective segments.

Your next question comes from the line of Riccardo Rovere from Mediobanca .

Sweden loss cut rate in September, so say, around 6 months ago, would you say that now the balance sheet on the assets and liability side has absorbed the loss cut made by the Riksbank 6 months ago? Or should we expect a little bit more tail in the coming months?

Yes. Generally speaking, yes. I think we have seen most of the effect, not all, but most of the effect for sure. So that's the short answer.

And let's assume for a second that short-term rates remain where they are. I mean, STIBOR goes up a little bit in the quarter. That I suppose nothing of that is eventually visible in these set of numbers, I would say so. Am I right in saying so?

I'm very sorry, I didn't catch your question fully. Would you be able to repeat...

Yes, yes, sure. The STIBOR month was a little bit higher in the -- especially in the month of March. Let's assume for a second that, that remains. I think it was 9 or 10 basis points higher in the month of March. Let's assume that, that stays for a while. Is it fair to assume that in set of numbers, we have not seen anything from this 9 or 10 basis points higher level on STIBOR 3 months.

I think it's what we usually say. I mean the reason for us being with silent here is that it's difficult to give you a straight answer on that question. I mean, obviously, as we always say that there are tons of factors that play in when we talk about the development of net interest of funding and margins. STIBOR is, of course, one component. But how a particular STIBOR movement in between months or quarters directly will affect the NII is very difficult to guide on. And as you know, we prefer to stay away from guidance -- sorry, Marten, please go ahead.

Your next question today comes from the line of Emre Prinzell from Nordea.

I know you touched upon this, but just to double check here, what do you need to see for Swedish lending growth to meaningfully pick up in the next few quarters? I mean we're expecting Swedish GDP to grow maybe 2.5%. Should we therefore see a read to you that you ought to grow 2.5% in Sweden? Or what's a reasonable way of looking at this going forward?

Yes. Great question. Yes, I would love to grow 2.5%. That would be perfect for us. And as Michael alluded to earlier, we have seen 1 or 2 tickets leaving the book in this quarter, not to other banks, but to the bond market. That happens, it can happen. And what will it take for us to really set off the corporate lending? Well, I think -- and we've been talking about this quite a bit also during previous quarters that generally speaking, we will need the economy to pick up speed in terms of the recovery phase that we are in. And everything that is disturbing that picture is obviously not good for business. So if we have globally, even if it's not evident in our books, but the appetite or the demand for credit needs to pick up speed. That's where we are. We are not growing on our own. We are growing with our customers. So if they have a need, then we support them, obviously, it's not more fancy than that.

Your next question today comes from the line of Johan Ekblom from UBS.

I just wanted to pick up on some of the earlier comments you made around costs and AI, right? So I think in response to one question, you said, look, the staffing decisions are made at the branch level. And at the same time, you feel like you're doing kind of enough in terms of technology and AI. But when we think about that, I mean, surely, technology and AI are investment decisions that had to be made at a central level and the benefits of AI are expected to largely come through in the -- in the form of lower staff needs. So does that create a tension in your decentralized model? Do you think you are as well equipped to reap the benefits of AI as maybe some of your peers that run more centralized business models?

So Johan, thank you for the question. I appreciate that because this is actually a very good point. When it comes to decentralized way of working and resources, that refers mostly to the branch business. And when it comes to decision-making in terms of infrastructure program, AI investments, which is obviously a larger ticket. that's been taken care of within the management of the different areas, but also, of course, with the Head of IT, sorry. And we discuss that both me and Marten when it comes to these large investment programs that we run to make sure that we don't have any problem with holding back on time when it comes to develop new facilities, new prospects for doing business or creating efficiencies. So this is not a decentralized way of working. The -- what we should do comes from business and from IT. And then Marten and I and Head of -- Anton Keller, Head of IT, makes decision when it comes to the more heavy investments in this. So there's not a decentralized way of doing what you like when it comes to IT investments.

But do you not need full buy-in from the organization on adoption to make the investments work.

Yes. But that's not a problem because if the reason is correct and right and logic and good for the bank, everybody will buy in. That's up to us to really make sure that the people understand why we do this. And I don't have any -- not once have I felt or heard that there is going to be difficulties in explaining the rationale when it comes to IT investment and spending because that puts the bank in a strong kind of competition position, which will be necessary all the time for a company to grow. So I don't think there is any problem with that, actually.

Your next question today comes from the line of Max Jacob Kruse from Bernstein.

Just one question then. So this quarter, you hiked your mortgage rates very late in the quarter and STIBOR moved earlier. Could you just talk a bit about what you saw in the quarter in terms of timing effects? And maybe you could touch on as well any kind of balance sheet hedge offset you have there?

We saw none of those effects is the short answer. So yes, that's it.

And sorry, how is that -- I thought your list price would be determining the kind of role of the negotiated rates or the rates on mortgages. And obviously, your STIBOR, any kind of swaps into STIBOR would have moved. So why would you not see any impact?

We reset the interest rate for mortgages the 1st of April to start with. So it's first every month is the cycle, if you will, where we reset these interest rates.

I'll just add that the price we get from the business when we do business with our private customers when it comes to mortgages is not -- it's -- the discussion stems from the list price, but it's not where we do business. So the cost for our branches when it comes to -- the funding costs for our branches, that it's volatile. It comes from where the market rates are. And they will then push and they do business where they find there is a profitability. So this -- the list price is just the way we start with the list price. We never do business on list price. So the volatility in short rating -- short interest rates are taken care of in the day-to-day business on the branches.

So just to clarify then, so the STIBOR moves are -- the STIBOR moved in the quarter, you say your pricing on the list price changed on the 1st of April because I guess your list price changed at the end of March. But I understand that your front book is a negotiated rate. But surely, as people roll towards -- if I have negotiated the rate, that will move with the list price. I think it will not move, but that plus the discount will be the role. So I don't quite understand how you can have STIBOR moving up and list prices staying stable without having any impact in terms of...

So when you roll your 3 months interest rate period, we have another discussion with the customers. And then we set the new price for the next coming 3 months. So I don't really understand your concern there.

Maybe I'll catch up with you. Yes.

We will now take our final question for today. And the final question comes from the line of Andreas Hakansson from SEB.

And sorry, some follow-ups since we could only ask one question. So a follow-up and a real question. And it's back to, I think it was Namita asked about the commercial real estate exposure. I mean you're one of the most commercial real estate heavy banks around. And if we look in this quarter, the only growth is coming from commercial real estate, I think, in all markets, while other corporate banking is declining. Is that a strategy that you're happy with given that, I mean, the profitability of a CRE loan is normally lower than other types of corporate banking given what you can do around it and so on. So are you steering the bank in this way? Or is it just happened to work out like this?

So Andreas, we don't steer the bank in which customer to pick and choose. That's for the branches to do. If they find it suitable or they find the risk suits us well. We have products that could solve problems for a corporate or real estate company, we do that. So it's the steering from my side. This is the way the bank is run. We make sure that our branches are in a position to compete and then they choose which counterpart they want to do business with. And this is how the balance sheet will ends up in that case. So it's not a -- it's not a choice from my perspective on where to do business. We try to compete on all segments. We compete on industrials or we compete on commercial real estate business. It's up to the branches to do that, to choose.

Yes, that's fine, but the branches is quite significantly steered by a cost/income ratio and want to keep costs low, as you discussed earlier. But if they would then go after some other types of corporates where the margin could potentially be thinner and the cost-income ratio would be higher and then the benefits of doing some other type of business could be taken in the markets division in Stockholm. So is the branch really the ones that would drive a higher profitability type of lending since they are driven by costs?

Yes, I say they are because what we do when we do business on the ancillary business, for example, within FX or other parts of the Investment Bank, that's been taken care of by refund, if you put that way to the branches. So everything comes down to the branches P&L anyway. So that's just good. So we do...

But eventually...

Sorry.

But eventually, but you might have to live 2 years with a low margin until you do that business because you have to be committed to the company and so on.

No, no, that's not how it works. So you get instantly repaid from the investment bank when they do their trades or their interest rates derivatives or whatever. That comes the month after. So that's not the way it works when we steer the bank.

Okay. Then finally, on your loan-to-deposit ratio in Norway at around 300%. If rates now start to go up in Norway, which seems to be expected, is that a positive or negative for you guys?

It will eventually be a positive thing, Andreas, but it will take a little bit of time to adjust, obviously. So yes, but it's positive long term, yes.

We will immediately benefit from the deposit side, of course. So that will give a boost. But then it's all about adjusting the lending book as well to the new market rate.

Yes, I was thinking that some of a very deposit-rich bank could afford to compete on the margin on the lending side, given that it makes so much more on the deposit side, will you guys have flipped the other way around.

Yes. But that's the way it has been for many decades now when it comes to the business and how we compete in Norway. So that's nothing new.

That was our final question for today. I will now hand the call back for closing remarks.

All right. Thank you, everyone, for all the questions and for those of you who listened in. And as always, you know you can always reach out to the Investor Relations department for any further questions and follow-ups. With those words, we wish you all a very good day. Thank you very much.

Good afternoon, everyone, and welcome to this call ahead of our silent period that starts on April 8. This is Peter Grabe, Head of Investor Relations speaking. And with me today, as always, I have the whole Investor Relations team, Lars Kenneth Dahlqvist, Andreas Skogelid and Per Aronsson. We would like to remind you that this call will be recorded.

The call is intended for sell-side analysts and will not include any communication of new information, information that is not publicly known or any new guidance. The aim of this call is to remind about publicly communicated matters for housekeeping purposes of estimates and expectations ahead of the interim report. In this call, we are not aiming at steering you towards any specific numbers, and the outcome of the quarterly results will occasionally deviate more or less from the trends we comment on in this call. And we will only answer questions related to public information. [Operator Instructions]

Now let's go through the respective lines and start with NII. First, in terms of volume development, we always refer to the official statistics. Our communication in the Q1 report was that Swedish mortgages saw a slight pickup, while corporate lending growth remained muted. Volumes are gradually increasing or were gradually increasing in the U.K. and the Netherlands, while the growth remained muted in Norway.

Second, in terms of margin development and NIM sensitivity, we don't guide because of the abundance of moving factors such as funding, competition, mix effects, et cetera. Generally, we have stated that lower policy rates burden the transaction account deposit margins and that it should take about 1 to 2 quarters with flat policy rates for the impact from the changes to have fully filtered through into the NII. In terms of policy rate changes, they were unchanged during Q3 and also in Q1 so far in Sweden, Norway and the Netherlands, but Bank of England cut the rate by 25 basis points in late December.

Third, Q1 has 2 days less than Q4. The net day count effect over the past quarters has been around SEK 20 million to SEK 30 million per day. Finally, in terms of FX, the average rate of the Swedish krona in the quarter has strengthened so far compared to the euro and the sterling pound and weakened slightly against the Norwegian kroner. This should mean a headwind to sequential NII development. As always, when assessing the FX impact on the P&L lines, look at the average FX level in the quarter compared to that in the previous quarter and take that times the P&L line in local currency in the respective segments.

Then over to fee and commissions, starting with savings-related fees, which accounts for around 2/3 of the commissions. The development of the daily average stock market indices during the quarter usually tends to be somewhat of a leading indicator for savings-related fees. There are, however, of course, several other factors affecting the savings-related fees, such as level of inflows, mix effects, et cetera. But we can note that the daily average of the stock market indices are actually up somewhat in Q1 compared to Q4 so far.

In the savings business, there is a slight day count effect of around SEK 20 million per day. And to remind, there were no performance-related fees in Q4 to bear in mind. And in terms of the other fee lines, we can only refer to the historical seasonal patterns.

Moving on to NFT. The NFT is a minor income line, as you know, and has averaged about SEK 500 million to SEK 600 million per quarter over the past few years. However, as seen in the past, it can vary by a few hundred millions in some specific quarters when credit spreads, interest rates or -- and/or currency rates have been particularly volatile. Over the past few quarters, this -- over a few quarters, these swings tend to even out, though. The base component of the NFT line is the customer-driven NFT, which is fairly consistent at around SEK 400 million to SEK 500 million per quarter. Then to the cost lines. Just like on the income side, it's fairly easy to get a sense of the FX impact also on the cost side. As mentioned previously, the Swedish krona has generally strengthened, which would mean slightly lower costs in our foreign home markets in Swedish krona terms, all equal. May I please ask everyone to mute. Thank you.

In terms of potential Oktogonen provisions, we do not guide, as you know. But as always, we appreciate when you are transparent about your Oktogonen estimates in order to be able to assess the underlying expectations for the staff costs. However, just to note, in Q1, most of the years, the Oktogonen provision has been more or less equal to the quarterly average of the previous year's final provision. Apart from that, we can only refer to historical patterns of the costs in Q1 versus Q4.

Credit losses. The only thing we can say is there's been no public disclosures that you might have missed for Q1. Regulatory fees. First, in Q4, there was a booking of interest-free deposits at Central Bank of SEK 98 million covering the period until end of June. That will, of course, not reoccur in Q1.

Second, from January 1 each year, the risk tax and resolution fund fee are recalibrated. The resolution fund fee formula suggests a minor increase in Q1 given an increase in total liabilities between 2024 compared to 2023. In terms of the risk tax, the formula has changed somewhat with a high 3%, but a deduction in the base amount. If you do back-of-the-envelope calculation based on the publicly announced formula, it would suggest a few tens of millions higher level per quarter compared to in 2025, all else equal.

Finally, on capital. The reported CET1 ratio in Q4 was 17.6%, which was 285 basis points above the SREP. This means that the bank was back within the target range of 100 to 300 basis points above the SREP. We will come back in the report -- in the Q1 report in terms of the dividend anticipation, but we will not guide on an exact targeted level within the target range since the target range is a range and not a specific point within the range.

And with those final words, we open up for questions.

And I think Andreas, you are first up. So please go ahead.

Policy rates have been stable, as you say, but we've seen market rates move quite sharply, especially during March. Could you tell us how does the market rate impact the bits and pieces that are rate sensitive? I mean it's not all policy rate. And should we then start to see a benefit from that rather in Q2 since it's only in March. Could you just go through the different parts that's sensitive to the different rates, please?

I'm afraid we're going to have to pass on that question. We haven't been explicit in terms of sensitivity to short-term market rates. So I'm afraid I'm going to have to refer to what I said previously that generally, when there are policy rate hikes, or cuts, you do usually see an effect on the transaction account deposit margins. But apart from that, I'm afraid we're going to have to pass.

But just to understand, I mean, if you take the equity capital, around SEK 200 billion, I would assume that, that's invested in the short end of the curve, so it should be impacted by market rates. Is that not the right way of thinking?

Again, Andreas, I'm afraid you're not going to get an explicit answer from us. You can slice both sides of the assets and liability side in different ways and draw different conclusions. But what you're alluding to is one way of looking at things, but I'm afraid I'm not going to be able to provide more information on that.

All right. Magnus, you're up next.

Yes. I was just wondering two things then. First of all, in terms of -- you had VAT recoveries in Q4, whether you said anything for which years those were and whether you have applied for anything more that could come into Q1? And secondly, on capital, is the most reasonable expectations we can do is that you keep the management buffer intact on accruals into Q1?

Well, in terms of the VAT, what we said that there might be some more coming. We weren't explicit on the exact year. But what we said, I think it was in the analyst call -- sorry, in the conference call in conjunction with the press conference, we said that there might be more coming ahead, but it's too premature to speak about the amount and when and so on. So we're going to have to come back on that. I'm sorry, could you just repeat your second question again?

Yes. Just on dividend accrual, is it fair to assume that you, like last year, keep the same management buffer and then the accrual is derived from that?

Again, as I mentioned, in Q1, we will come back when it comes to the anticipated level, and you will get more information then. But at this time, I mean, the last thing we've said is that we are at 285 basis points above the SREP. And I mean, if you assume something else for Q1 and then need to recalibrate that assumption when you get the numbers, well, that might be the case. But we will come back in terms of the anticipation in Q1.

I think, Sofie, you're up next.

No. So yes. Actually, I forgot what I was going to ask. Sorry about that. Sorry.

No worries. Then we move over to Namita.

Just on the wholesale funding side, sorry, I joined the call a bit late, so sorry if you already talked about this. But have there been any noticeable maturities in the quarter? And how is the issuance versus the maturities been?

Well, this is Andreas. I don't remember the exact figure of maturities during the quarter, but it's very evident if you look in the debt IR presentation to look at that. And when it comes to our funding activities, we have done 2 senior trades, one in Aussie dollar and one in euros, i.e., we have exactly followed our internal funding plan. So nothing from that perspective deviates from other quarters in any way.

All right. The only hand I see raised now is Sofie still. You might have a follow-up to the other?

Yes. So I was just wondering about the single resolution fund fee. I know you said that it's going to be slightly up year-on-year. But do you have any visibility on when the single resolution fund fee could disappear in Sweden?

No. Our guess is just as good as yours, unfortunately. It's a Swedish National Debt Office that typically publishes a level where the fund stands. So you will get that information at the same time as we will. So unfortunately, we have no more insights than you.

And what about -- if you have a change of government in Sweden, do you think there is a risk that we could potentially see an additional banking tax?

Again, I'm afraid it's anyone's guess really. It's too premature to also address that question, I think. So I have to pass on that one as well, unfortunately.

All right. I don't see any raised hands at the moment. I'll give it a few more moments if anyone wants to ask a final question.

Well, that does not seem to be the case. So thank you, everyone, for listening in. And if you have any follow-up questions, we, of course, know where to find us. We wish you all a very good day. Thank you very much.

Good morning, everyone, and welcome to this presentation of Handelsbanken's results for the fourth quarter and full year of 2025. The bank reported a solid fourth quarter with net profits from continuing operations, up slightly compared to Q3 and a return on equity of 13%. The savings business continued to perform well with strong inflows in customer savings.

Assets under management reached an all-time high in our home markets. Household lending has started to grow again in most of our home markets. And in the U.K. and the Netherlands, we now have also seen several quarters with steadily growth also in corporate lending.

All in all, the income increased in the quarter, while the normal seasonal pickup in expenses was fairly modest. Asset quality remained very strong, and we added yet another quarter with net credit loss reversals, bringing the consecutive count to 8 quarters in a row with net reversals.

So given the solid asset quality and strong financial position of the bank, the Board proposes a dividend of SEK 17.50 per share to the AGM, which an ordinary dividend of SEK 8 per share and an extra dividend of SEK 9.50 share. The CET1 ratio of 17.6% was 2.85% above the regulatory requirement.

In other words, the bank is now back again in the long-term range of 100 to 300 basis points above the regulatory requirement. Now if we look closer at the financials of the fourth quarter compared to our previous quarter, ROE amounted to 13% and the cost-income ratio was 41%.

Operating profits were down marginally, but net profit from continuing operations increased slightly. Adjusted for currency effects, the NII declined by 3%. The drop was explained by negative margin effects due to lower short-term market rates and by a year-end calibration of the deposit guarantee fee for 2025.

Fee and commissions increased by 5% and were driven primarily by continued strong net inflows into assets under management and positive stock market develops, boosting the savings business. The NFT increased somewhat and over income -- and other income, sorry, was supported by VAT reassessment in Sweden and Denmark of around SEK 200 million.

So all in all, the income grew by 1%. Expenses usually increased some in Q4 as the activity level is always higher after the preceding summer quarter. The increase of 2% was, however, relatively low compared to in previous Q4s, which reflects the increased cost focus in the bank.

Net credit losses amounted to SEK 5 million. If we switch over and look at full year of 2025 compared to 2024, ROE amounted to 13% for the year and the cost-income ratio to 41.5%. And adjusted for currency effects, the NII declined by 7%, again, mainly as a result of the material cuts in central bank policy rates during this year, affecting the margins.

Net fee and commission income, on the other hand, remained resilient and increased by 2% adjusted for FX effects. The key contributor was again the savings business. The NFT was down due to temporary negative effects in the second quarter in 2025.

All in all, total income dropped by 9%. Expenses at the same time dropped by 7%. And when adjusting for the FX restructuring expenses and Oktogonen, the underlying decline was 3%. The reduction of the running cost base of the bank came as a result of the initiatives carried out over the year -- the last year-and-a-half.

This enabled the bank to counter general inflation and annual salary increases by a wide margin. Net credit losses reversals amounted to SEK 313 million compared to the SEK 601 million a year ago. All in all, the underlying operating profit was down by 12%.

Now if we take a closer look on the NII development compared to the previous quarter. As said, the NII dropped by 4%. Over a number of quarters, we have seen positive signs of recovering growth in particular in the U.K. and the Netherlands, but also in the mortgage lending market in Sweden.

Overall, however, volume development only contributed with SEK 14 million to the NII in the quarter. The main effect in the NII rather related to effects from policy rate cuts with lower short-term rates, which impacted the net interest margins. In Q4, we received the final bill for the deposit guarantee fee in 2025 from the Swedish National Debt Office. It was a touch higher than expected and resulted in a top-up in Q4, burdening the NII with around SEK 50 million. Currency effects were negative due to the strengthening of the Swedish krona.

Net fee and commission income increased by 5% in the quarter. The bulk of fees and commission relates to the savings business, especially in the mutual funds offering. That's an area where the bank has seen the bulk of the increase in fees and commissions due to both positive market development as well as continued strong net inflows into our funds under management.

In both Sweden and Norway, the bank's market share of inflows into mutual funds exceeded the market share by the outstanding volumes by more than 2x in 2025. This has consistently been the case for over a decade in Sweden. In Norway, it has been the case since the bank refocused 2 years ago to a more balanced growth between lending and savings. Other fees have grown a bit more moderately.

Now over to the expenses. As shown in the slide, the trend of increased cost has broken in 2024 and the expenses have since then traded -- trended down despite annual salary revisions and general cost inflation. Central and business support functions have been streamlined and the use of external consultants materially reduced. The positive trend has continued also in Q4 in 2025, and we can note that the underlying staff costs are down by 5% compared to the same quarter last year.

Looking at the other expenses, they were down 4% -- were 4% lower compared to the same quarter in 2024. And the bank is now in a very good position in regards to cost efficiency. But that does not stop us from continuing to strive every day to increase our productivity.

And as part of that daily endeavor, we always explore and embrace new opportunities arising from technological advancements. One obvious field today is the AI, where we spend a lot of time and resources in examining the potential for improved operational excellence and productivity as well as for further improvements of the customers' experience and the bank's value proposal.

Now over to asset quality and the credit loss reversals. When summing up the last 5 years, meaning since before the pandemic, the bank has in total booked net reversals and as said now the 8 quarters in a row with reversals. The absence of credit losses is an evidence of the prudency in the bank when it comes to managing credit risk. It reflects the bank's underwriting procedures and policies, the risk appetite and the customer selection as well as the preference for collateralized lending.

But also not least in the ability to detect early signs of credit risk deterioration and the ability to quick make this necessary actions and decisions. In this context, the local presence through our branches and the close relationships with our customers is essential, but cannot be emphasized enough.

Now turning to Slide 9, a few words about our respective home markets. To start with our largest home market, Sweden, which accounts for 71% of group earnings. The market position for the bank is strong with the bank being the largest combined lender in private and corporate lending. Mortgage volumes are now growing again and have been since the last spring, although with a bit moderate pace. The market share of the net new mortgages was 6% in the first half of 2025, but doubled to 12% in the second half.

Corporate lending volumes remains a bit on a standstill, but expectations for recovery along with general economic growth in Sweden going forward. The saving business, as I've touched upon earlier, continued to develop well. The cost-to-income ratio was 33% in Q4 and the profitability around 15%. The U.K. accounts for 14% of the group earnings. Household lending volumes has consistently grown since early 2025 and we were up another 1% in Q4.

Corporate lending has grown consistently since the summer of 2024. In Q4, the volumes were up by 2%. We also see deposit volumes increasing steadily on both the household and the corporate side. In the recent quarters, the efficiency has gradually improved, and we are now starting to see initiatives filtering through in the cost base that offset margin pressure on the NII relating to lower short-term rates.

The cost-to-income ratio improved in the quarter to 57.5% from 59% in Q3. The operating profit increased by 3% in local currency and the profitability was 13%. Norway accounts for around 9% of the group earnings. After a refocus period that started during the spring in 2024, the business is now gradually becoming more balanced between lending, deposits and savings. While the competition in especially the mortgage market is fierce, the bank continues to focus on deepening our customer relationships and also in the fields of deposits and savings.

As mentioned, the savings business is progressing very well in Norway. In 2025, the bank attracted 6% of the net inflows into mutual funds in Norway compared to the market share of just about 2% on the outstanding volumes. For the full year, the cost-to-income ratio improved to 43% from 46% in 2024, and the profitability improved from -- to 11% from 10%.

And finally, the Netherlands account for 2% of the group earnings. And just like in the U.K., the trend shifted 1, 1.5 years ago on the household and corporate lending side. We have now seen a steadily growth month by month. The positive volume development was, however, offset by the margins due to lower short-term euro rates. The ROE fell slightly in the quarter. The bank is in a very solid financial position. Credit risks, funding risks, liquidity risks and market-related risks are prudently managed and the capital position is strong.

After the proposed dividend of SEK 17.50 per share, the CET ratio stood at 17.6% or 285 basis points above the regulatory requirement and therefore, now within the long-term range of 100 to 300 basis points. The dividend proposal corresponds to 146% of the earnings generated during the year. The bank should always be considered as one of the most trustworthy and stable counterparts in the industry. This is also the view in the lending rating agencies who rates the bank the highest among comparable banks globally.

And finally, to wrap up, we see now positive household lending growth in most of our home markets and within corporate lending growth also in the U.K. now again and in the Netherlands. The commission business is growing, and we see momentum continuing to build in the savings market -- savings business with strong inflows of assets under management into the bank. Income was up in Q4 and the cost discipline is maintained. Asset quality is robust and the financial position is very strong.

The customer satisfaction levels during the year follow the long trend of being higher than average of our peers in all of our home markets and on both the household and on the corporate side. And we will continue our endless efforts on making sure that our advisers in our branches are close and easily available to our customers, simply providing an offering in the customer ask for and appreciate, local and personal as well as through our digital offer and by our 24/7 service over the phone.

And finally, I'm also pleased to note that the total shareholder return created during 2025, meaning the share price performance plus paid out dividends exceeded 30% in 2025.

And with those final remarks, we'll now take a short break before moving into the Q&A session. Thank you.

Hello, everyone, and welcome back to this Q&A session. This is Peter Grabe, Head of Investor Relations speaking. And with me, I have Michael Green, CEO; and Marten Bjurman, CFO. [Operator Instructions]

And with those words, operator, could we please have the first question?

[Operator Instructions]

The first question comes from the line of Andreas Hakansson from SEB.

Well, one question then. Can we talk about volumes. I'm looking at -- I mean, you're growing nicely in the U.K. and Holland, as you say. But in Sweden, there's been no growth in the fourth quarter or year-on-year on lending or deposits while we know there's growth in the market. So could you tell us what's driving that and how you're going to turn that around? And same question for Norway, where loan or lending actually fell quite a bit in the quarter and so the deposits, how are you going to turn that around?

Andreas, this is Marten speaking. On Sweden first, I think it's fair to say that we are the largest lender totally in Sweden. And by that, it's fair to say that we struggle a little bit to grow more than GDP over time. So as we have now a little bit of a steady market or slow market in the corporate lending side, I think we suffer from that a little bit. And also, I think you should bear in mind on the corporate lending side that you're looking at the net number, and that is not very impressive.

But still, there are things going on underneath that. We are leaving connections that we do not see fit in our book for various reasons, and we are bringing on things as well. So things are going on. We strive for activity, of course, and we hope that the market picks up a little bit. We believe so. We've been waiting for it quite a bit. So that's on the corporate side in terms of lending in Sweden.

On household lending in Sweden, I think it's fair to say also that what Michael was saying earlier on that we have seen a pickup in our volumes in the second half of the last year. And I'm pleased to see that increased activity, and we have high hopes for that continuing into this year '26. In Norway, I think it's fair to say that it's been a tough quarter in Norway. I agree with you, Andreas, on that point. We have seen consolidation in the market. We have seen compressed margins also as a result of cuts in policy rates.

And above all, I think we have seen fierce competition. So it's tough for us in the quarter. But bear in mind, we are long term. A quarter is a very short period of time. We have a deep trust in our way of banking. So each and every branch manager out there is fit to navigate through this. And I'm very confident that they will do so in the future. So we have to be patient a little bit. And if you look at the year, the total year in Norway, it's not good, but it's decent, I would say, in terms of volumes.

next question comes from Magnus Andersson from ABG SC.

Just one question on capital. If you could tell us what made you change your mind now to move within the management buffer range as -- I mean, in previous couple of years, you've chosen to be above your management buffer range because of an uncertain environment. And now you seem to think that the environment is less uncertain. Just trying to get some predictability into it. Should we now expect you to remain within the buffer for the foreseeable future? And what could trigger you to revise that stance?

Thank you for that question, Magnus. Yes, the short answer is yes. I think you should expect us to strive to be within the interval as from now on, but let's come back to that a little later. I think you should also bear in mind where we're coming from. We're coming from years back, we had a huge surplus of capital for various reasons. So that's the starting point. And then we have gone from there, taking it down step by step.

And I think we've been fairly clear on our intention on moving into that interval. I think we touched upon it quite a bit during Q3 closing that our intention is to move into the interval. So it shouldn't come as a complete surprise in my world at least. So I'm very pleased to see us taking that step. It has not so much to do with us changing views. We still think that our credit book is of superior quality, of course, and we don't see anything else that is worrying from that sense. So it's just a matter of prudency taking it step by step into the interval, I would say.

Okay. And just on capital on Slide 19, when we look at your risk-weighted asset progression, it's down 3% quarter-on-quarter. Is there anything in there that you would say could -- anything that could impact that level in 2026, we should be aware of? I saw that you moved your op risk change to Q4 from Q1. But is there anything else? Or is this a reasonable starting level?

No, I think -- I don't think that there is anything to highlight in that picture. It's nothing to be worried about looking forward, no.

Question comes from Nicolas McBeath from DNB Carnegie.

So following up on the question on capital. So now that you are within the target range for the first time since before the pandemic, could you maybe help us understand how we should think about the long-term average buffer within this range because it's a pretty big range. So should we think that you want to be in midrange over time or rather at the top end of the interval?

I don't want to guide where we want to end up in certain situations. I think it's -- you should bear in mind that this interval was set so that it can fluctuate a little bit. That's the whole purpose of it. Is it a reasonable size interval? You can debate that, of course, but it was set a bit back in the years. When it comes to the outlooks, I think as it regards anticipated dividend and all that, we'll come back to that in Q1 closing. So we don't -- I don't want to guide anything further. I'm extremely pleased that we are now in the interval again.

Next question comes from Shrey Srivastava from Citi.

Just one from me, please. You talked about the momentum in the U.K., where I see average lending and average deposits plus 1% sort of on an annualized basis. Is this sort of volume growth something you're happy with or sort of how should we look at it? Is it more the momentum that you're carrying in, in terms of sort of pipeline into next year? Or is it the realized performance?

Thanks for that question. I'm happy to print those figures for U.K. And I feel that this momentum in the business is now stable. It is a broad and healthy growth that we see. It's not something odd in it. It's across our branches that we are growing now. And I feel confident that, that will continue. I had the pleasure to go over there a couple of weeks ago. And it's evident that the branches in U.K., they are in a different space now compared to a bit back. So it feels good. Are we happy with the speed in terms of lending growth in U.K.? I think we can -- we always want more, of course, but I'm happy to conclude that this has reached a turning point in that sense.

And I can just -- it's Michael here. I'll just chip in here. I think the -- overall in the bank right now, the ambition level and the goals for -- in each country and also in every branch for 2026 is quite higher than it has been before. So the willingness and the ability to work with more customers, especially in the U.K. and the Netherlands and also in the Norway to some extent, are on a much higher level when it comes to ambition, and we will be very close following up how this will work out in the -- in our different home markets.

Our next question comes from Sofie Peterzens from Goldman Sachs.

This is Sofie from Goldman Sachs. So just going back to kind of the growth in Sweden, could you maybe just comment a little bit how you see competition for mortgages, what the outlook is, how much kind of growth you would expect in mortgage lending? And also related to this, do you see any risk for -- kind of the risk rate for housing associations, which I believe is 3.7% currently that, that could be increased to kind of low teens or at least double-digit levels?

No. Okay. Again, I think bear in mind the size that we have in the mortgage market in Sweden. It's difficult to grow extensively. So in terms of outlooks, it's hard to tell. Again, I'm happy to see the momentum that we have later in the quarter, and hopefully, that will continue. I think as it regards to your second question, the housing association and the risk weights, we don't have any view in that for the moment, no.

Our next question comes from Namita Samtani from Barclays.

Can we just go back to the corporate lending market in Sweden? And can you just talk a little bit more of how you see competition there? And how do you see pricing as well? And could you maybe just also touch on the property management lending where it looks like the loan book on a net basis didn't really grow in Sweden in 2025.

Yes. So in general, when it comes to the lending book in Sweden and the market there, so we always follow our customers. When they grow, we are there and do our fair share of the business. And the activity from our corporate partners or clients has been a bit muted even this year. I think many of us were a bit more optimistic when we entered the year.

But then you had the liberation day and the tariffs and all that, and that actually made the customers a bit reluctant to invest and also the consumers. It all starts with consumers, and they've also been a bit hesitant to really invest or increase their spending in the year. But I'm very hopeful actually if we listen to our experts in macroeconomics in the bank, they're very positive to the growth in Sweden.

Now we need, of course, to bear in mind that things can change as we saw last year. But the general view now is that we will have a quite high growth in GDP in Sweden, which we will benefit from because our customer -- we follow our customers when they grow. I think there is a bit more interest in investing from our corporate clients in the late of the year.

And you should also, as Marten previously said today, it's -- we -- of course, we report always net figures, there is a change in the portfolio. So there are volumes that we actually more or less has welcomed us to come out of our books, and there are much more strong corporate business that has come on to our books in the last year. So the risk level and the performance of -- in the lending book is better than it was when we started the year.

Question is from Markus Sandgren from Kepler Cheuvreux.

So I saw the margins are taking the NII down this quarter again quite a lot. And you have probably upcoming rate cuts in the U.K. and in Norway. Do you expect NII to trough in Q1 or during the first half year? Or do you have any expectations on when we should see growth?

I don't want to guide and be that specific on the Q1 number, of course. But yes, you're right. We are expecting rate cuts in those countries. The margins in U.K., they are pretty healthy as it is. So if we end up in a policy rate where we think, then we can do healthy business there. And a reminder also, I think the volume growth in U.K. can compensate quite a bit as it regards to the fall in margins. Norway, yes, we are struggling a little bit this quarter. We'll see what happens. We have -- we don't guide into Q1, but obviously, we see a lot of activities in our branches and hope for the best.

Questions comes from the line of Max Jacob Kruse from Bernstein Autonomous.

So just on the growth you're talking about, could you -- should we read this as the cost management side that you went through over the past couple of years that is changing here and looking at investing a bit more into your business and perhaps staff levels? And if I could just also ask the VAT refund that you took in the quarter, is that all the ones you're looking to get? Or do you have other applications in the pipeline?

Thank you for those 2 questions. On costs first, I think, yes, I'm personally a little bit surprised of the outcome here. It's extremely impressive if you ask me that we continue to perform well on the cost side. For the future, yes, I expect that we gradually pick up a little bit in costs and have investments near the customer, near the business, and we are happy to do so. But first, we need to see the business growing and the need for us to spend more money.

But again, you should remember who we are. We are Handelsbanken, and we keep the money tight to our body. So it's about being stringent from that perspective. The VAT recoveries, yes, you saw us print SEK 200 million. It's booked on the line other income. Some of that -- a portion of that, I think the number is SEK 142 million is related to the parent company for the year of 2019. So yes, potentially, we have a little bit more coming from that and in terms of reimbursements for the year after that, obviously, it's a little bit too early to go into details in that. But yes, potential is there.

Next, we have the line from Riccardo Rovere of Mediobanca.

Just a quick one. Again, on the management buffer, what should happen to bring this to the midpoint of the range to 200 basis points? Because you ramped it to 400 basis points on uncertainty. The situation doesn't look different at least to me at the moment, even probably worse, but you bring it down to 300 basis points now. So I was wondering what could drive it to 200 basis points?

And is this your decision or a decision that you have to take together with the Swedish FSA because by magic, all the Swedish banks now got to 300 basis points exactly at the same time. So I was wondering whether this is a management decision or someone else decision? This is my first one. The second one I have is, if you could shed a little bit more color on the decline of RWAs in the quarter. What is driving that?

So can I just take the last part of the first question, I'd say it's absolutely a discretionary decision within the bank's Board, and there's nothing to do with any authorities or something else, if I understood your question correctly. And we -- and I emphasize, we're not on the 300 basis points range, we're 285 basis points. And we just do what we said. We said we're going to go and move into the interval, and we've said it for many quarters now.

And we will always assess every quarter or year actually where we would like the bank to be. So that's something we work with. But now we're in the range, and that could vary within the range. And it's up to our decision to make sure that we always run the bank prudently, but also has the capacity to be one of the largest lending providers in our home markets. And this is the assessment we do right now.

And on the question -- the second question there, the movement in RWA, I think you can see the details in the slide pack there. There are different components, obviously, volumes, migrations and risk weight floors and currency effects and other, but those are explained in the pack.

[Operator Instructions] We have follow-up questions from Markus Sandgren from Kepler Cheuvreux.

Now I was just coming back to costs since you're taking them down or at least being quite much below what people expected in Q4. What's your feeling about how staff are taking this? Are they -- do you feel that they're happy? Or do you -- are you afraid of that you should lose important people as the compensation is not up to standards?

No, on the contrary, actually. So the thing -- when you manage a downturn in a number of employees, if you have the right kind of leadership and the story with that and you see that the effects on the bank are there, you actually create the opposite. You create a very strong sense of -- and the feeling for the bank. You really want to be part of something that is actually evolving in the right way. And also the -- it also puts the finger on performance. So we always need to have people working very intensively, very hard on the business.

And what happened, we actually -- most of the downturn in staffing was not customer -- in close to customers. It was on the head office and central apartments. And what happens there is that the branches, they feel that everybody who's supporting the business is being more productive, more cost efficient that really empowers them to do more business. And the mindset within everybody who's still there and most of us are, we are much more business-oriented this year than we were a few years ago from the central department.

So we always -- we really make sure that we are there for our employees dealing with customers, and they really feel that. So I think absolutely doing -- having less people as we have now creates a lot of good energy. And the -- when you look at the employee survey we do every fall, it has never been on a higher level as this year. So we have a very, very strong committed workforce, if I put it that way, both in the -- close to our clients, sorry, on the branches, but especially nowadays also in central head office. So I'm very happy with the mindset of how you work and what we do here in the bank for whom.

Follow-up questions from Sofie Peterzens from Goldman Sachs.

Thanks again for taking my second question. So just a follow-up on Oktogonen. We saw that there was a small reversal this quarter of SEK 39 million. How should we think about Oktogonen going forward? Is it fair to assume that, that will be kind of 0 going forward? Or -- and is that important any longer for your staff? So if you could just kind of help us how we should think about Oktogonen contribution going forward?

Yes. I think Oktogonen still plays a role, obviously, in our corporate culture. I think it's expected for that to last a bit. When it comes to the actual number going forward, I think we just have to wait and see. It's always a little bit of a guessing game where we come out. Now we have had a little bit of a reversal in Q4. So -- but I don't want to predict the future from that sense. Is the Oktogonen here to stay? Yes. I think it's fair to say that it still plays a big role for our employees.

But what drove then the reversal in the quarter? What was the rationale for reversal?

It's a huge calculation behind that. And obviously, it's related to our corporate target to have a stronger ROE than our peers in our way of looking at it. And that's mainly driven by where do we want to compare us versus the peers in terms of geographies and different things. So there's quite a bit of calculation going on there. And in this case, we had to revert a little bit that -- the number in Q4 again.

And we also wait for the British Bank to post their Q4s in order to make the correct calculations. So this is the best assessment with the information we have right now from our competitors that has posted their Q4s.

We also have a follow-up question from Namita Samtani from Barclays.

Thanks for taking my followup. And I just wondered what's happening to the IRB model review in the U.K. And also what's happening to the Swedish IRB model review? I think there's a 50 bps requirement in your CET1 requirement. So just wondering what the update is?

Yes, I understand the question, but the complexity and the processes that goes into that work is really evident, and it's far too many details to go into that in this call, I'm afraid. The outcome, we don't really know. We are working on the situation that we have in the IRB world, both in U.K. and for that matter, in other places as well. It's too early to tell -- to be concrete in that matter.

Lastly, we have the questions from Riccardo Rovere from Mediobanca.

Thanks for taking a quick followup. Just wanted to ask you at the beginning of the call, when you were asked about loan growth in Sweden, if I understand and remember correctly, you stated something like you see in the market, something that does not, how can I say, kind of comply with your risk profile. If I understood it correctly, could you shed a little bit more color what you were referring to, if I got it right?

Yes. No, let me clarify that. And sorry for being a little bit vague if that was the case. What I was saying, and I think that you're alluding to here is that we are a large lender in Sweden. So to be able to grow significantly more than GDP, that would mean that we would have to alter our risk appetite, and we obviously do not want to do that. So in the long term, I think it's fair to say that you should expect us to grow with GDP more or less. So I think that was the core message.

At this time, there are no further questions from the line. Allow me to hand the call back to the presenters. Please continue.

All right. Thank you, everyone, for listening in and for all the questions. And we wish you all a good day. Thank you.

Thanks. Bye-bye.

It's 3:00. Good afternoon, everyone, and welcome to this call ahead of our silent period that starts on January 8. This is Peter Grabe, Head of Investor Relations speaking. And with me today, I have the Investor Relations team consisting of Lars Kenneth Dahlqvist, Andreas Skogelid and Per Aronsson.

We would like to remind you that this call will be recorded. And this call is intended for sell-side analysts and will not include any communication of new information, information that's not publicly known or any new guidance. The aim of this call is rather to remind about publicly communicated matters for housekeeping purposes of estimates and expectations ahead of the interim report.

In this call, we are not aiming at steering you towards any specific numbers, and the outcome of the quarterly results will occasionally deviate more or less from the trends we comment on in this call. We will only answer questions relating to public information and related to Q4.

[Operator Instructions]

First, to start off, as we stated in the Q3 report, the change to the Sveriges Riksbank Act effective from January 1, 2025, allows the Riksbank to demand a certain amount of interest-free deposits from Swedish banks and other credit institutions operating in Sweden for the purpose of restoring the Riksbank's equity and to contribute to the funding of its ongoing operations. The scale of the interest-free deposits is based on a proportion of the respective institutions deposit base, comprised of its deposits and issued debt securities.

As determined by the Riksbank, the requirement for interest-free deposits from Handelsbanken, including Stadshypotek amounts to SEK 8.4 billion, which will be recognized starting upon implementation on October 31, 2025.

In Q4, we will book the exempted interest on these funds for the full period until the next Riksbank decision in July on the P&L line government fees, i.e., 8 months of the Central Bank deposit rate times the interest-free deposit amount of around SEK 8.4 billion. Second, again, as stated in the Q3 report, the Swedish FSA has resolved to recognize the Norwegian Ministry of Finance decision to raise the average risk weight floor for Norwegian mortgages from 20% to 25% as of December 31, 2025. Based on the bank's lending volumes at the end of the third quarter, the higher risk weights correspond to approximately SEK 7 billion in additional risk exposure amounts.

Now let's go through the respective lines and start with the NII. First, in terms of volume development, we can only refer to the official statistics such as Statistics Sweden. A general observation is that volumes slightly picked up in October on the Swedish mortgage side, while corporate lending growth remains muted. What we have otherwise stated in the Q3 report was that we see signs of volumes gradually picking up in the U.K. and the Netherlands, while remaining muted in Norway.

Second, in terms of margin development and net interest margin sensitivity, we don't guide, as you know, as it's challenging to have a clear view on the net of several factors affecting such as funding, competition, mix effects, et cetera. But again, just to reiterate what we have said generally, lower policy rates burden the transaction account deposit margins.

And as you know, there have been a few policy rate cuts in Q3. In August, there was a 25 basis point cut in the U.K. and in late September, in Sweden and Norway, there were also 25 basis point cuts on the policy rates. But as always, the bank is sometimes able to adjust other rates such as lending rates or rates on term deposits that potentially partly could offset the negative effects. But we cannot guide you on the net of the effects in this quarter. And just to remind, in the previous quarter, we did not state any specific one-off related effects to the net interest margins.

Third, on the NII. In Q4, there should be no day count effect.

And finally, on NII, in terms of FX, the Swedish krona has strengthened compared to the currencies in the other home markets where we operate, which should mean a headwind to sequential NII development. As always, when assessing the FX impact on the P&L lines, look at the average FX level in the quarter compared to the previous and take that times the P&L line in local currency in respective segments.

Then over to fee and commissions, starting with savings-related fees, which account for around 2/3 of the commissions. The development of the daily average stock market indices during the quarter usually tends to be somewhat of a leading indicator for the savings-related fees. There are, however, of course, several other factors affecting savings-related fees, such as level of inflows, mix effects, et cetera. But we can note that the daily average of the stock market indices are up somewhat in Q4 compared to Q3. In terms of the development of the other fee lines, we can only refer to the historical seasonal patterns.

Moving on to NFT. The NFT line is a minor income line, as you know, and has averaged around SEK 500 million to SEK 600 million per quarter over the past few years. However, as in the past and in Q2 this year, in particular, it can vary by a few hundreds of millions in between quarters when, for example, credit spreads, interest rates and currencies are particularly volatile. There is nothing specific that has occurred in Q4 that we can highlight.

Then the cost lines. Just like on the income side, it's fairly easy to get a sense of the FX impact also on the cost side. As mentioned previously, the Swedish krona has strengthened, which should mean slightly lower costs in our foreign home markets in Swedish krona terms.

In terms of potential Oktogonen provisions, we do not guide, as you know. But as always, we appreciate when you're transparent about your Oktogonen estimates in order to assess the underlying expectations for your staff cost estimates. Apart from that, we can only refer to the historical patterns of the costs in Q4 compared to Q3.

Credit losses. The only thing we can say is that there have been no public disclosures that you might have missed for Q4.

Finally, on capital, the reported CET1 ratio in Q3 was 18.4% -- 18.2%, which was 350 basis points above the SREP requirement. What we have said is that the 50 basis point headroom to the target range of 100 to 300 basis points above the SREP will be reviewed continuously. And the ambition of the bank is to eventually move back into the target range. But when that is, we can't say at this point, though.

In the full year report in Q4, the Board will, as always communicate the dividend proposal to the AGM based on a holistic assessment of the current and forward-looking capital situation.

We have no other remarks than that in terms of capital. And with those final words, we take a short break, and then we open up for questions if there are any raised hands.

I can't see any raised hands. Here we go, Magnus. Please go ahead.

Yes. Just one question that you probably won't answer, but it's still -- it's very strange for us that you still reiterate your target 100 to 300 basis points, but remains above and you said you can't say when you will lower it within your buffer range. My question is, can you say anything about what we should look for that could trigger such a move? Because now it seems like we don't know anything.

Well, I'm afraid I'm going to have to answer just as you have predicted. We really have no comments to make on that point, I'm afraid. We said that we will go back into the target range over time, and that's the last phrasing.

All right. Any other questions? I see no raised hands. Well, it doesn't seem to be any more questions. If you would have any such, you know where to reach us, and we'll be happy to discuss with you after this call, of course.

And with those words, big thank you to you all for listening in. And if we don't speak ahead of Christmas, we wish you all a very, very nice and relaxing holiday. Thank you very much.

Good morning, everyone, and welcome to this presentation of Handelsbanken's results for the first 9 months.

The bank reported a solid quarter with earnings growing compared to Q2. Operating profit grew by 8% and the ROE amounted to 13%. As income grew -- increased by 4% -- as income increased by 4% and costs dropped by 5%, the cost/income ratio improved from 44% to 40%. The cost/income ratio improved in all of our home markets in this quarter.

Net credit losses again, now for the seventh consecutive quarter amounted to net credit loss reversals, and clearly, the asset quality remains very strong. And highlighted many times before, the bank is not only run with low credit risk, but also with low funding and liquidity risks and an ample liquidity portfolio amounting to around 1/4 of the total balance sheet.

The CET1 ratio stood at 18.2%, which was 350 basis points above the regulatory minimum and thereby, 50% above our long-term target range. The anticipated dividend for the first 9 months, which is deducted from the capital base amounted to SEK 10.65 per share or 119% of the earnings generated this year year-to-date.

During the quarter, the bank received a number of external recognitions, highlighting the customers' appreciation of the way -- our way of running a bank. For the fourth consecutive year, the bank received the reward, the Business Bank of the Year. And for the 13th consecutive year, Sweden's SME Bank.

In the annual EPSI survey in each of our home markets, the bank scored higher overall customer satisfaction among households and corporates than the sector average as well the larger peers. And to note in the comments by the Swedish arm of EPSI, or SKI, as it's called here in Sweden, the customers do not only appreciate the local presence and offering, but also rank our digital offering the highest among the larger banks. For the bank, a state-of-the-art digital offer to the customers is merely a hygiene factor, and we rather believe that the USP for the bank relates to our locally connected, decentralized and customer-oriented business model. But of course, we recognize, and we appreciate the recognition.

Now if we look closer to the financial summary of the third quarter, compared to the second quarter, ROE amounted to just above 13%. In the wake of lower policy rates, the NII dropped by 2%, which offset otherwise beginning signs of lending volume growth in several of our home markets. Increased volumes in the savings business contributed to an increase in fee and commissions by 4%.

Compared to Q2, the income development was also supported by NFT returning as expected, to a more normal level after temporary negative effects in the previous quarter.

All in all, income grew by 4%. Expenses continued to develop in line with the trend seen for some time now and decline a further 5% in the quarter. The drop relates partly to seasonality but also a stronger general cost awareness throughout the bank with an everyday challenging of unnecessary costs.

The cost-to-income ratio improved to 40%. Again, we saw net credit loss reversals this quarter of SEK 35 million.

Now if we instead compare the 9 months of the year compared to the same period last year, NII declined by 7%, again, mainly as a result of the material cuts in Central Bank policy rates. Net fee and commission income, on the other hand, remained resilient and increased by 1%. The key contributor was again the savings business. Due to primarily the drop in NII, the total income declined by 8%. Expenses dropped by 6% when adjusting for FX, restructuring expenses and Oktogonen, the underlying decline was 3%.

The reduced cost base comes as a result of the initiatives carried out over the last year with effect offsetting general inflation and annual salary increases by a wide margin.

Net credit losses reversals amounted to SEK 308 million compared to SEK 369 million a year ago. So all in all, the underlying operating profit was down by 10%.

Now if we turn to Slide 5. Over a number of months, we've seen positive sign of recovering growth, particularly in the U.K. and the Netherlands, but also in the mortgage lending in Sweden. Overall, however, volume development only contributed with SEK 22 million to the NII in the quarter. The main effect in the NII, however, related to policy rate cuts that impacted the net of margins and funding. Other effects overall had a fairly small effect.

So if we look to Slide 6, net fees and commission income for the 9 months increased by 4%, and the quarter -- in the quarter and by 1% accumulated year-on-year for the first 9 months. The bulk relates to savings business, especially in the mutual funds offering. The increased commission come as a result of higher assets under management, thanks to both the positive market development as well as continued strong net inflows into our fund markets funds under management.

The bank has for more than a decade, continuously had a market share of net inflows into the Swedish mutual funds market at around 2x the market share of the bank's current outstanding mutual funds volumes. We saw that the trend continued during the quarter as well as the first 9 months of this year.

The second largest fee and commission line is payment fees, which followed the seasonal trend of upticking in the third quarter. These were up, along with the normal seasonality and fairly stable compared to last year, and the other fees were relatively stable.

Now over to the expenses. Over the course of the past 18 months -- the past 18 months, intense internal work has been -- sorry, has been carried out to put the bank in a more cost-efficient position. We've streamlined in central and business support functions and reduced the uses of external consultants. The level of our IT development spend has also affected the run rate of the cost, and it's currently at a lower level compared to the elevated levels in the previous years.

Although running the bank with a lower level, there has been no change in our ambitions to continuously invest in order to improve efficiency and productivity in our daily operations as well as continuously develop and enhance our digital offering to our customers.

The total staffing, meaning employees and external resources has been reduced with more than 1,200 people or 9% compared to when the internal efficiency work was initiated in Q1 last year.

Compared to the same quarter last year, the total underlying cost and other expenses -- staff costs and other expenses were both down by 5%.

Now over to asset quality and credit loss reversals. Over the past 5 years, the bank has total booked net reversals. And to bear in mind, this includes a period of pandemic, sharp up and downturns in policy rates, disruption of supply chains, stress in commercial real estate sector, war breaking out in the Ukraine, tariff turbulence, et cetera. The absence of credit loss is an evidence of the prudency in the bank when it comes to managing credit risk, both in terms of underwriting capacities and risk and capabilities and risk appetite, the customer selection and consistently -- consistency, sorry, in our underwriting procedures and policies when it comes to -- as well as the preference for collateralized lending. But also not least in the ability to detect early signs of credit risk deterioration and the ability to quickly make necessary actions. In this context, the local presence throughout our branches and the close connection to our customers is essential.

Now in the bank, we always limit funding liquidity and market-related risk as much as possible in order to ensure the capabilities to always be able to support our customers and safeguard the bank regardless of whatever unknown external events that might occur.

In Q3, we received the annual regulatory requirement by the Swedish FSA, the so-called SREP. The Pillar 2 requirement was lowered by 15 basis points, which means that the regulatory requirement dropped to 14.7%. As we anticipate the dividend during the year to calibrate the CET1 ratio to be at 350 basis point above the SREP, the CET ratio was 18.2%. And as I previously mentioned, the anticipated dividend for the first 9 months amounted to SEK 10.65 per share, which was 119% of the earnings generated during this period.

The CET1 ratio was in order -- in other words, 50 basis points above the long-term target range of 100 to 300 basis points, above the regulatory requirement. And as we've said previously, this buffer level above the target range is renewed at a continuous basis. The solid financials, including the robust capital position, put the bank in a position of strength, being one of the most trustworthy and stable counterparts in the industry. This view is shared by the leading rating agencies who rate the bank as the highest among the comparable banks globally. And in Q3, the bank also again was ranked as the safest bank in Europe, and one of the world's safest banks by independent surveys.

Now turning to Slide 10, a few words about our respective home markets. In our largest home market, Sweden, which accounts for 73% of the group earnings, the market position in Sweden is very strong with the bank being the largest combined lender in private and corporate lending. Mortgage volumes are showing signs of picking up, while corporate remains a bit cautious given the current business cycles and geopolitical situation.

The savings business, as I've touched upon earlier, continues to develop very well. The cost/income ratio was 31% in Q3. The profits grew by 1% in the quarter and the profitability was 16%.

The U.K. amounts to 13% of group earnings. The trend in household lending volumes have broken the negative trend seen for a number of years, and we have now consistently seen volumes increase each month since the beginning of this year.

Also on the corporate lending side, we've seen a clear trend shift since a year ago with growth again. High activity within our branches have led to more business, at the same time as the amortization levels have come down from the high levels seen in the past year, meaning that the new business we've seen now also start to show in the net number.

In the recent quarters, the U.K. has been improving the efficiency. And we're starting to see initiatives filtering through in the cost base to offset margin pressure on NII relating to the lower short-term rates. The cost/income ratio improved slightly to -- in the quarter to 59%.

The profit before credit losses were flat versus Q2, but operating profit decreased by 4% as the net credit loss recoveries were a touch lower. The profitability was 13%.

Now Norway accounts for around 10% of the group earnings. After a refocused period that started during the spring last year, the business is now gradually becoming more balanced between lending, deposits and savings.

With the competition, especially in the mortgage market is fierce and has picked up gradually over the last year. The bank continues to focus on deepening our customer relationships, also in the field of deposits and savings. In Q3, deposits grew by 2% and asset under management grew with 6% compared to Q2. The increased cost focus is also gradually showing in the numbers, offsetting margin pressure from lower rates.

The cost/income ratio improved to 41.5% and the profits grew by 3%. The probability was 12%.

Finally, the Netherlands account for 2% of the group earnings. Since a year back, we've seen growth in both our household and corporate lending. The positive volume development was, however, been offset by margins that also in the Netherlands have been affected by lower short-term rates.

Although coming from a low level, the commission income is ticking upwards, mainly as a result of a growth in assets under management. The ROE improved somewhat in the quarter.

Finally, a few words to wrap up where the bank stands after this quarter. NII has adjusted to a more stable level after a period in the past 2 years with unusual big volatility in margins as a consequence of the big swings in policy rates.

We start to see positive household lending growth in most of our markets and with corporate lending growth also in the U.K. and the Netherlands. In Sweden and Norway, the corporate lending growth remains somewhat muted, which is not surprising given where we are in the economic cycle. However, we have a firm belief that the activity and borrowing demand from customers eventually will pick up along with an improved macro picture.

The commission business is growing, and we see momentum continuing to build in the customers' saving volumes.

Costs are decreasing as we gradually become more and more efficient. Asset quality is strong also in the financial position, even though the bank is anticipating 190% of the earnings in dividend.

And finally, and not least, our endless efforts on making sure that our advisers in the branches are close to and easily available for our customers continue. And we're happy to see evidence not only in our own interaction with customers but also in external surveys.

And with those final remarks, we now take a short break before moving into the Q&A session. Thank you so much.

[Break]

Hello, everyone, and welcome back, and welcome to the Q&A session. This is Peter Grabe, Head of Investor Relations speaking. And with me in -- for this Q&A session, we have Michael Green, CEO; and also Marten Bjurman, the CFO. [Operator Instructions] And with those words, operator, could we please have the first question?

The first question is from Magnus Andersson from ABG SC.

Yes. I have a question about the household mortgage market in Sweden as margins appear very thin. So what do you think about the prospects to eventually increase household mortgage margins in an environment where rates no longer fall? And related to that, what kind of volume growth do you deem necessary for the margin pressure to ease?

Magnus, this is Marten speaking. Yes, I agree with you that the mortgage business is super thin in terms of margins, but the whole idea with the mortgage business for our -- from our perspective is to broaden the business with the customer, obviously, to have a more broad business with each and every one of them.

We've been fairly successful with that throughout the years. And if you look at the hindsight also, we have had a huge market share in the mortgage business in Sweden for a long time. We are now, since a couple of quarters, also taking a fair bit of the market as well, and we are happy with that. So in terms of the margins, I think that obviously, as you alluded to, long term, I think that we will see margins also come into a better position, but that will potentially take a little bit of time. As of now, the margins are very thin and the mortgage business stand-alone is not a good business, profitability-wise. But again, it's just an entrance into a broader customer relationship with our customers, and that is nurtured by the branch office network, as you know, Magnus.

Yes. Okay. And I guess it will be very difficult to raise list prices when rates don't move. So number one, are you alluding to that you will reduce the discounts to clients? And secondly, is it -- do you think that the 3-month mortgage product will reach profitability in line with cost of capital again as a stand-alone -- on a stand-alone basis?

So Magnus, this is Michael. So the list price is something and the real price that we do in our day-to-day business with customers is really what it comes down to. And the branches and the employees working with this always strive to minimize the discount from the list price, if you put it that way. So that's a day-to-day ordinary regular business with customers. And we do not -- we can, but we don't measure specific products. So we always measure the business we have with the customer. And that includes mortgages, that actually includes occupational business and also deposits and asset under management. So we always focus on the customer, not on products.

And sometimes, over the years, the product is more or less profitable but we're very long term. And we have very strong customers. We focus on doing more of their business with us and thereby creating a profitable business with each and every customer.

We will now take the next question, from the line of Andreas Hakansson from SEB.

I have a question on the U.K. I'm looking at NII that's been declining, what is it 10%, 15% over the last year on falling interest rates, of course. And the ROE is now down to 12.8%. I mean, we expect Bank of England to continue to cut rates, I guess, something like 100 bps more. Could you tell us the sensitivity to rates now in the U.K.? Has that increased as we come lower down in rates? Or how should we expect the NII to develop? And how low ROE are you forecasting for the U.K. operations on those lower rates, please?

Yes. Thank you for that question. I think first and foremost, I think we see a pretty strong quarter in the U.K. We are happy to see finally, if I may say so, the business momentum is turning a little bit to our favor as it regards to corporate lending. We saw small signs of that during the Q2. And now we feel confident that, that is really something that has changed. That's the first thing I would like to say.

And then as you say, we expect, I think it is -- I think most believe that we will have 2 more cuts, but over the next 2 years or so in the U.K. And obviously, we will be affected by that. But we have to keep in mind also that the market share that we have in U.K. is still fairly small. So I think that we can grow, and the volume pickup that we have started to see now in U.K. will be the factor that will play into that also in our favor. So we're not too worried about the margin pressure in U.K.

And just on the back of that, you said that the volume growth, I mean, then we seem to only talk about lending. I mean mutual funds, you have negative flow in the quarter. And I mean, look at the staff numbers go down 7% year-on-year, your number of branches go down 7% year-on-year. So are you willing to invest in the business to grow it? Or are you just hoping that lending picks up?

You're right that we expect a little bit more in terms of the asset management side in U.K. I agree to that, and we've been waiting for that for quite a bit, actually. And we have a plan now in place to try and grow that as well. The flows in the asset management are going down a little bit. So again, we're working on that. And I think we can only look at, for example, the Netherlands, where we see now that the trend is shifting also there, where we have inflows in the asset management side from the branch office network coming into play.

We expect to see that in the U.K. also, but it will take some time. We have a little bit of obstacles in the way to sort out before that can actually kick off. So in terms of the asset management side in U.K., that's it.

And I think that are we willing to invest in the U.K.? Yes. We still believe that we have a really niche piece of the market that's super sweet for us. The model that we have with a decentralized model and the local knowledge also being very close to the customers is very fitting to that market. So I think that basically, since we are so small, we are less affected by the macro as such. So we have high hopes for U.K. still.

We will now take the next question, from the line of Nicolas McBeath from DNB Carnegie.

So I had a question on the staffing level. So if you could please first confirm what the staffing level was by the end of the quarter? And also, what you think is the kind of right size of the organization currently? Are you kind of seeing the organization as rightsized at the moment? Or where do you think the staffing will trend from here? What are you hearing from the Swedish branches? Are they seeing increased business opportunities and as expect to increase staffing? Or do they see more potential to work with more efficiency?

Thank you. I think I'll start with the branch office filling in Sweden.

I think in terms of staffing, we are at a good place. We should also bear in mind that we have actually launched a pretty extensive help in terms of IT to the branch offices lately. So they are now digging into that and trying to improve their processes and make the ability to stay closer to the customer even better. So in terms of staffing in the branch offices, I think that we are in a very good place. So you shouldn't expect that piece to go either up or down, I guess.

In terms of the head office, I think we are at a good place also there. I think that we have seen a huge effect of those initiatives that was carried out a little earlier in the year. You shouldn't expect too much more on that end. So I think all in all, I think we are in a good place to run the business as we would like to.

And if I just may add, I think it's important for me to again stress the fact that we've been working with our efficiency and the productivity and the cost side. You know all about that the last couple of years, actually 1.5 years. But now the focus in the bank is not working to decrease costs further. This is -- now we're in a position we have a strong -- we have a strong operating bank right now. We, of course, will watch out for unnecessary cost. But the focus for this bank is now to grow with profitability. So all efforts we are making now when it comes to do more business with more customers, bring on volumes, both in the -- on the lending side as well as the deposit side and the AM, asset management side and all that, that's the primarily target for the bank now. So you should not expect us, me to talk so much about costs going forward. We're in a good place.

Now it's focused to grow our income and the revenues should grow balanced between those different product types in order to create profitability for the bank. This is the focus. It's not about reducing anything more. So yes, I just wanted to stress that.

If I may just follow up based on the comment you made about the new help from IT systems in the branches. How are the branches at this point, incentivized to implement these kind of IT systems, which I suppose are more centralized initiatives? If you could comment on that, please?

Right. So when I speak to the -- our employees in the branches, they are -- you don't need that much incentive because the working tools that we provide them now, which are new to them is so easy to use, and it creates so much more business opportunities and also the offering we can give the -- our first -- both private and corporate business, when it comes to how we team up, how we approach customers, how we work very efficient with the branch managers, the branch employees, but also all of our specialists throughout the bank. So we are -- it's very -- you don't have to incentivize them. It's very easy to use, and they see so much benefits in their day-to-day business, and they can do so much more with customers and create so much more quality when they meet customers. So I think they do it by themselves actually, which is very good.

We will now take the next question from the line of Tarik El Mejjad from Bank of America.

Just one question from my side, please. I mean we've been discussing for a while now, the potential churn in household lending growth, especially in Sweden. You sound more constructive on some first signs. I mean, the numbers we see mainly in Netherlands and U.K. Can you expand a bit on what you see on the ground in terms of potentially increasing demand on the household housing markets? And maybe how do you read the potential positive news from the elections and also from the fiscal stimulus next year?

Yes. Yes, you're correct. We will see fiscal stimulus coming into play sooner or later, probably in the first half of next year or so, and that will probably have an impact, obviously, of the household, as intended. And by that, I think that we are cautiously optimistic about the household lending demands. And we are supporting those customers, obviously. But as I said earlier, I think that we are happy with the pace in which we grow the mortgage book as of now. We don't want to bring on every customer. So the growth that we have in the mortgage book in Sweden as of now is perfectly fine. It's more what Michael just said that growing the business profitability-wise is the measure that we take right now.

And if I just may add, the -- I'm a bit more optimistic now than I was last quarter when it comes to the -- our corporate side, our corporate customers having more discussions with us when it comes to investments from their perspective, both in M&As, but also in just regular investment in their business. So I think it's a bit more positive underlying feeling, if you put it that way, when it comes to the corporate side, but also in the -- as Marten you said on the -- on the mortgage side, where we've seen a pickup in volume growth over the last 2 quarters or so, which is quite nice. So the -- I think in general, the consumers in Sweden are gradually becoming more and more, what you say, safe or -- yes, safe when it comes to their ability to invest more. So I think we -- I'm a bit more hopeful even there.

But I said that last year, it didn't come into play because there was too much noise this year as well. But I think now when it comes to lower rates, fiscal stimulus, inflation is coming down and you have had time to adjust to that. I think we are a bit more -- in a better position now when we look forward than we were a few months ago.

I mean, it looks like really the fiscal stimulus and getting distance away from the crisis helps the household sentiment to improve. But I mean what about the risk to see a behavior in terms of lending deleveraging cycle maybe in Sweden? I mean this is something that you think we should exclude it at this stage as a scenario? Or it's still a risk from a behavior point of view to be witnessed?

Sorry, I didn't really get the question. Sorry about that.

The question is -- no, no worries. The question is, I mean, we've been -- there have been a risk of a scenario of credit cycle deleveraging, means household not willing to leverage more, which was actually kind of a scenario that could be possible given that we are already at the end of rate cycle, and there's no pickup at all, which is quite unusual in Sweden. So do you think that risk is now behind us? Or it's still something we could contemplate?

Yes. So as I just said, I think risk off is not really how it looks right now. I wouldn't say it's risk on, but it's something in between. I see signs of actually the willingness for consumers and corporates to bring on more risk and not deleverage anymore. So I think we're just in that position to see the shift. That's what I feel.

We will now take the next question from the line of Sofie Peterzens from Goldman Sachs.

Here is Sofie from Goldman Sachs. So I wanted to talk about your capital position. You have accrued already a dividend of SEK 10.65 in the first 9 months of the year. You're with 350 basis point capital buffer. Why not use some of the capital for kind of organic and inorganic growth opportunities? Would you consider M&A?

And if so would you consider any M&A potentially outside of the Nordic region? And if you were to consider any M&A, what would be kind of the type of transaction that would make you interested? And also related to capital, if you're not keen on M&A, how do you view kind of share buybacks and potentially also announcing an interim dividend similar to one of your Swedish peers?

Okay. No, let's just say that we don't have any news as it regards to the buffer as such. We want to stay 1% to 3% above the required capital. And so no news for you from that perspective. We have said earlier on that we will move into the range, and we continue to say so. The only thing we don't know for the moment is when. So no news from that angle.

As with regards to the M&A, yes, we have our eyes and ears open, obviously, to those opportunities. We're not ruling it out. That being said, I think you all know that our preferred method of growth is customer by customer, strengthening the relationship with each customer along the way. It takes a little bit more time, but it serves the purpose of being really cautious and sensitive also from a credit risk perspective. We know actually what we bring on to the books a little bit more careful than through M&As. But again, we're not ruling it out. And if you look historically, we have also bought businesses throughout the history. So we're not ruling that one out.

And would you consider any M&A that would be more transformational?

I'm not sure I want to go into that. Obviously, as I said, we are looking into all opportunities as with regards to M&A. We have been investing in bolt-on acquisitions in the history, and we could potentially do that again if the timing is right and if the counterparty is right and the customer base is right. So we're not ruling that one out.

And what about using some of the excess capital to introduce an interim dividend? Is that something you would consider?

I didn't get the question really.

I said did you like an interim dividend that you pay one dividend, let's say, in the second half and the final dividend in the first half of the year.

So we do not consider that right now.

We will now take the next question from the line of Riccardo Rovere from Mediobanca.

A quick one. You have roughly SEK 580 billion in assets and liabilities in dollar, which makes a lot of sense to me that the numbers match each other. But more than 50% of the assets is in cash, and more than 50% of the liabilities are in bonds, which I guess the 2 should be somehow, the remuneration from the 2, or the cost of the 2 should be linked to something different, short-term rate for the cash and maybe long-term rates for the bonds. So when the Federal Reserve will start cutting rates again, should we expect a negative impact on NII from the current, these two things may be linked to the different rate outlook.

And then a second one, sorry to ask a second one. But if I calculate total risk-weighted assets for credit risk divided by the loan book, I know it's not just the loan book, but it's a bit brutal. But I noted that over the past 2 years, that ratio has gone down from 33% to less than 29%. Half -- what is driving the consistent continuous progressive reduction in the risk density of your loan book, of your credit exposure? It's a fairly large one. It's 4 percentage points in only 2 years out of 33%. So it's already low and it's getting lower and lower. What is driving that SRPs? Maybe, I don't know, anything that can explain that?

Yes. This is Peter taking. Just on your first question, the simple answer is that the rate cuts in the U.S. should not be expected to impact NII, and the reason for having balances in the U.S. relates to partly our sort of normal long-term funding of the bank where we utilize the U.S. dollar market. And then also from a liquidity reserve perspective, we also deposit money at the Fed. But the simple answer is that you should not expect a rate cut in the U.S. to materially impact the NII as such. And then to the second question. I'm sorry, could you please repeat the second question?

The second question is, you take credit risk RWA, you divide it by the book. In September '23, the ratio was 33% and now it's less than 29%. So I'm wondering from an already very low levels, how can it be possible that this number keeps going down and down and down every single quarter. Every quarter it goes down. So I'm just trying to understand what is driving the intrinsic positive risk migration within the book despite everything that happens on this planet. I mean whatever happens on this planet, it doesn't affect you. And nothing affects you. It looks like. So I was just wondering how this can be possible because it's already -- it's already very low and it's getting lower. I mean I'm not like -- it's not -- I'm just trying to understand why.

I think the simple answer is that the underlying credit risk in our books has decreased. You can see it on a quarterly basis when you track the drivers for the RWA development in between quarters. You can just look in the appendix of the past number of quarters. You can see that we have had -- we've seen, in particular, positive volume migration, i.e., new customers are coming into the books with lower risk rates than the ones leaving the bank. So I would say that, that's the key driver. The other thing, of course, is relating to mix effects in the overall book, which can vary over time.

Okay. So there are no SRPs, transfer of risk, anything like that over the 4.

No. It's -- you can read it as it's pure underlying positive development of the asset quality in our books.

We will now take the next question from the line of Shrey Srivastava from Citi.

It's just conceptually on how you think about the cost base. Again, you beat expectations this quarter, and we know that you mentioned sort of a continued emphasis on just the cost culture around the bank. Is it now that you reached sort of steady-state cost from which you can invest further, particularly in the international operations? Or as a business, for these costs that are sort of top down rather than branch-driven, how exactly do you think about them?

Well, again, I think that the initiative as such that we launched, and it was a necessary one in the head office, taking down the IT spend a little bit and also merging some group functions with Swedish similar ones. That had a huge effect. That was very successful. But on top of that, I think it also brought something from a culture perspective into the bank and into many parts of the bank.

So as we see it now, I think if you look into U.K., for example, Norway, for example, they have done pretty much the same journey as the Swedish head office has done, bringing down the cost. And if you look into where we decrease cost, it's not related to a business close to the customer. It's rather supporting functions that we have decreased cost in. So it's a little bit of a mindset.

The initiative, as such, we have that behind us now. We are extremely happy with the outcome. But we are also happy with the steps that we have taken from a cultural perspective, taking us back basically to our roots where we are very cautious in terms of spending our money. So I think that the initiative as such, that brought more than one good effect.

We will now take the next question from the line of Magnus Andersson from ABG SC. Magnus Andersson from ABG SC.

Yes. I have another question on the savings business and then just a follow-up on the U.K. If I look just -- you talk about the savings business, and you're obviously proud about the inflows and have been for quite a long time. However, when I look since -- if I just look at the fact book since Q4 '23, your assets are up by more than 20%, 23% or so, while when I look at the fee level, it's up 7%. So obviously, you have quite significant margin pressure there. Do you have -- any view on that? Anything you can do about the mix, any initiatives you are taking there?

And secondly, just a follow-up on Andreas' questions about the U.K. I mean your cost-to-income ratio is nearly 60% now. It's twice the level in Sweden and the market is pricing in another 3 rate cuts. I know you've earlier talked about an elevated investment level in the U.K. impacting costs. So I'm just wondering for how long will that cost level remain elevated? And how should we think about cost-to-income ratio progression with normalized rates? Because as it looks now, you will have to answer questions about the U.K. every quarter for another year or 1.5 years.

Right. So I'm happy to talk about the U.K. as well as I'm happy to talk about all the other home markets, Magnus, as you know. So bring it on. But I'll -- to start with just on the margins within the -- our mutual funds business. So the -- you're right, the numbers are, as you described, I would say that the -- and we've seen that for quite a long time. There are some flow now more into the -- what do you say, index funds. Do you say that? Or yes, index funding instead of the actively managed funds, but not a huge part. I think -- and -- so we try to always have the offer -- a very strong offer in the market. And then of course, people choose, customers choose their own risk profile.

And for many years, 10, 15 years, we've seen an increased inflow in the index fund. And that's probably how we should look at it. We always do what customers feel like it's the right thing for them. But the good thing is that the flow is there. The inflow is there, and we'll bring on much more new customers to the bank in the private banking side as well in our premium side. So I'm quite happy with that, actually.

And when it comes to the U.K., just -- I mean you're right, the cost/income ratio is a bit on the high side, but we're now in a position where we are able to grow the bank. So it's all about growing. It's not so much about bringing down cost and the cost/income ratio of 30 in Sweden, that's something else. So I would say, look into -- we'll be looking to volume growth, we're looking to increase income in the U.K. That's where we focus right now, not on the cost side, and we try to bring down the cost/income ratio. Mainly it should be driven by higher income.

Okay. So the cost level in the U.K. is not impacted by any temporary elevated investment level or so. This is the actual running cost base...

Yes, I would say that.

We will now take the last question, from the line of Andreas Hakansson from SEB.

Yes. Thanks for the follow-up question. On -- you talked about an improved corporate environment in Sweden. And can I just ask, when I look at your lending, you're, of course, very big in commercial real estate lending, that's declining in the quarter. And I see it across from our commercial real estate analyst here in Stockholm, and he is very optimistic on the bond side of the funding for corporate real estate -- commercial real estate companies at the moment. So could you tell us what's the outlook for volumes in that sector? And also, if the bond market is back and being now at quite tight levels, what are margins really doing when it comes to bank lending to that sector?

So yes. So we -- I recognize also the bond market and the capital market is -- it's very liquid and the pricing is quite tight, as you say, but it's been that for a while. We always compete with the market financing and bank lending. It's nothing new.

The -- I would say -- when I say I'm a bit more optimistic, it's because I see many more, what do you say, we talk a lot more with our corporate business, not only on the commercial real estate side, but also on the -- on other corporate business, and they are much more interested in discussing investments and also mergers and acquisitions -- sorry, acquisitions.

So we don't have any forecast, but I'm just saying I feel a bit more confident that the volume growth will pick up, not only on the CRE side, but also on the other corporate side. We'll see. And we always compete with the capital market and the financing going there. And we're also there. So we help our customers enter there and also to finance themselves in the bond market as well from our investment side, obviously. So that's also a business for us.

Thank you. I would now like to turn the conference back to Peter Grabe for closing remarks.

Well, thank you, everyone, for listening in, and we wish you all a good day. Thank you very much.

Thanks. Bye-bye.