Swedbank Stock

Good morning, everyone. I hope you can hear me all right. Welcome to Swedbank's Q3 2026 pre-close call. So I'm Maria Caneman, I'm Head of Investor Relations here at Swedbank. And this will be an audio-only Teams call, which is being recorded, and the script used for this call will, per usual, be published in the Investor Relations website after the call.

So we will be focusing on the events during the third quarter, relevant public data, macro trends in our markets, go through macro indicators, P&L and also a few other comments where relevant. We would like to highlight that we only refer to already disclosed information or publicly available data.

To start off, there is, as you know, one more day in this quarter compared to the previous one. So this is resulting in a positive impact on NII and NCI. So if you look at average day count effects, it's around SEK 70 million a day on NII and around SEK 20 million a day on AUM.

Starting with the macro trends. On FX, as of 30th of September, the Swedish krona had depreciated from end of June versus the U.S. dollar and the euro. And on average, compared to last quarter, the krona depreciated versus both the dollar and the euro. So for P&L, the average quarter-on-quarter development is the relevant number to track.

The Riksbank policy rate was left unchanged at 1.75% during the quarter, and ECB raised its policy rate to 2.5% on September 10. As of 29th of September, the 3-month STIBOR rate had increased by 11 basis points while the 6-month Euribor rate was up by 53 basis points. Looking at average quarter-to-date compared to last quarter, the 3-month STIBOR was 1 basis point lower while 6-month Euribor had increased by 23 basis points.

Moving on to NII for the -- for Sweden. Mortgage list prices in Sweden were raised on 18th of September by 13 to 25 basis points on fixing longer than 3 months, while the 3 month fixing was left unchanged. This follows decreases in the second quarter by 5 to 15 basis points, of which interest rates on 3-month fixings were lowered by 5 basis points. All this information can be found on our website, and I would encourage you to visit continuously because we do show most of our offering there, and that's where you can find the most up-to-date information.

Actual mortgage prices decreased by 6 basis points on the 3-month fixings in the first 2 months of the quarter, following an increase of 7 basis points in the previous quarter. On deposits in Sweden, rates were unchanged in the quarter, and we paid 0% on transaction accounts as well as e-savings accounts.

So turning to mortgage volumes and public statistics, Swedbank's volumes in own channels in the first 2 months of the quarter, excluding savings banks on our balance sheet, but including Stabelo increased by SEK 5.3 billion, corresponding to an average front book market share of 19%. Swedbank's corporate lending grew in the first 2 months of the quarter by SEK 2.8 billion, corresponding to an average front book market share of around 22%.

Retail deposits in Sweden decreased in the first 2 months of the quarter by SEK 10.6 billion, and Swedbank accounted for SEK 3.6 billion of this. Corporate deposits in Sweden decreased in the first 2 months of the quarter by SEK 4.7 billion, out of which SEK 1.2 billion in Swedbank.

So turning to the Baltics. According to data provided by DCB, total lending in the Baltics in July increased by 13.5% year-on-year, private lending by 12.6% and corporate lending by 14.4%. Total deposits in the Baltics in July increased by 10.6% year-on-year, private deposits grew by 12% and corporate deposits by 8.7%.

Regarding retail deposit rates, we paid 0% in interest on transaction accounts, while Easy Saver accounts paid 1.5% in Lithuania, 1.75% in Estonia and 2% in Latvia. During the quarter, rates on longer fixings were raised in Latvia by 10 to 100 basis points and in Estonia by 25 to 35 basis points, while they remained unchanged in Lithuania. So please let me remind me -- remind you of the timing effects of interest rate changes in that the negative effects from interest rate increases materialize ahead of the positive effects, as has been repeatedly pointed out by a CFO.

Moving on to net commission income. First of all, a kind reminder that asset management commissions are generated by daily fees. Looking at average values of the stock market development which impact our asset management fees. On average in the quarter compared to the average of the second quarter, the Swedish stock market increased by 4.8%, while the U.S. and European stock markets increased by 4.8% and 4.5%, respectively. So on FX, just a reminder here on that component, where the Swedish krona had depreciated by 3% versus the U.S. dollar on average compared to the second quarter. So this should be considered when assessing the U.S. stock market changes.

According to the statistics from the Swedish Investment Fund Association, the Swedish mutual fund market had net inflows during July and August of approximately SEK 42.5 billion compared to an inflow of approximately SEK 63.3 billion in the second quarter. The trend with inflows to index fund and fixed income, both long and short term continued, while outflows in actively managed equity funds remains.

Swedbank Robur had continued net inflows in July and August, with a market share between 11% to 16% of the total market net inflow and Robur's back book market share of AUM at the end of August was 21.7%.

And on to costs, our full year 2026 cost guidance is around SEK 27.5 billion, excluding extraordinary items. So at Q2, we said at current levels, the full year FX effect is estimated to add around SEK 200 million versus guidance. So please keep this in mind, and the krona has depreciated even further since. The cost guidance excludes the settlement to pay USD 50 million to the Department of Financial Services in New York, which was booked here during the third quarter. And also, the cost guidance excludes the SEK 1.3 billion extraordinary cost for the restructuring program that was announced in the first quarter. We booked a little over SEK 800 million of those in Q2, and the remaining is mostly direct cost that will be spread over the rest of 2026.

Bank taxes, we continue to accrue 100% of the bank tax in Latvia, so around SEK 17 million per quarter. If any threshold for discounts will be reached, this will be booked as reversals in Q4, so similar to last year.

On asset quality, in Q2, the post-model adjustment decreased and stood at SEK 161 million by the end of the quarter. And let me also remind you of the positive revaluation of expected credit losses of approximately SEK 0.5 billion to be recognized here in the third quarter, as announced already in the press release because this is due to the sale of Entercard's back book of nonperforming loans. But you have all the details in the press release, but the credit loss revaluation will be recognized already in Q3.

On capital, I'd like to just mention that the balance sheet is affected by end of period FX rates, mainly via RWAs from the Baltics that are denominated in euro. And as mentioned earlier, the Swedish krona has weakened versus the euro in the quarter.

Let me also flag to you, this is what we said in the Q2 report that the reorganization of the business area, Swedish Banking and Wealth Management, has been done, and the restatement file for this is being published during today on our Investor Relations page, something called Investor News. So this is neutral on group level. But for those of you who wants to look into the business areas, that restatement file will be available today.

And that was all for the pre-close call. We -- please note that we go into silent period on the 9th of October. So if any questions, feel free to reach out before that.

And I see that we have a question here from Magnus. Let's see, are you able to unmute, Magnus? Yes, now it's working.

Yes. Okay. You have to unmute us, I think.

Yes, I did, but didn't seem to work, but please go ahead.

Okay. Just 2 questions. First of all, on capital, whether you will publish your SREP like SEB did yesterday evening, I think you used to do that. And secondly, if there are any regulatory issues or anything impacting risk-weighted assets quarter-on-quarter we should be aware of?

Secondly, just -- I don't know if you mentioned the remaining SEK 440 million in restructuring charges for the second half. Have you said anything about how that will be distributed between Q3 and Q4?

Thank you. I'll start with the SREP. No, we will not be publishing that separately. We will, going forward, we'll be publishing that in our quarterly reports. So no update on that until Q3.

No further items to point out on risk-weighted assets, I believe, and -- apart from the restatements and these things, but those are net on -- neutral on group level.

And the last question, what was that one again? Sorry. Could you repeat the last question?

That was just on the restructuring charges, the -- Q3, Q4 if you have indicated anything?

We have not said anything else. They are more than that they are direct costs so all the provisioning that was -- and the big part was already booked in Q2, as you know. And we have not guided on specifically how it falls between the quarter. It will be distributed over the Q3 and Q4.

Thank you. And next in line is Andreas.

Just you talked about this timing effects that you said your CFO has been flagging. But isn't that related to the covered bond funding and the pricing of it? And shouldn't we expect that the covered bond funding turned cheaper during Q3 compared to Q2? I mean, I think you priced at 207 bps in Q2 and you should be at 201 bps now in Q3, while you said that your mortgage prices were down, but net with other months of previous quarter, you're actually up 1 bp. So wouldn't we see a positive timing effect in this quarter? That's my first question.

So the timing effect that our CFO is mainly pointing to is that when market rates move now ahead but policy rates are staying that you see in Sweden, where you saw the negative effect in Q2. Now Q-on-Q, that should not be a big effect versus STIBOR, which has been, on average, flat, but you see that effect on Euribor, where Euribor has moved ahead of the ECB rate change. So that type of timing effect because we're not repricing until the policy rate change typically.

So that is the kind of dynamic. And then you have -- if you're looking at wholesale funding, the way we usually, that is affected also, of course, by the increasing Euribor. And then you need to add, of course, increasing volumes on that as well Q-on-Q.

Yes. So I follow in Sweden. So that -- my first question was on Sweden. So we shouldn't have negative timing effects in Q3, which we had in Q2. But then in the Baltics, have I misunderstood or aren't you repricing your loans according to Euribor? So given it's 6 months, it's 1/6 every month automatically. So shouldn't that be repricing as we speak?

Yes. But you -- I was referring to the wholesale funding aspect of it as you see higher funding costs. But yes, you're right on the [ repricement ] mechanism versus Euribor.

So you said that Euribor was up 23 bps in the quarter, but that's irrelevant, right? Because we should see the people in Q3 repricing from what it came from Q1. So isn't the repricing that's going to happen in Euribor some 70 basis points really?

So versus Euribor, we are repricing. But -- so I mean, that dynamic is correct if you're looking on the deposit side. That's versus 6 months Euribor. But my comment was also on the overall funding because you have wholesale funding costs, which is also dependent on the Baltics...

Yes, but not in the Baltics because there, you are only deposit funded, right?

Exactly. So depending on where you are in the Baltics, yes.

Okay. No, then I think we have the same view.

Yes, yes. So next in line, Sofie.

Yes. So my first question would be also on kind of your funding side. Like could you just walk us through how your wholesale funding is hedged? So when we see kind of higher Euribor rates, a weaker SEK, is that risk kind of fully hedged with cross-currency swaps? Or how should we kind of think about the impact?

Good question. I think I might have to come back to you a little bit on the hedging side of things on the technical aspects of it. So maybe I can come back to you on that question.

Yes, that would be great. And then my second question would be on funding. Did you do any material like funding in the quarter? And if so, how should we think about the kind of funding that was done in Q3?

Yes, we have done a few. Let's see, we did a Tier 2 transaction that we did here in September. And I don't have top of mind all of those, but we have on our website, I believe, we have all those. So -- but we have been acting in the funding market, but nothing sort of out the ordinary apart from maybe the Tier 2 transaction, which is a little bit more rare ahead of a call that's coming up next year.

Okay. And then my final question. I know you said there was nothing in terms of capital, but is there any update on the Baltic models?

No, we have no update on that. So nothing there, sorry.

Thank you. And Riccardo?

Yes, Maria. Just a very quick one. Among the values one-offs, the -- especially on the Department of Financial Services, the $50 million, the restructuring cost, the provisions from the release of provision from Entercard, is there any fiscal effect on all of these? Are they tax deductible, and especially with special reference to the $50 million?

No, they are not tax deductible.

Thank you very much. So I believe that was the last question. And so as I mentioned, silent period starts at 9th of October, and we will release our third quarter report on Thursday, 22nd of October, at 7 a.m. CET in the morning, and the analyst call will be hosted at 9:30 CET.

Thank you so much for attending, and wish you all a nice day.

Good morning. Thank you for dialing in this morning. I am Maria Caneman, Head of IR here at Swedbank. Welcome to our second quarter results. I'm joined today by CEO, Jens Henriksson; and CFO, Jon Lidefelt. We will first listen to the presentations, and then you will have an opportunity to ask questions.

With that, over to you, Jens.

Thank you, Maria. Swedbank has once again delivered a strong result in uncertain times. The global economy continues to show resilience despite geopolitical global growth this year. Technological development and especially AI, is offsetting some of the negative effects from geopolitical tensions. The global economy is being pushed in opposite directions. Our economists estimate that the GDP of Sweden, Estonia and Latvia will grow by around 2% this year. Lithuania is expected to see stronger growth by around 3%.

In these uncertain times, Swedbank has once again delivered strong results, and the quarter was characterized by a clear customer and business focus. Profit for the quarter amounted to SEK 7.2 billion. If we exclude the extraordinary cost related to the restructuring program announced last quarter, return on equity amounted to 15.5% and the cost-to-income ratio to 0.39. Earnings per share was SEK 6. 37. Credit quality is solid. Credit impairments were SEK 313 million, corresponding to 6 basis points.

Swedbank has a strong capital and liquidity position and our CET1 capital buffer amounts to 2.6 percentage points. During the quarter, both Fitch and Moody's raised Swedbank's credit ratings. In their decisions, they highlight the bank's strong capitalization. Good credit quality and stable risk profile. Yesterday, Swedbank reached a settlement with the New York State Department of Financial Services, DFS to pay USD 50 million for failure to disclose information to the authority on 2 occasions, once in 2016 and 1 in 2018. With this settlement, all investigations into Swedbank's historical shortcomings have been concluded, and we can now put this behind us.

Our customer promise is to make our customers' financial life easier. And we continue to deliver on our plan Swedbank 15/27. It's a plan with a clear customer focus to strengthen our customer interactions, grow our business volumes and increase our efficiency. As part of this, subsidiaries have been moved into the business areas to further increase focus on business and customers. And the bank's savings business have been moved into a unified organization. Swedbank Global and Swedbank for Cycling, our insurance company, are now part of premium and private banking. And the name of the business area has thus been changed to wealth management.

During the quarter, we had a strong lending growth and the activity in advisory was high. And we have a clear business momentum across all our markets. Through high availability and stronger business focus, we can further support our customers with financing, savings and advisory. Our proactive work contributed to high activity in the mortgage business during the quarter. And during the first 2 months of the quarter, we captured around 20% of total market growth in Sweden in our own channels. And this reflects our goal to grow more than or at least in line with the market.

We also saw continued strong growth in Estonia, Latvia and Lithuania, and our mortgage portfolio increased by 3% in local currency. The high level of activity is also reflected in the positive development in our savings business. Growth was driven by strong net inflows and positive market development, and the net inflow to Swedbank Global was SEK 22 billion. And among strong competition, 2 additional Swedbank Global funds were selected to the Swedish premium pension system, and this reflects the strength of our offering.

The bank's corporate business continues to develop well. Our clear customer focus is producing results and corporate lending grew by SEK 18 billion. The growth was driven by several sectors and mainly by the real estate sector. We also saw high demand for bond issues. And in continued times of uncertainty, we support our customers and the activity in corporate advisory increased. The interest in sustainable products remains high. Around 40% of the bonds we arranged during the quarter were classified as sustainable. And our sustainable asset register now amounts to SEK 179 billion.

We constantly work to develop the bank and our customer offering. And we see that AI solutions used within the bank are producing clear results. For example, we recently introduced an AI solution that will be rolled out to all employees during the year. Eken as it's called, will contribute to higher quality, security and efficiently and not the least cost control. And speaking about cost control, I'll hand over to our CFO, Jon Lidefelt.

Thank you, Jens. We delivered a strong quarter characterized by high business momentum and continued focus on long-term shareholder value. The return on equity was 15.5% and cost-to-income ratio of 0.39, excluding the extraordinary costs including the SEK 860 million in extraordinary costs during this quarter. Return on equity was 14.2% and cost/income ratio 0.43. We are delivering on our plan, Swedbank 15/27 and the restructuring program presented in Q1 is progressing according to plan.

Lending volumes increased by 2% during the quarter, supported by strong activity across all core markets and business areas. In Sweden, Mortgage volumes originated through our own channels increased by SEK 7 billion. In total, mortgage volumes increased by SEK 8 billion. The positive trend in corporates and institutions continued with SEK 16 billion of loan growth. In Baltic Banking, growth momentum remained strong. Mortgage volumes increased by SEK 4 billion and corporate lending by SEK 2 billion, supported by demand across sectors.

Deposit volumes continued to trend positively during the quarter, primarily driven by private deposits. In Sweden, private deposits grew. In general, corporate deposits also increased, but was offset by a decrease from a few larger institutions. In Baltic Banking, private deposits grew by SEK 14 billion mainly due to the Lithuanian pension reform, which also impacted corporate deposits negatively.

Net interest income increased by 1% compared with the previous quarter, mainly driven by higher market rates in Baltic Banking and the generally higher business volumes. Lending margins continue to be pressured, while deposit margins increased. FX and day count effect had a positive impact of SEK 127 million. Funding costs increased during the quarter primarily driven by higher market rates early in the period. This was partly offset by higher income from Central Bank placements.

As a reminder, changes in mortgage rates typically flow through to our lending portfolio with a lag of approximately 3 months in Sweden and 6 months in the Baltics. Overall, our interest rate sensitivity is as expected with the effects on funding materializing ahead of the asset repricing. Net commission income increased by 7% compared with the first quarter. Asset management commissions benefited from strong stock market performance, positive FX effects and high net inflow of SEK 22 billion. Total assets under management increased to SEK 2.9 trillion.

Payment related income continued to develop well with seasonally higher cards income. Insurance income was lower, mainly though due to the annual profit sharing from insurance partners that was booked in the first quarter. Net gains and losses was high in the quarter with strong underlying customer-driven results, characterized by high business activity primarily by positive treasury revaluation effects. Other income increased by 23% in the quarter mainly driven by stronger results from the insurance business in Baltic Banking due to claims normalizing and positive revaluations.

Results from associated companies improved. And as a reminder, our collaboration with the savings banks includes cost sharing for IT development and administrative services. The compensation received from the savings banks is recognized within other income, while the corresponding costs are included in our total expenses. Costs developed as expected and in line with previous communication. We incurred SEK 860 million of the announced SEK 1.3 billion extraordinary costs for 2026. Adjusting for this, underlying costs follow the usual seasonal pattern and are somewhat higher in the quarter due to the annual salary revision in the Baltic countries.

Our cost guidance of SEK 27.5 billion for 2026 is unchanged. It is excluding extraordinary costs and FX.. As we said in Q1, by the end of next year, we expect our FTE level to be around 16,800. This is an effect of the restructuring program, where we are strengthening our foundation for future growth, enhancing efficiency, supporting capital generation and our ability to deliver attractive and sustainable returns to shareholders over time.

In 2027, we will continue to have an elevated investment level related to this. But as the synergies will start to materialize, I expect them to offset the additional costs in 2027. By the end of 2028 the changes are expected to be fully implemented, delivering a lower cost run rate of SEK 1 billion. Asset quality remained solid. Total credit impairments amounted to SEK 313 million or 6 basis points. Macroeconomic assumptions were updated during the quarter, adding SEK 108 million. Rating and stage migration added SEK 462 million. and was primarily impacted by a few corporate customers and by the updated macro assumptions.

As a consequence of the updated macro scenario, the post model adjustment is reduced by SEK 109 million and now amounts to SEK 161 million. Individual assessed provisions decreased primarily related to a limited number of corporate customers where Stage 3 exposures have been resolved. Entercard added SEK 116 million to total impairments driven by model adjustment. Overall, we continue to see a resilient credit portfolio supported by prudent underwriting standards, strong collateralization and a well-diversified lending book.

Our CET1 capital ratio at quarter end was 17.4% corresponding to a buffer of 260 basis points above regulatory requirements, highlighting our strong capital and providing substantial flexibility to support customers' growth and shareholder value creation.

And with that, back to you, Jens.

Let me now summarize, Swedbank has once again delivered a strong result in uncertain times. We present an adjusted return on equity of 15.5%. The quarter was characterized by high activity, and we have a clear business momentum across all our markets. We've had strong growth in our lending, the activity in advisory was high, and we are well positioned for continued growth and profitability. We continue to deliver according to our plan, Swedbank 15/27 we've strengthened customer interactions, increased business volumes and improved efficiency. Our customers future is our focus.

And with that, back to you, Maria.

Thank you. We will now begin the Q&A session. [Operator Instructions] Operator, please go ahead.

[Operator Instructions]

The first question comes from the line of [indiscernible] from SEB.

My first question is on capital. Now that the DFS settlement removes the last major outstanding legal uncertainty. How do you think about the appropriate CET1 buffer going forward? And does this change the calculus around capital returns to shareholders, whether through buybacks, dividends or both?

Thank you. As you know, we have a capital buffer range between 100 and 300 basis points. And in our 15/27 plan, we target the middle 60% to 70%. And and capital release above our dividend policy continues to be a judgment call. With all -- all the U.S. investigations behind us, the uncertainties have, of course, diminished, and we have no intention of holding more capital than necessary.

Perfect. But if I remember correctly, Jens, you have said before that you were open to the possibility of calling an extra AGM once all the investigations were closed and do an inter-year dividend distribution. Has this changed? Or how do you view the excess capital that you currently sit on? .

Well, I have no recollection of saying that. We have an AGM each and every year and have no plans to do something different.

The next question comes from Gulnara Saitkulova from Morgan Stanley.

So on the market shares in Sweden, previously, you mentioned that you were working to regain market share in Sweden with the objective of gradually bringing the front book performance in line with the back book. Can you elaborate how is that progressing? And could you provide an update on the initiatives that you have implemented to support this effort? .

Well, thank you. That's a question I love. But let me sort of go on top and take the overall perspective because we are the market leader in all our 4 home markets. And First, let me say a few words of the Baltics or Estonia, Latvia, Lithuania and we see continued growth, as Jon pointed out in his slide. And during the quarter, volumes increased by SEK 4 billion. Now if we go to the Swedish housing market, it has improved. And it's a combined effect of new mortgage rules and a stronger domestic economic sentiment and so have our mortgage volumes.

And I don't need to remind you, but a few years back, had low volumes. And in April and May, then we have sort of comparable results from the Bureau of Statistics, we had around 20% front book market share in our own channels. Why? Well, the reason is we are available. Last time I called up -- in Sweden, we had a waiting time of 14 seconds to get in touch with sort of an adviser. I haven't called Estonia, Latvia, Lithuania. I will probably do that later on to see if beat them.

We are faster and we have a strong business momentum. We can be better, but it's very cool that we are sort of seeing these advances. If we look at the market, -- it's characterized by strong competition and low margins. The margins are on a historically low level. And our focus then is on availability speed and forward-leaning attitude. And when you have these volumes, we will, of course, use this momentum to increase our customer share of wallet and everything in line with our plan, Swedbank 15/27 strengthening customer tractions, growing volumes and increasing efficiency, SG&I.

And more broadly, for Swedish market, wording positively to the net interest income. What do you see as the key factors that would allow the current margin pressure to ease?

Well, the first thing is, of course, if you look in history, we would expect that, but we don't see it. It's a tough competition, and there are a lot of providers there. Of course, we see that volumes are up. We are not really to -- we were before. But I think we're seeing that continued interest and the new amortization rules have made it a bit more easy for customers to increase while it also made it a bit more difficult for those who want to have mortgage more.

Next question comes from the line of Martin Ekstedt from Handelsbanken.

Just picking up on Jacob's question around capital repatriation. So before the AML issue broke out, I recall you had a 75% dividend payout ratio target. Would it not as be a fitting end to the story if you return to that now that you seem to have the headroom, I mean with both Entercard and PayEx earmarks of divestment that might add up 25 to 40 basis points further 41. That's my first question.

Thank you, Martin. I mean, as you know, the dividend policy, of course, ultimately up to the Board of Directors to set. But the reason for having the 60% to 70%, it is balanced so that we can capture good growth on markets without having to be limited by the dividend policy. So we think it's a balanced policy ensuring that we can focus on long-term shareholder value and have a balance between growth and giving back capital to the shareholders.

Okay. And then secondly, we saw some stage migrations impacting loan loss provisions attributed to -- I think you wrote a few rerated corporates. Can you share with us a little bit more in which sectors these are concentrated in, if any? And do you see these as isolated events or early signals of something in some markets or another.

Yes. I think, first of all, there are a couple -- if you look at the slides that I showed, there are a couple of these bars that you need to look together macro and past model, then you need to look at together. And then you also need to look at the rating and stage migration together with the individually assessed bar that is reducing because there are movements between this. But having said that, so if you add those together, you see that it's around SEK 260 million to SEK 270 million in provisions.

It is related to individual customers in C&I and Baltic Banking, mainly a few customers, no particular sector, no particular trends. So it's nothing that I'm worried about or anything that concerns us. And now it's also, as I said in the speech, impacted, the macro change sort of has also an impact on the movement or the amount when you move between stages.

The next question comes from the line of Andreas Hakansson from Nordea.

Good morning, and I normally make fun of -- congratulating management. But I think stapling with all the U.S. mitigations now, I think current related issues are in order actually. Then to my questions. First of all, on the net interest income, I mean, we missed -- we were a little bit above, and I was surprised how much funding you did in the quarter. So first part of the NI question is that do you see that you're now prefunded basically the whole year given that you grew both your deposits and your cover bonds quite significantly.

And relating to the NII as well. I mean is the negative impact we saw in the second quarter, very much driven by the rise in STIBOR that drove up your cover bond funding cost in the quarter. which was then offset by higher mortgage margins. And since STIBOR now come back again, was that a temporary impact in Q1, which means that when we come in -- sorry, in Q2 and which means that we're now coming to Q3 and I should start to behave more normally. That's my first question.

Thank you, Andreas. You're right that we are front loaded in our funding. We have done close to 2/3 or something of our yearly funding. It has been volatile markets, and we have taken the advantage to go out when on days where the situations have been good so that we could sit still if things get volatile on other days and weeks. So that has been approach we've had throughout the year. So yes, we are front loaded. We have taken SEK 80 million out of the SEK 130 million, basically, that was our funding plan for this year.

The other part, when it comes to the NII, I would say 2 things. We have grown a lot in the quarter, but you don't see the full NII effect of the volume that comes into this quarter. I mean the they can come during the quarter. And so first, next quarter, you would see the full quarterly NII effect of the volume growth this quarter. The other is which you also touched upon I mean we have an early reaction on our funding costs than what we benefit on our asset side. So funding, wholesale funding reacts earlier. And then it takes 3 months in Sweden and 6 in the Baltics where it to fully roll through on the asset side. So you have a bit of timing effects when rates go up, opposite what you saw when rates went down, then you had the opposite that we...

But shouldn't that actually be even a bigger positive effect in Q3, given that STIBOR since come down, so your funding costs should normalize down but the margin increase as you did on your mortgages, I think you hiked by 15%, then you cut by 10%, so you keep some of the margin expansion. So shouldn't that actually be a double positive.

I don't want to go in a forecast in the NII in that sense. But -- so I'll try to give you the mechanics as you know, -- but you're right that the increased list prices or mortgage they will flow through during 3 months. So in that sense, you're right. otherwise. So you'll have to do the assumptions. I will not speculate on it.

Then my second question is, I mean, we've seen monthly data that all the strategies start to have to mortgage growth again. And then when I look at your net inflow in Swedish mutual funds, it's the highest level I've seen for, I don't know how long, and SEK 22.5 billion. So when you set with the DOJ, I remember, I was a bit disappointed that you didn't want to commit to reduce headcount, but you said that you rather wanted to steer staff over to service your clients better. Are we now actually starting to see a positive effect from that? Or is that too early to say? .

Well, I would say it's too early to say because you have to remember that the inflows of [indiscernible] consists of many things. There are institutional flows, there are premium pension flows that are sold for our own channels, we can be better within the bank to capture even more so for own channels. And the mortgage growth gives us this possibility. But of course, when people have their mortgage with us, we can do more business, we can talk with them more. And we have a strong business momentum. And even though the number of people that have been working with sort of the historical shortcoming and investigations into that, of course, it means that less management attention and more focus ahead.

The next question comes from Sofie Peterzens from Goldman Sachs.

Sofie from Goldman Sachs. So just on the fine, Danske when you got the defined from the U.S. They also had some give us -- or they had a corporate preparation period for some time. Do you have any restrictions set by the U.S. authorities, is there settlement?

No.

Okay. And then I was wondering on the Baltic IRB models, is there any update potential impact? And have you changed your thought process since the Q1 earnings?

Sofie. Well, I have no real updates. I mean, as you know, the IRB overall has taken longer for us and other than what we expected, and we don't fully know the time line. What -- we have fairly good visibility that the final outcome when we're done with everything will be somewhat positive compared to where we are now. But we don't really know the order of things to be approved. And as I've said before, even if we're positive on the final outcome, it might go a bit up and down as things get approved. We will get back when we have something tangible. We are in the approval process with both ECB and with the Swedish FSA. And I have hopes that we will during this year, be able to come back with more tangible results on a couple of the models. But let's see, the time line is not owned by us.

That's very clear. And is there any update on the Swedish IRB models?

It's the same. I have hopes for some progress, both on some Swedish and Baltic models. But the time line has been prolonged, so I'm cautious in sort of speculating on when we can get the approvals.

Next question comes from Riccardo Rovere from Mediobanca. .

I hope you can hear me well. Just one, if I may. Your buffer is about 260 basis points technically 60 basis points above the mid of the range, 100 to 300. And now that the AML is gone, okay, you're going to be fined or relative at -- third and enough to eventually bring the 260 closer to 200 over the foreseeable future or you think there still too much answer in related to model and [indiscernible] .

Well, I'm sorry, I don't have any new answer to compare to what I said before, and that is that we target the middle of it the capital buffer range, that's 200 basis points. We have a dividend policy, as Jon talked about 60% to 70% and that capital release above this dividend policy continues to be a judgment call. And as I also said that with all the U.S. investigations behind us, the uncertainties have, of course, diminished. And the final thing, I always say that we have no intention of holding more capital necessary.

[Operator Instructions]

The next question comes from the line of Magnus Andersson from ABG.

Sorry if I come back to this. But just to be crystal clear on your Article 3 add-on you made in the Baltics in Q1 there. I think you said you at the call back then that if you could do the same exercise for the corporate book, it would add some SEK 20 billion of risk-weighted assets. I don't recall if that was kind of a projection of what could happen or if it was just hypothetical exercise. And if there is another potential SEK 20 billion in the short term that you might get back eventually, is that something we should have in mind when thinking about your capitalization. That's the first one. Your buffer thinking.

Thank you, Magnus. Yes, as I said, and that stands. I mean, we are in the approval process with ECB. And as soon as we have some outcome, we will come back. But you're right, what I said, if we have to do the same with the corporate as we did with the retail portfolio, then it would mean SEK 20 billion additional Re. The exact number will depend on the timing, but around there. and that stands.

Okay. So we should keep that in mind when looking at your buffer down for the short term, at least, I guess.

I won't speculate in the outcome since we are in the approval process. But if we would have to do the same, then it would be SEK 20 billion for this portfolio, yes. .

Okay. Okay. And my second one is just a bit curious about your IT cost and IT expenditure and what we should expect going forward. I realize you're in the restructuring program, but we also remember that you talked about elevated IT costs in 2024 and '25. And now when I look at it year-on-year in the first half, IT costs are up another 15% from the previous temporary elevated levels, around SEK 800 million and 8% year-on-year. Is this additional cost increase? Is it the restructuring driving this? Or is there's something else if you can give us some color on that?

I think if I start for a couple of years back, we had extra investments. Now we are, apart from this SEK 1.3 billion, we are in the normal mode where we steer the bank so that we, over time, can increase the profit because that is what needed above the dividend for us to ensure that we can bring the shareholder return and then we need to balance sort of both costs and income growth to get this together. Of course, IT, I mean, it we are using IT -- AI IT all over the place. So of course, that, I think general will be a part that we need to focus more and more on in the future, and we will automate more and more. So there might be differences between the line over time.

If you look at this SEK 1.3 billion, then you can see the split between staff costs and other things for this SEK 1.3 billion in the report. But so far, it has very much been that we have taken a reserve for severance pay. We have also started with other integration. Going forward, it will be more IT integration where we merge systems and adjust them so that they can -- we can have 1 system instead of 2. So that will be a bit elevated next year, but synergies will start to materialize. So total costs should not, from that perspective, be elevated next year.

Can I take the chance and say a few words about AI because I think it has to do with is that, as you know, we worked on machine learning and AI in the bank for a very long time and that's something we will continue to do. When we do that, we have a twofold focus. The first 1 is that we empower employees with the right AI tools and skills. We say AI for all opportunities for all -- and we've just, as I said in my call that we just introduced a new AI solution.

The idea is that each and every employee should have it, and it should be sort of quality, security, efficiency and, as I said, cost control because the idea is to have AI capabilities through vendor-agnostic architecture. And that means that we can be agile and we can adopt the tools we prefer and are willing to pay for. The second part that we use AI is that we use in the specific cases where we see significant improvements, and we can get return on our investments. And a few things we talked about is call summary, KYC processes and software development. And the key drivers here are the CFO and the CIO.

And what kind of productivity improvements do you expect from this in terms of head count development, for example, in -- if you look 3 years out? You think we will see a significant head count reduction before because of the implementation of AI? .

Well, looking ahead, 3 years in AI is extremely difficult. I expect that we will be less people working in the financial industry and in the bank. That is what I see ahead. I see that each and every individual in the bank will have a great person working with them, and that is what I call the Eken. And then I see fantastic opportunities to do more both when it comes to the customers and processes and things like that. But remember that AI will cost money, of course, to use. That's why it's so important that the CFO is the driver here because we need to make sure that we understand how many tokens are used, what kind of models, if I ask it simple questions, you should not go to the most expensive models and things like that. So we need to have an orchestrator and a thing like that. And we are moving ahead, and it's a lot of fun, and I'm heavily involved. I can speak for hours about this. .

Yes. Okay. Sounds exciting. .

The next question comes from the line of Jacob Kruse from Autonomous.

Sorry. Can you hear me now? .

We can hear you Jacob. We can hear you.

Okay. Great. Great. So I just wanted to follow up on the AI question just before. So you are 1 of the banks that give pretty good disclosure around your IT cost, cloud balances, et cetera. So you are not putting anything in for inference and tokens and these of things. Could you comment at all on how much the spend that is within your IT cost at the moment? Or where you see it going, especially in light of the cost with perhaps being less subsidized going forward?

No, I can't give you the number of AI in here. But I think the key is, of course, AI, we have used it for a long time I say, and we're increasing the usage. I think the key is that the heavy investments in the AI development that we see in the world. It has to be paid by someone. So we need to make sure that we're not 1 building us into being stuck with certain suppliers. We need to be flexible here and be able to change models, as Jens said, both from the cost perspective, but also because we don't know which LLM model will be the best for certain things in 1 year's time.

And the second is that we need to make sure that we actually measure the efficiency. We need to look at the efficiency from AI and the costs versus other types of automation versus the savings in in labor manpower that we're having and then look at the totality from the efficiency perspective, and that's what we are focusing on.

Okay. And do you think you might start to disclose this as you go forward?

I don't think so we don't have the plans. And I'm not sure it will be fully relevant and possible to fully separate out either because it will be so integrated in everyone's daily work. So we'll let you know.

[Operator Instructions]

We have a follow-up question from Sofie Peterzens from Goldman Sachs.

Here is Sofie from Goldman again. Just a quick follow-up. On Entercard the sale, you got that the net interest income impact is around SEK 600 million. Could you also give guidance what the cost impact from setting the SEK 11 billion Entercard consumer book will be at also how we should think about the fee impact and maybe also yes cost of risk if that will have any impact?

Thank you, Sofie. If we start I mean we are in the sales process on this. We will come back when we have concluded it and let you know. But for you to be able to manage the NII, we have separately reported the full year 2025 NII effect on this portfolio -- when it's sold, and moved out that will go away. The sales process is going fine, but I will not speculate in exact timing for when this will come out.

When it comes to the cost of risk, what I've said before when we bought Entercard in the end of last year, that it will have an impact on Swedbank's credit provisions of around 1 to 2 basis points. That stands. What you saw this quarter, the SEK 116 million was mainly related to model adjustment and for the portfolio that is up for sale. You can also see that in the report. So going forward, expect 1 to 2 basis points on the Swedbank cost of risk.

When it comes to the savings, I mean, of course, when we sell it, we can reduce the costs, but that will come with a little bit of lag. And it's also included in the total restructuring that we're doing of where Entercard is included, Entercard web and pay and so forth is included in this extra restructuring, SEK 1.3 billion that eventually will lead to cost efficiency on a run rate of SEK 1 billion lower per year. So that is included in all these programs.

Okay. And just a similar question for PayEx. They are around SEK 400 million gross saves. Is that also already included in the SEK 1 billion cost guidance?

No. PayEx is not included in the SEK 1.3 billion extra cost with the corresponding SEK 1 billion lower run rate later. PayEx outside of that. There, we're selling a company. So of course, you will -- we will sort of get rid of both the costs and the income from PayEx when that deal is concluded. And I hope that we can partly invest some of that in something that will bring higher shareholder value. But it's not included. PayEx is not included in the restructuring program. It's a side thing that we're working with. .

Okay. That's very clear. And then maybe just a final question. How do you think about M&A opportunities both in the Nordics and outside of the Nordics? .

Well, the first thing is that we see a strong organic growth. That's the first thing to keep in mind. Second thing is that we've done that with both Stabelo and Entercard and the third, we're always looking for opportunities as a part of my job. And if we see something interesting, we will act upon it. And if we act, we will tell you.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Swedbank for any closing remarks. .

Thank you. I'll steal the word, Maria, that's okay we view. Thank you all for calling in. And as always, as a difficult and challenging question, it makes us better, and we now look forward to meeting a few of you and continue our dialogue otherwise take care and enjoy the summer. Thank you.

Ladies and gentlemen, the conference is now over. Thank you.

Hello. Thank you all for joining. It's 2:00 here in Stockholm. So let's kick off. Welcome to our Q2 2026 pre-close call. I'm Maria Caneman, I'm Head of Investor Relations here at Swedbank. And as usual, this will be an audio-only Teams call, where you'll be able to unmute yourselves during the Q&A session. We would kindly ask you to remain muted unless you're about to ask a question. And of course, as per usual, this call is being recorded, and the script used for this call will be published on the Investor Relations website after the call.

So we will focus on events during the second quarter, relevant public data and macro trends in our markets. We'll go through macro indicators, P&L statements, some comments on capital. We would like to highlight that we will only answer questions related to already disclosed information as well as publicly available data. To start off, there is one more day in this quarter compared to the previous one, resulting in a positive impact on NII and NCI. So looking at average day count effects, this results in around SEK 60 million per day on NII and around SEK 20 million per day on AUM.

Starting on macro trends, FX movements, and this is as of end of last week, June 12. The Swedish krona had appreciated from end of March versus the dollar and the euro. On average, quarter-to-date compared to last quarter, the krona depreciated versus both the U.S. dollar and the euro. For P&L, the average quarter-on-quarter development is the relevant number to track. Riksbank policy rate was left unchanged at 1.75%, and the ECB raised its policy rate to 2.25% on June 11. As of June 12, the 3-month STIBOR rate had decreased by 15 basis points, while the 6-month Euribor rate was up by 16 basis points. On average, quarter-to-date compared to previous quarter, the 3-month STIBOR was 5 basis points higher, while the 6-month Euribor increased by 30 basis points.

So turning to NII, and first of all, a reminder from what our CFO said in Q1. Wholesale funding costs improved slightly during the first quarter, but as STIBOR moved upwards towards the end of the quarter, we expect to see the effect of this on our funding in the second quarter. Let's continue with NII in Sweden, where mortgage list prices in Sweden were lowered on May 29 by 5 to 15 basis points, of which 3-month fixings were lowered by 5 basis points.

This follows increases in the first quarter by 15 to 25 basis points, of which interest rates on 3-month fixings were raised by 15 basis points. This information can be found on our website, and we would encourage you to visit continuously the website as we show most of our offering there and where you can find the most up-to-date information. Actual mortgage prices increased by 8 basis points on 3-month fixings in the first 2 months of the quarter following an increase of 8 basis points in the previous quarter.

On deposits in Sweden, rates have been unchanged as of June 12, and we paid 0% on transaction accounts as well as on e-savings accounts. So turning to the mortgage volumes and public statistics, Swedbank's volumes in own channels in April, excluding savings banks on our balance sheet, but including Stabelo, increased by SEK 2.8 billion, corresponding to a market share of around 23.2%. Swedbank's corporate lending grew in April by SEK 6.5 billion, corresponding to a market share of 29%. Retail deposits in Sweden grew in April by SEK 37 billion, and Swedbank accounted for SEK 7.5 billion of this, corresponding to a market share of around 20%. Corporate deposits in Sweden decreased in April by SEK 38 billion, of which SEK 3.5 billion is Swedbank.

So now turning to the Baltics. And according to ECB data, total Swedbank lending in the Baltics in April increased by 13.9% year-on-year, private lending by 12.6% and corporate lending by 15.4%. Total Swedbank deposits in the Baltics in April increased by 12.7% year-on-year. Private deposits grew by 13.5% and corporate deposits by 11.6%. Regarding retail deposit rates as of 12th of June, we paid 0% in interest on transaction accounts, while e-savings accounts paid between 1.25% in Lithuania and 1.75% in Latvia and Estonia. So that's unchanged from the fourth quarter, and rates on all other accounts have so far been kept unchanged compared to the end of the first quarter.

Continuing on net commission income. First of all, a kind reminder that asset management commissions are generated by daily fees. And looking at average values of the stock market development, which impact our asset management fees up to 12th of June and compared to the average of the first quarter, the Swedish stock market increased by 1.8%, while the U.S. and European stock markets increased by 5.9% and 1.2%, respectively. And also here, reminding you of the FX component where the Swedish krona by 12th June had depreciated against the U.S. dollar on average compared to the first quarter, and this should be considered when assessing the U.S. stock market changes.

According to statistics from the Swedish Investment Fund Association, Swedish mutual fund market had net inflows during April and May of approximately SEK 47 billion, compared to an inflow of approximately SEK 4 billion in the first quarter. There were outflows in actively managed equity funds, while index funds and fixed income funds saw inflows. Swedbank Robur market share was 21.8% at the end of May 2026. Regarding card commissions, card activity in the second quarter is normally seasonally higher -- sorry, in the second quarter is normally seasonally higher than in the first quarter. And let me remind you what our CFO has pointed out in recent quarters that commission expenses continues to be higher due to the large investments that are needed to transform the Swedish payment system.

Continuing to expenses. Please keep in mind the usual seasonal increase in costs in the second quarter, and this is stemming from annual salary costs, among other things. Our 2026 cost guidance is around SEK 27.5 billion, and that is excluding the SEK 1.3 billion extraordinary cost that we announced last quarter. We then also said that around SEK 800 million of provisions will be booked now in the second quarter and the remaining balance of around SEK 500 million. That's mostly direct costs that will be spread over 2026. On bank taxes, following the Riksbank decision on 6th of May regarding the interest-free reserve requirement, an annual interest cost will be booked upfront now in Q2, similar to what we did end of last year. And for this time, it's 12 months, and it will be approximately SEK 100 million. More on bank taxes, we continue to accrue 100% of the bank tax in Latvia, so that's around EUR 70 million per quarter.

And if any threshold for discounts will be reached, this will be booked as reversals in Q4. So this is very similar to how it was done last year. Asset quality in Q1, as you know, the post-model adjustment was increased, stood at SEK 268 million by the end of the quarter. And in regards to capital, just a reminder that our balance sheet is affected by end-of-period FX rates, mainly via RWAs from the Baltics that are denominated in euro. And as mentioned earlier, by 12th June, the Swedish krona had weakened somewhat versus the euro. And then some additional items. As we talked about before, the Lithuanian pension reform is ongoing. And if you recall, we had corporate deposits that were a little bit elevated in the Baltics in Q1 due to this. So this money has now been transferred to individual accounts, both to Swedbank's customers and others, so that you should expect to see corporate deposits normalize and instead some increase in private deposits.

And as a result of the expanded mandate of the business areas earlier this year, subsidiaries have, as of June 1, been organizationally moved into the business areas. So that means Swedbank Insurance and Swedbank Robur have both moved to Premium and Private Banking, and the business area has subsequently changed its name to Wealth Management. Swedbank Hypotek moved into Swedish Banking and Swedbank Pay into Corporates and Institutions. Overall, these changes do not impact the aggregated P&L lines as all income and costs already were allocated out to the business areas. But you will, of course, see allocated costs become direct costs.

And of course, FTE numbers move around, numbers will be restated. And as we said in Q1, we intend to sell PayEx, and it was during Q2 moved to segment reporting, meaning that P&L is now reported in group functions instead of being allocated out to business areas. So just a reminder of what the numbers look like for the full year 2025, it was around SEK 400 million of income and the rough split would be 30% NII, 50% NCI, and the remainder other income and around SEK 400 million of costs.

So previously, PayEx was allocated out to business areas, and it was mainly Corporates and Institutions, around 80% of it, and the remainder in Swedish Banking. That was all for the pre-close call. I'll pause for a moment to see if there are any questions.

And we have one from Magnus. I need to allow you to unmute. We can't hear you Magnus. You should be able to unmute.

Okay. Can you hear me now?

It doesn't seem to be working. Can I try with the next in line then, Sofie from Goldman Sachs. Are you able to unmute yourself?

Here is Sofie, can you hear me?

Okay. It might have been on my end. Sorry, I can now hear you. Okay. Sorry. Let's go back. I think it was setting on my side. So please go ahead, Magnus. I think your sound is fine now.

Is it fine now?

Yes, it's right.

Good. First of all, if you have any news about the potential increase in corporate IRB risk weights in the Baltics that you mentioned in Q1 could be another SEK 20 billion? And secondly, just -- I don't recall if you mentioned the day impact in net commission income in Q2. Thanks.

Sure. So first of all, you have not missed any update on the IRB side. We will provide those as soon as we have any. And secondly, on day effect, it's around SEK 20 million a day affecting AUM.

And now we try again, Sofie.

So here is Sofie from Goldman. So I was also having 2 questions. The first one was on rate sensitivity. I know you mentioned that in Sweden, we should expect potentially higher funding costs. But how should we think about the rate sensitivity in the Baltics given that Euribor 6 months, as you mentioned, is up 30 basis points quarter-on-quarter. So if you could just talk us through the mechanics around the net interest income in the Baltics? And then my second question would be on VAT refunds. Last quarter, you didn't get any VAT refunds, but should we expect any VAT refunds in Q2?

Thank you. Let's take them in order. So first of all, on NII sensitivity. Last quarter, we added some additional details specifically around Baltics and the rate sensitivity in our presentation. So that, if I remember correctly, Slide 22 is in the appendix, where we've broken out exactly how much is what market rate connected. So of course, there is a higher sensitivity there given the larger deposit base. But please take a look at the numbers there, and happy to take detailed questions later then.

But sorry to interrupt, but is it then fair to assume that like if you use that slide, whatever number you get that it's kind of going to be immediately repriced. So we should already expect kind of the rate sensitivity to come through in Q2?

So yes, I guess that is the simple answer. But it depends on which deposits you are looking at, of course, some reprice immediately and some take a little bit longer. On VAT then, your question, if we have had any further refunds there, or we haven't said anything, but we have now submitted the applications for the final ones, which is the year 2024 and the first quarter 2025. We don't know when we will hear back, but the applications have been submitted.

And next in line would be Namita.

I can probably look it up myself, but just quickly on the deposit side, on the Baltics on the retail side, have there been any changes to deposit rates since the ECB raised rates last week?

No. On deposit rates, I mean, in the Baltics, we pay 0% on transaction accounts. We paid some money in savings accounts, and that is unchanged so far in this quarter. So not yet is the question -- is the answer.

Okay. Cool. And then just another question. You talked about the corporate deposits being elevated in the first quarter in Lithuania and now some of it will move to the private deposits in Q2. Have you said how elevated the corporate deposits were in the first quarter of '26 for Lithuania?

We haven't specified specifically what was related to Lithuanian pension reform, but we had, if I remember correctly, around SEK 5 billion higher in Q1. So they were partly elevated due to this. And so what we mean to say by this is that you will see some traffic between there moving into private deposits, but it's difficult to say exactly how much and what individuals would do with this money that they receive.

Jacob Kruse, please go ahead.

So just, I guess, 2 questions. Firstly, on your Swedish savings accounts, I think you have an account which pays about 50 basis points where you have a delayed withdrawal process. I just wanted to check, is that a relatively new product? And what kind of volumes are you looking at there if you -- or if you could say anything about sort of the take-up on that one?

And then my second question would just be on the negotiated mortgage rates. It looks to me like you've managed to widen the spread a little bit versus 3-month STIBOR. But I guess it's hard for me to know what's going on inside your bank. So just any -- has there been a little bit of an improvement in pricing or growth that makes that market a bit better for you?

Thank you. So on the deposit question there, I don't have the numbers for that specifically. If I remember correctly, several banks launched this type of product last year, but I have to get back to you if we have any data on how much we have on those accounts. And secondly, I mean, we did see a slight improvement in Q1 in terms of net interest margin as a whole. Mortgage margins, I think you can tell from the markets has been looking to stabilize a little bit, but it's too early to tell. I mean it's a very competitive market. That continues to be the case. And I think you can see that from how the banks are also acting and reacting to price changes.

Let's see -- are there old hands or new hands? Because I have Namita and Jacob, but maybe they were the same questions?

Can I ask a quick one?

Sure.

On PayEx, sorry, I'm a bit confused. What's going on? Is it getting discontinued?

So no. The thing is we have said that we will sell PayEx. It will never qualify as discontinued operations. It's too small. So we have said that we will sell it. We will, as a preparation of the sale, move it to segment reporting. So instead of being allocated out to the business areas, it moves and will be reported under group functions. And that's a preparatory step towards the sale. And then at some point down the line, when we approach a sale, we -- it may qualify as held for sale, so same as for Entercard. But that's a balance sheet activity. It doesn't affect P&L until it finally gets sold and out of our books.

May I have another question as well, if possible?

Yes, please go ahead.

So you may not have much here, but I just wanted to ask, the Swedish elections are coming up in September. I know the Social Democrats were talking about additional bank taxes in their shadow budget last year. Do you have any -- is there any live debate there about that topic? And I guess, in particular, how it would relate to existing bank taxes and resolution fees and these kind of things, if it's just additive or if this is sort of a change in composition?

Yes. So I'm afraid I probably won't be able to answer the question much. But yes, I mean, you're absolutely right. There is a lot of debate around this going into the elections. There have been all sorts of more or less wild propositions for new bank tax and also for a change of the existing one. So it's definitely a case for the elections. I think it's interesting that it's at the same time also a question, the legality of the existing one is questioned by the EU at the same time. So we have no idea where this is going, but it will, for sure, be a hot topic in the election.

And I think, Sofie, are you next in line, I believe.

So just on Entercard, the sale of the consumer book, is there any update on that?

Yes. No, you haven't missed anything. There has been no update. So as soon as we have one, we will share it.

Okay. And should we expect something potentially later this year or it's further out?

We haven't said anything about the timing as such. But I mean, we're very much working on it as we classified it as held for sale now in Q1.

Maybe I can just come back to the question on the savings accounts that we have a page in fact book, was it Page 40, I believe it was, where you see the balances on the different deposits account. It doesn't give you exactly what you were looking for in terms of those delayed accounts with a delay effect on them, but it just gives you a more detailed split on the different savings accounts, if that's helpful.

Good. I believe there are no further questions. So by that, we would like to round off this call. Note that we will go into silent period on July 9, and our Q2 report will be released Friday, 17th of July, at 7:00 CET in the morning, and the analyst call will be at 9:00 CET. Thank you so much for joining. Enjoy the rest of your day.

Good morning. Thank you for dialing in this morning. I am Maria Caneman, Head of Investor Relations here at Swedbank. And it's my pleasure to welcome you to our first quarter results presentation. I am joined today by our CEO, Jens Henriksson; and our CFO, Jon Lidefelt. Jens and Jon will start with the presentation, and then, there will be an opportunity to ask questions.

With that, over to you, Jens.

Thank you, Maria. Swedbank has started 2026 by once again delivering a stable result in uncertain times. The resilience of the global economy is once again tested with increasing geopolitical tensions and rising energy prices. The IMF revised down global growth slightly the other week, but they warn that the effects on the world economy could be significantly worse if the conflict in the Middle East is prolonged or escalates.

The bank's 4 home markets continue to perform well, especially relative to other countries. Our economists estimate that the Swedish economy will grow by around 2% this year, and the same applies for Estonia and Latvia. The Lithuanian economy is expected to continue to grow by around 3% in 2026. In our home markets, growth is driven by both private consumption and large public investments.

In these uncertain times, Swedbank is once again delivering stable results. The quarter was characterized by increased proactivity. New regulation for Swedish mortgages also contributed to more customer interactions. Turbulence in the equity markets led to higher activity in the savings area. Despite the fact that demand for corporate credit is somewhat muted to the global turmoil, the bank has done more business in both the Baltics and in Sweden.

In total, we achieved a profit of SEK 7.3 billion in the first quarter of 2026. The return on equity is weighed down by the fact that our dividend was not paid out until the end of March, and therefore, amounted to 13.3%. The cost-to-income ratio was 0.4. Credit quality is solid. Credit impairments amounted to SEK 164 million. Our CET1 capital buffer amounts to 2.7 percentage points. Swedbank has a strong capital and liquidity position.

We want to make our customers' financial lives easier. And just under a year ago, the 4 business area heads, our CFO, Jon, and I presented our plan Swedbank 15/27. The plan has a clear business and customer focus. We will strengthen our customer interactions, grow our volumes and continue to increase efficiency. When presenting the last quarterly report, I said that the business area would be given more responsibility and influence. This is now in place. The business area has been given full responsibility for meeting customer needs. Business development has moved closer to customers, and large portions of our IT are centralized. This will increase our pace and strengthen our ability to execute.

I also announced that we would clarify our plan for card and consumer credit following the acquisition of Entercard. And this plan has 3 parts: one, we will grow our card business with existing customers of Swedbank and with our partners. Entercard continues to operate a card business under its own brand. Two, we will create a unified consumer credit business based on Swedbank's values and credit standards. Everything is done with Swedbank as a part -- within Swedbank as a part of our offering to existing customers. Three, we will realize synergies in both card issuance and consumer credit.

To realize the value from the organizational changes I talked about and from the Entercard plan, we are running a program that will reduce long-term annual costs by around SEK 1 billion. To do this, one-off costs of SEK 1.3 billion will be added during the year. It will cover transitional costs, competence shifts and integration. As a consequence, the number of employees will decrease from 17,350 today to 16,800 at the end of 2027.

In addition, we intend to divest PayEx, which today primarily works with various types of invoice financing. This will increase their opportunities to grow while reducing capital that is tied up in the bank. All of this is in line with our plan Swedbank 15/27 and contributes to a more business-oriented, focused and efficient Swedbank.

The mortgage market in Sweden continues to be characterized by a somewhat muted customer activity and intense competition. To grow at least at the same rate as the market, several actions have been taken. Availability has increased significantly. We are faster and more business focused.

In November last year, we finalized the acquisition of the digital mortgage challenger, Stabelo. They complement our offering well. As a result, our market share of new mortgages in Sweden through our own channels was almost 17% in the first 2 months of the quarter. Since Stabelo was acquired, it has grown steadily and contributed with over 3 percentage points to this. Swedbank's mortgage portfolio also grew in Estonia, Latvia and Lithuania during the quarter. Activity in the housing market remains high, supported by rising real wages.

At the end of the quarter, the savings area was affected by increased market turbulence. In these times, we place even greater priority on being available and providing advice and support to our customers. Net inflows to Swedbank Robur were SEK 4 billion. The number of customers who choose our premium concepts is increasing. Growth was particularly high for customers in need of personal, qualified investment advice.

The bank's corporate business continue to develop at a steady pace. As a result of renewed and increased uncertainty, we saw a cautious attitude among companies at the end of the quarter. Total lending volumes increased by SEK 9 billion. In Sweden, growth mainly came from large customers in the real estate sector. In the Baltic countries, lending to corporates increased by 2%, and the energy sector accounted for a large part of the increase. In our corporate business, we continue to focus on customer value and proactivity. Customer satisfaction among our large corporate customers has increased.

Let me also, as always, say a few words about Swedbank's societal engagement. Children and young people are particularly important in our work to promote financial literacy. Every month, we educate tens of thousands of school children in personal finance, and we distribute the magazine Lyckoslanten. And those of you that are not from Sweden now had a pleasure to see the front page of the new edition from that coming out soon on the right-hand side and the other older one on the left-hand side. It is Sweden's largest youth magazine and is distributed in schools to all children in grades 4, 5 and 6. And Lyckoslanten celebrates its 100th anniversary this year. Since 1926, it's been important for increasing young people's understanding of money and savings, something we are both happy and proud of.

And with that, Jon, the floor is yours.

Thank you, Jens. The quarter was stable with good business momentum despite the geopolitical uncertainty. Return on equity was 13.3%, weighed down by the higher equity base as the dividend payout was as usual in the end of the quarter. The cost/income ratio was 0.4, and the CET1 buffer was around 270 basis points. Swedbank has a strong capital and liquidity position. Lending volumes increased by 1% in the quarter. In Sweden, mortgage volumes sold through our own channels increased by SEK 4 billion.

Stabelo now grows at good pace, clearly showing that Swedbank's strong balance sheet is enabling growth. The positive trend in corporate and institutions continued with SEK 6 billion of loan growth. In Baltic Banking, growth momentum continues. Volume growth in mortgages was strong, adding SEK 4 billion. Corporate loan demand remained high across sectors with loan growth of SEK 3 billion.

On group level, you now see that Entercard's consumer lending portfolio is reported as held for sale. Deposits continued its strong trend during the quarter, driven primarily by Baltic Banking with good growth mainly in the corporate deposits. The pension reform in Lithuania has temporarily boosted corporate deposits by around SEK 3 billion. These are transferred to individuals during the second quarter.

In Sweden, private and corporate deposits were stable. Net interest income increased by 3% compared with the previous quarter. As last year's rate cuts were rolled in at year-end, we now have the full quarterly NII effect. The impact was offset by solid underlying loan growth. Furthermore, the full quarter effect of Entercard added SEK 481 million compared to last quarter. FX and 2 fewer days had a negative impact of SEK 192 million.

Wholesale funding costs improved mainly due to the lower STIBOR rate in the beginning of the quarter. Changes in mortgage rates typically fully feed through to our lending with a lag of around 3 months in Sweden and 6 months in the Baltics. Our rate sensitivity dynamics is as expected with the impact on the funding side materializing ahead of the impact on the asset side.

Net commission income decreased by 2% compared to the fourth quarter, which was boosted by one-offs. The decrease was mainly in Securities and Corporate Finance, as they normalized following the positive one-off effects we had in the fourth quarter. Asset management commissions benefited from strong performance and added -- and a net inflow of SEK 4 billion, offset by day count effect and FX. Total assets under management was SEK 2.6 trillion.

Robur is the largest fund manager in Sweden and in the Baltics. Asset management commissions contributed with around SEK 2 billion to our total NCI. Payments income increased and card commissions were higher due to the full quarter effect from Entercard, adding SEK 67 million. As usual, card commissions were seasonally lower.

Insurance income was boosted by annual profit sharing from insurance partner companies of SEK 49 million. Net gains and losses decreased as we had exceptionally large treasury revaluation effects in the fourth quarter. Business-related income remained, however, strong, driven by client trading activity. The treasury result was impacted by revaluation effects in derivatives, offset by positive valuations in equity holdings.

Other income decreased by 20% in the quarter, mainly driven by higher claims from the insurance business in Baltic Banking. Results from associated companies were lower, mainly due to P27. As a reminder here, our collaboration with the savings banks include cost sharing for IT development and administrative services. The savings bank's share of these costs is included in Swedbank's total expenses with a corresponding compensation recognized under other income.

Costs in the first quarter were higher compared to the previous quarter, but Q4 included one-off effects of around SEK 1 billion. So adjusted for that, costs were seasonally lower. Entercard full quarter impact added SEK 241 million compared to the previous quarter. Asset quality remains solid. Total credit impairments for the quarter amounted to SEK 164 million.

Macro scenarios have been updated, but as the heightened uncertainty is difficult to fully capture in our models, we have added post-model adjustments, which now stands at SEK 268 million. Individual assessment increased mainly due to a few corporate exposures, but we also saw increased repayments. Entercard added SEK 48 million.

Overall, our asset quality is solid, and I'm comfortable with our strict credit origination standards and the strong collateralization of our lending portfolio. Our CET1 capital ratio at quarter end was 17.5%, corresponding to a buffer of around 270 basis points above regulatory requirements.

In the quarter, we have taken the decision to add an Article 3 add-on of approximately SEK 11 billion. This relates to our IRB application for retail exposures in Baltic Banking and is a self-imposed capital add-on, which will remain until the ECB has reviewed and we have implemented the updated models.

With the reorganization implemented during Q1, we have realigned responsibilities and resources to sharpen customer focus and improve speed and execution. We have also taken further steps to transform and streamline our operating model for card issuing, card acquiring and unsecured lending to strengthen business focus and capture synergies across the group. Areas such as IT and operations will be consolidated to enable synergies, while Entercard and Swedbank Pay will continue to act as focused distributors of non-Swedbank branded products.

As communicated previous quarter, the consumer finance back book of Entercard will be sold, and you see it reported as held for sale in the balance sheet. We continue to focus on efficiency. And in 2026, we will have extraordinary costs of around SEK 1.3 billion. The majority, around SEK 800 million, will be booked in the second quarter and the rest during the remainder of the year. Our cost guidance of SEK 27.5 billion is excluding the extraordinary cost.

In 2027, we will continue to have an elevated investment level related to this. But as the synergies will start to materialize, I expect them to offset the additional costs in 2027. We also expect an FTE level of around 16,800 by the end of 2027. At the end of 2028, the synergies will fully materialize, resulting in a lower run rate of SEK 1 billion. On top of this, PayEx will be divested. Recent years, we have restructured and streamlined the company. And a few months ago, it was split into 2 legal -- separate legal entities, Swedbank Pay and PayEx.

The new PayEx consists of mainly invoice servicing and tailor-made financing, products that meaningfully complement our offering, but are best sourced through a third-party provider. It is not our core business, and we believe PayEx can realize its potential better with another owner. The financial effect of this, you can find specified in the appendix of the presentation. Divesting PayEx will also create room to invest more in our core business, creating further shareholder value. We expect a CET1 release of approximately 15 to 25 basis points, stemming mainly from the divestment of Entercard's consumer finance back book.

To conclude, our actions combined will continue to support our strong profitability and market-leading cost efficiency.

Back to you, Jens.

Let me now summarize. We live in uncertain times. In these times, Swedbank once again delivered a stable result with a return on equity of 13.3%. Our credit quality is strong. Swedbank has a strong capital liquidity position, and we continue to deliver according to our plan, Swedbank 15/27. And we are continuously improving the bank by strengthening our customer interactions, growing our volumes and increasing efficiency. Our customers' future is our focus.

And with that, back to you, Maria.

We will now begin the Q&A session. I would like to start with a kind reminder to please limit yourselves to 2 questions per turn. Now, operator, please go ahead.

[Operator Instructions] The first question comes from the line of Ekstedt, Martin with Handelsbanken.

Can you hear me?

Yes, we can.

Excellent. So first, I wanted to ask about mortgages. We saw mortgage growth on a systemic level to what was published actually today by Statistics Sweden just an hour ago or so and growth on a systemic level then crept up above 3% year-on-year in March. You improved your share of net new lending, but you still took well below your back book market share. I know you just look at your own channels in terms of market share though. But I wanted to check if policy rate now -- if policy rate, sorry, now potentially come up again to go against inflation. How do you see further growth in the mortgage sector playing out from here? Are there any particular initiatives on your side beyond Stabelo to further enhance your share of that growth? And then lastly, please remind us of the state of your work with your call center to be able to spread incoming calls to the branch network when mortgage volumes pick up? Are these now all up and running?

Well, thank you for very good questions. And let me take the overall view first. So as you know, we are the market leaders in all our 4 home markets. And sometimes we tend to forget to talk about how good we are in Estonia, Latvia and Lithuania, where we continue to see strong growth in volumes. And during the quarter, volumes increased by SEK 3 billion excluding FX.

Now, if you look on the Swedish housing market, I dare to say it's still somewhat muted. The positive effects of new mortgage rules and improved domestic economy -- economic sentiment are almost fully mitigated by geopolitics and energy prices. And if you look on our mortgage volumes, you described it right, it has increased. But during 2024, we captured a meager 5% of the front book market share sold for own channels. That doubled to 10% in 2025. And I'm sorry, I haven't seen the numbers yet for March because they came this morning. I've been focused in presenting the results. But in January and February, we had a market share of above 13%.

Now, on top of this, you should see Stabelo's market share has gone from negative before we acquired it to over 3% after we acquired it. All in all, almost 17% for our own channels. So rightfully said, still slightly below our back book of 18%, but hard work and a strong customer focus will take us there. Be available, be fast, be more proactive, and that is what we are. Now, when you see the numbers from Statistics Sweden this morning, and I'm sorry, once again, I haven't seen them, do not forget that Stabelo is not on that list.

The final thing I want to answer is on the phone system. Yes, that system is fully operational. And what we did during 2025 was that we changed the opening hours for walk-ins, and that meant that the people working in the local branches could take the phone and do meet the customers for the phone. And that is one reason why we with lower number of FTEs working in the Swedish business area are answering calls.

And I think the numbers I saw were that during the quarter, we've been around 90% of the calls are answered within 3 minutes. And if you look on the number of minutes people have to wait in line at offices, I think it's somewhere around 80% are being -- sort of met the customer representative within 20 minutes. So we are faster, we are more agile, more proactivity, but we will deliver more. And it's a strong focus on this. And let me look at the numbers and get back to you because we want to grow.

The next question comes from the line of Andersson, Magnus with ABG.

Just on the reorganization here, it's always a bit difficult for us with these programs with the large upfront cost and effects materializing over a number of years. So I was just wondering if you could share with us something about how we should think around cost growth net 2027, 2028 or jaws or anything there? And also related to this, is this program an increased ambition from you guys? Or is it just measures you have to take in order to stay below a 40% cost-to-income ratio? And on costs also, headcount reduction, if you could say anything about the pace there of getting down to the 16,800 at the end of '27?

That's a lot of questions. I'll do sort of answer first, and I give the floor to Jon, who can sort of cover what I missed. The first thing is you need to start in 15/27. I talked about SGI. I'm not going to repeat it. And that plan was presented by our business area heads, and that was no coincidence because the plan has a clear business and customer focus. And then, what we did during the quarter was we've taken important steps in strengthening the role of the business areas. That means that business development has moved closer to the customers. Most of the products are now in the business area, and IT has been centralized.

Now, this will increase speed, agility and delivery. And then by clarifying roles and responsibility, working more efficiently, we see that we can take away double work, we can reduce the number of -- or sort of shrink the processes, and that is what we are using within this program we talked about. If you look forward, we today said that we go from 17,350 to 16,800.

And Jon, do you want to follow up more?

Yes. Thank you, Magnus. First of all, it's definitely an increased ambition. We have always the work to do with efficiency, and we constantly work with this. This is an extraordinary work, and hence, we also take an extraordinary cost for it.

Let me also be clear that the divestment of PayEx that we have talked about, that is outside or on top, depending on how you want to put it on this program. It's also so that we already before said we're going -- that we're going to sell the back book consumer credits in Entercard because it was on a different risk level than what Swedbank would like to stand for. That is also sort of on top of this or outside of this in that sense.

So what we're now doing is that, as we have done the reorganization and implemented that, that has made it easier to some extent to work with efficiencies even though the reorganization was mainly focused on strengthening the business, as Jens talked about before, but it has also made it easier. Then, we have fully integrated or fully bought, I should say, acquired Entercard, and we have overlaps in terms of IT systems. We have overlaps in terms of back office and other types of operations. All of this makes it possible for us now to put the structured work to realize the synergies that we highlight based on the reorganization. And based on that, we then have operations in different parts.

So the extra costs of SEK 1.3 billion that we saved this year, they are related to that we have double IT systems, i.e., we have double licenses, but then we need to consolidate those IT systems. They're also related to premises and other things that we will have less use of when we have fewer people, and of course, related to severance pay as we reduce the number of FTEs.

This year, we will not have any material synergies from this. But next year, we will start to materialize the synergies. So even if we will continue with the investment during next year to integrate IT systems and so forth, those extra costs will be met by the synergies. And from '28, we will see a larger portion of these synergies. And when we leave '28, we will have a SEK 1 billion lower run rate compared to what we would have had if we don't do this program. So then, as you know, we will come back in conjunction to the Q4 report and guide you on the costs for next year. But I think I've given you sort of the components of that so that you can make your own judgment of it.

Yes. Okay. So what you're saying about '27 is really that the increased investments should be met by synergies, so nothing in addition to kind of normal cost growth?

Not from this program, no. The extra additional investments for integrating IT systems next year will be met by the synergies that start to materialize from the work that we do this year, yes.

And the pace of the headcount reduction until end '27, is it mainly a '27 thing or...

Yes. I mean, it will start this year, but we said that when we end next year, we will be then 16,800, excluding PayEx to be very clear then. And you can see the effects of PayEx and so on in the appendix of the presentation. But that is on top of this SEK 1.3 billion program.

The next question comes from the line of Hakansson, Andreas with SEB.

So first on the Baltic IRB that you took the increase in the risk-weighted assets. And you said that over time, you would get benefits that would offset it. Could you tell us a little bit about the timing? Do you have any visibility when you're going to get those risk-weighted assets down again? That's my first question.

Yes. Thank you, Andreas. I mean, what we have said before, if we look at the total IRB journey that -- both for Baltics and Sweden, it will be positive when we come through it. But then, depending on sort of the order of things, it might go a bit up and down as we come to the end state. But when we are at the end state, we expect a positive impact of it.

When it comes to Baltics, we have then been in a dialogue with the ECB. And it's been clear to us that we need to do some adjustments to our application and that, that will then prolong the process. And as a consequence of that, we have taken the decision to self-impose an Article 3 add-on for that. The duration, it's hard to say really since it's not fully in our hands. It's also in the dialogue with ECB. But it will take years before we are fully through with both Baltics and with the Swedish part of the IRB application. Then, we expect to see different models to be approved, not least on the Swedish side during the coming years.

Okay. That's fine. Then, a little bit on the Entercard divestment. You said that you're selling what is the SEK 7 billion gross. I think in the balance sheet, your held for sale is a little bit smaller than that. And the NII from that is around SEK 600 million, right? But could you tell us how much cost savings are going to come through? Because I imagine you need to reduce costs in Entercard if you're going to reduce your loan book by that much.

Yes. I mean, just selling it will not by itself reduce costs, but let me come back to that. The SEK 7 billion is the net figure. The gross figure is larger. But if you recall what we said when we -- in the Q4 presentation that we had taken extra provisions due to the higher risk level in the Entercard back office -- in back book portfolio. So the SEK 7 billion is the net value, not the gross value, just to be clear. The gross value is SEK 11 billion of the portfolio that we are selling.

The synergies, you're right, I mean, as both Jens and I said, we are going to integrate future going forward, we're only going to have consumer finance business in Swedbank AB. Today, we have it both in Swedbank AB and in Entercard. So this -- synergies from this is part of this program that we have talked about, part of making sure that we do not have duplicate IT systems nor for cards or for consumer finance that we do not have duplicate sort of operations around rather cards or consumer finance. I will not split this program up, but on total level for everything, which then includes the consumer finance operations, it is SEK 1.3 billion this year, and then, a lower cost of SEK 1 billion as we leave 2028.

I can follow up then on -- just say that when we talked about the Entercard, it was 3 parts: first, we want to grow our card business in Swedbank. Entercard will continue as a smaller and sales-focused company with the card business under its own brand. Two, within Swedbank, we will create a center of excellence for all our consumer loans based on our values and credit standards as a part of offerings to our customers. And three, we will realize the value of synergies in both card issuance and consumer credit. So that's the plan I talk about.

Good. Just to understand, didn't you say before that the 16,800 excluded PayEx, but it also excluded potential savings from Entercard in FTEs?

No. The FTEs include Entercard, but not PayEx. What I tried to say, but maybe I was unclear was that, I mean, just selling the portfolio itself will not create much savings since we still will sit with IT systems and the FTEs. So we need to do an additional work on top of it, so -- but maybe I was a bit unclear.

And I could also follow up there. Like half a year ago, we were 16,800, then came -- Entercard came in. We're now at 17,350. And when we go out from 2027, we will then be back to 16,800.

The next question comes from the line of Saitkulova, Gulnara with Morgan Stanley.

So the first question is a follow-up on the synergies. So you highlighted the potential cost synergies between cards and consumer credit coming from IT systems, synergies and licenses overlap. Should we view these benefits as primarily cost-driven? Or is there also scope for revenue synergies? And if so, how material could this be? And how do you plan to realize them?

Well, I think I got it. It was a bit bad line here. But the key point is, of course, this will provide us with more opportunities to do business, but that's not something that calculated in this. What you see are the effects of the cost synergies. But we have plenty of customers within Swedbank that doesn't have credit cards with us. That's an opportunity. We have plenty of customers that use their credit cards, not as much as they do in other places, that's potential.

We see a lot of Swedbank customers that have consumer finance loans with other institutes, and we think we can give them a better deal with lower interest rates and because we know their credit history. So we see potential in this, but that's not included in this. That's a business perspective, and that's why we went into this. But then, we found quite a lot of cost synergies as well.

And the second question on capital allocation. So you mentioned divesting PayEx could allow you to invest more in the business. Can you remind us your priorities when it comes to the capital allocation? Now, you're operating at the upper end of your management buffer, how are you thinking about the capital allocation priorities at this stage? And how do you balance the organic growth in Sweden and the Baltics, particularly given the faster growth in the Baltics against the bolt-on M&As and the shareholder returns?

Thank you. Yes. What I said about PayEx, it will have some positive capital impact from 5 to 10 basis points. But that was not what I meant with that it will create room for investments. I mean, we -- as you see, the costs for PayEx and you see the income for PayEx in the appendix, what I mean is that when we divest this, we will have room and focus, both cost room and focus on, in that we can divert to something that will create better shareholder value.

Then, when it comes to our capital distribution between Baltics and Sweden, yes, we have excess capital, as we have talked about before. We have a target range of 100 to 300, and we'll want to come down to the 200 going forward, when the uncertainties around us that we have talked about before are lower. The dividend policy that we have of 70%, it will give us room to capture good growth, both in Baltics and Sweden. So it's calibrated to make sure that we can continue to grow at a good pace with our customers as our markets grow.

The next question comes from the line of McBeath, Nicolas with DNB Carnegie.

I wanted to follow up first on the IRB update in the Baltics. So I was wondering, has anything in discussions with the ECB regarding these models come as a surprise to you as I think you last year seemed quite confident that the developments for SEB did not apply to you? Yes. So I'll start with that question.

Yes. Thank you. I cannot fully go into details of this since it's ongoing dialogues that we are having. But it is a difficult journey. And what we have said before that we did take an overhaul of our program some years back and that we have been in the dialogue with them. Now, as we have seen that there are adjustments that we need to do with our application, which will somewhat prolong the time line, then we think it's prudent to take the self-imposed add-ons as we move forward.

All right. But you mentioned this is for the retail part of the portfolio. But would you expect anything similar also on the corporate books? And if you do, I mean, would you dare to speculate how much that could be? Because, as I recall, I think corporate risk weights in the Baltics are relatively high. So would that kind of cap the potential headwind from a similar development on the corporate portfolio?

I cannot, at this point, sort of speculate or comment on the outcome of the review of the corporate models. So we will come back on that when we have more clarity. But just for your answer on your second question, hypothetically, if we would do the same, then it would be SEK 20 billion of REA approximately. But I don't know at this point. It's an ongoing dialogue. So we will have to come back when we have come through that.

All right. And then my second question was to follow up on the mortgages. And if you could say anything about what kind of change you've seen on the mortgage demand since the new mortgage rules were implemented in April with relaxations? Have you seen any size of the commitments picking up? And -- I mean, do you have any figures to share there? Or is it more like a case of you've seen some increased interactions, but not necessarily any substantial changes on the ticket sizes?

Well, thank you. Well, let me say that what we saw was quite an uptick before the rules came in, and we saw that the mortgage more came in a bit more. On the discussions with the customers, I would say that it's this balance right now what -- I mean, in one sense, we expected house prices to go up. But, of course, the geopolitical sentiment has affected our customers, and we have not seen as much as maybe you could have expected in a Swedish economy performing so good. So the volumes are okay, and we will continue to fight to reach our target of at least in line with the back book.

The next question is from the line of Prinzell, Emre with Nordea.

Emre Prinzell from Nordea. I agree with your earlier statement, Jens, that one ought to speak more about the Baltics. So regarding the Baltics then, how should we look at the Baltic NII going forward? I noticed you printed double-digit year-on-year loan growth, and 6-month Euribor is up some 30 basis points since the start of the war in the Middle East. So provided Euribor stays and remains at these levels, shouldn't we see a mechanical repricing of Baltic loans by Q2, and therefore, an increase in NII? That's my first question.

Thank you. Yes, you're right, Euribor and also STIBOR and other IBOR rates have come up. What I've said, and that stands, when it comes to our sensitivity is that it takes 6 months for a rate change in the Baltics to fully feed through and 3 months in Sweden approximately. So if you look forward from the components here, and we have also in the appendix included sort of the balance sheet and highlighted the various things so that you can do your own estimations.

The positive part from -- or that you're on to, yes, Euribor increase will, if it now stays on these levels, feed through during the coming 6 months on the asset side in the Baltics. On the group level, you will also see, and that also has an impact on Baltics, of course, that higher STIBOR rate will impact our funding going forward since that is mainly STIBOR 3 months related after swapping it. But it will also have a positive effect on our asset side in Sweden, as we also have increased mortgage rates in the end of the first quarter. And we also have around SEK 500 billion of STIBOR or IBOR-related lending in C&I.

So -- and then also reminding you that the negative effect comes on the funding side before the positive effect of a rate hike comes on the asset side. But we are, of course, positively exposed to increased interest rates. But you will all have in the end, make your own assumptions on where the rates will stay during this time and also on continued loan growth and on margin development since those will also have a high impact on the NII going forward, and I will not guide you on that. But, look in the appendix, and there, you have the components to make the assessment.

You also printed some 5% year-on-year growth in corporate lending within C&I. Can you provide some color within what segments did we see the lending occur? Is it real estate, SMEs, large corporates? And do you expect Swedish corporate lending demand to continue to -- at these levels? Or should we see a drop in the market demand for credits provided the geopolitical uncertainty?

Well, let me say that overall, loan demand from both corporate and private customers is still somewhat muted. And, of course, you see the effects on what's ongoing in the world when it comes to geopolitics. In the Baltic, demand is stronger. When you look into the corporate loan book, it has increased mainly in the real estate sector in Sweden. In Baltics, it's been broader, but also quite a lot within the energy sector and infrastructure.

The next question comes from the line of Srivastava, Shrey with Citi.

Only 2 for me, please. The first one is the FTE reduction target you have for 2027. Presumably, the percentage of FTEs you are reducing is actually greater than this, and it's offset by some investment in customer-facing areas of the business. So if you were to frame it in terms of what percentage of FTEs which are not customer-facing that you're cutting versus how much investment you're making in customer-facing areas, how would that look? That's my first.

Okay. Well, I'm not going to give a percentage point, but I will say it will be much more in head offices and sort of back-office meetings. I'm not saying that nobody of these persons are facing customers and some of them are working with customer system. But I would say the majority and even more is on back office and headquarters.

And my second question is on -- it's the same question I asked one of your peers today. We've seen a lot of coverage about the Swedish banks being now able to, a certain extent, model the contractual maturity of overnight deposits. In the case that we get some rate hikes this year, would there be a material difference in how you're hedging this time versus the last hiking cycle a few years ago?

Yes. Thank you. I mean, as we have talked about before, we have some NII hedges, but they are immaterial when it comes to our NII development. And the reason for that is that the Swedish FSA's way of looking or on internal model for non-maturing deposits is limiting us from the capital perspective. They still think that in the models that we can get approved from the Swedish FSA, the liability side is still shorter than the asset side.

So if we would put more hedges on to prolong the asset side, which would potentially be what we would want to do in these hedges, it would increase our capital requirement. So we have hedges, but they are immaterial, so you can discard them from the NII analysis. I've also said before that should this change, then we will be transparent with you on that. And since I haven't this quarter, then nothing has changed.

The next question comes from the line of Sandgren, Markus with Kepler.

If I can start with following up on the cost savings, you have quite a lot of staff in the Baltics, where the average salary is much lower, but the pace of salary increases is much higher. So what are you -- how are you thinking about the balance between FTEs in Sweden versus Baltics for things that are interchangeable, so to speak? That's my first one.

Yes. Thank you, Markus. You're right that the salary increase level in the Baltics has been high and is still high. And I know that -- I mean, Jens, you have talked about several times that if there are some concerns for the productivity in the Baltics it is if that continues and don't slow down over time. But in many aspects, it's still beneficial from a cost perspective to do things in the Baltics and in Sweden. We have not made any major changes to this here and now. And the cost saving that Jens or that we have talked about that, of course, there are people in the Baltics, but that is not the main part of it. It's also so that we have -- Entercard does have people in Norway, for instance, and so on, so that is.

But, of course, on the broader type, where we operate and where we have staff to do different things that we try to balance both from the cost and efficiency perspective, but also from the security perspective of actually being able to do things on our home markets and for the country that is done. So there are many aspects that are into this, but not related specifically to this program that we now have talked about today.

Okay. And then secondly, if we would have sustained high oil and gas prices or if they would even go higher, which we don't hope, how -- I guess, the impact on the Baltics -- Baltic economies would be much more severe than on Sweden. Is that right? And can you just...

Well, I'd love to answer all the macro questions, but Jon is an expert on Estonia, Latvia, Lithuania, so I'll let him shoot.

Thank you, Jens. I mean, generally, you're right. But I think we need to look at it from -- also from the comprehensive level. The gas storage is still on an okay level in the Baltics. It's a little bit lower compared to previous year because the winter was colder this year. So they have used a bit more of the gas. And they will then, during the summer or in the end of the summer, start refilling this. Of course, the price level will have an impact. But I think you need to -- if you look at the price level for gas now compared to what it was when the full-scale invasion of Ukraine took place, then the levels are completely different. So some impact, yes, but look back at the price levels and the impact back then. It is -- so I think that it will be manageable, but of course, some impact, but not -- you shouldn't overestimate the impact on the current levels that we're having.

Okay. No, I was more thinking about -- I mean, now we're talking about canceling flights and so forth because there's lack of fuel. If there should be any -- I mean, substantial lack of gas for the Baltics, that must be an issue? Or is that not right?

We don't have any indications at this moment that they should not be able to refill the gas storage. But, of course, it will be, as it is now roughly 50% higher than last year, but still way below the levels that we had some years back.

The next question comes from the line of Rovere, Riccardo with Mediobanca.

Follow-ups. One thing is on -- when I look at your financial statement, the way I'm understanding is that the consumer finance of Entercard, and the book is classified as assets held for sale, the SEK 7.4 billion, but revenues related to that, so NII, is included in the P&L. So if you had to sell it, the NII, as far as I understand, would be closer to SEK 11 billion rather than SEK 11.147 that you have reported -- you say in the presentation, the SEK 600 million of NII related to that. Am I right in understanding the way you reported the number this quarter?

The second question is the 16,800 FTEs that you expect by the end of '27, that without PayEx would actually reach 16,500. Do I get it right?

And last thing I just wanted to better understand on this Baltic RWA add-on. You have added something related to only retail exposure this quarter. And this number is your best estimate? Or is it a number that you have discussed with the ECB? And sorry to ask this, not clear to me whether something on corporate will follow at some point?

Yes. Thank you, Riccardo. If I start with the NII for Entercard, you're right, it was SEK 600 million, the NII for 2025, related to the back book portfolio that is classified as held for sale. So the day that we sell that portfolio, then the NII related to this portfolio will go out. SEK 7 billion approximately is what we have it in our balance sheet for since when we bought it, we bought a large portion of this as purchased or originated credit impaired and then made a valuation upfront of it from that day. So that valuation was lower than sort of the nominal value of this portfolio. So the nominal is rather in the range of SEK 11 billion. That's why SEK 7 billion and SEK 11 billion are corresponding depending on what kind of number you're looking at. And SEK 600 million was the NII for 2025 related to that. So that's correct.

The 16,800 FTEs, that is related to the program. PayEx, the divestment of PayEx is on top or outside of this program. So you're correct on that, too.

The Baltic Banking IRB, we do have -- in accordance with ECB, we have multipliers on our corporate models since before, as we have talked about in previous calls. So there are add-ons compared to the models that are in place also for the corporate. Now, we took a self-imposed decision to -- for the retail to add an Article 3 on top of the levels that we had for retail.

Thank you all for calling in. Thank you for once again asking difficult questions that makes us better. And as you could hear, we are continuously improving the bank by strengthening our customer interactions, growing our volumes and increase efficiency. I'm really looking forward to meet you again. Thank you, and have a great spring.

Good morning. Welcome to Swedbank's Q1 2026 Pre-close Call. I'm Maria Caneman. I am Head of Investor Relations here at Swedbank. [Operator Instructions] And we would like to start by informing you that this call is being recorded. And the script used for this call will be published on the Investor Relations website after the call. So this call will focus on the events during the first quarter, relevant public data and macro trends in our markets, and we'll go through the macro indicators, P&L statement and comment on capital.

We would like to highlight that we, of course, only answer questions related to already disclosed information as well as public available data. To start off, there are 2 days less in this quarter compared to the previous one, resulting in a negative impact on NII and NCI. And looking at average day count effects, it's around SEK 50 million per day on NII and SEK 20 million per day on NCI. On FX movements, as end of last week, that's 27th of March, the Swedish krona had depreciated from end December versus the U.S. dollar and the euro. On average, quarter-to-date compared to last quarter, the krona appreciated versus both the dollar and the euro. And for P&L, the average quarter-on-quarter development is the relevant number to track.

The Riksbank policy rate was left unchanged at 1.75% during the quarter, and ECB kept its policy rate unchanged at 2%. As of 27th of March, on average quarter-to-date compared to the fourth quarter, the 3-month STIBOR was 9 basis points higher and the 6-month Euribor had increased by 7 basis points. We've seen quite sharp increases towards the end of the quarter where STIBOR end of period was up 22 basis points and Euribor 40 basis points. On net interest income, reminding you that our CFO said in the Q4 results call that the Swedish Central Bank cut the policy rate effective as of 1st of October and ECB's latest rate cut was in June. So by the end of the year, these policy rate changes were fully priced in. Hence, we should see the full quarterly NII effect of the rate cuts in the first quarter of 2026.

Let's turn to Sweden first. Mortgage list prices in Sweden on fixings 1 year or longer were lowered on 17th February by 15 to 20 basis points and raised on 24th of March by 30 to 40 basis points. Furthermore, the mortgage list price on 3-month fixings was raised on 28th of March by 15 basis points. All this information can be found on our website, and I would like to encourage you to visit the website continuously as we show most of our offering there, and that's where the most up-to-date information is located.

Actual mortgage prices fell by 2 basis points on 3-month fixings in the first 2 months of the quarter compared to a decrease of 11 basis points in the previous quarter. On deposits in Sweden, rates on 6 months and 1 year were raised on 23rd March by 20 basis points and 40 basis points, respectively. We pay 0% of transaction accounts as well as on e-savings accounts. And mortgage volumes and public statistics then -- Swedbank's volumes in the first 2 months of the quarter, excluding savings bank volumes on our balance sheet increased by SEK 2 billion or by 13.4% of the total market increase.

Including savings bank, volumes grew by SEK 1.1 billion. Swedbank's total market share, excluding volumes by savings banks, was 18% at end of February. Savings Banks volumes added another 3.6 percentage points. The acquisition of Stabelo added around SEK 17 billion of mortgage loans when incorporated and will in conjunction with the first quarter report, and we will, in conjunction with the Q1 then report and comment more on the developments during the quarter as Stabelo is not yet included in the monthly public statistics.

And on the corporate lending, for January and February, Swedbank's volumes grew by SEK 3.3 billion or by 13.4% of the total market growth. Swedbank's market share was 15% at the end of February. Retail deposits in Sweden grew in January and February by SEK 13 billion, and Swedbank accounted for SEK 6.2 billion of this, corresponding to 46.1% of the market growth. Corporate deposits in Sweden in January and February decreased by SEK 21 billion, of which SEK 13 billion in Swedbank.

As of February, Swedbank's market share amounted to 18% for retail deposits and 13% for corporate deposits. Now turning to the Baltics. According to ECB data, total lending in January in the Baltics increased by 13.7% year-on-year, private lending by 12.7% and corporate lending by 14.8% Total deposits in the Baltics in January increased by 8.3% year-on-year. Private deposits grew by 9.3% and corporate deposits by 7.1%. Regarding retail deposit rates as of 27th March, we paid 0% in interest on transaction and Easy Savings accounts, unchanged from the previous quarter. The rates on all other accounts were kept unchanged compared to the end of the fourth quarter, except for 5 to 25 basis point reduction of fixings between 3 months and 6 months in Latvia and Estonia and a 20 basis points increase on fixings longer than 12 months in Estonia.

Moving on to net commission income. And first of all, a kind reminder that asset management commissions are generated by daily fees. Looking at average volumes of the stock market development, which impact our asset management fees, up to 27th of March, and this is compared to the averages of the fourth quarter, the Swedish stock market increased by 9.6% in the U.S. market is 0.8% increase, and European stock markets increased by 5.8%.

Also a reminder about the FX component where the Swedish krona by 27th March had depreciated versus the dollar on average compared to the fourth quarter, and this should, of course, be considered when translating the U.S. stock market changes. According to statistics from the Swedish Investment Fund Association, the Swedish mutual fund market had net inflows during January and February of approximately SEK 15 billion compared to an inflow of approximately SEK 80 billion in the fourth quarter.

There were outflows in actively managed equity funds, while index funds and fixed income funds saw inflows. Swedbank Robur market share was 21.4% at the end of the fourth quarter of 2025, sorry. Regarding card commissions, in addition to the negative day count effect, card activity in the first quarter is normally seasonally lower than in the fourth quarter. And let me just remind you that our CFO pointed out in connection with the fourth quarter results that commission expenses are impacted by the large investments needed to transform the Swedish payment system.

Moving on to expenses. As communicated in Q4, 2026 cost guidance is around SEK 27.5 billion based on the exchange rate of SEK 10.6 over euro. Please keep in mind the seasonal decline that we normally see in Q1 and the full quarter impact from the consolidation of Stabelo and Entercard.

And furthermore, of course, that we received VAT recoveries of SEK 963 million for the years '19 to '23, those were received in the fourth quarter. Bank taxes in Sweden, the government decided on a base deduction as of '26 to the bank tax while delivering the same tax revenues. So the tax rate is therefore raised to 7 basis points in '26. And then there is the SEK 6 billion Riksbank reserve requirement for which interest is not paid, that cost up until June 2026, SEK 71 million has been taken in full upfront in the fourth quarter of '25 and as a bank tax.

And in Latvia, we are into the second year of a 3 year with the tax on NII, while Lithuania, the previous year's NII tax, which ran from '23 to '25 has been abolished and is no longer in place in 2026. On asset quality, at the end of the fourth quarter, the post-model adjustments stood at SEK 131 million following the release of SEK 228 million, reminding you that the acquisition of Enticard added SEK 354 million as a day 1 effect on Swedbank Stage 1 credit impairment provisions and credit impairments, excluding Entercard was net reversals of SEK 60 million.

And lastly, on capital, the balance sheet is affected by end-of-period FX rates, mainly via risk-weighted assets from the Baltics, which are denominated in euro. As mentioned earlier, by 27th of March, the SEK had weakened somewhat versus the euro. And that was all for the Pre-close call. I'll pause for a moment to see if there are any questions.

[Operator Instructions] We have a question from Magnus Andersson.

Just on Entercard, will you book a restructuring charge now in Q1 when you will present your plans for that business? And secondly, will you already now account for the consumer finance portfolio as discontinued operations now in Q1?

We will come back. That's what I have said, we will come back now in Q1 with an update on that and come back with the integration cost for Entercard. And we have not mentioned anything further on other than that we have decided to initiate a sale of the consumer portfolio. But we will be back in the Q1.

I think you said you would account for it as available for sale, which would mean that you take it as discontinued operations in the P&L, I guess, from Q1? Or could...

Yes, exactly. So we have said that we are initiating that process. So it will be discontinued, but we will update on the timing of these things in the Q1 report.

Yes. Okay. And secondly, just in -- you mentioned in Latvia, you lowered deposit rates from 3 and 6-month fixed rates. Have you received any reactions on that considering that Euribor is up?

No, nothing in particular that we could say something about at this point. Let's move on to Sofie.

So a quick one on the VAT refunds, do we have any visibility if we will get more VAT refunds in Q1? Or we should expect assume no VAT refunds this quarter?

Well, now we have received all the years. So it's only the kind of ongoing, and we have not said anything further, but it is about submitting that and then receiving an answer for that. So therefore, it's fair to not assume that this will continue. But of course, we have the year 2024 still, but that we have not commented on.

So kind of, we should assume no VAT refund in Q1?

I mean, yes, exactly. So we have communicated all the amount that we have received. So it's -- and then we will let you know when the last one gets submitted, but we are not yet there.

Okay. Okay. And then the Lithuania banking tax that has been abolished. Can you just remind us how much it was in Q4?

Let's see if I have the Q4 number for Lithuania in front of me here. In Q4, we had SEK 163 million.

Okay. And then my final question. You mentioned on the commission expenses that they are impacted by higher costs to reform the payment system in Sweden. How should we think about this commission expense? And is it just a Q1 impact? Or should we expect the impact to continue throughout 2026?

No, the way we spoke about it in the fourth quarter is because you've seen the increase during 2025. So there was a difference -- if you look at the beginning of '25 and if you look at the end of '25. So it's more that the run rate has now come up and is higher. So if you were to compare to Q1 last year, you will see a difference. And I think that was the point that our CFO wanted to make that this is a higher run rate.

And let's move on to Andreas.

First question on your rate sensitivity. I mean we have a situation where the market rates are moving sharply, but policy rates haven't moved at all yet. Could you tell us your different NII in Sweden and the Baltics, how big portion of the sensitivity comes from market rates compared to policy rates? That's my first question.

Good question. I might have to maybe come back to you on that one. I mean we have the rate sensitivity as we usually presented in the fact book and where you see where the different components are, of course, policy rates are a big part of that depends on how we look at it. But maybe it will be a good timing for us to come back to that in the Q1 report as we now are. We were hoping to be in a place with more stable rates, but we're now back to more volatility in the rate cycle.

Okay. Yes, let's please go into that in the Q1 call. Then on Entercard, if you now move it to available for sale, should we already now make an assumption of the different P&L lines that falls out? So if we had it 1 month in December and now it should be nothing into the P&L? And is that now one line accounted? Or how should we look at that?

I think it's fair to say that we will come back with as much detail as possible on that in the Q1 result to be as helpful as possible because so far, it's been quite limited information from Entercard side on these different portfolios.

Sure, Maria. But you can imagine, I mean, if you're selling SEK 10 billion, SEK 15 billion of loans and if you're going to not include NII in the [ NII line ], your consensus number is going to be all over the place. So I think it's quite helpful if maybe not in this call, but you'll let us know before estimates are set if it's going to be on NII on other lines. Otherwise, you might beat or miss quite significantly.

Absolutely. We'll try to be as helpful as possible on that.

And then just back to the resolution and bank taxes in Latvia and Lithuania. I mean the bank tax in Latvia in Q4 was 0, right?

Yes, correct.

And that's not coming back now? Or what did you say that Latvia is on the second year you said, but if it's 0, is it going to go back up again, while Lithuania is, of course, continue to be at a high level?

Yes, exactly. So the Latvia still has it for 1 more year. But because there are these effects where you have to precalculate and then there are these discounts that you can reach, where if you reach a certain volume, you get a discount. So that means that it was adjusted to 0 in the last quarter.

So you probably need to look at an average for the year rather than an individual quarter. So these are things we can't count on because we're not steering on that. We're not trying to reach a certain bucket of volume in this calculation. But as it happened, we did and then we got the discount at the end of the year.

Let's see if we have another question. It doesn't seem like it, but we remain available for yet some time after Easter as well as we go into silent period on 13th of April, and our Q1 report will be released Wednesday, 29th of April. So thank you so much for attending the call, and we wish you all a nice day.

Thank you for dialing in this morning. I am Maria Caneman, Head of Investor Relations here at Swedbank. Welcome to our fourth quarter 2025 results presentation. I'm joined today by our CEO, Jens Henriksson; and our CFO, Jon Lidefelt. Jens and Jon will start with their presentation, and then there will be an opportunity to ask questions. With that, I would like to hand it over to Jens.

Thank you, Maria. 2025 was a successful year for Swedbank. The target of a sustainable return on equity of 15% was achieved. During 2025, the global economy was, despite tariffs and geopolitical uncertainty, more resilient than expected. A few weeks ago, the International Monetary Fund released an update to its world economic outlook. It revised the world growth forecast slightly upwards for this year against the backdrop of a steady and resilient economy. However, with renewed global tensions and strained public finances, global growth could be curbed. In our home markets, the economic situation continues to brighten, thanks to large investments and strong private consumption.

In Sweden, the recovery began in the second half of 2025 and our economist expects growth of more than 2.5% in 2026. Lithuania had a strong development in 2025, and growth is expected to pick up further this year. In Estonia and Latvia growth also is likely to rise in 2026. In these times, Swedbank has once again delivered a strong result. For the fourth quarter, we saw a return of equity of 14.7%, and the return on equity for the full year was 15.2%.

Costs developed as planned and the cost-to-income ratio was 0.36, both during the quarter and for the full year. Cost control is strategically important issue and is reflected in all parts of the Bank. Credit quality is solid. Earnings per share for 2025 amounted to SEK 28.98. The Board of Directors is proposing to the Annual General Meeting, a total dividend of SEK 29.80 per share of which SEK 9.35 is a special dividend on the basis of the bank's strong capital position. Our CET1 capital buffer then amounts to 3 percentage points.

Swedbank has a strong capital and liquidity position. During the past few years, we have by strengthening governance and internal controls, improved work methods and investments in new technology created a stable foundation for the bank. Now we are looking ahead with increased focus on our customers. At our Investor Day in June last year, we presented our direction, Swedbank 15/27 and it has a clear customer focus.

We will strengthen our customer interactions, grow our volumes and increase our efficiency. Availability and efficiency are fundamental. Succeeding in these areas will enable us to be even more proactive, meet more customers and do more business. And in these areas, we've already made significant progress. Our availability in Sweden increased significantly last year. In 2025, we had over 30% more calls with our customers than a year before.

At the end of 2024, we answered 29% of incoming calls in Sweden under 3 minutes. At the end of 2025, that figure has improved to more than 80%. We're also constantly working to increase our efficiency. Digitalization and newly developed AI tools are simplifying our work and reducing administration, and we see continued great opportunities in this area.

We are now taking the next step. Our business areas will gain more influence and control in developing their businesses. To sharpen our focus on customers, business and productivity, the work of developing services and solutions should be closer to those responsible for our customers. By refining and moving roles and responsibilities and working more efficiently, we can better meet customer expectations and develop our offerings.

The acquisition of Stabelo and Entercard have been completed. This will also provide us with new business opportunities and I've had the privilege of welcoming all our new colleagues to the bank. These acquisitions and the changes we are now implementing are all contributing to our 15/27 plan. We are now working to update our strategies and plans for Entercard and in connection with our next quarterly report, we will present what this entails for the bank going forward.

During the year, Swedbank's lending increased by SEK 108 billion, excluding FX effects. Of these SEK 47 billion was lending to corporates. Entercard and Stabelo contributed with SEK 44 billion, and private loans increased organically by SEK 17 billion.

Our mortgage portfolio is growing and during the quarter, lending and mortgages increased by SEK 23 billion, excluding currency effects in Sweden -- sorry, currency effects. Of this amount, SEK 17 billion came from the acquisition of Stabelo.

Lending volumes in our own channels in Sweden increased by just over SEK 4 billion. And that means we have doubled our market share of new mortgages sold in our own channels in 2025 compared to 2024, but that is not enough. We want to grow at least in line with the market.

Savings continued the positive development and net inflows to Swedbank Robur amounted to SEK 11 billion during the quarter. At the beginning of 2026, Premium and Private Banking will celebrate 2 years as its own business area. We are expanding our customer base and we strengthened our premium offering during the quarter.

The corporate business is developing strongly, both in Sweden and in the Baltics. In Sweden, our market share increased by 0.5 percentage points to 15.2% at the end of November. We have a competitive offering and a strong customer focus. By building sector teams in defense, food production, and forestry and agriculture, we strengthen our capacity to advise customers in these sectors.

At the same time, we continue to focus on local business relationships with small- and medium-sized companies by strengthening our local presence. On September 1, our partnership with the new investment bank SB1 Markets was officially launched. They have had a good start in Sweden and have completed several deals. And as you know, Swedbank owns 20% of the SB1 Markets.

Given the geopolitical tensions, we continue to strengthen our resilience. Swedbank has a good ability and preparedness to manage the associated risks. After the end of the quarter, Swedbank was informed that the U.S. Department of Justice had closed its investigation into the bank without enforcement. That leaves us with one American investigation ongoing evolving the Department of Financial Services in New York. We cannot assess when it will be concluded, whether we will get any fines. And if we do get fines, the size of such a potential fine.

Finally, let me say a few words about the bank's social commitment. In 2025, we met more than 100,000 children and young people in Sweden and educated them in personal finance. And at the end of last year, Swedbank donated EUR 10 million to the Vilnius University Foundation to support growth and prosperity in Lithuania. These are just a few examples of our efforts to create financial health and economic stability in our home markets.

With that, let me hand over to our CFO, Jon, who will deep dive into the numbers.

Thank you, Jens. Let me now walk you through the fourth quarter. We delivered a strong result with volume growth across markets and increasing income. We have continued our focus on long-term shareholder value through business growth and cost efficiency. Cost-to-income ratio in the fourth quarter was 0.36 and return on equity 14.7%.

As you know, this quarter, we have consolidated both Entercard and Stabelo into our numbers. However, keep in mind that they did not add a full quarter effect. Entercard was incorporated as of December 1 and added SEK 27 billion of lending. Stabelo was incorporated as of November 4 and added SEK 17 billion of mortgages. The CET1 effect was in total 50 basis points in the quarter.

As communicated earlier, we will de-risk Entercard's consumer finance business as the risk level is too high. The risk level for new lending has been adjusted. Our intention is also to divest Entercard's back book of consumer finance loans. And going forward, we will report it as held for sale.

We have worked with strengthening our organization, and it will be effective as of March 1. The strategic review of Entercard is aligned with this and we will, hence, come back in conjunction with the Q1 report with more details and how this supports our 15/27 plan.

Lending volumes grew by 3% in the quarter. Mortgage volumes in Sweden sold through our own channels increased by SEK 4.1 billion, while the savings banks reduced their mortgage volumes on our balance sheet by SEK 1.9 billion. Our Swedish mortgage front book market share in November sold through own channels was 11%, still below the back book market share of 18%. In total, with savings banks volumes on our balance sheet, we have a market share of 22%, the largest actor on the Swedish mortgage market.

Stabelo's growth has picked up as Swedbank's strong balance sheet enables lending up to 85% in loan-to-value. In the corporate business in Sweden, the positive development continued with increasing volumes, mainly within the property management and public sector.

In Baltic Banking, corporate loan demand continued to be strong across sectors, leading to a loan growth of SEK 5 billion in the quarter. Customer deposits increased in the quarter, driven by Baltic Banking, where we had a good growth in both private and corporate deposits.

In Lithuania, deposits increased in the end of the year following the usual pattern due to the annual 1 month extra salary. In Sweden, private deposits decreased slightly as consumption is picking up. Corporate deposits in Sweden were impacted by end of year effects, mainly driven by the larger institutions as normal.

Net interest income was unchanged compared to the previous quarter. We saw continued impact from lower rates. However, organic growth and acquisitions partly mitigated this. Higher business volumes had a positive impact of SEK 72 million in the quarter. With lower policy rates, our cash with central banks generate less income, but this is partly offset by lower wholesale funding cost.

The Swedish Central Bank cut the policy rate effective as of first of October and ECB's latest rate cut was in June. By the end of the year, these policy rate changes were fully priced in. Hence, we should see the full quarterly NII effect of the rate cuts in the first quarter of 2026.

Net commission income increased in the quarter, driven mainly by securities and corporate finance where the annual market maker fees contributed positively. We also had a one-off effect relating to the closure of some retail products, which were phased out several years ago. Asset management commissions benefited from strong net inflows of SEK 11 billion and positive stock market development, measured by assets under management, Robur is the largest player in the fund market in Sweden and the Baltics.

Card commissions were lower in the quarter, in line with normal patterns. Net gains and losses increased from an already high level and amounted to SEK 982 million. Income was strong, driven by client trading. The treasury result was impacted by unrealized valuation effects in derivatives and equity holdings. The business activity remained high despite some seasonal slowdown towards the end of the year. Other income increased by 1%. Net insurance decreased, mainly driven by revaluation effects.

A reminder of 2 things here, in the result from associated companies we now report the ownership stake of SB1 Markets and Entercard is fully consolidated since December 1. So in the fourth quarter, only 2 months are included under other income. As usual, also a reminder here that our collaboration with the savings banks include cost sharing, for IT development and administrative services. The savings banks share of the cost is included in Swedbank's total cost. And you can see the corresponding income under other income.

We delivered on the 2025 cost guidance of SEK 25.3 million, which gives an underlying cost growth of around 3% adjusted for the VAT recoveries and the acquisitions. Costs in the fourth quarter were 4% higher compared to the previous quarter. But as you know, we had a number of moving parts this time. We have, during the fourth quarter, received VAT recoveries of SEK 963 million for the years 2019 to 2023. This including SEK 125 million for the year 2021.

Our 2 acquisitions added SEK 180 million to the fourth quarter cost. So what does this mean for 2026? Our full year expenses for 2025 were SEK 24.5 billion. However, our underlying expenses were somewhat higher in total SEK 25.1 billion. This is due to the one-off VAT recoveries of SEK 1.5 billion, the temporary high investments of SEK 800 million and fourth quarter costs related to Entercard and Stabelo of SEK 180 million.

Going into 2026, we also need to include the current run rate for our 2 acquisitions in order to have the correct starting point. These add SEK 1.6 billion, which together with our underlying expenses of SEK 25.1 billion gives a new starting point of SEK 26.7 billion. We expect costs to grow by approximately 3% in 2026, meaning costs of around SEK 27.5 billion. This is net of efficiencies, headwinds as well as investments and based on current FX rates. Strict cost control and focus on efficiency is key.

Asset quality is solid. Total impairments for the fourth quarter amounted to SEK 355 million. The macroeconomic outlook has continued to improve and led to a release of SEK 186 million. Rating and stage migrations led to credit impairments of SEK 433 million mainly due to downgrades of a few corporate customers. This is partly offset by the continued release of the post-model adjustment, which now stands at SEK 131 million. The quarter also included effects from Entercard that in some increased credit impairments by SEK 415 million, mainly due to the SEK 354 million day 1 accounting effect for Stage 1 exposures.

The estimated overall impact from Entercard going forward on the credit impairment ratio is an increase of 1 to 2 basis points. I feel comfortable with our strict credit origination standards and the solid collaterals that secure our lending.

Our CET1 capital ratio was 17.8%. REA increased in the quarter due to lending growth and the annual revision of operational risks, which led to an increase due to the uptake of the rolling 3-year average income. Furthermore, as previously communicated, the acquisition of Stabelo and Entercard led to reduction of the CET1 capital ratio of around 50 basis points. The Board proposed a total dividend of SEK 29.8 per share of which SEK 20.45 is ordinary dividend and SEK 9.35 a special dividend. This reduces the buffer above requirement to around 300 basis points.

Our capital target remains unchanged with a buffer range of 100 to 300 basis points above the requirement and over time we're targeting the midpoint, 200 basis points. To conclude, we continue to focus on growth and efficiency. We delivered strong profitability while maintaining prudent underwriting standards, strong liquidity and capital positions.

With that, back to you, Jens.

Let me now summarize. Swedbank has had a successful 2025. We delivered a strong result with a return on equity of 15.2%. The Board of Directors is therefore proposing to the Annual General Meeting, a total dividend of SEK 29.80 per share of which SEK 9.35 is a special dividend on the basis of the bank's strong capital position. Swedbank is well positioned for sustainable growth and profitability. We will strengthen our customer interactions, grow our volumes and continue to increase our efficiency. The future of our customers is our focus.

And with that, I give the word back to you, Maria.

And we will now begin the Q&A session. I'd like to start with a kind reminder to please limit yourselves to 2 questions per turn. Operator, please go ahead.

We will now begin the question and answer session. [Operator Instructions] The first question comes from the line of Andreas Hakansson from SEB.

So first question on your net interest income. We saw some, of course, negative headwind in the fourth quarter from falling interest rates and you say that that's going to spill over into Q1. But what we've been a bit disappointed about over the last year when interest rates have been coming down is all the big -- all the banks' inability to improve mortgage margins that are now continue to be at a very, very low level. I mean the profitability of the mortgage product is today quite unsatisfactory. So my first question is, how do you see that mortgage margins could be developing over this year?

Well, I think, thank you for that question. I think it's my time to answer that. And I would say that we do not forecast on that. But as you rightly said, it is a tough competition out there. We've seen that our market share was around 5% of new loans in our own channels in 2024. It was up to around 10% in 2025. And then we have ambitions to reach at least our back book market share, which is 18%. But the competition is tough. [Audio Gap] Hello, I think I've given abrupt answer, but the answer is that the competition is tough.

Yes. That's fine. I mean you have, of course, discounts. That's how the Swedish mortgage market work. Are you currently working with the discounts in order to improve the margins in that way?

Well, it is a competitive market, and I'm not going to talk about exactly how we meet our customers. But I think our offering, the key point is that we come as a full service bank. That means that we have attractive prices, we are much faster and we're available. And those who seek total digital solutions, they can go to Stabelo. And we've seen that they have gained market share as well.

Right. And then my second question, on capital. And Jon, you mentioned already that it's still a 200 bps midpoint that you're targeting over time. Can I just ask you, is the timing of moving towards 200 related to the final investigation that's going on in the U.S.?

Well, I think I'd answer that in a little bit overall perspective, and that is to say that we have the capital buffer range, which is between 100 and 300 basis points and as Jon said, in our 15/27 plan, we target the middle of it, i.e. 200 basis points. And then talking about the dividend, we have a dividend policy of 60% to 70% with an earnings per share of SEK 29 gives us an ordinary dividend of, what is it, SEK 20.45. And on top of this, the Board has proposed an extra dividend in SEK 9.35. That means that we have a total dividend of SEK 29.8. And with this proposal to the AGM, Swedbank is within the capital buffer range.

Further capital release continues to be a judgment call depending on several uncertainties such as the long-running U.S. investigation. Timing of IRB approvals and the uncertain world we live in, and we have no intention of holding more capital than necessary.

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

Just a follow-up on the prior question. You mentioned the competitive nature of the Swedish market. And given that, could you remind us how you are approaching the defense of your back book market share? Are you prepared to be more flexible on the repricing to retain the existing customers or margin protection is a primary focus?

Well, of course, as Jon and I usually say, it's always a balance between market share and profitability. We've said that we want to increase the market share and when we work with our customers, always have individual price setting. And I think the main problem for us has been that we have not been fast enough or not available enough. And I boosted about that in my introduction because that's something we're very proud of.

With fewer people working in -- with this, we've managed to reach above 80% of the calls that answer within 3 minutes. And we have had 30% more calls with our customers. And last time I checked, I think we had a waiting time of 14 or 13 seconds, I don't remember. But the key point is, we want to be available, we want to be fast, and we want to grow.

And the second question on the volumes in Sweden and the Baltics. How are you thinking about the loan growth into this year? And in particular, given the fiscal stimulus in Sweden and a more constructive outlook for consumer sentiment and confidence where do you expect the loan growth in Sweden to settle? Would mid-single-digit loan growth be a fair estimate for Sweden in 2026? And how the trends differ between households and corporate lending?

Well, let me take that as well. And let me take a sort of a broader perspective in the sense that -- as I said in my introduction, the global economy has been a little bit more resilient than expected. And you saw this slightly upward revision by the IMF, but that was then closed before the trade tensions flared up again, which, of course, increased headwinds. And the good thing about Swedbank is that we operate in a region with very healthy fundamentals, strong public finances, low government debt, real wage growth, innovative companies, profitable banks and low interest rates means that our home markets remain well prepared for the future, and I mentioned the growth figures.

Overall, loan demand from both corporates and private customers is still somewhat muted. In the Baltic, demand is stronger. And in terms of trade policies impacting our region, we are, as always, very close to our customers, and we can see only limited effects on companies directly exposed to increased tariffs. And the key point is that we expect growth to come from strong public investments and strong consumption. We do not go out and forecast what loan growth is what we expect for this year. But looking back at 2025, Jon talked about, we increased our loan book with SEK 108 billion with -- excluding FX effects.

We now have a question from the line of Martin Ekstedt from Handelsbanken.

So first, congratulations on the closure of the Department of Justice investigation. So just quickly, the outstanding DFS, New York investigation, how does this differ in scope from the one undertaken by the Department of Justice? That's my first question.

Well, I don't want to get into the scope. But as I said, after -- we've closed now the U.S. Department of Justice without any further action. That is, of course, a relief. But we are still on investigation by the Department of Financial Services in New York. I still do not know the timetable. We -- I still don't know whether we will get any fines and if we do get the fines, I cannot estimate the size of those. And we've been as transparent as possible during this long-running process. And when something material happens, we'll continue to adhere to that principle.

And then secondly, we have some long-end yield curves deepening behind us now, and we've seen some upward movements on your longer-term mortgage rates as a result. But as Andreas alluded to in his question earlier, it's not really translated into mortgage margin improvement so much yet. So what is your experience currently on customers electing longer term fixed rate mortgages instead of the 3-month floating ones? That would clearly help our margins. We can see limited movement in Statistics Sweden data on a systemic level, but what is your own experience from your customer base?

We see the interest for floating rate mortgages is still high. So we see no major movements towards fixed rates rather the opposite.

The next question comes from the line of Magnus Andersson from ABG.

First of all, on lending, we saw that your loan growth in the Baltics was 10% year-on-year in local currencies. If you can tell us what you think about the sustainability of the re-leveraging that seems to take place currently? And secondly, if you could just give us some outlook about what -- if anything has changed on the bank tax front there? And secondly, just on your cost target, if you can give us some color on what is embedded there in terms of headcount development and net IT investments, please?

Well, don't get me going about bank taxes because then I need to sort of give the whole landscape. I do that, and then, Jon, you can follow up here. First, as I've done now for many quarters, let me remind you, we -- banks are an important part of our societies. We channel our customers hard earned deposits to lending thus empowering people and businesses to create a sustainable future. And to do that, we need to be profitable. And a sustainable bank is a profitable bank. We are proud taxpayers that contribute to the financing of welfare and security in our home markets.

What we do not like are sector-specific taxes, retroactive measures and an unpredictable regulatory environment. What we do like is equal treatment, a rule-based system and an investment climate that fosters growth, financial stability and sustainable transformation. With that said, let me do a quick tour across our 4 home markets. In Estonia, corporate taxes are increasing. In Lithuania, corporate taxes are also up. And on top of this, since 2020, there is a 5% extra tax on banks. In Latvia, we are into the second year of 3 years with an investor tax on NII. That is bad for the investment climate and thus, the Latvian economy.

During 2025, our Latvian loan portfolio increased enough to give us a deduction of 1 quarter on the investor tax. In Sweden, the government has decided on a base deduction to the bank tax while delivering the same tax revenues. The tax rate is therefore raised from 6 to 7 basis points in 2026, and the government inquiry will investigate the future design of bank tax further. Another defect of tax on the banking system is that since the end of October last year, we know we have been obliged to place an interest-free deposit of SEK 6 billion with the Riksbank. Jon?

Thank you. If I just add the numbers on the bank tax then, in Sweden, the risk tax due to the base deduction that Jens talked about was increased to 6 basis points. That had an impact of us of SEK 50 million, around SEK 50 million. Then you have the SEK 6 billion in the Riksbank's reserve requirement that we do not get an interest rate for. The cost for that until June and then for 2026, which is the period is SEK 71 million. And we are reporting that under bank tax, and we have taken the full cost upfront in this quarter. So the total SEK 71 million is accounted for in this quarter.

If I then move back to your question on cost target FTE and IT. I mean our cost target of SEK 27.5 million is inclusive of the fact that we know that we need to continue to invest quite a lot in order to make sure that we are relevant for our customers also going forward. So that is included in that. Then we do not forecast on FTEs. We have a strict hiring policy. We know that we need to continue to work heavily on efficiencies. Otherwise, we will not be able to meet our long-term objective that we set out when we presented 15/27, namely to over time in a stable [ rate environment ] to increase profit over time.

In order to do so, we need to improve efficiencies. And of course, if you extrapolate that in the long run, then it will be very restrictive on FTEs and rather downwards and upwards, but we don't forecast that in the short-term.

Two follow-ups. First of all, my question regarding taxes was really, if there is anything new on the horizon in the Baltics, but it doesn't sound like it? And secondly, if you could comment on volume growth in the Baltics and the re-leverage, that's ongoing sustainability there, what do you see?

Sorry, I forgot that one. But no, there is nothing new. The Lithuanian bank tax is falling off this year or has been falling off. Remember, though, that there is a 5% extra corporate income tax that is permanent for banks in Lithuania. The Latvia, as Jens alluded to, we have no news or any -- on any changes. Estonia, there is no bank tax, and they also withdraw the increased corporate income tax. It's not a bank tax, but they changed there. So short answer, no.

When it comes to the sustainability of the growth in the Baltics, keep in mind that the loan to GDP, especially in Latvia and Lithuania, is very low, around 20% in Lithuania, both for corporate and private. So there is room to have a good and high continued increase without creating balances in that sense. The worry from our side would then rather be on the quite high salary inflation. If that is not met over time by productivity improvements and that in the longer run risk leading to some imbalances. But otherwise, the lending growth is not.

In Latvia, even so that, I mean if you go back to the financial crisis, it's been a continuous de-leveraging in the society. Estonia has leveled out a bit. So I think it is sustainable as long as other things in the economy is sort of sustainable as well and then not at least then that the wage growth is in line over time with productivity.

We now have a question from the line of Sofie Peterzens from Goldman Sachs.

This is Sofie from Goldman Sachs. So my first question would be on Entercard. You mentioned a few times that you plan to de-risk and cost of risk will only be 1 to 2 basis points higher. If you look at the 2025 numbers, cost of risk would have been kind of 6 basis points roughly. How should we think about the net interest income impact from the deal -- de-risking and also the fact that you're selling some of the back book of Entercard? And then the second question would be on the VAT refunds. You had SEK 1.5 billion of VAT refunds in 2025. How should we think about VAT refunds in '26?

Thank you, Sofie. Yes, you're right. We've put up, and I guess your question around NII and Entercard is then referring to the fact that I said that we will -- from going forward, we will report the back book of consumer finance as held for sale. It means that in the longer run, we would want to sell it. The new inflow has been adjusted. It will take some time. It's not going to happen in the near future, but over time, that will go out.

I also said that we will implement a strengthening of our organization in the -- as of March 1, and that we look at the Entercard strategy in conjunction with that. So when we present the Q1 report, we will come back with more details on both those matters, how they are linked together and how they support 15/27. But there's no changes in the short-term when it comes to the back book.

When it comes to the VAT, we have then 2024 that we could get something back for. The amounts are gradually shrinking a bit. And as the interest rate has come down and going forward, we have included this in our ordinary business unless something unexpected is coming in. And from this year -- from last year when we started to get the VAT back, we have also adjusted sort of how much VAT that we account for in our business. So I don't expect the same type of amounts going forward as we have had presented for 2025, it's going to be on a different level.

Okay. And just to be clear, after 2026, we shouldn't see any more VAT refunds?

No major ones. As I said, we have 2024 that could be up for something. We haven't applied for anything there. But compared to the amounts that we have seen now historically, it's much, much smaller amounts. Then there is always sort of small adjustments in the tax paid since -- but that's not on these major levels that we've seen. So nothing major going forward is what I expect.

The next question comes from the line of Nicolas McBeath from DNB Carnegie.

So I had a question on the implications from the DoJ investigations. So now that it's settled or closed actually without any penalties, and we are approaching the end of this investigation. Can you comment and help us understand if you have any substantial excess resources in the bank working with these investigations or with AML that you think you can reduce? There seems to be some expectations among some investors and parts of the market that there is significant potential here. So it would be helpful if you could help us kind of clarify this.

Well, when we started this work, it costs a lot of money, but we've seen that, that costs have decreased substantially. I think the last time we sort of gave it out as a special part of our cost was like more than a year ago. And I mean, we do not have -- it's very small costs associated with this.

So that's for the investigations. Could you comment on how many employees you have in the bank working with AML and what you think is kind of the long-term level that you should be as to be compliant and be well resourced from a AML perspective?

I would say we have around 17,000 people in the bank working fighting money laundering, because that's everybody in the bank. And I think that everybody's role to do that. Then we have something called economic crime prevention, which is a group within the bank. And they always continue to adjust whether they can use new technology. And we always search for efficiencies there. The key point is this is an integral part of the bank's work and it will keep on being that way. So we don't get into the same position we were a few years ago.

All right. And then my second question, just a question on the cost guidance. For the 2026 cost guidance, do you have any implementation costs for Entercard included? And have costs related to the consumer finance back book being excluded. So you're basing that cost guidance on some costs falling off from that business being divested?

No, we have not adjusted the Entercard cost going forward. We have assumed sort of some efficiency gains from Entercard just as we generally do for the bank as a whole in the SEK 27.5 billion. But then you're right that in the longer run, there might be other synergies that we have on a very high level, talked about before. But when we present both the adjustments of the organization and the strategy for Entercard going forward, we will allude more on those.

We now have a question from the line of Jacob Kruse from Autonomous Research.

[Technical Difficulty]

The connection with the questioner has been lost. We will proceed by taking the next question, which comes from the line of Riccardo Rovere from Mediobanca.

Just one, it's not 100% clear to me whether you think your managerial buffer for common equity Tier 1 [ purposes ] in the foreseeable future is going to be 300 or maybe the middle of the range, 200 basis points and somehow related to that. I just wanted to have an idea if you have been active in SRT or you think you could be active or something that you're looking at in the foreseeable future to optimize your capital absorption?

Thank you, Riccardo. Yes, as Jens said, we are now in our buffer range of 100 to 300. Then the long-term target of 200 still stands. And when we will get in there, as Jens said, it's a judgment call based on the various uncertainties. I think if you look into the future that SRTs will be a tool, we have not used it now, but we're definitely not ruling it out in the future.

Okay. And just a very, very quick follow-up. But in the foreseeable future, given maybe geopolitical tensions, do you think it's more appropriate at least for the moment to stay at 300?

Well, I think Jon answered that direct and that is that further capital release continues to be a judgment call depending on the several uncertainties such as the long-running U.S. investigation, the timing of the IRB approvals and the uncertain world we live in. And as I've said, we have no intention of holding more capital than necessary.

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

I was just going to come back to the capital question. The 100 bps you got in add-on in P2R for IRB noncompliance, is the best guess of the net effect of that and reinflation still 50 bps lower requirement net-net?

Thank you, Markus. If you go back, if I take some time back, then we said that when we are through the IRB approvals, we expected at least 50 basis points positive impact, which then mainly was related to the fact that we have this Pillar 2 add-on in Sweden, and the fact that, that is also related to mortgages, which is under the mortgage floor. Then when we presented reports last year when we had the SREP in Q3 last year, then we concluded that they had adjusted that due to the new capital adequacy rules for standardized. So we back then got to 20 bps release. So of the 50, we had gotten 20. So in that sense, that would be 30 basis points left of that.

[Operator Instructions] We now have a question from the line of Jacob Kruse from Autonomous Research.

I hope you can hear me this time. I just wanted to ask, firstly, on your AI -- where your thinking is on AI. Do you see at this point near-term opportunities to reduce staff by the deployment of AI? Or is it still more of an exploration mode? And then my second question is just on commission income. How do you think about the -- I think in the quarter, you had about SEK 100 million of one-offs? And I think it was a relatively solid quarter across most product lines. How do you think about the outlook here? Is this in line that can continue to grow? Or do you need to see a meaningful pickup in the domestic economies?

Well, first, a few words on AI and then Jon will follow up. And we've used AI for a long time. We used that in anomaly detection and we're using it more now. And one cool thing that me and the full Board was doing a few months ago was listening in on calls and you see call summarization by AI. This is a very cool feature. And that, of course, is an instrument that our customer representatives can use to be more available because they don't have to spend that much time on writing summaries. They can be there for our customers.

And that's one of the reasons we're seeing that our availability has increased so much, and we have so many more calls with our customers. And we see continued use of AI within the bank. That said, we steered the bank on cost and not on FTEs. And we want -- which we're very clear for this, we want to do more business and we want to meet more customers. So that is my point on that. Jon?

And if I then go into the NCI, yes, you're right, we had a one-off of roughly SEK 100 million part from the -- on this, which was then related to retail product that we decided to close several years ago, but that has now been running off. If you look at NCI, then -- and remember what I've said before is that we are the biggest when it comes to bank [indiscernible] and payment processing in Sweden. [ Bank Europe ] increased the commission expense for our customers by 30% in the beginning of this year. This is due to the big investments needed to transform the Swedish payment system. That is more visible. It's the same for everyone, but it's more visible for us since we are the biggest.

What they also did in the fourth quarter, they added a one-off commission cost, which in our case, was around SEK 35 million that, of course, is weighing on this result. And I think this will be there as long as this is in the investment phase that the cost -- commission costs will be higher on that row and hence, weigh on the net.

Card commissions are seasonally a bit lower in the quarter compared to the third quarter where you have the summer months and with people traveling and so forth. But then you also have, over time, a big movement between rows here because we are working more with concepts, both in the Baltics and Sweden, which means that some income has moved from the card line to service concepts. Over time, this is something that we believe is good both for our customers and for us.

Asset Management is long-term growing. What you think you need to remember here is that we have around 40% of our fund capital denominated in U.S. dollars. And of course, the strengthening of the Swedish krona is, to some extent, and hence, counterbalancing the strong stock markets in U.S. But this is definitely over time, a good and growing income for us. And if you look at 15/27, this is an important area, and Jens also talked about now celebrating 2 years with the Premium and Private Banking business area, which is also a testament to that this is an area where we see long-term growth, and it is important and it's in our DNA.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Maria Caneman, for any closing remarks.

Well, I'll steal the word then I say thank you for calling in. And I think as Jon and I have talked about today is that Swedbank is well positioned for sustainable growth and profitability by strengthening our customer tractions, grow our volumes and continue to increase efficiency and the future of our customers, our focus. Looking forward, meeting you either on the road, on teams or next time in April. Until then, take care, and thank you for calling in.

Good morning, and thank you for dialing in this morning. I am Maria Caneman, Head of Investor Relations here at Swedbank. Welcome to our third quarter results presentation. With me today is our CEO, Jens Henriksson; and our CFO, Jon Lidefelt. Jens and Jon will start with the presentation, and then there will be an opportunity to ask questions.

Jens, I hand over to you.

Thank you, Maria. Swedbank has once again delivered a strong result in uncertain times. The geopolitical situation, continued uncertainty about tariffs and trade and the increasing concerns about weak public finances across the world are slowing down global growth. Twice a year, the world's economic policy decision-makers meet at the IMF. The starting point for their discussions is the world economic outlook, which was published a week ago with the headline, "Global economy in flux, prospects remain dim."

With that said, our four home markets have healthy fundamentals, strong public finances, low government debt, innovative companies, profitable banks and low interest rates. In Sweden, we see signs of improvement. Our economists forecast growth of 2% next year, while the Swedish government is more optimistic and projects 3%. In Estonia, economic development is still subdued, and we are seeing some recovery in Latvia and the development in Lithuania continues to be strong.

In these uncertain times, Swedbank stands strong and is well positioned for sustainable growth and profitability. We can today report a return on equity of 16% and earnings per share of SEK 7.53 for the third quarter. During the quarter, income increased while cost decreased. Our cost-to-income ratio was 0.35. Strict cost control is producing results. We have a conservative and thorough lending process and, during the quarter, we saw credit impairment reversals. We have a robust ability to generate capital, and we have a very strong capital and liquidity position.

During the quarter, Standard & Poor's upgraded Swedbank's credit rating. In their decision, they highlight the bank's improved governance, regulatory compliance and risk management. Furthermore, during the quarter, the U.S. authority, SEC, ended its investigation into the bank's historical shortcomings without enforcement.

We are delivering according to our plan, Swedbank 15/27. And as you know, it focuses on three areas: strengthen customer interactions, grow volumes and increase efficiency. Our customer focus is producing results. We have further improved our availability during the quarter, and now 70% of incoming calls in Sweden are answered within 3 minutes, and we are thereby getting closer to our target of at least 80%. We consistently work to improve our digital offerings, and we see that more and more customers do their everyday banking through our app or the Internet bank.

We have also increased our efficiency. Our employees can spend more time meeting customers and less time on administration using new AI tools, and the number of advisory sessions per employee has increased.

During the quarter, we lowered mortgage rates due to lower policy and market rates. Mortgage loans increased by SEK 5.2 billion, and mortgages in Sweden distributed through our own channels accounted for SEK 4.2 billion. Deposits from private customers are stable, and we continue to be close to our customers and give them advice. Strengthening their financial health is an important task for the bank.

Savings and pensions continued to develop positively. Swedbank Robur saw a net inflow of SEK 9 billion in our four home markets. As announced in August, we want to acquire the remaining part of Entercard, thereby, Swedbank will have the largest card business in the Nordic-Baltic region. This will develop our business and strengthen our customer offering.

In Lithuania, the business climate remains strong. In Sweden, Estonia and Latvia, economic activity is improving, but from low levels. During the quarter, corporate lending increased by SEK 7 billion. Our customers are showing a high demand for sustainable investments. 36% of the bonds arranged by Swedbank during the quarter were classified as sustainable, and our Sustainable Asset Register has now surpassed SEK 150 billion.

We now own 20% of the investment bank, SB1 Markets. And during the quarter, they started up in Sweden. It's an important step in further developing our offering to corporate customers. In addition, our customers will get access to an expanded range of equity research. In the Baltic market, we launched the card payment feature, Click to Pay, a secure and convenient service that simplify payments.

Jon, it's your turn now to deep dive into the financials.

Thank you, Jens. We delivered a strong result in the third quarter with volume growth across markets and increasing income. We have continued our work with focus on long-term shareholder value through business growth and cost efficiency. Cost-to-income ratio was 35% and return on equity, 16%.

Lending volumes grew in the quarter and the increase came mainly from Baltic Banking, where we continue to see solid growth on both the private and corporate side. Mortgage volumes in Sweden sold through our own channels increased by SEK 4.2 billion, while the savings banks reduced their mortgage volumes on our balance sheet by SEK 1.6 billion.

We see continued result of our increased efforts on customer interactions and availability as we're capturing a larger share of the market. In August, our front book market share through owned channels was 16.4%, still below the back book market share of 17.8%, but the development continued in the right direction. Also for the corporate business in Sweden, the positive development continued with increasing volumes, though somewhat offset by repayments related to a couple of larger exposures.

Customer deposit volumes were stable in the quarter. In Sweden, private deposits decreased somewhat from a high level as the second quarter was impacted by seasonal inflow of tax returns. In Baltic Banking, deposit volumes were overall stable.

Net interest income decreased by 0.9% compared to the previous quarter, driven mainly by lower mortgage rates. Lower deposit rates impacted NII in Q3 with a full quarter effect, while lower rates on the lending side were gradually rolled in during the quarter. Higher business volumes had a positive impact of SEK 94 million in the quarter. Wholesale funding costs continued to decrease in the quarter. Liquidity was, however, reallocated from the markets business increasing liability volumes, but also positively impacted Central Bank placements. and, hence, had an overall neutral NII effect.

Day count and FX effects impacted NII positively in the quarter. The Swedish Central Bank cut policy rates effective as of the 1st of October and ECB cut rates effectively as of the 11th of June. Hence, there are further repricing dynamics in play. Reminding you that the positive effect on the funding side materialized ahead of the negative effect on the asset side, furthermore, that it takes approximately 3 months in Sweden for a rate cut to roll in and 6 months in the Baltics. We will continue with our pricing strategy on both sides of the balance sheet and maintain focus on the balance between volumes and long-term profitability.

Net commission income increased in the quarter, driven mainly by strong asset management commissions. Mutual funds had a net inflow of SEK 9 billion and combined with the positive stock market performance, increased asset under management to SEK 2,471 billion. Card commissions were seasonally higher in the quarter following higher spending abroad during the summer months, while brokerage and corporate finance commissions were seasonally lower. In addition, we saw positive development in commissions from insurance products.

Net gains and losses remained at a high level in the quarter and amounted to SEK 847 million. Income was strong, driven by high business activity, mainly within fixed income. Positive revaluations supported the treasury result. Other income increased by 2.7%. Net insurance decreased driven by both normalized levels of claims compared to the low levels we saw in the second quarter and the effects from revaluations of future cash flows. One-off transfer, in connection with the establishment of SB1 Markets on the 1st of September, also contributed.

The results from partly owned companies supported as well as increased income from services to the savings banks. As a reminder, our collaboration with the savings banks include cost sharing for IT development and administrative services. The savings banks' share of the cost is included in Swedbank's total cost, and you can see the corresponding income as services to the savings banks here under other income.

Total expenses were 1.4% lower. Fewer employees, together with seasonally lower staff costs, IT maintenance and consultancy costs contributed. As announced in conjunction to the Q2 presentation, a VAT recovery of SEK 197 million related to the year 2016 was received in the beginning of the third quarter. In line with previous patterns, costs will be seasonally higher towards the end of the year. Costs for the full year 2025 is expected to be around SEK 25.3 billion at current exchange rates. This includes the already received VAT recoveries related to the year 2016, '17 and '18 amounting to SEK 576 million. It also includes SEK 200 million lower temporary investments this year and an estimated SEK 300 million lower costs due to FX.

Asset quality is solid. During the quarter, there were reversals of credit impairments amounting to SEK 398 million, which corresponds to an impairment ratio of minus 8 basis points. The reversals are mainly driven by improved macro scenarios, and we have continued to reduce the post-model adjustment, which now stand at SEK 364 million. Individual assessments resulted in a SEK 568 million increase, driven by a few larger corporate exposures. At the same time, repayments and reversals of previously written-off exposures resulted in a release of SEK 451 million. I feel comfortable with our strict origination standards and the solid collaterals that secure our lending.

Our CET1 capital ratio was stable at 19.7%. In the 2025 SREP, our Pillar 2 requirement was lowered by 40 basis points, and our CET1 capital requirement now stands at 14.8%, meaning we have a buffer of around 480 basis points above the requirement. The reduction by the Swedish FSA stems from two parts.

Firstly, 20 basis points are related to the new CRR3 risk weights for standardized credit risks. This has an impact on the Pillar 2 add-on that we shall hold until the new Swedish IRB models are approved. Thereby, approximately 20 basis points of the expected capital relief of at least 50 basis points from the new IRB models has now materialized. We continue to expect most of the remaining impact from the IRB model updates to materialize during next year.

The Swedish FSA also approved parts of our nonmaturing deposit model, resulting in 20 basis points lower capital requirement for interest rate risk in the banking book.

To conclude, we continue to focus on growth and efficiency. We deliver strong profitability while maintaining prudent underwriting standards, strong liquidity and capital positions.

Back to you, Jens.

So let me now sum up the quarter. Swedbank once again delivered a strong result in uncertain times. Income increased, cost decreased, and we saw credit impairment reversals. Return on equity for the third quarter amounts to 16%, cost-to-income to 0.35. Our credit quality is solid and our capital buffer is very strong at 4.8 percentage points.

Swedbank is well positioned for continued sustainable growth and profitability, and we continue to deliver according to our plan, Swedbank 15/27, with a focus on strengthening customer interactions, growing volumes and increasing efficiency. We create value for our customers and our shareholders, and our customers' future is our focus.

With that said, back to you, Maria.

Thank you both very much. We will now begin the Q&A session. A kind reminder to please limit yourself to two questions per turn. Operator, please go ahead.

[Operator Instructions] We have the first question from Martin Ekstedt, Handelsbanken.

Can you hear me?

Yes, we can.

Excellent. So could you just give us a bit more on the SB1 Markets initiative? You mentioned it launched in Sweden in the quarter. Is it now fully staffed up on the Swedish side? And are all the business lines up and running? That's the first one.

To be honest, I don't know if it's really fully staffed up. A lot of persons have gone over and I think they're doing some great jobs. So I think they're fully running. And the key point is that this is a partnership that offer our corporate customers a strength and offer through access to a larger set of investment banking services and sector expertise. And both corporate and private customers can also benefit from access to a broader range of equity research. So this is great.

Okay, okay. And then second question, if I may then. I'm looking at your NII sensitivity on Page 20 of the presentation deck. So in the past, the NII elasticity, so to speak, or rate shifts have been balanced around plus/minus side. But your calculation example is now tilted towards seeing a larger impact if rates come down than if they go up. And I just wanted to confirm, this is due to some deposit rates now having reached 0 and therefore, are not able -- at least commercially able to go any lower, right, i.e., it's the floor of 0% rates that you mentioned on the page coming into effect. Is that correct?

You're perfectly correct, Martin. That is the reason.

The next question from Magnus Andersson, ABG.

My first question is how you view the prospects of potentially being able to increase the thin household mortgage margins in Sweden now that short-term rates are no longer expected to fall? And related to that, what market growth rate you think is necessary for this household mortgage margin pressure to ease?

And secondly, just how -- you have lending growth now 4% quarter-on-quarter in the Baltics FX adjusted. How you view the sustainability of lending growth in the Baltics now that the deleveraging that's been going on for nearly 20 years finally seems to be over? And related to that, how you tame the inflationary tendencies, the impact on the cost base there?

Thank you for that. Two good questions. First one is, let me say a few words of the overall situation in the mortgage market, and reminding you that we are the market leader in all four home markets. And first, just me repeat that in the Baltics, we see continued strong growth in mortgage volumes. In Sweden, we've seen that the housing market remains muted, although we see some gradual increasing mortgage market growth during 2025 and you see that we're now picking up some momentum.

And the reason for that is that we are more active. We have shorter waiting times and quicker to resolve questions. There is a strong competition out there, and we want to grow. And when that competition abates, we do not know. I don't think the competition will go down. I think it will be continued competition there.

Then when you move over to the Baltics, we have seen quite a large volume growth in that. Reminding you that these are steady and stable economies, and we now expect Estonia and Latvia to pick off as well, while Lithuania has been doing very good.

Okay. So are you saying that you think the household mortgage margins we have in Sweden currently are here to stay? My question was whether you think there will be a potential to increase them going forward and what the trigger would be able to drive how you would be able to achieve that. Because I think it's a concern to all of us.

Well, I won't do any forecast on that. There is a tough competition. But I think when you see higher volumes, I think that we can grow in that environment.

Okay. And the inflationary impact on costs, in the Baltics?

Magnus, I think as we've talked about before, I mean, in the Baltic Banking, we have lived with higher inflation for many, many years, even before the inflationary shock. So that is something that we are constantly working with to make sure that we can increase our efficiency to mitigate that. If you look at the societies as a whole, then I mean, our concern, as we have been talking about, generally, it's very stable and healthy. But of course, if the salary inflation continues, then that will eventually lead to a problem since it's going to be hard to pick up on the productivity in line with the current salary levels', increased levels.

The next question from Andreas Hakansson, SEB.

So first question on costs. You mentioned the three VAT refunds you had during this year. Could you tell us how many years have we got outstanding? And just to confirm that you don't assume one of those reversals to appear in the fourth quarter.

You're correct. We have assumed no VAT recovery in the SEK 25.3 billion guidance that I gave you. If that will come, it will come as a one-off extraordinary thing that we will not take into account when we run our ordinary business. So no further VAT in the SEK 25.3 billion. We have, as I think I mentioned in the previous quarterly presentation, requested VAT return recovery for year 2019 up until 2023. It's in the hands of the tax authorities, and I have no visibility in the numbers, and we'll not speculate if and when we would get anything more back there.

Are the cases similar? Or I mean, it seems like you won three cases. So are the other cases different? Or wouldn't the outcome be likely to be the same or...

Sorry, I said '19 to '23. I should have said '19 to '24. But it depends a lot on the interest rate levels since this is sort of depending on the turnover that we have in the parts of our business that is non-VAT related and the one that there is VAT, i.e., mainly the leasing business. So it depends a lot on the interest rate levels for the years, and that's why I don't want to speculate in any numbers or if we would get it back before we have the answer from the tax authorities.

All right. That's fine. Then on the Baltic NII, I mean, you talked about the 6 months' time lag. But could you just confirm that when you talk about that NII should trough 6 months after the loss rate cut, that's with a static balance sheet. And we saw already that NII grew Q3 with Q2 on the back of very strong volume. So if volumes continue at the current pace and, if anything, it seems to be picking up. Is there any reason why the NII shouldn't continue to grow even though you have that underlying pressure driven by interest rates?

First of all, yes, you're correct. When I talk about the 3 and 6 months, then I mean the same margins, the same volumes, and then you'll have to make your own assumptions on that as well as some further central bank rate cuts. When it comes to the NII development in the Baltics, it's impacted by FX in this quarter. So underlying, the NII in the Baltics is stable quarter-over-quarter.

With 3% volume growth, right? So those are the two components there, margin pressure and the volume growth. That's up to 0 in this quarter.

Yes.

The next question is from Gulnara Saitkulova, Morgan Stanley.

So on capital, given your solid capital buffer, could you remind us of your latest thinking on how to deploy the excess capital between ordinary dividends, special dividends, buybacks or potential M&A? And how should we think about your approach to excess capital in a theoretical scenario where the AML resolution is still delayed by several years? Would you still aim to be around the midpoint of your targeted management buffer range? Or would you adopt a more cautious stance in that case? And if you were to pursue M&A opportunities, which areas or markets would be of the greatest strategic interest for you for potential acquisitions?

Well, thank you for that question. Let me be very short here. And that is that we have a capital buffer range between 100 and 300 basis points. In our 15/27 plan, we target the middle of it, i.e., 200 basis points. We now have a buffer of 480 basis points with a dividend policy of 60% to 70%. And the timing of further capital release continues to be a judgment call depending on the many uncertainties, where the long-running U.S. investigations is the largest one. And we have no intention to hold more capital than necessary.

When you look into M&A activity, reminding you that we've had seen quite a lot of M&A activity during the last quarter. We want to acquire Stabelo. We want to acquire the remaining part of Entercard, and both those two are still subject to approvals. And then we've gone into SB1 Markets, which was the first question. As a CEO, I always need to look out for new opportunities.

The next question is from Markus Sandgren, Kepler.

I was just going to follow up on Gulnara's question when it comes to Entercard. Can you just give some more flavor of your thinking about the acquisition? And what do you think or what's your planning in terms of asset quality for that company?

Well, straightforward, we've had a business cooperation with Barclays, and we own roughly 50-50 each. And they wanted to sell it, and we wanted to acquire it. It's that simple. And the reason we want to do that is that we want to become the largest card business in the Nordic-Baltic region with scale benefits and, of course, benefits also from increased efficiency. And I think Jon will get back later when we have more information when that's fulfilled and tell you the effects on the bank at large.

What we will do is we'll do a strategic overview. And when we look on Entercard, we've seen that we think that the risk level is a bit too high, and we wanted to reduce it a bit more to a more appropriate level for Swedbank.

And what does that reduction mean? Is it getting rid of loans? Or how do you plan to do it?

We -- let us get back to that when hopefully, this goes through all the sort of processes.

The next question from Shrey Srivastava, Citi.

It's actually on the 20 basis points benefit to your sort of capital requirements that you've got from being able to model the contractual maturity of nonmaturing deposits. My question is twofold. The first is, is this all we can expect to see in terms of benefit? And secondly, does this open up the possibility of you sort of investing these nonmaturing deposits in potentially sort of high-yielding, long-dated assets going forward?

Thank you, Shrey. First of all, we have gotten a partial approval for our modeling of nonmaturing deposits. So all things equal, if we would get the full approval, that would be a little bit more to come. When it comes to our NII -- or sorry, non-NMD hedging, I have said in previous quarters on questions from you and your colleagues that we have had some hedges. It's been an important tool for us to have in the toolbox. So we wanted to test it and try it out. But it is and has been immaterial from an NII perspective so that you can discard the impact of the hedges that we have in place when you forecast our NII.

The approval that we have gotten, it still means, to make it simple, that our liability side is still shorter than our asset side. So if we would add further hedges to prolong our asset side, which is what we want to do in order to smoothen out NII when the timing is right, it would still mean that our capital for IRRBB, our Pillar 2 charge, will go up even with this approval. It might go up a bit smaller than before, but there still will be an increase. We will come back should we do more or should our hedges be material to make sure that we are transparent should that be in the future.

And a very brief follow-up. You said you received partial approval. Should you receive full approval, what sort of capital benefit can we expect there?

Unfortunately, as long as the Swedish FSA do not change their view on this, even a full approval will lead to the same thing, that if we prolong our asset side, our capital charge will still go up. There is a difference between the Swedish FSA's view and the view that banks under ECB supervision have. They can do this hedging much more efficiently than we can do.

And a final one for me. Have you noticed a sort of softening of the Swedish FSA's view? Because it seems sort of that way, looking at the partial approval you received. Or is that inaccurate?

No, I have not.

The next question from Namita Samtani, Barclays.

My first one, I just wondered what measures you're taking in the Baltics to bulletproof your ROE of above 20%. I saw an announcement that Revolut is now offering mortgage loans or something similar to that in Lithuania. And in time, that will probably become a full offering. And clearly, the deposit rates they offer better than banks. So what initiatives is Swedbank taking to protect itself from competitive threats?

And then secondly, I appreciate the 2025 updated cost guidance. But we're almost through 2025. Could you please qualitatively talk us through the main moving parts of costs going forward or what we should think about going into 2026?

Well, the key thing about Estonia, Latvia, Lithuania, these are growing economies, and when compared to Sweden, they will grow with, let's say, 1%, 1.5% more. So it's a very attractive market. And it's also a market that doesn't have the same financial inclusion as there is in Sweden. So that means that we see many possibilities. And I think we went through very much this when we had Swedbank 15/27. In the end, it's about being close to our customers.

We are the most loved brand in the Baltic region for the seventh year in a row. We want to grow volumes, continue to grow with the countries. We want to increase financial inclusion. We want to be -- have more customer interactions and want to make sure that we keep costs contained and work in an efficient way. So in that sense, it's not different from the other markets. Is the competition tough? Yes, it is tough. Will it be tougher? Yes. But that's life. Keep on and be close to your customers. Do you want to say a few things about the costs?

I think your question was about 2026 costs, and we will come back in conjunction to the Q4 presentation on that. But principally, we tried to explain how we work with cost efficiency with the headwind and investment and so forth when we had the 15/25 presentation. But more details, I'll come back with when we present the Q4 results.

The next question is from Tarik El Mejjad, Bank of America.

Just quick two questions, please. First, on costs. I mean you had quite impressive, good cost control here with cost/income really at very low levels. I just questioning the strategy of sustained hiring freeze, which -- how long that you can be sustained and especially in the context of potentially a recovery of growth.

But also, we just had a call with one of your competitors and the approach is this hiring freeze or control could be sustained as long as we invest in AI and technology and be able to question each time, can we replace or hire or invest in some technologies that would be more cost efficient? Where are you in this thinking and these investments in AI and technology?

And the second question is on the U.S. on money laundering litigation. I mean I've been following those with the German, French banks and so on in the past with the OFAC. How the conclusion from the SEC, you think are correlated to what would come for DOJ? Or is it -- because usually it's bundled within one decision. How do you read that? Are you more optimistic about the outcome?

Well, thank you. Two important questions. The first one when it comes to the personnel, we steer the bank on costs, not on FTEs. But what happened a year ago was that we saw that FTEs increased too much due to change of churn. And what we did then was that we implemented an external hiring freeze but sort of possibility for people to make exceptions. I gave quite a few exceptions but it worked. And then last quarter, we decided to take that away. And we now have a process where Jon take that sort of those kind of decisions together with the Head of HR. So we do not have a hiring freeze anymore. That's the first thing to say.

The other thing is to say that we see quite a lot of use of AI. We work it both on the individual level and on a structure level. We work with AI for a very long time. And what we want to do is we want to decrease administration so that we can see more time with our customers. So to give you an example is that right now, we are seeing that the waiting lines or sort of the time waiting, if you call into a Swedish customer center, it's much shorter than before. So we've reached 70% of the call answered within 3 minutes. Why? New technology. And then we can use call summary, so that means you can have more time to meet the customers rather to do the administration, and we can do more things like that.

When it comes to the U.S. investigation, first thing to say is that when it came to OFAC, that was closed quite a while ago. And as I said in my introduction, during the quarter, SEC decided to close their investigation without any further actions. That said, still have two other investigations by U.S. authorities. And now I need to sort of repeat myself. But I've told you many times when I was new as CEO, I met and called around and talked with colleagues that have been in similar circumstances. And they told me that a process like this usually takes 3 to 5 years. Now more than 6 years have passed, but the time line is fully owned by the U.S. authorities.

I can just repeat what I say, and that is I still do not know whether we will get any fines. And if we do get the fines, I cannot estimate the size of those. And we've been as transparent as possible during this long-running process. And when something material happens, we'll continue to adhere to that principle. Thank you.

The next question is from Nicolas McBeath, DNB Carnegie.

I had a question on the deposit volumes. So after the most recent rate cut in Sweden, your deposit rates on some of your most popular savings account like eSavings have been cut to 0. So I was wondering how are deposit volumes behaving on these accounts. Have you seen any increased tendency of withdrawals since the rates were introduced, either to your own Swedbank players or migrations to competitors' deposits with above 0 rates? That's my first question.

Well, thank you, Nicolas. The volume or the mix has been stable in that sense. So we have not seen any mix shift. And over time, the deposit beta has been around 1 on accounts with interest rate and where the sort of distance to 0 has been enough to reduce it. So then as we have talked about before, sometimes, we have for business reasons, taking a little bit of time lag between doing different rate changes. But over time, it has been one, and we have not seen mix shifts lately.

All right. And then I had a question on levies for next year. What's your expectation there? And could you confirm whether the cost for interest-free deposits at Riksbank, will those be taken on the levies line or reduced NII?

Well, let me start with saying that if you see overall loan demand in Sweden from both corporate and private customers is subdued. In the Baltic, demand is stronger. And just to be blunt here, but we have an appetite for healthy loan growth while sticking to our conservative lending standards and focusing on profitability. You want to follow up, Jon?

On your question on the Swedish Riksbank, we will have to deposit SEK 6 billion for which we will not get an interest rate for now for 9 months, I think it is. I think the jury is still somewhat out on exactly how to account for that. But my assumption or belief is that, yes, it will be under the bank tax row. And then the discussion is will it be a one-off now in Q4 or will it be spread out for the period? But most likely under the bank tax rule. Yes, I think that was the answer, right?

Yes. And then just also if you could comment what your expectations for bank taxes are for 2026?

Bank taxes, don't get me started. But let me say a few words. And then as always, I want you to remind you that banks are an important part of our societies. What we do is we channel our customers' hard-earned deposits to lending, thus empowering people and businesses to create a sustainable future. And to do that, we need to be profitable. And a sustainable bank is a profitable bank. And we are proud taxpayers that contribute to the financing of welfare and security in our home markets.

What we do not like are sector-specific taxes, retroactive measures and an unpredictable regulatory environment. What we do like is equal treatment, a rule-based system and an investment climate that fosters growth, financial stability and sustainable transformation.

With that said, I need to say that. Then let me do a quick tour across our four home markets. First, Estonia, general corporate taxes are increasing as we see, but there is a political debate on that. In Lithuania, corporate taxes are also up. And then remind you that on top of this, since 2020, there is a 5% extra tax on banks, and the extra investor tax on NII further on top will be phased out during the year. In Latvia, we will have 3 years with a similar investor tax. There are some discussions on excluding new lending from the tax. If that would materialize, it would be positive for the Latvian economy.

In Sweden, the government has proposed a base deduction to the bank tax while delivering the same tax revenues. And the tax rate is therefore proposed to be raised from 6 to 7 basis points in 2026. And now there is a government inquiry of some kind that will look into the specifics. And then as Jon talked about, let's call it what it is, it's another tax on the banking system, is that the Riksbank has decided that credit institutions from the end of October this year will need to place an interest-free deposit with them. And as Jon said, it amounts to around SEK 6 billion that will earn 0 interest.

The next question from Sofie Peterzens, Goldman Sachs.

Here is Sofie from Goldman Sachs. So my first question would be on net interest income. When do you expect net interest income to trough? One of your competitors this morning said that it will be 3 to 6 months after the last rate cut? Do you think that's kind of fair? Or do you have a different view to this?

And then my second question would be on the VAT refund that you continue to get. It was SEK 197 million now in third quarter and SEK 174 million, sorry, in the previous quarter. Like when should we expect these VAT refunds to come to an end? Or should we expect still some VAT recoveries in 2026?

Thank you, Sofie. If I start with the NII, then if we assume no further rate cuts, to make it a bit simple, then ECB did their last one. It was effective on the 11th of June; and the Swedish Riksbank, it was effective as of 1st of October. And then if you take 3 months roughly in Sweden and 6 months roughly in the Baltics, that means that around year-end these rate cuts will be priced in, and the first quarter next year then will be the first quarter where you have a full quarter effect. Then as I've said before, you'll have to add your own assumptions on potential further rate cuts from the central banks, volume growth and margin development.

When it comes to the VAT, then I don't know. There is a discussion from the Swedish government to change the VAT legislation. And everything around the VAT recoveries is due to that there has been a clash between the Swedish VAT law and the European regulation around that. So I would expect in a couple of years that there will be a new Swedish law in place. I don't know how fast or when it will come or what it will mean. So I don't -- we don't know. We'll have to see what happens.

But we have so far then asked back for '19 to '23. Now it's clear '23, I've been a bit back and forth on it. But '19 to '23, we have asked recoveries for. And then let's see for the years after how things play out.

[Operator Instructions] The next question from Riccardo Rovere, Mediobanca.

Just a quick follow-up, again, on NII. Do you think that the pickup in lending volumes in general, and also deposits could somehow offset the last leg of pricing that you've just mentioned, 3 months in Sweden, 6 months in the Baltics. It should be visible by the end of the year, the same volumes can offset that?

We lost you. But thank you, Riccardo.

Can you hear me?

Okay. Sorry. Now we can. Do you want to...

Can you hear me now?

Yes.

Yes. We hear you. Okay, please repeat.

Okay, fine. Just wondering whether you think the volume growth, deposits and loans could somehow offset the last legacy repricing that you've just mentioned, 3 months in Sweden, 6 months in the Baltics, so to say that the last cuts done should be visible by the end of the year because that is the margin part of the equation in NII. I was wondering whether the volume side of the equation can somehow offset it.

Thank you, Riccardo. Yes, I mean you're perfectly right, but I do not sort of forecast the NII. So I can leave that to you to do your own assumptions on volume growth, margin development and so forth. But of course, there is an offsetting effect on this. I said that in this quarter, higher volumes has had a positive impact of SEK 94 million on the NII. So of course, growth do offset. But I'll leave you to do your own assumptions on how that will develop going further.

This was the last question. I would like to turn the conference back over to Maria Caneman for any closing remarks.

Well, I'll take that, Maria, if it's okay with you. So thank you for calling in, and thank you for always asking tough and knowledgeable questions. I now look forward to meeting you and many of your colleagues in our dialogue on Swedbank. Thank you for calling in. Bye.