Sparebanken Vest

Welcome to the presentation of Sparbank Invest's first quarter for 2023. As before, if anyone has questions they want us to answer after the presentation, send the questions to this email address and we will try to answer all the questions that come in during the presentation on our question and answer sequence after the presentation. It is a bit of an exaggeration to be able to present Sparbank Invest's first quarter figures in this quarter, because it is a quarter where we are 200 years old. We are Norway's next oldest bank and are very proud of our history. And we are extra proud because we evaluate it in such a way that we are a very vital, modern and performance-strong 200-year-old. It is not just fire that is in the flow every day. We also think that we are a very good place as a bank. with a net capital return of 17% in this quarter. And then we don't just have a good quarter behind us. We have a period from 2012 to 2022, where we have numbers on all our toughest competitors, which shows that we are completely ahead. In this period, we have an average net capital return of 12.8, which is not far from our newly revised goal of a net capital return of 13% this year. In this quarter, we have also taken a look at our financial targets and adjusted our one-capital-release target to 12 or more, to 13 or over 13 percent over time. We have also adjusted our exchange policy from up to 50 percent allocation to a total of 50 percent allocation. Our target for pure core capital allocation unchanged is 16.75 percent. If we look at our history in this period, it is as follows. In the last six years, we have exceeded this target. In the last three years, we have also delivered a one-capital transfer of over 13%. We are quite optimistic and have an offensive starting point for achieving this increased financial target over time. It is also a target that we have managed to compete against, if you look at the bank's history, as this picture shows. We have also had a good growth in the exchange rate from Sparbank Invest over time. Here you can see our exchange rate from 2019 to 2022, where we have divided out 5.50 kroner. We have also moved up towards what is now defined as around 50% in our exchange policy, if you look at 2020 to 2022, as illustrated on this slide to the right. We believe that we have a robust value proposition for the capital market. We have a robust strategy at the bottom to also deliver good performance in the future when it comes to the results of the bank. We are a bank that strives to create complexity, that does everything we can to stay far ahead when it comes to digital services, especially on mobile banking, because it is so important in terms of the number of hits between bank and customer. We are a bank that are concerned about and have a conservative loan book. We may get that to a greater extent in the time we are on our way into testing. And then we are a bank that has worked very well with the right people on the bus and our positions in relation to being a performance-oriented team over time. In sum, we believe that this is a good starting point for also delivering a good risk-adjusted forecast in the coming years and quarters. I'm going to share my presentation in three. A little about our banking business, a little about our credit risk and foreign books, and finally a little about why we think we have a very good starting point to deliver good returns in relation to the market position we have in our core market. A little about the overall financial figures in the first quarter. We deliver a one-capital return of 17%. It is up from 16.5% in the first quarter of last year. It is mainly up from the fourth quarter, as you can see, from 12.5% to 17%. And then finance will affect these quarters a little. But over time, as I have shown, we have delivered a very good return, even though it varies a little from quarter to quarter, and especially finance is involved in affecting that. We have a solid core capital coverage at 18.4. I would also like to point out that for those who compare this capital coverage with our biggest competitors, other regional savings banks, we have implemented this IRB roundtable, which means that we may be a little lower than we otherwise would have done. 0.2-0.3 on capital coverage, if it can be compared with others who have not considered the IRB roundtable. So we are very well capitalized, as you can see here. The result per capita income in the quarter is 3.14 kroner. And then we have a recorded value per capita income of 73.80 kroner at the beginning of the quarter. Very happy with the growth in this quarter as well. We have a good foreign growth in both segments. 11.2 on the personal market. If we remove the bull there, we have a 12-month growth of 5.9 percent. And then we have a very good growth also in the business market. We believe the period we are on our way into We think we have a very good starting point, a very good value proposition in the time we are entering, which means that we will get a good risk selection, a good growth with a reasonable margin, also in the coming quarter when it comes to the real estate part. The last 12 months of the real estate growth is also slightly influenced by the currency effect. If we remove that, then our 12-month growth is 2.9% lower than the 15.3% that is illustrated in this picture, but still a very good underlying growth, also when we look at in relation to the currency effect on our foreign book. Income growth is important for us now. The income margin is on its way back again with an increased interest rate level, and we have a fine development on the personal market with 11.5 in the last 12 months. And then we have a 12-month growth in business life of 29%, which we are very, very happy with. And this is important in relation to a good development in net interest over time. We have a good growth in our interest rates. You see growth in nominal interest rates here from 1,136,000,000 to 1,175,000,000 from Q4 to Q1 this year. The relative interest rate netto is also in good development. We are in the quarter of 1.73. We also believe that we have additional potential in the coming quarter, with full effect of the interest rate changes that may occur and that are effectuated. We also believe that there is room to adjust the margin of something beyond that, so we are optimistic when it comes to the interest rate net and the development of the bank. Cost-income, nominal cost growth, slightly above what we had hoped for, and we are working fairly well there. But there is no doubt that we are a cost-effective bank. We drive effectively and we have a good development in cost-income over time. And as you can see, for this quarter 32%, which is probably among the most in Norway and most likely in Europe as well. When it comes to cost efficiency, we will continue to do so, and we are working hard to deliver on it in the future. Here we have taken a overview of how we performed in 2022 compared to our toughest competitors. Here you can see that we are leading when it comes to cost income in Norway, and in Norway we are far ahead in the global community, perhaps best in this area. Frende Brage is doing very well. We have a good improvement in Frende compared to the same quarter last year. The financial results are better. It affects a good part. We have a good development in our stock growth of about 6.4% in the last 12 months. We also have a good development in Brage, as you can see here. A company that is growing steadily. Very impressed with its own distribution in Prague. Now the banks have around 40% of the distribution and portfolio in Prague. The rest is growth on their own channels. Very impressive what company management and employees are ready to build. It is quite robust in terms of distribution power, as it builds up its own distribution channels in a very good way, and has exploited the unrest in this market and has brought on board many good people in the last 12 months. Nordne has a slightly lower state budget, but we know that many projects are being worked on, so we are quite sure that we will get good results in the last three quarters of 2023. We have some variation in the fund balance, which affects other revenues to a certain degree. Of course, this affects the capital market when stocks, stocks or other things go down. The balance will also go down and the provision revenues will go down a little. But we see that we have two quarters behind us now. There we have a very positive development in net and new design, which means that we have a good starting point to deliver good other revenues in this area as well. And as you can see here, the treatment value is now in the first quarter at 17.8 billion, and slightly below the example we saw in the fourth quarter of 2021. And this will swing a little with the capital markets. We also have a conservative liquidity portfolio. I will not go into much detail, but we have a liquidity portfolio of 31 billion, and it is conservatively placed, with 90% of the portfolio invested in state and state-guaranteed obligations or high liquidity obligations with the right to profit, It's a very liquid portfolio, and we have a conservative liquidity strategy in Sparbanket Mest, and are well equipped for more demanding times, as we have seen in other places around the world. A significant margin for regulatory requirements. I commented on this a little earlier. I also commented on this IRB document that we have implemented, which others may not have implemented yet. But we are very well capitalized. We are well over the minimum requirements and are also concerned with being capital effective over time. So to indicate a little, we are now perhaps a little over what we want over time. We do not need to be so far over the minimum requirements over time, but we are very well capitalized where we are right now. If we look at the development in the results from Q1 last year to Q1 this year, you can see the development here. We have a significant increase in net interest, 288 million. The provision revenue is largely flat, associated with business, is a little forward. Finance will vary a little, and you can see that here. We are slightly down to 150 million. We have a very small portfolio of stocks and self-trading on interest and currency, so this is largely swings related to the core business of the bank. We have a development on the cost side, with 45 million in increased costs. There is a significant pressure, especially in the IT area, when it comes to cost development. We do what we can to reduce that growth. And then we have an increase in losses, among other things, which I will come to, a model offset on the personal market, which is rising a little after recalibration of our models. And we have a little less tax than we had in the same quarter last year. This means that the results range from 7.56 to 8.70, as you can see in this waterfall diagram. Summing up, some of the main conclusions in our core banking business are 17% peace, which we are very pleased with. We have a good capital coverage, which we have been aware of several times. We have a strong net interest, which is driven by good growth, but also through repricing. Our costs are up a bit, but we are quite competitive when it comes to cost percentage and cost income. We work on that. The goals must be the best in the class. We have a moderate increase in deductions, as you can see in the quarter. We have a result that is at 944 million before tax. And that sums up the big lines in the first quarter for Sparbanket Vest. A little about our risk picture in the next point in the presentation. We are a bank that has managed to have a good risk selection over time. We have been careful with geographical expansion. We have been concerned with the church tower principle. We have been concerned with building running competence, learning from engagement where we have lost money. This shows that we have a very good credit culture over time, and we have a very good connection, especially between the business market and our credit and risk environment in the bank, which cares a lot about each other, but has a common goal of having a good risk-adjusted return on our foreign books over time. And we have succeeded in that. We have brought our toughest competitors in the grey line, and then we have Sparbank Invest in the In the dark blue line, you can see that over time we have performed quite well when it comes to losses in Sparbank Invest. We also have a conservative loan book dominated by housing loans, as you can see here. 12% of our foreign books are bulls, 63% of our personal brands are ex-bulls, and we have a business market that consists of 25% of our foreign books. We also have a very clear strategy to be present in our three counties, Rogaland, Vestland and Møre Romsdal. There is a great potential for further growth in Møre Romsdal. What we have mainly outside these three counties is moved customers or bulls. Of the rest, bulls stand for 63% of the geographical exposure we have. We will come back to that later, but with a very moderate LTV. We see no signs of a lot of challenges in our personal market portfolio yet. We are sure that it will take some time before electricity prices and increased interest rates affect people's everyday lives. But for the time being, we are at a very low level when it comes to payable housing loans. We also see a good development in the last quarter when it comes to debt-free housing. There is no negative development, especially for those who have the highest LTV, i.e. over 60% of the loan when it comes to debt-free housing. We are still at a very low and moderate level, and that does not mean that this cannot change over time, but we come from a very good place and we believe that we have a good foreign portfolio that is robust also for a little tougher times. And then we will point out, as we have done earlier, that 96% of our housing portfolio is within 70% LTV. There is a significant robustness in that. And then we are also largely in the market area, which has had a significantly lower housing price development, which may still indicate a decline, than what has been in the Oslo region. We have taken with us housing price development in Bergen and Stavanger from 2014 to the present day. In Stavanger it has been 10% and in Bergen it has been 34%, while in Oslo it has been almost 70%. This also gives another drop in a slightly more challenging time. We also see that we have no worrying signs either when it comes to lost and lost loans, if we take a business life here. A small increase, but largely flat over time. It is single engagement that affects this a little up and down. But in the big picture, we have a flat development when it comes to lost and lost loans. on the personal and business markets. Over time, within the framework that we have the opportunity to exercise understanding on, we have had a conservative approach when it comes to deductions. We have a deductions rate for mis- and debauched loans on the personal market at 57%. and has been especially robust in the business market, where we have a rate of misuse and loss of loans of 72%, which is a good starting point for tougher times. We have taken model assumptions and assumptions over time, which means that we think we have been conservative in terms of the scope of action we have in relation to the regulatory rules. If we look at the development in loss costs since the first quarter of 2020, you can see that 80% of our loss costs are model deductions. In this quarter, we have some model deductions, especially on the personal market, that are involved in raising the loss level. Even if the loss level is not unimaginably high in the quarter, we have some model deductions on PM that are about the calibration of our PM models. Over time, however, there are few confirmed losses and a certain increase in model revenues from Q1 2020. We have a good growth, and a good growth in the business market. And we also experience that there is an extra focus on business units right now. And we think that we have a very low exposure to offices and hotels, which may be the most cyclical segments within business units. You see our business unit portfolio on this cake diagram, and see that it is a very well diversified portfolio. And as I said, moderate exposure to the most cyclical segments within the industry. And a very reasonable long to value in the industry is our assessment that we have. And we see that we, at least where we are today, have a robust starting point in relation to meeting a segment that is probably entering a little more demanding times and already is. We have a growth in the operating market that is at an acceptable risk. Two thirds of this growth is on existing customers, and we have a growth that is divided into a number of industries. We believe that it is also reasonable to have a diversified loan structure within different industries, and we see, among other things, that in this quarter, or the last 12 months, we have strengthened ourselves well, among other things, within fishing, but also in a fairly good diversified growth in our business portfolio. That was a little about our banking business, the main key word. That was a little about our loan book, and then I will conclude the last part of the presentation by sharing some views on why we think we have a very good starting point, a strong market position, in order to also get good growth with reasonable margin and at a good time in the time we have in the meeting. We are a bank, as I said, in the city, which is concerned with strengthening our focus, if we look away from our bulldog concept, in these three provinces. And we have a significant potential, we think, for still good growth in Rogaland, Møre and Romsdal, which are the two markets where we have the least long history, where we have the fewest infusion banks. and believe that we will be able to build stone by stone in these regions and strengthen the growth and development of the bank and do not see that we need to move far away from where we have our core market area to get a good growth over time in our market where we can market it and where we have the best conditions to succeed, which we mean is along the coast. We are finally in place in Ålesund. We opened our new office up there in the first quarter. I am incredibly proud of the team that works up there. What we have achieved in the first phase. And I am quite sure that the framework, conditions and conditions to take the next step in Møre and Romsdal is incredibly good with the fleet. New offices that are centrally located. in Ålesund. I'm sure it was worth waiting for. We have been sitting in quite awkward, medium-term rooms, but now we are in permanent rooms, which also shows that we really mean something with our investments in the Ålesund region. We are focused on being far ahead in the green shift. The focus of sustainability is strong in our bank, in our industry, and we have taken a few examples of this in the presentation on how we work. We are very interested in getting sustainability-linked structures in the business market around our loans. And I think we are one of those who are far ahead when it comes to linking sustainability to our external loans and clear commitment from our customers in relation to emissions reductions and net zero in 2040, where we have set earlier goals than many other financial institutions. You can see here that under 20% of our loans in the first quarter are included in a sustainable structure. We are very proud of that, and we think it is right in front of what we see in the markets around us. And we will be in such an important area that will affect our industry so significantly in the coming years. And as I said, you probably know from before that we have set a goal that our foreign book will have net zero in 2040. It is a very demanding goal. The trade banks have done the same. Most of the other banks are in 2050. We think this is possible, but that means that we have to work very well with our customers, and especially within the sectors that have a long way to go before we are in place with new technology that we will lift now in net zero. I have taken a customer case here that I am very proud of. Peak Group, which is a shipping company, which is right at the forefront when it comes to sustainability reporting, and which is very ambitious within a industry that is one of the most difficult industries to transform into net zero. And where we have linked sustainable energy-linked loans up to very clear and strong climate goals together with the customer, which we think is good for the customer and which is good for us, and which ensures their competitiveness in the long term. And through that, of course, also take down our credit risk on the customer over time. So this is one of many good examples where we work very well together with customers, linked to sustainable energy-linked loans. Another thing we have prioritized over the past year is to get a real boost in the digital area of the business market, and especially our mobile bank. We have had quite a few deliveries over the past 12 months. My main point here is that this has given results. We are now completely ahead when it comes to our mobile app on the business market as well. Very proud of that, because you know for sure that DNB and others have significantly greater resources for the development of this type of functionality. So when we manage to be at the forefront of customer satisfaction, which must be the most important character book in this area, then we are very proud. We have been in the personal market for a very long time in Google Play and App Store, and now we are also at the forefront when it comes to App Store on our car bank. We will continue to work very targeted with how we can be at the forefront when it comes to user experience, also in the business market further in this area. It is also fun to note that Bulder is also at the forefront of the personal market when it comes to the rating of the Bulder Bank app in Google Play and App Store, with a rating of 4.7. We see that the intention we had when we established Bulder is what is happening in practice. It is to have one technology platform, one common good, but two brands and two ways to take out the basic work we do at the bottom. on Bulder and Sparbank Invest, it gives an effect. We learn a lot from the Bulder team, who are right at the front, completely dependent on digital conversion and digital distribution, into the bank. And then Bulder has a fantastic platform in what we work with in the bank, as the starting point for taking out the last stage in terms of user experience in the Bulder app. This gives synergies that have great value and that are at least as big as what we had seen when we established the Bulda concept in its time. We see that they give results. Especially in the last quarter, I am very proud of the Bulda team, who have worked enormously to take care of the traffic in Bulda.no. our websites and really get as many stores as possible from the traffic we have today, instead of asking for an increased marketing budget to increase traffic. We see that we are far on the way to the traffic we need. What we need is to take care of that traffic better than today. Make sure that the customers we want to have are completely in line with the digital process we have around Låneflyt in Bulder. This really gave results. When we presented last quarter's results, we said that we needed 1 billion in net growth per month to reach 36 million in outlay at the start of this year. We are ahead of the schedule. Now we only need 6 billion for 8 months to reach 36 billion by the beginning of the year. A goal I so far dared to hope that we would achieve over the course of the year. Now it looks like we are ahead of the schedule and it looks like we will achieve that goal by the beginning of the year. Incredibly proud of the work we have done when it comes to digital conversion and I will also show that in the next light picture. We are almost at 30 billion in loans in this concept now. We have a sustainable LTV of 41%. And we have an investment growth that is reasonable over time. The investment coverage is at 15%. We will work with it to expand it. It is important for profitability in the concept. And then we see that the number of customers, both on housing loans and customers who use the app, ticked steadily upwards. An incredibly good rating on bytt.no. We see that with a very moderate market budget, we manage to build knowledge. Our knowledge is impressively good for the Bulldog concept, 39% in the Norwegian market. And we have managed to take care of our traffic much better in the first quarter when it comes to how many who started a process and eventually get a loan offer. We are constantly looking at digital conversion, and there is only one priority at the moment, and that is to take the most possible care of the traffic and ensure the best possible digital conversion on the traffic we have, which is far enough good enough to achieve our goals, including this year, which is 36 billion US dollars at the beginning of the year. On the part of the bank, we are extremely interested in our value proposition. Banking it into the market all the places we can. An important part of our value proposition, one of the four things we should really differentiate ourselves on in the market, is customer exchange. You should get the experience of being a customer in a bank with a different business model than the big Nordic and Norwegian business banks. In 2023, we paid full customer exchange, a customer exchange of 580 million kroner. We see that we manage to get significant engagement and significant experiences with this way of making the banking model visible, which we have the opportunity to do through customer exchange. We use this in the digital space. Some examples are illustrated here. We try to be offensive in terms of using this with more in terms of differentiating the bank and separating us from our competitors. We believe that this is a unique way of showing that we are a different bank, that we are a customer-owned bank and that we are a bank with a social ownership that differs from our biggest competitors. The last thing I wanted to show on market position is that we are trying to find ways to make it clear that we are another bank with a physical location. A bank that you can count on in a different way than many of the big Norwegian banks that are primarily concerned with providing loans and contributions. We provide advice in a different way. We have a fantastic office structure. Another way to show that we are a different bank is to take seriously the uncertainty and impatience that is in the market for our customers when they first go out to buy their home. It is incredible that we managed to have 720 potential young This is a concept that we have been working on for a long time, a great success, and that we will continue to work on. It is incredible that so many people have invested in this concept, and it also illustrates that even though we believe If the children are fully digital, it does not mean that they are necessarily safe in the housing market, even though they are very safe in using technology. That was a little bit about our bank account, a little bit about our foreign book, a little bit about why we think we also have a very good starting point to deliver good risk-adjusted deductions in the coming quarters and years. Finally, again, we are incredibly proud to be a vital 200-year-old. We will use this anniversary year as much as possible to highlight the savings bank idea, our unique interest. We are also in a year where we will really give a footprint in the region through the gift of all-new business. We put 301 million for our results last year, which we will share this year. In addition, in previous years, we have put 150 million for the anniversary year. So this year is really a year where we will put a significant footprint in the region linked to our business model with a total of 451 million. in gifts to all with useful items, in addition to the customer exchange that customers enjoy. In short, we are quite confident that this differentiates us, creates goodwill and makes customers like everything else. Choose a bank that stands up for the region in a different way than many of our competitors. Just a few examples of this. Our largest division ever was 15 million for this project, which is about creating a new concert arena in Bergen, which makes Bergen an exciting place to live and live in. A good example of a project we will prioritize in the year of the Jubilee. The second thing we use significant resources for is to fuel the ability to change in this region in the face of more demanding times, and not least change from oil and gas to renewable in our region. We have breaking time, which is a collaboration with the Hanseatic School, which is about leadership in change. We have the Western Conference, where we put on the agenda important challenges for our region, filled in Grighallen again. In the first quarter, 1,600 politicians and leaders were in Gregghallen and discussed the change that the region is facing. We are working to get more women into tech through Women in Tech, and we are also working with the digitalization ring in our region through the conference we call Volum. A few examples of how we work with setting the agenda, and not least being a catalyst for an exciting, attractive and competitive region. Finally, why invest in Sparbanket Vest? Over time, we have demonstrated that we are a low-risk, low-complexity bank. We are far ahead in the digital shift. We believe that the large interest rates are as large as the large interest benefits. We see that we get a good account of the ecosystem that we have built up over time, linked to digital development. We are a bank with both customer exchange and high yield, because we are a bank with large community ownership, so we have a reason for both. We have high ambitions for sustainability. I have given enough examples in the presentation. We have a strong performance culture, and we also have a situation where three out of four employees own the bank and are concerned about our performance in a different way than if we had not had the employee ownership. We have proven, and we will prove, that we will also be up front when it comes to If you also pay attention to the implicit risk in the bank with the loan book we have, then we mean that we are on the front line when it comes to risk-adjusted issuance over time, and we will continue to do so. We are going to work even more with this already next week. We will gather all the leaders at Finse to work with performance culture, learning pillars, and behavioural principles. How are we going to ensure that we are a strong team, a team that learns faster than our competitors, that makes good intentions in negotiations, We look forward to a week at Finse, together with two groups, next week, where we will include senior business leaders such as Eivind Reiten. We will have with us Kristin Harila, who is now in Tibet and is trying to set a fantastic world record with several. And get inspiration to ensure that we will be up front also in the next quarter. With that, thank you very much for your attention, and I would ask Brede and Frank to come up, then we will take questions and answers that have come in along the way.

Thank you, Jan-Erik. A one-capital discount of 17%. What are you most pleased with in the first quarter?

I think our investment growth is good. I think we have a good development in the net income. I am impressed by the bulldozer group, which has achieved a very good growth rate. I think that 36 billion was a very hard target when we set our start, but I think they have done very well. So there are many things that could have been achieved with a performance of 17, but that may not be the most important thing.

I also hear from your presentation that it's not everything you're happy with.

Can you tell us about that? We have a rule of thumb in the West, that we should be proud but never satisfied. We also think that we can get even better at our own expense. We think that we have a bit more to gain on the net. Those are perhaps the two most important things that I think we should work hard on in the future. And 17% is very good, but I think it's important to have that attitude. There are some areas that we can still improve on, and we think we are honest about that. We also know that we have a tough competition waiting for us. We are well capitalized, as are many others, so we don't think this will be easy. We see that the competition rate is rising, but we think we are a very good place, and in sum, we have a very good team. I am proud of the team we have in the bank. A very good starting point for meeting a slightly different time, and then I think it will deliver good profitability further as well.

That's good. Bulldog is also strong in the quarter, as you mention. How big is the cannibalization of the SPV portfolio, and why do you have too much margin to achieve this growth?

The answer lies in the one-capital transfer. We deliver 17% and with the construction of buildings. Cannibalization is about 5%, which is significantly below 1 third of what we intended when we launched the concept, so it is still at a very low level. It is also right to say that, as the interest rate curve is now, it is challenging for a concept like Bulder to deliver very good profitability, because the interest rate curve goes ahead. You have a small investment coverage, which makes the concept in itself in the first quarter has a negative cash flow of 5 million. But I am greatly proud that we manage to build up Bulder in a demanding interest rate scenario, while delivering very good results. So I am quite sure that Bulda will be overwhelmed when the interest rate has stabilized. But just now we were a little, and then we managed to deliver very good numbers, even if we build up such a large concept as Bulda. And that's probably what I'm most pleased with, that we have a construction of something that obviously takes value in the long run, while not eroding the bank's profitability.

You were talking about the impact growth in Bulder, and we have received a question about if there are any goals for the impact reduction in Bulder. Do you wish for greater impact reduction? Two questions.

Of course, we wish for a higher rate of production in Ulldal. We do not have any specific goals now. We have, as Jan-Erik was saying during the presentation, the main focus now on converting as much as possible of the traffic that comes in on the foreign side. That is priority one within each year. And then we will of course increase the focus on other products and the production side over time. But of course, we also hope that the coverage will also be better and increasing in the BULLA concept in the future.

So the better we succeed abroad, the more difficult it will be to reach coverage in any case. And then I think we have to live with the fact that it is mainly housing customers here. So if we look at the financing rate for housing customers in Sparbanket Vest, then it is not super good either. That's just the way it is. So it's a bit about which customer groups you have too. But at the same time, the most important thing for us is to get to the top line growth while at the same time being a sensible country as one. So it's not the most important thing for us to get to the top line growth while at the same time being a sensible country as one. So it's not the most important thing for us to get to the top line growth while at the same time being a sensible country as one. And that happens at some point.

We have also received questions related to pure core capital coverage and exchange. You are very well capitalized and are above what you want and have done over some time. Do you want to guide at a higher exchange rate in the future, or do you view the growth opportunities as more attractive?

We think first and foremost that we should be capital efficient. And right now we are a little better capitalized than Peirce. Over time, we do not want to have a heavier backpack than others. We also think that we may have to accept a little more volatility in the degree of allocation and all this, what opportunities we have each year. So we are a little over what we want to have as a control goal right now. Because we know that if we want to deliver among the best in one capital transfer, there is something above and below the bridge. And we are concerned about being good above the bridge, but we are also concerned about being good below the bridge. So we do not necessarily think that it is negative to be well capitalized now, but it is a tough competition in one capital transfer, and we are concerned about being in parity with the others on that. So I don't think we should say much more than that, but we are at least not concerned about getting growth at the expense of profitability.

While we are on exchange, there has been a question about customer exchange. Do you see it as possible or likely that customer exchange will be taxed differently in the coming years?

That is a good question. We believe that customer exchange is well established. The basis for the distribution of customer exchange is regulated in the financial company law. The tax problems are also expressed in many contexts through various BFUs to the various banks. We believe that customer exchange and regulation around customer exchange is of great support, both when it comes to the basis for paying customer exchange and the tax-related treatment of it. When we are in trouble, it is because the customers get compensation from the customer exchange when you sell out. If you want to make changes to that, you have to get a different dynamic in this. But we believe that the framework conditions for customer exchange are good and that the regulation that is there today is standing.

If you look at customer exchange in general, and I understand that some competitors think it's not good that we have this reason, but for my part, I have been managing director of Frende insurance since we established Frende, and I have never used a lot of energy to say that Gensidi has customer exchange, something that Frende does not have. There are frame requirements, and that's how it is. You have to do well in line with the frame requirements you have. For the savings banking sector, we have some drawbacks and some advantages. One of the advantages is that we have another business model and a one-capital building that we can use to create differentiation. That's how it will probably be in the future. We think it's quite natural that the sector And I have also simply said that customer exchange is based on costs and gifts. If you look at who has shared the most gifts in recent years, then I think Sparbank Invest with 2.1 billion in the last ten years has come up very high. So we have a unique starting point. We can combine both gift distribution and customer exchange in a good way, and I am sure we will continue to do so.

In the portfolio, unemployment and freedom of expression on the personal market are falling in the quarter. It is a bit surprising given the interest rates that are now beginning to change. Can you tell us a little more about that development?

As Jan-Erik mentioned, it is a positive development. We also believe that there is some lead time for the effects of higher interest rates, increased electricity prices and so on, before it hits the households' economy. Over time, we will see a different picture. Generally, the losses in the market and banks will increase in the next five years. But a very positive development in the first quarter. As the risk manager said, April was the first month he could remember not having sent things to the cash register.

It will probably change, but I experience that we have at least a quarter, as Frank is aware of, where we have shown that we have a robust portfolio, and the example of Frank is a good example of that.

And while we're at TAP, another question we have received is, how highly do you assess the likelihood of a hard landing in scenario values for outlay TAP?

Oh, I knew that. As Jan-Erik also said, we believe that the losses will increase, but a moderate increase in the future, and perhaps more normalized than what we have seen in recent years. The losses have been said to be zero for several years now, so it is obvious that we will get a higher number of losses next year. As we have said, we believe that even if the losses will increase, we will deliver on our main goal.

We have come from an unusually low level. I have been in the bank all my life, and I can't remember if we have been in periods like we have now. We have talked a lot about this internally and externally, that we have come from 10 years with very good framework conditions for DrivBank. You should have done quite a lot of work to get very far on one capital transfer. We think it will be different in the next 10 years, and that is why we have invested so massively in culture, learning, sharing of experience, loss learning, as we have done. Because we believe that the difference between the best and the next best, and the worst, will be significantly greater in the next 10 years than we have seen in the last 10 years. So that's what we're focusing on. We think it will be a little more demanding, and we think we have a good starting point. But we don't take it for granted that it doesn't have to work fast in the next few weeks. But I think we have a good starting point.

Last question we will take. Personal costs. Should we expect as much increase year over year for next quarter as the increase year over year in this quarter?

We have no ambition to significantly increase the annual operating budget in the bank. The development will be in terms of wages and costs. Not least, we are excited to see what the wages and costs of finance will be. We have a good indication of what is happening with the front line now. And then we have a significant journey behind us. From 2012 to 2021, we had flat cost development. We managed to invest a significant amount in IT while we had nominal flat cost development. After 10 years of flat cost development, it is demanding to continue to do so, at least when the price and wage growth is as it is now. But a good indication is what will be the wage increase now. We are working in the right direction in some areas. It does not exactly hit the wage line, but we have a very concrete plan for how we will convert additional consultants to permanent jobs. We see that we have become very attractive in the labour market. We have a completely different pressure now on key figures in some areas, including IT, than we had last year at the same time. We see that we have several places where we have advisors who have tried to compete with us, who have come back to us and want to come back again. So I experience that we have worked well with employer branding and are an attractive employer, which means that we do not always need to be the one who stretches the longest on salary to get good employees. And that is a good starting point for managing a moderate growth further, but we cannot shake off the wage growth that will be significant this year.

That's right. Thank you, Henrik. That was the last question. You can contact us at investorrelations at spv.no if you have any further questions. And with that, we wish you all a nice day ahead. And thank you for us here from Mediasity Bergen.