Arion banki hf.

and a warm welcome to this presentation and webcast of Arion Group's fourth quarter and full year results for 2024. My name is Benedikt Kislason. I'm the CEO of Arion. And here with me today to present the numbers and our operating environment are our CFO, Olof Høskulsson, and our chief economist, Erna Björk Sværestudter. I'll start by going through sort of the key highlights and then I'll hand over to our chief economist to discuss the operating environment. This was yet another solid year where we posted our return on equity in excess of 13%. This is the fourth year in a row that we deliver on our medium term target of plus 13% ROE. It is, however, as well a year of investments where we made considerable investments into growing our business further and making solid sort of grounds for further growth in our business. So and that is reflected in the cost to core income being slightly higher than our three to five year medium term financial target of 45%. But it was good to see that we delivered the same return on our risk exposure amount as last year, 7.1%. And our businesses are going well. Insurance business had a particularly good year, as I'll come to in a minute. And we are now finally getting closer to delivering on our capital optimization plan where we want to have our SAT 1 ratio somewhere between 150 and 250 basis points above the regulatory minimum capital requirements set by the regulator and we've already committed 19 billion of capital distributions this year through the ongoing share buyback and a dividend proposal for our AGM of 16 billion and Here I want to make the note that additional distributions will be considered when capital levels are above this target, and we will consider that in the context of how we see loan growth evolving into the year, having seen the loan growth slowing a bit in the fourth quarter. Depending on how our business develops this year, we will consider further capital distributions. It was an eventful year, a lot of positive things happening in our business. Maybe one of the biggest milestones in terms of numbers is the fact that last year we got our assets under management, that is from our markets division, virtual insurance and establishment management, crossing the six 1,600 billion mark, and it's a milestone because it's the first time ever that we post a number that is higher than our own balance sheet. When it comes to our businesses, it was very active in the corporate and investment banking space. As you can see from the slides and some of the major transactions that took place last year, we were involved in. A lot of work, heavy lifting, and some of that revenue is actually accounted for at the beginning of this year rather than last year, even though most of the work was done last year. Our leadership in capital markets continued and Retail banking, I'll go in more detail into that, but we continue to run a very efficient retail bank where the majority of our sales are done digitally, interacting with our clients. We saw a substantial increase in household deposits last year. And our insurance sales continue to increase substantially. And I'll talk about some of our investments on the following slide. I mentioned the insurance business. This was the best full-year results of Verder Insurance since we acquired the business in 2016. Vörður opened four new branches in shared offices with Arian, two in the capital area and two in the countryside. These complement the two existing branches shared by Vörður and Arian in Salfoss and Akureyri before we opened these four branches. And obviously we want customers who use a wide range of services from the Arian group to feel the full benefit of doing business with a one-stop shop. And this is why we have launched Aryan Refund, which enables Aryan Bank customers that are insured with Vörder to get a 5% refund on their insurance premiums if they are claims free for 12 months. And we will be taking further steps in the near term with our rewards system. This was... This business resulted in more than 30% return on equity for the full year. Obviously a very good operating environment on all fronts, both investments and when it came to the combined ratio. But I think it's worth mentioning here that Arjen, the group, is using the Danish compromise, which allows banks to risk-weigh their insurance investments instead of deducting them in full from the capital, which means that the effective ROE for the group is somewhat higher, as Ola will explain in his presentation. Now coming to our investments. last year that have already demonstrated a substantial growth in our business. So one of the teams for last year was the family. We wanted to service the family needs in a better way. We launched a number of new services in our app there, and it's very interesting to see how better services, better access to services actually increases the volume of our business. The same applies to our corporate services, where we have a three-year roadmap, a digital roadmap for corporate services, where we felt we were lacking. And some of the initiatives that we introduced last year have already resulted in substantial growth in our business. I forgot to mention some of the awards that we received for last year. And I want to mention in addition to the three that are up here, the educational awards which Business Iceland awarded us this week. In the jurist discussion, it stated that it's clear that strategic and targeted work in educational matters at the Aryan Bank results in progressive and professional educational work, and as a result, satisfied employees. And that with projects such as Women Invest, the bank also connects educational work with social responsibility. Yesterday, we celebrated the 12-month anniversary of having launched this long-term initiative, Women Invest. Why did we launch this? We felt that women were underrepresented when it comes to investments and finances. The objective, obviously, was to increase women's participation in financial markets. What did we do last year? We had 45 and actually 46 events, if you include the event yesterday, campaigning for involvement of women in investments, seminars, online accessible information, followed how to start investing. And over 4,000, actually close to 4,500 women have now attended 46 seminars, all around the country. And what has the impact been? It's very pleasing to see when we reflected on the results at our one year anniversary event yesterday that In all areas of investments, women are doubling or tripling their engagement compared to men. So this is already a success, but as I highlighted, this is a long-term initiative, and we will continue throughout the year and the following years to advocate for women investing. My final slide before I hand over to our chief economist with the key development assets. These are the residential development plots in the capital area, which are very large compared to the kind of estimated delivery of new housing in the capital area and in Iceland as a whole. probably represents around 10% of what could be on supply for the next 10 years. And this is the year that we expect to see a result of years work of planning and preparing for the development. in close cooperation with the local municipalities and the citizens of these municipalities. And we're expecting the approval processes of both projects to be completed, the first phase for Blikkastad. And here we put out the book value. I think it's worth mentioning that the book value of Artaland is the total book value, and we hold 51% stake in that project. And we discussed this in detail at our Kevlar Markets Day last year in March. And I think we will see some of the ideas that we floated there coming into more discussion and maybe reality later in the year. And with that, I'm going to hand over to our chief economist, Edna Björk Sverigesdottir, who will discuss our current and future operating environment.

Thank you, Ben Dicht. Good morning, everyone. It's great to be here today. Despite all the storm warnings and bad weather we have had, Icelanders certainly seem to have spring in their step. In October, following the first rate cut of the central bank, the Gallup Consumer Confidence Index saw its biggest monthly jump since measurements began. And for the past three months, the index has remained well above 100 points. This suggests growing consumer optimism, a view that is supported by payment card turnover figures, as Icelanders' payment card turnover increased by 6.1% between years in the fourth quarter. In addition, registered unemployment measured 3.6% and real wages increased by 1.3% between years. Normally, this would indicate a solid increase in private consumption, but as you can see on the slide here, the predictive value of these indicators seems to have weakened. And this was especially evident in 2024, when private consumption consistently surprised analysts by being softer than expected. According to preliminary figures from the national accounts, private consumption only increased by 0.2% in the first nine months of 2024. While this didn't flip the balance, it certainly contributed to the 1% economic contraction over the same period. The contraction was mainly driven by exports, with the cable failure having significant negative effects in the first quarter, and service exports turning out weaker than expected. The silver lining? was strong growth in exports of aquaculture products, which increased by 17% between years, and pharmaceuticals, which increased by a whopping 55%. All in all, it is likely that the preliminary GDP figures for 2024 will show a contraction, despite the substantial efforts undertaken by the government around the volcanic eruptions on the Reykjanes Peninsula. As some of you might have noticed, I deliberately used the word preliminary, and this is something that I can't stress enough. These are preliminary figures from the national accounts, and they have been called into question, most recently by the central bank, as there are signs that economic activity is stronger than implied by these figures. However, there is no doubt that economic activity has lost pace as the central bank continues to battle inflation with high real interest rates, but the tide may seem to be turning. According to economic forecasts, the economy has reached the desirable soft landing, with expectations for increased economic growth in this year, with a consensus at 2.1% GDP growth. The growth will be driven by domestic demand, with private consumption at the forefront, and also regular business investment. The increase in investment might surprise some, given the tight monetary stance, but this is primarily due to two sectors, land-based fish farming and data sectors. As I mentioned earlier, private consumption has been surprisingly soft, but there are signs of recovery. In the fourth quarter, households consumption picked up. And private consumption growth is expected to gain momentum this year, supported by households' overall strong financial position, accumulated savings, and growing net wealth. However, these forecasts that I have referred to, they were all published before President Trump's trade war escalated. And I would just briefly like to touch upon that. Growing trade protectionism can dampen global economic activity, and that will of course affect Iceland, being a small open economy that is dependent on exports. It is still unclear whether Iceland will be directly affected by tariffs, and to what extent, as Iceland is not a part of the EU, and most of our exports to the US are in the form of services, mainly tourism, while exports of goods is limited to two sectors, seafood and medical products. Even though escalating trade wars could negatively affect exports, the outlook still remains fairly okay. Indicators from the tourism industry from the fourth quarter suggest a strong quarter, and in fact it was the strongest fourth quarter on record when it came to tourist arrivals. In total, 2.3 million tourists visited the country in 2024, exceeding expectations. We are slightly more optimistic for this year than we were, because there seems to be an increased interest in Iceland, and according to the largest Icelandic airline, the booking outlook is promising. However, we can't ignore the challenging operating environment. Labour costs are continuing to increase, and this has been reflected in the demand for labour, especially in the tourism industry, where it has continued to decline. And this is actually one of the clearest signs that economic activity has eased. Although labor demand is still strong in certain sectors, there are clear signs of slowdown as job growth has lost pace and registered unemployment has continued to inch upwards, measuring 4.2% in January compared to 3.8% one year ago. Additionally, firms' recruitment plans have returned to historical averages. So there is no mistaking it. High real interest rates are affecting the real economy, with some even suggesting that a small negative output gap is developing. Not only that, but inflation has continued to come down, reaching 4.6% in January. More importantly, underlying inflation, has also continued to fall, albeit not at the same pace as the headline figure. Although analysts anticipate that inflation will continue to subside, bringing it down to 3% to 4% could prove challenging. And this is something that the governor of the central bank has addressed and is one of the main reasons why the Monetary Policy Committee is committed to keeping real rates high for an extended period of time. Still, the MPC has managed to lower nominal interest rates by 125 basis points, down to 8%, while keeping the monetary stance relatively tight. Further rate cuts are expected, despite increased geopolitical uncertainty. However, given the fact that underlying demand pressures have remained quite strong, and inflation expectations are still well above the inflation target, Most anticipate cautious steps and tight monetary stance going forward, at least until inflation is closer to target. With that, I would like to welcome Oliver Høskundsson, our CFO, to the stage to go over the financials. Thank you.

OLIVER HÖSKUNDSSON Thank you, Erna, and thank you, Benedict. So now looking at the results for the quarter and for the full year 2024. And as usual, starting with my key highlights. So first, an overall good quarter, a solid quarter where our diversified businesses delivered an ROE for the fourth quarter in a row, like Benedict mentioned, four years in a row, as Benedict mentioned, of 13.2% for the year and 16.3% for the fourth quarter. I think it's a good result for the year, especially given the fact that it's fair to say that as Ayrton outlined in terms of the economy and the rate environment, it's been a somewhat challenging external environment. Second, I think some of you might remember that in the Capital Markets Day last year in March, I emphasized our view that the insurance business has the potential to become a key material contributor to the group's net earnings in the future. I think we can safely say that 2024 provided a positive milestone on that journey, and the year ended very well with a profit, as been edited out, of 3.7 billion, and a return on allocated capital at group level of above 40%, being one of the most profitable businesses, I think, in the group. Third, I think another positive highlight from my perspective in the quarter was how we managed the net interest margin during the period. While the margin is down at 2.9% between quarters, its stability in what has been a complicated external rate environment is, in my view, a good demonstration of our ability to manage this through the cycle, which I will outline a little bit more further later in the presentation. And finally, in terms of our funding liquidity position, the bank is in a very, very strong position, which allows us to opportunistically capture growth opportunities that could arise over the coming year. And we are, of course, very pleased to continue the decisive steps on our capital optimization journey towards our medium-term targets and are, of course, proposing a dividend proposal and the ongoing buyback program of close to $20 billion at the start of this year. So now looking more closely at the income statement in the quarter. So total operating income was 17.9 billion, which is up 10% from the fourth quarter last year. Net interest income was roughly flat between years, while commission income was up by 6%. Insurance service results are generally seasonally low in the fourth quarter, but were, as like in Q3, up considerably from last year. We then had a generally good quarter in terms of equity and bond markets, which supported our investment income on the insurance side and in the market-making business in the bank, and allowed us to deliver a $2.2 billion profit in the financial income line, which is up by 60% between years. Offering expenses were up by 10% between years, where the main driver relates to the variable employee incentive scheme, which I will outline more in more detail later in the presentation. We then had a positive quarter in terms of impairments. And I think, as we have discussed in previous quarters, we have been conservative in recent years in terms of proactive provisioning on our own portfolios. And this continues to be the case. And I will outline that in more detail when we go through the IFRS 9 provisioning later in the presentation. However, during the quarter, we had a periodic review of certain provisions and discounts on individual loans and loan portfolios. which resulted in a positive impairment line during this quarter. The effective tax rate is low in the quarter, and as you know, this primarily relates to gains on equity holdings which are not taxable. So net profit for the quarter is 8.3 billion. And this then takes the net profit for the year to 26.1 billion, which compares to 25.7 billion for the previous year. Net interest margin is importantly unchanged for the full year at 3.1%, and the overall operating income is up by 4%. And now looking more closely at some of the key line items. I started with the net interest income. Net interest income was 11.2 billion, which is roughly flat from the fourth quarter last year, but is down from the third quarter this year. The net interest margin as a percentage of interest-bearing assets is, like I said, 2.9% for the quarter compared to 3.1% from the previous quarter. I think we've discussed this at some length in previous calls, and we have guided for this, but there have been a number of moving parts when it comes to the margin over the last past few months. The primary challenge over the past few months has related to the rapid reduction in inflation, as Ayrton outlined earlier, which combines with a slow reduction in policy rates, which has meant that short-term policy rates have risen to extremely high levels over the past few months. This environment does place a short-term pressure on the margin of our CPI-linked mortgage portfolio especially, which is partly funded by non-CPI-linked deposits. As mentioned in previous calls, we were anticipating this and have utilized the levers that we have to defend the margin as best we can. And this primarily relates to increasing the interest component on the floating rate mortgages, which are largely the CPI-linked mortgages, which are largely floating rate, and also increasing our funding efforts on the CPI-linked bond side. And as mentioned earlier, I think we are pleased with the way we managed this period and And we definitely expect the margins of these projects to improve again in the coming quarters. So we continue to guide to the margin over the medium term and near term around the 3% level. So looking at fees and commissions. So now the soil quarter in that regard with fees of just under 4.2 billion, which is the highest for over a year for the group. As discussed earlier in the year, annual comparison, I think it's important to note, I'm not going to continue to do this every quarter, but I think it's still important to note that we did, there was a reclassification of insurance card fees and the impact of the Kevlar Airport brands at the start of the year, which combined contributed to around 240 million of fees for this quarter last year. So, of course, adjusting for this, there's a strong underlying momentum in the feed generation of the group. Most of the feed-generating businesses are doing very well. And it was especially pleasing this quarter to see the strong quarter from the corporate finance and capital market businesses. This area, as Melitit outlined earlier, is also having a very good start to the new year and closed, of course, one of the most significant corporate finance projects in Iceland to date in Q1, when Mara concluded their merger with JPT. As most of you know, corporate finance fees are not something that really should be measured on a three-month basis, as most of those fees are generally lumpy. But I see us being in a very, very good position to leverage what could be an increased activity in a rate reduction cycle in the corporate finance business. Also, you know, as Benedict outlined, our asset management business continues to grow, and it was very pleasing to see a milestone of the assets under management in the group now exceeding the total balance sheet of Arian Bank Group at $1,633 billion. So, as highlighted earlier, our insurance business, Werther, had a very strong year and delivered that profit of $3.7 billion. This represents a standalone basis, an ROE of 30%. And like I said, because of the capital treatment at group level, the earnings return allocated capital is above 40%. In terms of the fourth quarter specifically, we had a solid results as previously guided for a seasonal low in terms of profitability for insurance businesses generally. Its results in a quarter were net results of 1.7 billion compared to 450 million in the same quarter last year. I think in terms of the overall results, most of the earnings drivers are performing well. Firstly, the investment income, of course, which is a key part of insurance business earnings, improved significantly from a couple of very challenging years in that area. We also had, in terms of the insurance side of the business, we also had a very good improvement in most of the drivers, claims cost and reinsurance rates were down between years, which contributed to a combined ratio of 89% versus 97% last year. We're also seeing strong growth in the business continue with increased market shares underscoring the potential of our overall back insurance effort. And looking forward, we also continue to see very good traction in terms of growth in the business, with, for example, sales to individuals up by 21% between years. We do, however, cautiously continue to guide, and we have a medium-term target for the business of a combined ratio of around 95%. And we retain this for the time being, at least, but clearly this year provides some optimism in this regard. So we're looking at operating expenses, including those from the insurance business. Total operating expenses in the quarter were $9.6 billion, which includes a $1.8 billion provision related to the variable employee incentive scheme, which is usually, as you know, accounted for for us in the fourth quarter every year, when we have a good view of the key KPIs which drive the employee incentive scheme. So this year, we have 100% provision related to this, compared to 80% in the fourth quarter last year. And this mainly explains the impact of 1.8 billion being provisioned versus 1.4 billion last year. So this year, yeah, so just for perspective, I think it's worth noting that excluding the cost related to this variable cost, which is definitely variable, the ROE for the group would have been 13.9%. So excluding the incentive scheme, costs were around 5% up between the year, and this is partially due to increased number of employees during the period, but also just because of the general inflationary environment, which continues. And inflation during this period was the same number, around 5% area. As before, the increase in number of FTEs for the group is mainly in IT and in the fast-growing insurance side of the business. So looking at the balance sheet, starting with the loan book, which is up by 1% to around $10 billion and a quarter. As discussed in previous calls, we remain dynamic in the way we manage loan growth with a view of balancing our credit strategy and profitable growth opportunities. I think it's fair to say that recently we have been seeing more appealing opportunities on the corporate side of the business and with margins, like I mentioned earlier, especially compressed in the CPI-linked market space, as outlined earlier. So this is, of course, demonstrated in the fact that in this quarter, with the growth in the loan book, it was virtually all on the corporate side. This is not to say that we're not writing new business on the mortgage side, as we are, of course, always turning the book continuously. And we are optimistic that the margins in that area will improve as the year progresses. And we are in a very good, strong position to increase growth there again, with strong funding position and market position. allowing us to be optimistic when the opportunities arise. At the same time, we see strong traction on the corporate side, and we have been able to add very good exposure there over the last few months. We've also continued to leverage our strong relationship with private credit partners, where we originate to distribute and sell assets to third-party investors. And we sold a total of 22 billion of corporate loans to investors over the last year. The key strength of our platform is that we can be optimistic and dynamic in the way we manage our loan growth. in the way to decide what to retain on our balance sheet and what to syndicate out to other investors. And this is and will continue to be a strength over the coming year. And the loan book continues to be very well balanced, 46% to mortgages, 6% other loans to individuals, and 48% to corporates. So looking at provisioning, as discussed, we had just around 900 million positive reversal of impairment in the quarter. As discussed, this primarily relates to certain discounts and provisions on individuals' loans and loan portfolios. We have, however, not changed our conservative outlook when it comes to our IFRS scenario-based provisioning. We retain our 30% pessimistic weight, for example, which we increased when the rate hiking cycle started a few years ago. So the total loss allowance at the end of the quarter is 9.4 billion or 0.8% of the loan book. And I think in general, the theme is very similar to what I've been describing in previous quarters. Credit indicators are robust. And our clients seem to be managing through the very high interest rates relatively well. But we are, however, conservative. And while the rates are starting to come down, rates are still very high. So we retain, and this is the primary driver for us retaining our conservative stance when it comes to our IFRS 9 assumptions for the time being. And we continue to see through the cycle expected loss of the loan book around 20 to 25 basis points and slightly higher over the next 12 months at around 27 basis points based on the loan book composition currently. So on deposits, deposits continue to grow in the quarter and ended at just under 860 billion. And as before, we continue to drive the strategy of growing where we see stable categories of deposits. And as you see in the top right chart of the page, the growth is in those areas. And I think it's also worth noting the impact of deposits in our net interest margin. And it's worth highlighting, like I did in the Capital Markets Day, that The fact that the deposit betas are very high in the isolated market, deposit rates were high when the rates came up, this can create a buffer for our margin when rates come down again. From the clear, obvious reason that there is just more room for the deposits to come down during the rate reduction cycle than you see in other countries where the deposit beta was lower. In terms of wholesale funding, in general the funding markets have continued to be very constructive and our focus has been to nurture this as best we can and continue to diversify the funding profile continuously. Following a successful 81 issues in the third quarter, we have been especially active in the scanty market in the fourth quarter with a senior and tier two issues. And on capital, Our position remains strong, a common equity ratio of 18.2% or 293 basis points above regulatory requirements, and still, of course, above our 150 to 250 basis points target. This includes, of course, the full impact of the $16 billion proposed dividend payment and the ongoing $3 billion buyback program. During the year, there were some movements in the capital requirements, where the systemic risk buffer was lowered from 3.2%. But at the same time, the buffer for systemically important back was increased from two to three percent. So the impact overall for us was negligible. We also had an increased risk amount, risk exposure amount at the end of the year because of the operational risk component. This is an annual revision of the operating risk requirements. And the impact was this was around 0.1 percent increased capital requirements on the CET1 ratio. As outlined in third quarter presentation, we expect some net positive impact from the CRR3 implementation, which we now expect to be coming into effect in July. This year, at this time, as subject to ongoing dialogue with the regulator, we expect this to increase surplus capital by around $5 billion. We are committed, of course, to our medium-term targets of reaching the 150 to 250 basis points management buffer. and we expect to reach the target within the next year or so. The leverage ratio continues to be very strong at 12.2% and the MML position very strong again with a 6% buffer above requirements. So before I hand over to Q&A, just want to highlight some of the key themes from my perspective going forward. So we conclude another solid year for the group, where a key of the diversity of our business provides support for the overall operating income of the group through the economic cycle. We continue to cautiously anticipate continuing complicated external operating environment near term, both in terms of the domestic rate environment and also, of course, because of the international political landscape. But, however, the recent definitive reductions in policy rates, coupled with the sustained strength of the Icelandic economy, clearly offers potential upside from that conservative outlook. We are, as before, well positioned to navigate this environment and to capitalize on profitable opportunities as they emerge into the new year. With a robust balance sheet and a seasoned and focused business model, We start the new year with optimism. Thank you very much. And I'd now like to hand over to Q&A and to welcome Theodor Freiburgsson, head of IR. Thank you.

Thank you all. Good morning, everyone. As usual, we will start with questions from our online participants, and also we'd like to remind them that they can still submit questions through the online platform, and then turn to the auditorium. But I have a few questions already in here, and we'll start with a few questions from . Five questions. The first three ones are on . So I'm going to read them all up. Should we read anything into the decision to pay bigger dividend than the 50% target rather than do more share buybacks? Secondly, the current share buyback plan probably ends shortly. Can we expect further buybacks in the near future? And thirdly, can you shed some light on when you expect or wish to achieve your CDT1 couple ratio target of 17.2%, which is in the mid-range of our target? even when accounting for the dividend and ongoing share buybacks you still had around 100 business points in excess of the target at year end. And I assume you will add another 50 to 100 business points through profits in Q1. Did you get all that?

Thanks, Raoul.

Do you want to take this?

Yeah, so I think the first question was on the dividends versus buybacks. So we're paying above our 50% dividend payout ratio for this year. And I think this is just always a sort of consideration. We have different stakeholders, different investors that have preference for different types of payments. We've been very active in the buyback space over the past few years.

So I think on balance, we decided to increase our dividend payout ratio now.

Yeah, but obviously the buybacks provides a little bit better flexibility in capital management as we navigate into the year and see how our risk exposure amount develops on the back of loan growth. So I think the fact that we decided to propose a dividend payout, which is higher than kind of a financial target, I think demonstrates the our intention to get as close to our target as we can this year. And then I assume that buybacks will be other means of getting closer to that.

So you almost answered the next two questions. I think the second question was on whether more buybacks could be expected. And I think Benedikt outlined that in the beginning of his presentation that we are looking at loan growth into the next year. but clearly we've been very active in the buyback space and that's a good way to distribute capital when we see the opportunities. So I wouldn't exclude that, definitely. And the third one, I think I answered that as well. I think we have the ambition to optimize the levels within the next year or so.

Then the next question is on regarding our development properties. Can you shed any light on the possible upside in land day? At what point in time do you expect to mark up Bleakestad? Will you wait until the first phase plan has been fully approved, IEQ 425 or IEQ 126, or could it happen sooner?

Yeah, I think I want to stick to the message in the presentation that this is going to be the year when we start seeing results of years work, extensive work in close cooperation with the municipalities around developing these development sites. And we, as you can see from the Timelines that we put on screen here, you know, first half of the year we're expecting Artaland to come basically into development phase with district planning being approved, second half of the year for Bliggastadir. But I suspect that we will sort of start preparing for kind of a future ownership structure for the benefit of our shareholders earlier than that, publica staer. And I think these two projects are somewhat different. I think Arnhem Land, once it gets the final approval, It's effectively fully kind of monetizable, whereas the Blikkastad obviously has three considerably large phases. So our approach for kind of retaining and ensuring that the value is distributed to our shareholders is somewhat more complicated than Adlanet.

I think maybe just, I mean, we of course always reflect in our accounts our best estimates of the valuation. But of course, the key uncertainty, key driver of the valuation is the timeline of these projects. And as we show on this page, as we reach those milestones, that timeline becomes more known. And of course, then there will be, as we go along that timeline, that uncertainty becomes less clearly.

And the final question from Akur is on the impairments. So if borrowers have managed to get through the last couple of years with very high interest rates and elevated inflation without any major setbacks, should we expect further release of impairments this year with lower interest rates and inflation?

I think as Ole outlined in his presentation, some of the releases were due to loan portfolios towards individuals with a bit of a legacy kind of situation going back years and I think we always try to reflect on the sort of true value of our loan portfolios and this was a time where we felt especially having gone through the environment that you described that we felt that this was the right point in time to release some of these provisions back. And I must admit that it's been pleasing to see the depth service capabilities of our clients through this challenging period. And that demonstrates that finances of households and corporates are generally in good order. But Ole, you provided a certain guideline to kind of the provisioning for the year.

Yeah, so we have 27 basis points, 12 months expected provisioning. But like I said earlier, we provisioned very cautiously when the rates started to increase. We increased the IFRS 9 model assumptions, putting a weight on a worse scenario, pessimistic outlook. Clearly, if we start seeing rates coming down and And the underlying sort of assumptions around that, those assumptions becoming clear, then we have the scope to reduce that again. I don't think we're there yet is what my message was, but it all depends on how the economy comes through this.

And we have another question on Lante, but I believe we have answered that quite thoroughly. And then the final question here is on loan growth. Could you elaborate on how you perceive the long-term potential in relation to expected lower interest rate levels? And related to this, there is a decrease in markets lending from last quarter. Do you expect further decrease in this portfolio?

Yeah, the market's portfolio is very price sensitive. In order to manage our CPI imbalance, We've priced our workers' products in a way that we sort of didn't want to see a substantial increase in that impulse. So, you know, we can manage this growth, especially on the market side, through pricing quite well. And it's the market response. fairly quickly to sort of different pricing. On the corporate side, I think, you know, it was relatively slow quarter, fourth quarter of last year. However, a little bit better growth on the corporate side. The year starts off slowly, but as Erna outlined in her presentation, there are a number of capital intensive projects being worked on where we are involved. and committed to kind of supporting corporates in that space, in the industries that we believe in, in building up the businesses. So it sort of remains to be seen how much the improved interest rate environment for corporates and households leads to long growth.

I believe that concludes the questions from the online participants. So we'll move to the auditorium. Are there any further questions? No? Then I think this concludes our session today. So thank you all very much for attending both here and online.