Norion Bank AB

I am Martin Åsmann, CEO of DEDE. I have a regular contract with CPF and Petroson. If we start on page 2, as a summary of the total, the loan book has increased to 45.2 billion. The reduction is about 250 million, but we increased it by 8% compared to Q1-23 and Q1-24. The revenues are at 933 million, the Q1-24 is at 27.7, we have a growth rate of 417 million, which is also an increase of 8% compared to Q1-24. The reduction in the bank capital is 15.8%, we continue to strengthen our capital, and the capital balance is now increasing to 16.1%, which is an increase of 20 points compared to Q4-23. If we switch to page 3, we talk about both different business areas, and we start with companies. A small reduction here between Q4 and Q1, the season effect, the majority of the reduction is from factoring, which is what is between Q4 and Q1. Beyond that, I think this is a very exciting business that we have, we have a good position, we continue to build a position in the Nordic region. This segment we want to continue to grow in, we want to enter that part where we have moving credits and factoring somewhere between 30 and 300 million crowns. Companies between 50 and 250 employees, balance calculation or balance summary and 100 million, here we see a big demand and we have a fairly small market share today, so this is an exciting area that we continue to fix over the next year. If we go to page 4 and look at business areas, a little less increase in the market, we continue to be selective. We have seen for quite some time now, trends that the countermeasures are getting better and better, the quality of security and property continues to be good, it is a lot of customer dialogue, just like in companies, we have seen here from somewhere the end of Q4 a greater interest in our business, we have a lot of customer dialogue, it continues even this quarter, but as I said a little less increase in the market share, we continue to be selective in all areas, if we go and look on the next page, page 5, a little more detail about the property share, no differences compared to Q4 regarding the senior and junior shares, no major changes in the average of LTVs between the quarters, what we have done with new businesses, we have done new businesses within senior and share on LTVs on 49, the current sales of LÖSEN has been at 54, and we have had LÖSEN on the junior share where we have had business on 71 on average LTV. A little about the values, no major difference between Q4 and Q1, somewhere between 1-2%, if we look at the whole year, we have seen a value decrease between 8 and 10, and then in the interest rate, the value has gone down somewhere between 12 and 15%. We have done some step shifts, continued this quarter, increased by a mere 2 milliliters in step 3, and a decrease of about 1.4 in step 2, and this follows the trends of private business, that is, it is the business that gets the problem to pay its rent, however those who have got 1-2 on the mind, have a tendency to drag the rent, and we see that generally private and also the real estate. If we look forward to the step shifts, we see some shifts downward, we expect, maybe not in Q2, but later in 2024 we will see some improvements with the information we have today. When we do step shifts or when we have some engagement in step 2 and step 3, we do not pay the rent for those who are in step 3, and not those who are in step 2, which means that the NIM margin is affected, because we do not pay the rent for the rent, but Peter will talk about that later in the presentation. We go to page 6 and talk a little private, about 100 million more, this goes exactly according to the plan, I would say. We have worked very hard to improve the credit allocation in recent years in this segment. We are doing clearly better quality today, in the new firms, we maintain the margin quite well, but the credit quality is getting better and better, it will show in credit allocation over time. We have worked very hard with flow-only channels, we have now over 40% of flow of new business in own channels, and what does that mean? It means lower costs, of course. It means that customers stay longer in the stock and that also means better quality in general, so this segment continues to develop in the way we have hoped. And besides, we have had a better competition situation in the last three quarters, something like that, but continued competition situation and a good development of private share. We go over to page 7, about payments. As we usually say, the e-commerce market has had a challenging time, even this quarter, however, we strengthen our position. We increase both transaction volumes and loans by 50%. So this is a good business that is growing, we continue to take the ground in the Nordic region, we have very interesting developments, we have also worked with this in the last years to create a payment solution that is profitable and stands on its own two feet, and this continues our goal to contribute to the whole banking solution. So it is an excellent quarter before the Wall-E. We go over to page 8 and talk about some numbers, then I hand over to Peter.

Thank

you.

When I look at the revenues, we have a stable and good revenue level here during the first quarter. The revenues are up by 6% compared to the corresponding period last year, and during the same period the stocks are up by 8%. There is low volatility on the effect side and no big effects on net results of financial transactions during this quarter, just as we want it. And it is in a way a very good and stable revenue level. Looking at the NIMM, it does not go up to 7.3%, it is a little down compared to the level we were at under Q4, which is completely according to our expectations, and we talked about this in the last report presentation as well. The drive specifically during this quarter is above all that the funding costs have continued to increase, completely according to the expectations we have had and the time lag we have on the pricing of deposits on the bond savings account. Looking at the NIMM from a little further perspective, we have been making a profit during a period when the market revenues have been structurally in a moving phase, which has now been cut off during this period. So the development is again a lot more than expected when we entered this quarter. Martin also talked about slow movements and we really want to see the NIMM in the future. We choose not to pay the interest rates on the bond savings account when customers are after their interest payments and this affects the NIMM negatively, but despite that we are doing well and report .3% in this quarter. We move on to part 9. Just zooming in a little more detail on the NIMM here, you can see the difference between Q4-23 and Q1-24. As I said, the yield is completely unchanged, that is, our all-in price increase against customers. This is very well related to the fact that our entire company and the bond savings account are bond linked and the bond savings have been more or less unchanged during this quarter. At the same time, as you can see, the NIMM has increased. They have increased partly because of the inflation, they have also increased a little during this quarter because we have been in a higher liquidity readiness because we see a possibility of good trade flows during the second quarter. So the NIMM is relatively well due to the developments we have seen. We move on to part 10 and look a little at our segment, starting with the company segment. As I said, the volumes are down, about 975 million during this quarter. The main part of the reduction is then related to the factor side and the seasonal monsters we typically see there. And it is also the factor side that explains the decline we see in NIMM during this quarter. If we break down the numbers and look at the company's loan, it is a much more stable development that we see in that area. We move on to part 11, the property segment. As I said, a volume increase of about 650 million crowns, a stable and good revenue development compared to the fourth quarter, total revenue of 342 million crowns and NIMM at 6.2 percent, a slight decline compared to Q4, but completely within a normal fluctuation level, especially within the property segment, where we previously pointed out that NIMM can vary from quarter to quarter. Side 12, the private segment, as I said, increases with a little over 100 million in the loan stock. We are keeping an increase in pace that we feel comfortable with, and also that is completely according to the plan and completely according to the expectation picture we had when we entered this quarter. As I said, we feel that we have found the right balance with our own distribution, about 40 percent now comes through our own channels, and we feel that we are achieving a much better risk reward than we had done before. NIMM is up by 7.1 percent, completely unchanged compared to the last two quarters, but we are a little down in the longer perspective, but this is in line with the fact that we, at the same time as we have changed distribution, have also moved towards better customer groups with lower risk, have a slightly lower price tag, but that this will be positive over time, where it will contribute with lower interest rates and that we expect the lower margin to be positive from a result and a perspective of Side 13, payments. Payments continue to go well, as Martin said, both transaction volumes and stock are up by 15 percent compared to the corresponding period the previous year. If we look at the stock now under Q1 and compared to Q4, we can see that it is a weak decline. This is a typical pattern for payments during the first quarter. We typically build stronger volumes under Q4, where we have both blackwigs and Christmas shopping, so it's not strange that we see a weak decline here now under Q1. Both revenues and margins are good and we have a good profitability in terms of our payment activity. Side 14, look a little at the costs. They go up to 258 million during this quarter. Side 15, it's a weak increase of 5 million compared to what we saw in Q4. If you zoom in on this quarter specifically, it's mainly the personnel costs that have grown a little. It is partly due to the fact that we have employed more staff and that we have a annual salary adjustment that is now in place under Q1. If we look at the costs from a longer perspective, it's the driving forces we have talked about earlier. Partly volume-driven costs, we have invested a lot in the organization over time and we have had an inflation pressure that I have seen clearly here in recent times. So even from a cost perspective, we are glad that we see signs in the market that inflation is on the way down. But we are still maintaining a good efficiency, good cost-effectiveness and we have a K-layout that goes up to .7% here now under Q1. Side 15, our credit loss reserves have gone up to 258 million here under Q1. It is a little down compared to the previous quarter, but we continue to be conservative when it comes to our credit loss reserves. Credit losses go up to .3% during this quarter. If we look a little bit at the reserve levels, Stage 3 private has gone up to .7% here now. It is up by 1% compared to the corresponding period a year ago. But it is a little down compared to the level we saw in Q4 2023. This is not a consequence of the fact that we have solved up reserves or in some way become more aggressive with our reserves, but rather the opposite. We have cleared out and written off some of the oldest batches in our cash portfolio with credit quality. So what is left in our books has a clearly better risk profile than what we had earlier. So that the reserve level change reflects the clear-cut we have done here under Q1. Side 16, we sum it all up here, we have a reserve result that goes up to 417 million. It is up by 8% compared to Q1 2023. And the reserve stock is also up by 8% during the last year. We have a good return on equity, up to 15.8%. As you know from this, we have not distributed any money, be it here during the spring or during the previous quarter. So we have almost 1.3 billion more in capital than we should have spent on now compared to last year. Side 17, let's look at the capital side. We strengthen the core capital with 20 points from .9% to .1% here in Q4. As you can see, the capital base is completely clean. We have bought back the previous existing AT1 obligation of 500 million. It was bought back here at the end of Q1, on March 28. So when we closed Q1, the total capital was 16.1%. But we have good levels, good buffers in relation to our regulatory demands. Our objective is clearly that we will work more with the effective capital structure over time. And that means, in practice, first and foremost, emissions of P2 to start our journey in the hybrid capital market. Let's go to side 18. So I'm back to Martin.

Thank you very much for that, Peter. Summing up the quarter, it's quite unromantic. We continue to have good profitability, at absolute level, and emissions of P2. We continue to strengthen the balance sheet, continue to be conservative in terms of credit flow resolutions. What can you say about the patterns? As I said earlier, when you are after the rent, you have a hard time getting a raise. It's tough for the customers, generally speaking. Then we see a positive trend, and that the number of people in this quarter compared to Q1-23 is fewer, which is a problem with paying the rent. But again, those who are after the rent will have a hard time getting a raise. Now that we have seen that the rent does not rise, we have seen, as we said in relation to Q4, and as I said in the previous presentation, that there are a lot of customer dialogues. The interest in doing business has come into play very, very well. It is a pleasure, so we have a lot of interesting dialogues and a good activity on all areas. So that's really what we were going to say. We thank you for listening and opening the questions.

Thank you. Have you also booked any revenue costs in this quarter, or is it just OAT's salary increase that drives the increase?

What drives it is, as Peter said, is a certain inflation. We also have certain salary increases from January 24. Then what drives it is still that we invest in the organization, it is the customer responsibility, and there is a lot of senior personnel around various road works, but no one-time effects.

Can we assume that Q1 is the new run rate for the whole year?

Something like that should be the case now. I don't think we will go down, but I don't think there is any drama. There is no drama going up or down, but Peter will have to fill in if I'm out cycling. I

agree with that picture. As I said, we see a weak cost reduction in Q1, not at all the same pace as we saw in Q4. There is still a certain inflation, you talk about the entire cost balance and so on, but we expect no big increases from the level we are at now in Q1.

Okay, thanks. The loan volumes within companies, you talked about earlier, but can you tell us a little more about how the dynamics look on the market right now? Is it that companies are not dare to expand and invest, given the economy right now, or have we also seen that big banks have chosen to go down in ticket size, given that their own company loans are almost still right now and the competition has thus increased a bit?

You can see here in the quarter, Q1, Q4, the reduction we see there in companies is driven by the fact that we have a classic seasonal effect, you build volume in Q4 and then reduce it here above Q1. So it's actually a seasonal effect that we usually see in Q1. But the activity is on the contrary very good. We actually said in connection with Q4 that we saw somewhere in December that there was a lot more business dialogue. It's in all parts of the world, and it has continued in this quarter. So we have a lot of business dialogue and I think there will be good activity forward. So we don't see any other competition situation we succeed in. We maintain the marginal motion we have had. I think we have found our segment somewhere between 30 and 300 large companies, so we don't see any bigger competition pressure from other actors right now. No difference, but good activity, a lot of customer dialogue. So the activity and risk-wise has changed with companies, to do business. Of course, it's dependent on that you know in any case where the interest is, that we start to see a decline in interest rates, and that's what makes you a little more interested in doing business where you need to have financial support or funding or other types of financial support.

That sounds great. If we move a little to credit quality, we still need to discuss. Can you first of all remind me if you have taken any macro-related buffers, either as overlays or how much of your Stig II reservations are more macro-related?

There are no numbers we have published, but it is clear that that is what we mean when we have said, as I have said now and we have said during a number of the previous quarters, that we have tried to be conservative and have tried to be forward-looking with our reservations, and it is clear that the macro-related is a factor that plays into the whole reservation. Then we will see if it is an overlay or if it will significantly fall into normal model reservations. It is a little clear.

We also see that corporate Stig III coverage ratio is coming down quite reasonably this quarter. How low is the coverage ratio in a mix with being more forward?

Here I think one must remember that a reservation or coverage ratio against companies and properties says significantly less than it does, for example, on the private side. We are constantly looking at the underlying securities that we are sitting on in each of the individual engagements in combination with the already made reservations that we have. So this will be a hit and we should not go so far as to say that we have a target or a lower limit or anything. It is a judgment in every case and you should not go back to especially many quarters. We will see when it was when we were at somewhere, here we had a 60% reservation rate against companies and properties. We did that in Q4-22, -62% and 59% in Q2-23. So this will be a hit.

Yes, but it has still fallen to 25% now. It is starting to get a little low, but you are comfortable with the fact that the underlying securities are strong. Yes, absolutely. And just one last question on funding. You redeemed Q8-1, but also some obligations in the near future. How should we look at wholesale funding in the future? I understand that this is a question from the market price point and the like, but you have no views from your rating agency or anything like that that you have more deposit funding?

Of course, I think that we would also like to have a better balance. We started a journey before this rent-up came, where we had capital market financing of somewhere around 6 billion. There is not much left of that now, but I think it sends a signal of what the ambition is. We want to go back to this market. Then it is about building up that slowly, but surely over time, because as you say, it is a cost aspect related to it too. But over time, our long-term ambition is still that we want a very diverse funding side, both in terms of source, currencies and latitudes.

We have a space we can use, and we will do that. It is a price picture and the market is interested. We have ambitions to emit, but we should not forget that it depends on what kind of deposit source you have. Do you have your own flows? Do you have them with different currencies? What types of platforms are they? We are constantly working to create a much more diversified funding, both in different countries, different latitudes and flow-independent channels. The fact is that we want to create an efficient capital sector, and we have the intention to do that during this year, when the market has priced a little better.

Alright, great. Thank you for my questions.

Thank you.

Good morning, Jens Hallena from Carnegie. Peter, can we continue on the credit loss side? I think that the low-reservation rate says a lot that you are not particularly worried. My question is, now that we are down to 24% in the reservation rate, what type of LTV are these loans on? Can you tell us what type of stress you are looking at in these records? If you can write down -30% in the stress and reserve afterwards, then these figures say quite a lot. Shouldn't the market be so worried?

We have known about the engagement that has moved from 2 to 3, for example. That is what we have seen as a potential. There is no doubt about the security. We feel safe with the engagement. We have also reserved historically. We have chosen to be conservative for a very long time. This is with the same customers that are following us. From 30 days, 6 days and 90 days. We make a judgment on all the engagement separately every month or every quarter to make sure that we are sufficiently safe. I can't say anything about the percentage in general. It's from case to case. We are safe with the engagement we have. There is no greater risk. That is the information we have today.

Question 2. Who is the income leader of the pension network? Step 2, step 3 loans. Two questions. I have been looking at that. What is the impact on the pension network in Q1? Question 2, a little follow-up question. Aren't you very conservative? I think so. I may be wrong. But the legal firm said that step 2 is income leader as step 1 loan as usual. Step 3 is income leader as net loan after credit losses.

We are looking for conservative and secure. Step 3 is income leader. Then there is the division of step 2. It's from case to case. It's hard to say that all steps are from case to case. We are rather conservative. And the income for the pension when we get it. Than to take it here and now. Then Peter can talk a little about the size. How much it costs for Nimmin.

If you expand the research on Nimmin. If we expand the research a little. We can see that we have this time lag on deposits. There we believe that the funding costs with the information we have now. If the market behavior does not change. We believe that the funding costs will rise. Sometime here during the second quarter. And that the big increase is behind us. As I said we have been a little more liquid. Even here under Q1. Because we see a good pipeline forward. Then Nimmin is very hard to judge forward. Because of the way we handle the revenue management. We book the revenues. On the commitments we see. That the clients are after. We see a little increased risk picture. They book the revenues. We book the revenues when we see payments. On the commitment. That has contributed on the one hand. Positively here in Q1. On about 25-30 points. Than we have not received payments on everything. That we handle in this way. We have seen a total negative effect. From the commitment we handle. On this revenue management method. On about 25-30 points. That too. There are some gums and carousels. In this case. Then when it comes to Nimmin forward. You should also remember specifically in Q2. That we have a typical seasonal effect. That we expect to come this year.

That was a long answer Jens. Was it a good answer for your questions?

Yes, it is. It makes it a little harder to model. But I understand it. I can just ask. In Q4. If we try to look at a trend. Was there any strong positive effects. From the review of step 3. Or was it quite clean?

It was quite clean. There were no big

changes. Then I have answered all my questions. Thank you very much. Thank you Jens.

You

are welcome. Thank you so much. Patrik Brotelius from ABG.

Yes, hello Patrik.

Thank you. I start with a small follow-up question. Jens. The steps are a little difficult for us to model. Can you say something about the expectations. For 2024, the coming quarter. Something we should have in mind. If it will affect positively or negatively. How to think about that.

As I said, Q4. We have no big changes. But we see that we have a good plan for the customers. To get rid of the interest. I think we will see a reduction. If we see that today. And if we get the rent easier. Then we will make a profit. Q3, Q4.

Thank you. It is not possible to put a range. On an approximate impact. In absolute numbers. What are the plans you have to think about?

We have a good idea. On how much volume decreases. I do not want to go out and say that. I would rather show it. We have a plan. How to see it on the inside. I do not want to go out and talk about it. If we can not deliver.

I understand. Many of my other questions have already been answered. I will go in on questions. About MPL backstop. We see in the capital. When we look at this range of additional value adjustments. Is it right to think that the majority of this. Is driven by MPL backstop. And that it is a sequential increase. The total amount of MPL backstop. Is about 45 million. Per quarter. In additional reservations. You have to do because of this rule.

Is somewhere in the capital.

If you look further out in 2024. Will this expect the same delta. Or that it will accelerate. Or that it will slow down. How should you think about that?

I expect it to be somewhere at that level. Then it can be a certain variation. From month to month, quarter to quarter. But what we see now. There is probably no big difference.

Yes. And then it is so. That this beats. It beats. It beats 60 points. On CTE1. In the current situation. And how do you think about this long-term. What is your plan about handling. Of this in and with. It gets an even greater impact. On capital. We have seen competitors. Who talk about. Increasing forward flows. And other competitors who have made agreements. With larger partners. How do you see this forward and what do you think?

We have talked about this earlier. We turn the stones. And we have analyzed. Many different types of solutions. We have not decided. Which solution suits us best. As we have pointed out earlier. That it is a market where the price picture. Has adjusted. Quite a lot. The last one and a half years. We have done something. In relation to this rent. Both we and many other actors. Also. Look at different types of solutions. And analyze. Also some new types of investments. It is a market under quite a big change. Because the price picture has changed. And we have done a lot. You should remember. For our part. It affects us. But this is our private sector. Which affects. A quarter of our business. We are also affected. A little less than some other actors. We will never be stressed. In any form of solution. We want to do what is right. And

it is a relatively small part of the whole. Just as Peter said.

Okay. I have no more questions from my side. Thank you.

We have one more question. Please.

Good morning. Thank you for the presentation. I missed the first two minutes. I'm sorry if there will be any delay. I will start by asking. If and when we get a decline. On the level of the rent. Do you think the rent margin will be temporarily. Reduced under the entire rate reduction cycle. That is the inversion of what we saw. Under the rate increase cycle. With regard to lag effects.

I hope not. I think this is also about the pace. We will see a reduction in the future. What we see now. That is rising in the market. And the expectation is quite profitable. From that perspective. It went very fast upwards. Which benefited us. Can we go a little flatter. If we go a little lower. Where it is not the same. Same slag and same pace. In the reduction downwards. Then we have good conditions. To be able to parry that and get a better balance. Between asset liability and the balance. If we see a scenario where we go as fast downwards. As we went upwards. Then we have the inversion of that situation. But it is not the scenario we see now.

That makes sense. I also saw that the corporate volume. In step 2 and 3. Was a bit higher compared to the previous quarter. You mentioned that you think it can be. Re-releases later during the year. What do you see specifically. That speaks for. That it could happen.

It is the different engagements. Where we know where the plans are. And we have the time. That the plans should be materialized. That the customers will come with the rates. It is the sum of the different specific engagements. That we have the time and the status and plan.

Have you seen an increase compared to the previous quarter. In the number of companies like Behram waivers. For rent payments or amortization.

No, there are no changes. No changes.

Have there been any other exposures. In corporate or real estate. Which were not in the target last quarter. But which are now.

We have had a call on them. There are no news. We have had full control. We have had the call on the materials.

In step 3 on corporate real estate. The reservation rate is now at 24%. And reasonably. It should be higher in corporate. And in real estate. How do you see the change. How high are the reservation rates. Highest in corporate.

It is 100%. How can we go to the highest. We reserve the entire engagement. When we see a high risk. We do that every month and every quarter. If we see that it goes in that

direction. Then I will reasonably. Then we can probably put a part. Real estate exposures. Which is reasonably under 24% in reservations.

Absolutely.

The biggest. Real estate exposures in step 3. What is the reservation rate. Is it 20% or 60%? It depends on the

market. We go from case to case. It is difficult to find a way to go through. From some reservations to 100%. And some reservations to 2%. It depends on the whole engagement. What is there for insurance. Around the engagement. And how the market is. As soon as we see something. It is difficult to say. It can be a very wide range. But it is case to case.

Can you say something. How big is the biggest. Corporate or real estate exposure in step 3.

We do. Our sweet spot is 30 to 300 million. It is where we are. It is where we land. That is where we have range. That is our sweet spot.

I can expect. At least one exposure in step 3. Which is around 300 million.

Yes.

And. I saw. It is a quarter of the corporate or real estate. That is in step 2 or 3. When we talked about. Now it is more like. If you end up in step 3. It is more likely to go to step 3.

And.

From that. What do you think. That the level of reception. In step 2. Should be 3%. Instead of 25%. If it is high risk. To go to step 3.

I have a question.

If it is. If it is. High risk now. Those who are in step 2. Go further to step 3.

Shouldn't

the levels of reception in step 2. Be more equal. Where they are in step 3.

I think so. I think. You are wrong. Between step 3 and the levels of reception. We have said many times. Martin has been in this earlier. We have a judgment from case to case. Where we look at the individual securities. A level of reception. Must be seen. What I know about the property. How the values are adjusted. What is our exposure. And so on. We look much more from case to case. And make an individual judgment. On each exposure. Rather than see the systematics with the levels of reception.

It is not the same as when you have models on private loans. You have a model reservation. This is case by case. Where we see what kind of engagement we have. There is a big difference between the company and the property. Compared to private. Which is a model system when talking about private. Even if you want to overlay.

Okay. It feels fair. I have no more questions to ask. Thank you for the answer.

Thank you for calling Emil. Have a good one.