Skandinaviska Enskilda Banken AB (publ)

Good day and thank you for standing by. Welcome to the SEB Financial Results Q4 2024 webcast and conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session. To ask a question during the session you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Johan Targeby, President and CEO. Please go ahead, sir.

Thank you very much. Good morning and welcome to this closing of the books for 2024 earnings call. As always, we will run through the PowerPoint presentation that we have posted on our website. Going to highlights, we have seen increased customer activity within corporate and investment banking, still called large corporate and financial institutions division, and some healthy customer activity with low growth in the Baltics. Both costs and capital came in as planned for our full year targets. The cost target for 2025 is set at 33 billion, which will enable us a fair balance between incorporation of AirPlus, reinvesting in the business, acknowledging some higher inflation rates going forward, compensated by continuation of extract efficiencies and productivity gains within the group. The board has proposed to the AGM an ordinary dividend of 8 kroner and 50 öre per share, combined with a special dividend of an additional 3 kroner per share. And we've also announced the intention and the share buyback program for the full year of 2025 of 10 billion kroner. Going to page three, some of the recent developments when it comes to the all-important customer satisfaction scores that we follow very closely. It is very encouraging to see that we maintained the top position for the Nordic Corporate Bank. We also came out, and this is a little bit novelty for us because we haven't had this position for some time, as the top-ranked domestic equity provider, equity service provider in the Nordics. While for financial institutions, we came out at number two with the top position in Sweden, Finland, Norway, but a third position in Denmark. The yearly Prospera survey of private banking in Sweden, we came out six, which is something we're not satisfied with. Double-clicking on the six, which comprises three different categories, the mass affluence of below 10, we're number two. The affluent, which is 10 to 49 million, we're number six. And the high net worth, about 50 million, we're number one. We also got awarded the best fund company of the year. And also for many years, we have not had any change on the credit ratings, but it's encouraging to see that S&P has moved its outlook for S&P to positive when it comes to our external credit ratings. Page 4, we look through the lending and our credit portfolio development and broadly speaking, it is muted and we can see a sideline movement as we have for some time. The reason top line grows very nice is of course that FX has worked in favor of SEB. And therefore, we note the 5% to 6% increase in the lending portfolio and corporate credit portfolio for corporates. But FX adjusted, it is still saying that we're moving sidelines. This also goes for households, and I would say for the smaller areas within real estate and housing co-ops. with one exception, and that is Baltic. So in Baltic, corporate lending is up like for like in local currency of 4% year-on-year, and Baltic mortgages are up 6%. So there's a clear sign that something positive is happening in the Baltics. With that intro, I'll hand over to our CFO, Christopher Malmer, to run through the financials in more detail.

Thank you very much, Johan, and good morning, everyone. So I'll start on slide number six, where we'll have the financial summary for the full year 2024. Operating income is up somewhat compared to the previous year at 81.9 billion. Operating expenses at 30.9 is at, or as you can see, a sliver below our communicated cost target of 31 billion. and that's an increase excluding Airplus of 6% on an underlying basis, and operating profit of 46 billion, down 2% versus last year, excluding the impact of Airplus for the year. Net profit at 35.9 billion sequentially from last year, down 3%, and as you can see from the EPS developments, down 1%. Underlying, you can see the impact of our continuous and ongoing share buyback program that we also announced a new one last night. Return on equity for the full year at 16.2% and asset quality remains very benign with net ECLs at three basis points. Going to page number seven and a closer look at the financial summary for the fourth quarter. Please note that we now continue to provide comparison columns both within, including and excluding AirPlus. This will be the last quarter that we'll be doing that. We're now working very hard on the integration. And as we are effectively merging AirPlus into SAP Card, you will start to see merger effects and synergies in both of those areas. And therefore, we will continue going forward to report this as part of CNPC. Now, having said that, we will, of course, provide an update on the progress and an evaluation of the business case as we progress. And a brief reminder, Q3 had two months of AirPlus, and Q4 has the full period of AirPlus included. Looking at the income line, at just under 20 billion, it's down underlying 6% compared with the previous quarter. And if you look at the mix of that, we'll see the net interest income is down 2%, and we'll come back to that in a moment. Fees and commissions at 6.5 billion on an underlying basis at an increase of 7% compared to the same period of last year. And because of the seasonality, of course, Q4 of last year is the most relevant comparison. And here we can see underneath that 7% growth that there are some signs, and Johan alluded to them, of activity levels in the Corporate Investment Bank, in LCNFI. Fees around advisory, securities, and secondary trading are up in the region of 25% to 30% compared to the same period of last year. So some encouraging signs of activity levels picking up. Net financial income is down from the Q3 high print. As you will recall, Q3 was a significant increase compared to the average run rate. And here we have the mark-to-market effect, not least of our strategic holdings, which in this quarter is an adverse impact, so a decline of negative mark-to-market about 390 million. Against that, we have positive X-ray effect of about 150. That takes us to the income line. looking at the expenses for the quarter of 8.7 billion, and then noting that within that 8.7 billion, there is about 500 million of implementation charges related to AirPlus, as previously communicated. In note number 16 in the release, you will also see that about 400 of that is actually booked in AirPlus, and the rest, the balance, is booked within SEB cards. As you will recall, we also have 200 million of transaction costs related to Airplus in Q3, so the total Airplus-related implementation and transaction costs for 2024 then adds up to 700 million. Going below the profit end before ECLs and imposed levies at 11.3, we come to the ECL number, and there we're reporting 377 million, similar to in line with the previous quarter. And the underlying pattern is quite similar as well. There's a handful of larger exposures that are requiring provisioning, uncorrelated, both geographies and industries. And we're also releasing some of our portfolio overlay to the tune of about 400 million. So a similar release as we saw in the third quarter. On imposed levies, there is a decline compared to Q3. And here we have a primarily related to the solidarity levy in Lithuania. Looking forward into our levies going to this year, 2025, we will continue to see the resolution fund fee and the risk tax roughly at the same level as we are this year. The mortgage levy in Latvia will discontinue and will be replaced by a solidarity levy instead. Largely the same effect, somewhat bigger. And the Solidarity Levy in Lithuania, we're expecting to decline somewhat and that's a mathematical effect as it is based on an average net interest income over historical run rate. In total, we're estimating this to be somewhere in the region of 3.3 billion for 2025. That takes us to an operating profit of 10.1 billion. You will also note that the tax rate is somewhat higher at 25.6 and there's a couple of reasons for that. First of all, there is some dividend payments between our subsidiary in Estonia up into the mother bank, and that has a tax effect in the quarter. We also have a slightly higher amount of subordinated debt outstanding. You will recall that we did an 81 in October. So the tax on those securities is non-tax deductible, so there's a tax impact of that. And the third effect is also a prudent and cautious treatment of deferred tax assets related to Air+. Now, having a look at the, and just to mention the ROE for the quarter of 13.2, and we're also providing the ROE adjustment for all the R-plus effects at 14.6. Now, double-clicking on the net interest income and the development in the quarter from 11.1 to 10.8. Looking at the divisional effect, you will see that the large corporate and financial institutions, excluding the effect from IFTP, is largely flat. You will recall that in Q3 we did have some effects from IFTP, internal funds transfer pricing, and we flagged that they would continue into the final quarter of the year, and that's what you're seeing now. We talked in Q3 also about a negative deposit mix effect in LCNFI. That has abated. None of that we're seeing in the quarter. However, the yield curve effect that we alluded to in Q3, which had a negative impact at the time with an inverted yield curve, That is now flattening out, and it's actually a small positive contribution, and the steepness of the yield curve is an important development. And as you will recall, the difference between the coupons that we're booking on our fixed income inventory in FICC relative to the mark-to-market effects that goes through the net financial income line. Online volumes and margins are largely flat, so adjusted for ISTP, a sideways movement. Looking at the CNPC division, you'll see that the IFTP effect is about 200 million as well. Both of those effects, by the way, are offset in funding and others. So in Treasury, that's a full mirror image of those IFTP effects. Outside of that, there's a decline of 200 million, which reflects the lower rate in the quarter, impacting deposit margins somewhat offset by improving mortgage margins. You will also have seen in the quarter that we have had repricing of our wholesale funding at market rates, which have been declining, linked to Stiver over the course of the quarter. And some products, which are lending products that are priced off the policy rates, have stayed somewhat higher in the quarter, resulting in a positive contribution to net interest income from those repricing effects. And we're estimating that somewhere in the region between 100 to 200 million, and they will eventually fade away as rates stabilize and normalize. In the Baltic division, there's a sequential decline of 100 million, and that is reflecting, as Johan was alluding to, a positive contribution from volume growth, as we have seen some pickup there, offset somewhat by a continuous competitive environment in margins on the lending side, and the lower rates, of course, impacting deposit margins, resulting in the 100 million sequential decline. In the treasury funding and other, you will see the mirror image of the ISTP effect in combination with a positive trading treasury net interest income. Turning to page number nine, you will see our normal distribution of net fees and commission trends. And on an underlying basis, as I mentioned, an increase of 7% compared to the fourth quarter of last year. Now, the positive effect is split over two categories in this disclosure. So if you see the securities and commission income that is up 17% year-on-year, that does reflect those trends that we've been commenting and those activity levels in combination with continuous good growth in our asset and wealth management business. Net inflows in the fourth quarter amounted to $12 billion, and net inflows for the full year stood at $60 billion. In the advisory fee and lending fee, you'll actually see a drop year-on-year, and that is primarily related to the fact that lending fees in the fourth quarter of last year were very elevated, so the advisory fees are the strongly performing year-on-year contributions. Payment to card fees, largely reflecting the consolidation of Air+. Turning to phase number 10, you will see the breakdown of our net financial income development. And as I mentioned, the biggest swing factor between the quarters is related to our strategic holdings, and that impact is 390 million of that. Euroclear is the largest contributor, around 350 million of that. You will also recall that the yield curve steepness that we talked about previously would have had a positive effect here in the third quarter. And consequently, when that is reversing, that also presents somewhat of a headwind. Nonetheless, a solid underlying divisional NFI of 2.4 billion, largely in line with the longer-term trend of that line item. Turning to slide number 11, and the development of common equity Tier 1 buffer quarter-on-quarter. We ended the third quarter at a buffer of 470 basis points, and we communicated that our ambition before the end of 2024 is to come in within the management buffer range of 100 to 300 basis points. The developments during the quarter is, of course, our retained earnings after the proposed dividend, and as Johan mentioned, the proposal of the ordinary dividend is 850 per share. We then deduct the impact from the special dividend that was also proposed of 3 krona per share. And then the share buyback, where we have applied for a full year 2025 buyback program of 10 billion. And since that has been approved, as usual with approved buyback programs, we deduct them in full from the Common Equity Tier 1 ratio. You will see some impacts from RIA in the quarter, but perhaps worth calling out is that FX impact with increased RIA by about 13 billion in the quarter, primarily as a result of the weaker Swedish Corona. This had a negative impact on the common equity one ratio of 26 basis points in the quarter alone. Another 26 basis points attributable to market risk RIA, risk RIA, and also some Article 3 add-ons related to IRB models in retail. That takes the management buffer at the end of 2024 to 290 basis points in line with communicated targets. Turning to page number 12, the cost target that we're announcing for 2025, and as Johan mentioned, of 33 billion, and here's a little bit more color behind that. We will start with the reported 2024 full year cost level of 30.9, so just under the 31 communicated in Q3. Now, bearing in mind, and as I mentioned, this includes the 700 million implementation and transaction costs related to AirPlus. As we're expecting roughly the same size of implementation charges in 2025, there is no delta from the AirPlus implementation cost charges. So the delta we'll go through here is primarily related to inflation, which we expect to have an impact of about 8 to 900 million. And then, of course, the full year consolidation. So for five-month consolidation in 2024, we will have 12 months of AirPlus in 2025. And, of course, the impact from the ongoing activities consolidating these businesses and reaping the synergies. And just a quick word on that. The integration is running at full speed. And as I mentioned, it's effectively merging the businesses of AirPlus and SDP Card. And the synergies will then be realized in both parts of that equation. We've had good progress in negotiations with the unions, and we have reached an agreement with the Workers' Council, which allows us to proceed with our plans in that area. We can also see that our new offering is attractive. So combining the footprint of Airplaf with that of SCP Court has allowed us to sign, at this point, two quite sizable whole market customers that otherwise we would not have been able to serve to that same extent with this new offering. And we have a number of exciting projects prospect discussions with that new offering. We're also proceeding with the exit of 29 markets that we will be leaving as part of the restructuring program. Now, having said that, we are of course facing a challenging macroeconomic backdrop in Germany in particular, and that is the biggest and most important market for Airplus. So the range that we're providing on the cost outlook for Airplus in 2025 is really giving us the ability to take action if needed to accelerate the implementation activities in the event of any adverse developments on the revenue side, and therefore allowing us to meet our communicated target of breaking even of that business effective income meeting costs, so a neutral EPS effect excluding implementation charges in 2025. It is a challenging target, but we're committed, and we're giving ourselves this flexibility to deliver on that target. So with that, we are concluding the fourth quarter reporting and we're moving into a business plan update, as you want to mention. And before I hand over to you, I want to take us through the outlook for 2025 and our business plan activities. Going to page number 14, just putting the business plan into context of our longer-term strategy. As you will recall from 2021, we announced SEB's 2030 strategy. based on a number of pillars, and this very much is the foundation of what goes into the business plan. The business planning period is in three-year cycles, and we just concluded the one between 22 and 24, and now Johan will go through our forward-looking ambitions for 25 through 27. In addition to that, as you know, we're also calibrating these annually and providing annual cost target guidance, just like the one we're providing today. Quick look in the review mirror on page number 15, just a glance of the activities and achievements from the business plan 22 through to 24 across the strategy 2030 for pillars of acceleration, change, partnerships, and efficiency. And starting with acceleration, I think it's worth calling out that we continue to expand our corporate banking business carefully, but importantly, in new markets in Europe. And having added then the Netherlands, Austria, and Switzerland categorized as home markets for large corporates and financial institutions. A new one will talk more about our plans going forward in that area, but that, of course, has been an important accomplishment in terms of accelerating our growth and our ability to address customers across Europe. I would also call out the acquisition, of course, of Airplus, which will create a European leader in corporate accounts, cards, and payment activities, which, of course, is also an important part of the acceleration of our income and profitability ambitions going forward. Under change, I think it's worth mentioning that we have created the new division, Wealth and Asset Management, combining private wealth management and family office together with SCB Asset Management and SCB Life to really emphasize our ambitions to grow within this area and underlying the opportunity and the potential that lies therein. We've also continued to work on our digital presence and upgraded activities both in our Swedish mobile app and digital platform as well as in the Baltics where we actually moved to a new digital infrastructure that allowed us to release a number of exciting features and products over the last couple of months. We're also live in production with our banking as a service platform on a cloud-native platform in SED Embedded. Across partnerships, we continue to work with partnerships to improve our product offering and there we work with partners to both provide products but also to enhance our distribution capabilities. For example, with PE accounting for digital accounting services and also helping our small businesses to open new companies together with Fortnob. So combination with partners allowing us to both expand our product footprint and leverage technology partners and distribution channels. Finally on efficiency, We continue to expand our digital presence and our capabilities around our API infrastructure. This is a critical enabler to be able to tap into new technology capabilities that we would like to add going forward, but also allowing us to more cost-effectively operate our broader technology stack and become more nimble and able also to leverage SaaS partners and SaaS providers. We continue to see an increase in operational productivity by 18% over the last three years, And that is measured as transactions per employee within business services and operations. So a good continuation. And focus going forward is to continue to automate and make more efficient anything that can be automated. So with that glance in the review mirror, I'll hand over to Johan to look forward on the horizon.

Thank you, Kristoffer. And then I'll turn to page 16, the strategic priorities for the three-year plan. And just to start off, the 2030 strategy is unchanged and holds firm. And there is no revolution in what we are here to say today about the next three years, but this is the way we work with three-year plans, as Christopher just went through. Every plan, in order to anchor it within an organization like SAB, needs something of a campfire to gather around. So this is really our campfire slide where we center the high potential areas in two categories. Generate more profit, income, and customer satisfaction in business growth and becoming more efficient and productive and cost efficient in technology. The business growth is centered around the very positive long-term secular situation for wealth and asset management. and we'd like to reorganize ourselves in order to capture it, which has just been done. We continue to hope that we can sit here in three years and say that we have grown our corporate banking efforts in the whole bank, including in business and retail banking, CMPC, and also gain market share, as well as future-proofing and growing our retail bank, where it also has a large degree of technology in it, not at least digital channels. On the technology side, we can divide it into two. One is the tech stack that we currently control and operate to continue to modernize it. And in conjunction with the establishment of the COO function, we really want to speed up here, as well as accelerate the implementation of new technologies. Now I'm going to go through the areas very quickly as one page on each. So on page 7, the COO agenda, more bank for the buck, is really to reorganize and make sure that we have the best possible prerequisites to get everything we can out of this very significant portion of the investment budget and the cost base within the bank. Things are changing rapidly around us, not at least how you adapt to a new cybersecurity and security in general. Every bank and every institution, every firm needs to revisit their strategies and implement new measures in order to be protected. Everyone also needs to acknowledge in this bank that we need to be more software driven. There's always a conflict between hardware mentality and software mentality, but looking into the future, we really want to make a big effort into becoming a better coder and a better software developer in order to meet our customers' demand in the future, as well as Implementing next-gen AI, classic AI, machine learning, the new technologies in the best manner, both to achieve better customer satisfaction and experience, but also to improve productivity. And the regulatory environment, not at least, is constantly evolving and changing, and that's very topical as we sit here today. Few priorities for the COO function is, of course, to refine all the roles and responsibilities, to be very clear, in who is responsible and accountable for executing what in order to increase the internal speed of decision making and clarity. We also want to leverage all the capabilities within data and cloud and obviously implement different type of functionalities that are new to us, particularly within the AI area. And we've done significant investments over the last five years. Many billions of the increased cost base that we have been allowed from shareholders to reinvest has now come to a point where we will take a little bit of a pause and we'll try to consolidate what we have added to make sure that it's fit for purpose as best as we can. On page 18, we look at the corporate and the investment bank where we start the foundation in a very strong position. Here are some of the classic surveys that are being done, where we are very strong in effects, domestic equity, sustainability advisor, because we really believe that's to be the highest growth areas in the future, and the general theme of large corporate banking in the four Nordic countries. Focus area going forward, the first one is really around big where we stand. There's still a lot of potential, and in volume terms, it's actually the most significant one, is to do more with the client base you have in Northern Europe. We then also want to add new clients. In the long run, you really need to have an expansive strategy in order to add more clients if you want to gain more of the pie that exists in Europe. So we will continue selectively to grow in whole markets outside the Nordics. And also focus more on the whole private capital market, including private equity. infrastructure and private debt, where there's a lot of things evolving as we speak. All these efforts up to your right-hand corner touch two particular areas. It's the corporate growth, but also the wealth and asset management, and I'll make that point. To grow equity trading in the retail space, to have a good savings and investment platform also benefits a lot the markets division, which is within corporate and investment banking. Corporate investment banking is also the main provider of all those services that we provide to everyone out there, but also to ourselves. So this is also a very important area for wealth and asset management that we continue to have a formidable equities, fixed income, commodities, derivatives business. The next page is business and retail banking. And first, just the foundation, where do we start? So first, I would like to point out that 50% of what we today called or did call CNPC is corporate banking. and 50% is retail banking. The corporate banking here is, of course, SME and mid-corps. We've had some of the weaknesses in the external service, but the one we do internally, which is the net promoter score, both for private and corporate advisory meetings, is exceptionally high, if not the highest we've seen in recent times, of 70 and 63 approval rates. Where we start is a market share in retail banking in Sweden of approximately 13% and in corporate business banking for mid-corps around 31%. So a very strong position in corporate and here we have an ambition to grow both areas modestly. I'd also point out that the retail banking for Sweden is 13% but we are above 20% market share in the three major cities, Stockholm, Gothenburg and Malmö and we have therefore a lower market share, of course, outside the larger three city centers. Focus areas going forward will be to continue to increase our market share within the business banking segment, the corporate banking within business and retail banking, and strengthen our position with some prioritized segments. For retail, we continue to improve our digital offering and deepen the relationship with individuals, and it's prioritized to continue to shape an individualized personal banking experience. We also want to, through the acquisition of Airplus, to establish SEB as a European champion within the corporate payments space. Wealth and asset management, which is probably the one that a little bit stands out as more of a focus area than we've had in the past on page 20. The foundation is now, of course, very strong. We haven't had the best performance over the last five, ten years, but something looks a little bit better as we sit here today. First on performance, which is the key that you have a product worth asking clients to pursue. Performance has been very good in 2024, and we have now 75%, of our discretionary mandate portfolios in private wealth management and FO beating the relevant benchmark index. For asset management, when it comes to the actively managed funds, 68% of those beat the relevant benchmark index. As I previously mentioned, we won the Fund Company of the Year. We have over the last 24 months engaged in many interesting complementary partnerships for this area. And in this box with the logos, you have a few of them that we bought 100%. A few of them we have a minority stake, and some of them are more partnerships in distribution, like the EQT one and Copenhagen Infrastructure Partners, which we also took a stake in their newly formed company. and we are a top provider of occupational pensions for corporates and this is really the life division. Focus areas is on distribution for pensions and savings products both to retail and mass affluent clients in Sweden. We'd like to expand our institutional offering as well as work better with third-party sales activities internationally. And as in corporate investment banking, where we have private capital, alternative investments continue to be an area to be further developed, not at least for the more affluent areas. We also need to look inside the bank and make sure that we have the best operational platforms and strengthening the digital capabilities, particularly in the area of self-service. Anyone who's financially literate and like to invest in their own funds or trade equities or such needs to have a better offering from SEB in this plan when we get through it. And we also would like to strike a blow for the personal meeting, which is still very important to us that we want to continue to boost our advisory services. Page 21 is the Baltic division where we conclude on the foundation that we broadly speaking have a quarter of the market in the three Baltic states both in corporates and in private clients. Also here we have a very historically high net promoter score of 65 for private customers and 61 for corporate. And we have just announced the intention to see if we can streamline our Baltic division from three separate wholly owned banks to one. This will of course mean that it becomes governance-wise operationally more efficient and we hope that this can be done in the next couple of years. Focus areas is really to continue to grow the corporate franchise in the Baltics. also have an ambition to have slightly higher market shares within retail through customer experience in the second to none and good advisory. And here we are in the beginning of what I would think is a several decades trend and that is to introduce savings and investment outside the bank system through savings accounts to the populations and institutions of the Baltic countries And very interestingly, we have now seen this quarter where net sales has actually been mirroring numbers we've seen in Sweden, of course, from a very low base, which makes it even more impressive. My second to final slide, page 22, is one of my favorite slides. It's just in this quarterly discussion that we always have to strike also a little bit of long-termism as the final notes. SED is all about the long term. We think 10, 20, 30 years ahead and even longer. And the whole plan that is guiding us when we design plans and business plans is to have operational leverage. In the medium to long term, the design is around having higher income growth than cost growth. And with a cost income significantly below 0.5, that means more than twice that in operational leverage and financial leverage on bottom line. And here I thought it would be just interesting to show the underlying trend before the data helped all banks in the world, particularly in Europe. And that is the years 2016 to 2021, before the interest hike and the shock inflation rates got introduced to the economy. And we have an underlying growth rate of profits around 9%. Obviously, you get a beta that goes up very much in profit when rates go up, and we are now experiencing the opposite. This is exactly as expected. Looking at the NII for 2024, it was down 5%, exactly as one would have expected when rates go down, but also encouraging to see that net fees and commission was up 11%. almost or around twice as much, which is exactly when we talk about swings and roundabouts in the long-term perspective, how a bank like SEB is put together. Last page is just to conclude that we have unchanged from the board yesterday SEB group financial targets, 50% payout ratio, this is the last page, 23%. But I would point out one change that we have announced as an intention today, and that is that we would like to switch from an annual dividend to a semi-annual dividend, but not for 2025, but for 2026. Or I would say this is prudent in our opinion that everyone knows that this is something we will take on the next AGM March 2026. So the dividend payment for the calendar year 24 will come now as planned, as always, and then we intend to change it. But that will be, of course, subject to approval at the time of the AGM. Dear operator, that concludes the prepared remarks, and I'll hand over to you.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will now take your first question. One moment, please. And your first question comes from the line of Magnus Andersson from ABG Sundar Kodja. Please go ahead.

Yes, thank you very much, and good morning. Two questions, first of NII and the second one on costs. Thanks for the color there on the timing effects of 100 to 200 million here in Q4. Secondly, I was just wondering, given your scenario in Nordic Outlook released yesterday where the policy rate is expected at 2% in June 25 and 150 the ECB deposit rate in December 25, 175 June 25, roughly speaking, In what quarter, when do you think your NII will trough in this scenario? That's on NII. And the second one on costs, just on the investment plan, the 600, 700 million, if you could tell us what this progressive investments, where they are going and what portion is more house in order that you can't really impact so that we can get the feeling for the potential flexibility there. Thanks.

Thank you, Magnus, and good morning. So I'll try and answer your two questions on the net interest income side of things. I think we're talking a little bit about, of course, is the impact that is happening when market rates are moving and policy rates are moving not exactly in tandem. So under the assumption that you eventually get a flattening out and a stabilization of policy rates, and as you said, in Nordic Outlook, we have our assumption, I think one Rule of thumb, one indication that we're thinking is that repricing of loans subsequent to that flattening out and similarly on funding would be three to six months, but we're probably more on the six-month level. So, broadly speaking, six months after the stabilization of rates, we would have seen most of those effects play out. And after that, effectively being a function of volume and margin developments for net interest income from there on. On the investments, and thank you for reminding me, Magnus. I should have, of course, commented on that when I went through the slides, so thanks for calling that out. On those investments, the plan is there to continue to invest in some of our core platforms in the bank. It's primarily on the technology side of things where we have ongoing projects that are related to upgrading of our technology stack that you want to allude to a little bit in your forward-looking comments as well. And those are the ones that will enable us to leverage and tap into the new technology opportunities that are related to AI and other components. But that means that that ongoing and underlying upgrade of our infrastructure needs to continue to fully be able to leverage that. And I'll take the opportunity to comment on the other point on that cost slide that I didn't mention, which also on the efficiencies. And Johan mentioned a little bit in his comments as well that we're into a phase of consolidation. We have had This is a somewhat lower investment pace than you have seen over the last couple of years and critically an important time to take out and manage efficiencies and take out the benefits of having made those investments. So that is where we're seeing the benefits from the efficiencies coming through. That takes us to the 33 billion total targets.

And just on the investment plan, how much of the 600-700 is house in order, like risk compliance, financial crime prevention?

I would say at this point in time, that is a relatively smaller part of the overall investment. We continue to invest in that, and that continues to require attention. And some of the activities are actually, particularly on the technology side, things that we are doing to improve our infrastructure has the dual benefits of making us better at, for example, transaction monitoring and automation and digitization also allows us to build better customer experiences. So as far as technology upgrades are concerned, there are investments that are playing into both house in order and our ability to build and develop new products.

Okay, thank you. Just a short follow-up then on AirPlus. You mentioned that we should see the similar amount of integration cost or implementation cost of 700 million in 2025. Do you still expect anything there in 2026? And also, will it be primarily in the form of redundancy charges, as we saw a large chunk here in Q4?

That's right. So we're expecting some charges to continue into 2026. And as you will recall from our initial target communication, we said that in 2025, we want to be EPS neutral, excluding implementation charges. And in 2026, we want to be EPS neutral, including implementation charges. So if they continue into 2026, they should be absorbed by the improved profitability in the underlying business, such that they will not be impacting the overall profitability and the EPS neutrality should come through. But there would be somewhat less redundancy charges. We try to front load a lot of the redundancy charges. And in 2026, you'll probably be looking more at technology costs to put the businesses together.

And if I may add, Magnus, now when you alluded to our Nordic Outlook published the other day, I recommend everyone to read it if you haven't. There's another point in that, which is that the GDP growth for the countries that we are exposed to is for the first time very optimistic in terms of FEB. So looking at Europe, it looks pretty dysfunctional compared to the U.S., but not Estonia, Latvia, Lithuania, Denmark, and Sweden, which are all five expected to be outliers in terms of European growth, even better than the U.S., And it's a quite different position when we look medium-term forward on economic activity, not only on when will NII drop, but what else will happen. And I think that's, of course, a medium-term observation that I'd just like to point to, that given some years where we were the lowest growth country in Europe, Sweden, and that, of course, with interest rates being predominantly short-term, There is an expectation from our economists now also to see economic activity and consumption investments, et cetera, come up more here, relatively speaking, than in many other places. Okay. Thank you very much.

Thank you. Thank you. We will now go to the next question. And your next question comes from the line of Namita Santani from Barclays. Please go ahead.

Good morning, and thanks for taking my questions. I have two P's. Firstly, you have this long-term aspiration of 15% ROE, but consensus is neither there for 2025 or 2026. Do you think you can achieve the 15% ROE in 2025 or 2026? And what do you think we're missing to get you to the 15% ROE? And if you think you can get to the 15% IRA, why is this called an aspiration rather than a set target? And secondly, the DPS is a bit of a myth today versus consensus. So I just wanted to understand why you haven't used your pension surplus you spoke about in the second quarter of 24 to top it up. And what's the rationale for a semi-annual dividend now? Thanks very much.

Thank you. The problem here lies within your question, actually, that it's a long-term aspiration, which is really an assessment that we do of the banking industry, the Nordic banking industry, the closest peers and ourselves, triangulating that with what is requirement to be a competitive bank in the long run with everything we know about what we have. It's the capital, it's the liquidity, it's the cost, it's the income potential. that we have not changed for a long time. We think it is around 15%. We didn't meet that target for many, many years when we had zero to negative interest rates. It didn't mean that we changed the kind of indication for shareholders of what you can achieve with an institution like this. And then, of course, the backside of that is that we significantly outperformed that long-term target when rates went up. So for us, it's not really next year how we're going to get there. We will try to maximize return on equity, you know, limited by being a safe bank, a well-capitalized bank and making sure that we are robust and just have on a shorter period reference point that we are competitive compared with peers. then exactly where we end up or not, you need to have an assumption about interest rates, about M&A volumes, about mortgage margins, etc. And that's not something I envy you guys. You need to predict. We don't. We just try to perform in any market, regardless of what it brings us as best as we can. Malmö, you want to say a word on dividend?

Yeah. So just to comment maybe on the RIA development in the fourth quarter, maybe worth mentioning that the FX effect, And we looked as well a little bit at where expectations were for the quarter and could see that that was probably the big deviation. So the weaker krona, not least against the dollar, had an impact on RIA of 13 billion. And I think that was the deviation. That's 26 basis points of common equity, one ratio. And for every five basis points or so, it translates into about 25 euro of dividend on a like-for-like basis. So that explains probably some of that deviation. In terms of the pension fund contribution, we have continued this year to take a similar contribution as we have done in previous years. And some of this, as the decision is made in Q4, some of this will also be seen in Q1, common equity ratio. There's no change in the contribution from the pension fund in the quarter.

Okay. Thanks very much. That's helpful.

Thank you.

Thank you. We will now take the next question. And the question comes from the line of Tariq El Mayad from Bank of America. Please go ahead.

Hi, good morning, everyone. Thanks for taking my questions. Two from my side. First of all, follow up on the distribution and dividend. I was also surprised that you didn't even try to meet consensus expectations, especially that, you know, I mean, you've guided you'll be within the range. So you chose to be at the higher end. But, I mean, given the fact that, you know, I mean, theory clearly not a concern, Basel IV is behind us almost. I mean, the NII is eroding, but you kind of see the light at the end of the tunnel, and you see how comfortable the outlook can grow. So why this not small extra distribution to, especially on the buyback? You mentioned, I think, previously that up to 15 billion buyback in a year would still be not disrupting your share price action. So... So this is the first one. And second one on growth. Yes, I read your outlook yesterday, but we've been there in the past where, you know, there have been some economists, mechanical optimism as the rates go down and the economy grow and improves. But what interests me here is to hear you more what you see in the ground and when do you see The growth actually picking up last year. It was supposed to be second half last year. I think you postponed it to second half this year. What do you see now as an infection point or acceleration in growth? Thank you very much.

Thank you very much. I can start with the first question on the dividend distribution. The communicated target was, of course, to get inside of the 100 to 300 basis point buffer. And I think we could say that We are taking active actions to get us into within that range. When we are within that range, we don't take more additional actions to manage the capital level proactively and moving inside of that range. So we have an ongoing buyback program of $10 billion that we've had for a few years, and we like the continuity of that, and that is part of our capital repatriation model. But since we have been above the 300 basis points, we wanted to manage actively down to be within the range. Now that we are within the range, of course, the most desirable development would have been that we see a pickup coming to a second question of growth so that we can redeploy capital into our balance sheet. But since we're not there right now, we have taken the action to go down to be within the range. But then going forward, we would like to provide visibility and continuity, stability in our dividend and stability in our ongoing buyback programs. And with a special dividend of 3 krona, we have then gotten down to be within that range. So that has been the reasoning around. And going forward, that's how we should think about the movement inside of that range of 1 to 300 basis points.

I just want to add one thing in the narrative of your question, and that is, the dividend is not us, it's the shareholders of the bank who appoint the board. So it's not, I don't think, just to be clear, it's not accurate to think about the way we work as why did we not pay as consensus on average did. It's actually why did consensus miss what we paid? So we don't get this wrong that the board and the shareholders of the bank It looks at that. So it is a very prudent institution, SED, so there's always an air of cautiousness. There is a reason for not paying out more in the deliberations in the boardrooms around that everything is very uncertain as well. So even though I completely agree, macroeconomists, you know, they're great, but it's not something we can bank on. It's just an observation about the public, call it collective economist group, that seems to be a bit more optimistic. And all in all, I think it needs to be just pointed out that you add the three things, the share buyback of 10 billion, the 3 kroner and the 850, we are above 10% in dividend yield equivalent or total capital repatriation. And the board, after yesterday's deliberation, thought that was a very nice and balanced way. Then, of course, it's never fun to miss consensus. I acknowledge that more than anyone. But that was not the big theme of why we didn't do more. And then you have the Basel effect coming, and then we'll see how the profit develops over the year.

You had a second question on growth. Could you please repeat that one?

Yes, in a substance, our economist is drawing a kind of positive outlook, but I wanted to hear you more on what you see in the ground. What's the growth or the loan volumes outlook you expect? And I was just referring to the optimism you had last year about picking up in the second half of last year that had been delayed to the second half of this year. I want to know if there's any updates on that front.

Sure. I would say that it still looks very muted. So in the actual numbers where we have just published today and what's happening on the loan side, it looks to be very much wait and see. So both on the mortgage side, you can look at the expectations for house prices in the future. It's come up significantly from being very negative, but it has not yet been very positive and it's not transformed in a meaningful way. in increased volumes. The same on the corporate side, which is also, particularly in the northern European part, moving sidelines, and the growth outlook is, of course, we are very dependent on Germany and these things, and there is a lot of worry out there. I don't dare to predict because I'm so bad at it, so if I said second half of 24, I won't say it again. It will come, but I don't know when. There are a few very strong positive signs not to be mixed up with real data. The first one is that the investment bank, which is an early mover where you actually can track and trace the optimism and the feelings in the boardrooms around our clients, seems to be picking up. There has been already now a meaningful uptick from a low base in fees and commission, and if you just look at the fees and commission we generated this quarter, it is very, very strong. So both on advisory, we're talking more than 30% growth in Q4 compared to Q4 last year. Also, net fees from commissions from securities is up significantly. And all these areas are very, very positive early signs. What you do not see is an increase in loan fees. which is 100% correlated, obviously, to loan demand. The leading indicator is also points of which one is the economist's view on investments and consumption, which are the two main drivers why borrowing needs to take place. So companies expand, they invest, they build a new factory or they need more working capital, the first thing they need to do is to talk to their banks and make sure that they can finance it We also have a very strong signal from the Baltics where it's actually already materialized. So this is not true what I just said in the Baltics where we have seen 5-6% growth. But it's in that little no man's land right now where rates are continuing to come down. People would like to see them bottoming out because you then get certainty that, okay, this is a new environment. This is where we are. I don't want to do funding right now if I think rates are going to continue to come down, particularly if I do floating rates. And then you will find a new steady state that we will come to, I hope, next year.

Thank you very much for the detailed answer. Thank you.

Thank you. Your next question comes from the line of Sophie Peterson from J.P. Morgan. Please go ahead.

Yeah, hi. This is Sophie from J.P. Morgan. Thanks a lot for taking my question. So just going back to net interest income, considering that you said earlier that it takes around six months for kind of NII to drop once rates have stabilized, does this mean that the 2026 net interest income should be lower than the 2025 net interest income? And also related to this on rate sensitivity, one of your peers gives a very detailed rate sensitivity, but at the end of the day, they've got to look at the equity base. They look at the transactional deposits. If I would take your equity base of 230 billion, 1.2 trillion of deposits, but let's say 25% of those are transaction deposits, I would get a 500 billion base Is it fair to assume that kind of 100 basis points lever rates would translate into 5 billion lever NII, or is it that totally wrong approach? And then the second question would be on your interim dividend. Did I understand it correctly that the 2025 dividend will be paid in two tranches, basically in 2026? So, or is it the 2026 earnings that will have an interim dividend in 2026? But if you could just clarify, how do you think about the interim dividend that will be paid in 2026? Is it against 25 earnings or is it against 2026 earnings? And then just a final clarification, the BOSA4 impact, has it changed or is it still of limited around 50 basis points. Thank you.

Thank you, Sophie. Johan here. I start with apologizing if I was unclear on the dividend. It is the dividend attributable to the result of 2025 payable in 2026, which is semi-annual. So the dividend for 20, yeah, that's the shortened suite of it. That's a proposal that we aim to put to the board at the time, to the AGM at the time. I would put in the model a semi-annual because I think it's more likely than not that will be approved.

And on your net interest income, I think you're onto the maps very similarly to you. So, of course, you take your assumption of interest rates, when they trough and stabilize, and then, as we said, around six months for repricing effects to play through. And working around, as you said, the free funds of equity and transaction deposits. Then, of course, it's the big question around volume and margin developments in general. So, with all those assumptions, I think then you'll come up with a net interest income that you think you should be calculating for 2026 and 2025. On your Basel question, yes, there's no change in our outlook there. So what we said in Q3, 50 basis points ratio on the high end is the expectation.

And just finally, your 2026 net interest income should then be lower than that 2025 net interest income.

It depends on your assumptions, so we don't know. It depends on the margins and the volumes and where the rates drop.

But I think you have all the dynamics to put in your assumptions.

Okay, clear. Thank you.

Thank you. Thank you.

Thank you. Your next question comes from the line of Gornara Sakalova from Morgan Stanley. Please go ahead.

Hi, good morning. Thanks for taking my questions. So the first question is on Swedish mortgages. So we saw that the mortgage margins on the portfolio level have expanded in Q4. Do you think that the competitive pressure in Sweden could subside from here? And you mentioned that retail banking market share in Sweden at 30% and you want to grow it modestly. What would be your desired market share in Sweden and what are the key levers for growth for you there? And the second question broader on the regulatory front. Maybe can you share what are the key debates with the regulators that you are having at the moment and what are the key areas of concern? Over the past couple of years, CRE was high on the agenda, but now it looks like the risks have subsided and the exposures have been resilient. What do you think are the key points of their attention right now? Thank you.

Thank you. I can start and Kristoffer can fill in. On the Swedish mortgages, I would start with saying a comment on how I view the dynamic in the pricing. And that is that there are two vessels communicating with each other, and that's deposits and mortgages. When interest rates go down, it is in favor of lending and is unfavorable for deposit taking. And when rates go down, it's favorable for lending and unfavorable for deposit taking. The thing that has happened now is it's a transition. So demand is not there. Therefore, the margins have not expanded anything meaningfully during the last 18 months on mortgages. So you can see that the cuts that the central bank in Sweden has done, we more or less followed it because you had enough on the deposit side. That dynamic is now very interestingly shifting. Therefore, in this quarter, you saw a modest margin expansion on the mortgages, which is the natural direction of travel. You will see margin coming down. If rates go down on deposit taking, you will see margins going up. But they will be dictated by competitive pressures, timing effects, who does what and when. And right now, I think there's still very high competition and very low demand. Therefore, that explains, with the benefit of hindsight, probably why margins have not expanded to compensate for the falling NII generally. I think it's very useful to look at the negative to zero interest rate time and see how things look then. Then it was absolutely the reverse. No one here, I do believe, thinks we will have negative interest rates or zero again in the near term, and therefore we should be somewhere in between where the rates peaked and where the rates were at the all-time low. And that is a process right now. Normally, you should see volume starting picking up when the cost of financing goes down. And that is the whole point. And I'm pretty sure that the central bank will continue until this happens because that's how you get the transmission mechanism for the economy to be more supported by rates. Sorry for the long-winded answer. Maybe I didn't answer the question at all.

I think there's nothing to add. I mean, mortgage margins remain under pressure, particularly as volumes are low. So there's no other development there right now.

And on risks, you might recall that we were unusually comfortable, very comfortable, I would argue, with the CRE risks that we had. But it was very, very topical for almost 18 months. That has now, of course, completely gone away. And some of the best performing stocks is now within this space. Therefore, I would conclude this. Cyber risks are very high on the agenda going forward. We're very happy with the credit quality of the bank and the liquidity position of the bank. There are certain industries in Europe that we have special attention to, not at least there's a lot of discussion about Germany and the larger industries in Germany, and the long-term outlook is being discussed. We, of course, are very conservative and always look on potential risks. And I would say we have special attention on some of those. We also have a little bit of legacy from any business model that relies on funding or financing to a large extent, like the real estate sector or like the private equity industry, but everything is not Goldilocks yet. The weaker business models who did experience these high interest rates, they are not yet. It takes many years sometimes to do restructuring and making sure that you have the appropriate capital structure to cover, to survive any cycle that comes. And if there's anything that's good with increased interest rates is that this gets challenged. You see what models are strong and not, and who can stomach higher financial costs. And then you need a good underlying business to support it. And then there are also, of course, a huge amount of discussion right now on the regulatory framework, particularly the U.S. and the European. It's all out in the air. So I wouldn't call it as – it's a risk in that sense that right now I think there's going to be a lot of political decisions over the coming two years that might change things. It doesn't feel like there's been a common agenda communicated clearly to the financial industry of what is what.

Thank you very much. Thank you.

Thank you. We will now go to the next question. And the question comes from the line of Nicholas McBeath from D&B. Please go ahead.

Thank you and good morning. So a question on your capital target now. So you've acted on your commitment to be within the 300 basis points management buffer for 2024, which was set three years ago. So just wondering, looking ahead, are you still committed to be within the range? Should we always model that you pay out any capital buildup exceeding the 300 basis points management buffer?

I would say, and I'm glad to hear from you, it's no change from the board financial policies that we should aim for being in the range 1 to 300. So no change.

But what does that mean in practice? Because you've had this target and you've been above the target for quite a few years now. So how should we interpret that? Is that still something that we should model according to or, yeah?

What's the... Yeah, I mean... Okay. The reason we were... I mean, we peaked at whatever, 800, 900 basis point buffer. It was not inside our control. It really started with a dividend ban due to COVID and inflation and uncertainty of credit risks, which was, of course, something we were very loudly against in 2021. Okay. it did create for strong banks like us a very precarious situation because it doesn't matter what the board or the shareholders say, they overruled us. And we said when we had that enormous position, given all the things you need to consider when you run a firm like SED and politicians, general public, shareholders, employees, and capital markets attractiveness that we would have a three-year, we committed to a three-year transition to get back to where we were, subject to everything else that can happen. That has now been concluded today. So now we're back to normal, and therefore I should say that Our ambition as management is to live up to the target set by the board, and therefore the 300 should be the upper range when we have the decision once a year to calibrate the capital structure, which we do in conjunction with the Q4 for the AGM to approve. Was that okay, Niklas?

Okay. Yeah, sure. Thank you. Thank you. Then my second question on the cost target. So you're guiding for... 33 billion plus minus 300 million, but assuming average ethics rates from 2024. So just wondering if you could please provide what this would be on today's spot rate, also taking into account the dollar strengthening versus the average from last year.

I don't know. Yeah, no, I don't think we have that number. I mean, we'll have to get back to that. So what number you want, D? I know which number. Okay, Pavel knows the number. We'll come back on it.

Could you tell how much costs you have in dollars?

Oh, dollars. I don't know exactly, but let's say that we have roughly, don't quote me, 50% of the cost base in foreign currency, where euro is the largest and dollar is the second largest currency. Yeah, it's predominantly Euro, so it's not that much. The IT systems are predominantly priced in U.S. dollars. And, of course, we have some staff in dollars, but that's not so meaningful. We can probably do that divide for you, too.

We'll come back to you on that one, Nikos.

All right. Kind of the current, the rate we use now is the rate, but I don't know, I can't tell you which one it is. It's the one we have for the 33. So there is a 33 with current. So if the dollar moves from the average, what we've used, but I don't know that number, that's when we might have an explanation where we will come in lower or higher for the dollar and euro. But the dollar is smaller. I think it is significantly smaller than the euro exposure.

Right. Thank you.

Thank you.

Thank you. Your next question comes from the line of Shreyas Rastava from Citi. Please go ahead.

Hi, and thank you very much for taking my question. My first one is on costs. You've given this AirPlus 1 to 1.3 increase figure, and that, to me, already factors in 200 million extra implementation costs. given the 2024 number included 200 million at one-off. Of that, if you take 875 million for seven months more of air class in 2025, that means you have 125 to 425 extra costs from consolidation net of synergies. So my question to you very simply is, do you think this guidance is fairly conservative and there's a strong likelihood that you'll come in under this? And I'll ask my second question afterwards.

Okay. I'll see if I can answer that question. So basically, if you're looking at the current cost-based run rate in EPLUS, it's about 250 per month. That's the run rate coming into 2025. Now, what we're expecting to happen during the course of 2025 is to get that run rate of costs down to meet the run rate of revenues. Now, the major drivers of that is going to be the three factors that I mentioned previously, the redundancy activities that are going on, the exiting of non-core markets, and the IT migration plan. So this means that we need to exit, and if you just take that in a straight line, and if you look at the current run rate of revenues, you will see that it's quite a sizable reduction of monthly costs that needs to be accomplished. So what we are expecting at this point in time is that the 1 to 1.3 is the impact on those operating expenses as we run through the year. And then we have factored in, as I mentioned, in the starting base of 30.9, we have 700 million, which is flat from last year then of implementation charges that we're expecting to take in 2025. So the reason we're opening up the range is to say that should there be a situation where we would like to accelerate something, for changes or the challenging macro backdrop to make sure that we meet the target of costs and income leveling out. That's why we've opened up that range. But those are the drivers, and I would say to get to the run rate where we need to be for the end of the year, it's an ambitious target. It should be, and it is.

But I wouldn't say it is conservative to the notion that you think it is a high likelihood we will come in lower than these numbers. It is a best effort, as accurate as we can, the picture of where we think we can go. And it's an ambitious plan. It's very, very much hard work that needs to be done in the card business this year to achieve this.

Okay, understood. Thank you. And my second one is just on... capital return. You've obviously front-loaded the $10 billion deduction from capital with the fourth quarter, but obviously you're still at the upper end of your range. The macro environment is getting better, and obviously you'll continually be generating capital quarter to quarter. So is there a possibility that you can expand the approval and potentially deliver more than $10 billion of buybacks this year? Or would you say that the $10 billion is very much What do you think?

10 billion is very much what I think with what I know today. There is no reason we couldn't change this, technically speaking, but there is no such plan. And I think you are absolutely right in the kind of more of a little bit benign outlook, but there are also a more distressed risk scenario for uncertainties going forward, and that needs to take into account. So my base case, which is just an explanation how we work, is that The dividend will be the swing factor next year, depending on how 2025 ends. And during 2025, this pace of share buyback would hold. Unless something really good or really bad happens, things might change. But I think it needs to be significant.

Understood. Thank you.

Thank you. Your next question comes from the line of Patrick Nilsson from Goldman Sachs. Please go ahead.

Hi, and thanks for taking the time today. I appreciate many of the questions have been answered, but I just wanted to ask one clarification and one question on capital as well. And the first one was that you call out these 100 to 200 million timing benefits related to the CNPC segments, if I understood that correctly. But shouldn't you see these timing benefits in other segments as well, such as the Baltics? Or are they so small that they're not really significant? And the other one was just on the RWA segment. trajectory. So except for this Basel impact, do you think that there is anything else we should expect there or will the risk weighted assets sort of grow parallel to how your volumes develop in the medium term? Thank you very much.

Thank you. So on the net interest income development, I think you're right to say that in the Baltics, we should keep some separately. The dynamics are a little bit different and particularly how the mortgages are priced and funded. But say that 100, 200 million is coming across, you will see a little bit of that in the other parts of the SEB group as well. So keep that as a group number rather than a particular CNPC number. The second question on your capital, if I understand correctly, we have no updates on any impacts on RIA compared to what we have communicated thus far. So to your point, future RIA expansion in line with volume growth, apart from what's been communicated.

I would just add the Baltic has much more fixed loans, so it's a different dynamic. and it's much smaller. So I don't know if it's insignificant, but it's much smaller even though there will be the same direction also when the ECB would lower it, but smaller.

Thank you very much.

Thank you. Thank you. The next question comes from the line of Ricardo Raviri from Mediobanca. Please go ahead.

Good morning, everybody. Thanks for taking my question. So two or three, if I may.

The first one is on deposit cost. Your fact book shows that it's about 2.8%, which is still higher than the level, much higher than the level that was reported by one of your competitors a few days ago. So can you explain what you have done in Q4 to bring it down because it is down quarter on quarter. If you brought transaction accounts to zero, whatever, if you can elaborate a little bit on that. Second question is, can you explain why for you it looks like that the share buyback, buying shares at 1.5 times the equity or whatever it is, seems to be better than paying it cash. I really don't understand. It is the same. Let's say both instruments are to return capital to shareholders, but one is one sec equals one sec. When you buy back shares at 1.5, your tangible equity, one sec costs you 1.5 sec. So I really don't understand why in your thinking it was preferable to go for 10 billion buyback, missing the cash DPS, and not doing the other way around. And the other thing I wanted to ask you is, okay, now you say that you are a 290 basis buffer. Okay, fine, but this is just because you have front-loaded hold by back, which means that in Q1 or in Q2, you're gonna be 310, 350, 370. So, Is this the way we should see, the way you think about solving the problem, just up-fronting the whole buy-back? Because this is arithmetic at the very end of the day, because you will accumulate capital in 25 if you have just up-fronted everything. So I was wondering, is this the way you think about bringing the common equity tier one ratio within the range of just at the very end of the year, you know, uploading, up fronting all the whole impact? Is this the way you're going to work in the future too? Thanks. Thank you very much for your question. So if I start with the deposit rate that you mentioned, it's hard to comment on how other banks are reporting and what's included in their numbers, but the decline that you see from Q3 to Q4 is reflecting lower deposit rates paid. So the path through the lower rates that we have seen across the bank, it's been on savings accounts in in Sweden and it's also been on the equivalent accounts in the Baltic. So that is a reflection of the lower deposit rates paid and also both in private and corporate. Your second question, if I get it correctly, on the structure of the capital repatriation program and in relation to the bank's valuations. I think what goes into the plan is not so much considering and marketing to market our actions depending on where the share price of the valuation is but rather to have and provide a consistency and a continuity of a stable growth and stability in the growth and keep stable our ordinary dividend and also have a continuity in our buyback program and we believe that over time that is something that will help us grow EPS even when net profit is not growing quickly so we think there's a value in providing visibility and continuity on an ongoing share buyback program in the size in the order of magnitude that we have and then we have added the special dividend to get us inside over the range of 100 to 300 basis points so we believe that the visibility stability and continuity in those three tools it has a as a value and not on the and a broader theoretical part of the capital repatriation plan. Your final comment, I'm not sure if I exactly understand the question, but you're right to say that the deduction of the full-year program that we have gotten approved from the Swedish FSA is what takes us down to get a special dividend inside of the range of 100 to 300 basis points. And as we commented previously, we have an ambition and we communicated it to be within that range. And going forward, if we were to move above that range, we'd have the conversation again how and what actions we need to take and consider to propose to the board to get us down within the range. If we continue to operate within that range or if we go down because of growth in our business, well, then we'll continue to operate within that range. So we are now in the range. And as long as we're in the range, we don't see need for further proactive actions. Should we go outside the range, that's when that conversation comes back to the agenda. Okay, thanks, Christopher. But why is the buyback preferable to the cash? Because the buyback is up. $10 billion is larger than what you have done last year, if I remember well. I'm pretty sure about that. And the DPS is stable.

It's the same we had the last quarters of two and a half, but you're right. The sum is higher. Well, there are different schools of this. I hear which school you have, and that is, of course, the one which is priced to book type of school. But here I must sometimes refer to the shareholders. We speak to all of them, and there are many preferring share buybacks from dividends. Regardless, the repatriation, they look only on the EPS and they have that kind of census. We have most of the shareholders, they are indifferent. And then we have some who would prefer cash. But in the end, it's really the shareholders that we try to read as well as we can to find striking the best balance by continuously now with the 10 billion, it's a 3% EPS accretion every year, which helps the share price and then having the majority of the repatriation in cash. There are many other benefits for the share buyback, which is not really relevant for the valuation, but I get your point. I know it very well. And that is, of course, that share buybacks are easier to cancel when politicians and regulators and other things would like to give a dividend ban. I was very jealous of the Americans who continue to pay dividend in COVID. The other thing is there's increased flexibility to use that over and beyond the dividend policies. You can change it during the year, increase it, reduce it, which also has very large strategic importance for running a bank. And the last thing I would say that implied in your question is that more capital repatriation is better and less is bad. And that's also a thing which is very subjective. Many, many shareholders actually like to be the last one in the queue. And if you can have a decent return on equity that is competitive, you prefer to have more rather than less capital. But that's also, you know, we are 260,000 owners of this institution and everyone has a slightly different sort of opinion. Our job is to try to get it as right as we can together with the board. And this is the proposal for 2025.

And I understand that, Johan, the stock is down 3%, more or less, which is the buyback of one year, the EPS accretion. So the buyback, the EPS accretion of one year is wiped out in 30 minutes. That's the thing that's happening today, right at the moment. So I don't know if there is, I honestly admit it. I don't know if there is a fiscal incentive for shareholders in Sweden in a buyback rather than in a dividend. Maybe there is something I personally didn't know at all. Maybe I should know. But, you know, missing the DPS consensus DPS is costing you today the whole EPS accretion of one year from the buyback. That's what's happening right now on the market. Just, you know,

Thank you.

Thank you. We will now take our final question for today. And the final question comes from the line of Jens Hallen from Carnegie. Please go ahead.

Thank you. And it's a short one because it's a clarification on the last answer you gave. Can I ask, is there any operational reasons why you're moving from semi-annual buyback approvals to an annual one, except that, of course, you get within the C2-1 target range? I can't see any, so that's where my question is coming from.

No, the major reason is, of course, that we did an annual complete reset. And when that gets approved, regardless of what we actually buy back or not, you deduct it. And then we have taken the decision for the year. That was the reason.

Okay, because I think when we talked about it previously, I think we've discussed that you prefer to do this manually because then you don't need to tie up. the second half year's worth of capital, because effectively there are no meaningful reasons for it. But is this the way you plan to do it now, annually, or is this just a one-off reset to get within the target range?

Good point. We start with quarterly, then semi-annually, and now annually. We haven't discussed, and I have no answer to guide you beyond 2025 if we continue with annual, semi-annual, or quarterly. So I think that's going to be a fluent discussion given whatever you acknowledge around you. So it could change, but we haven't discussed that, what frequency you apply for your share buyback volumes. But I say for me, it's very nice to have 10 billion approved at the beginning of the year. So it gives a little bit extra stability as well, given that we needed to do a 10% or so repatriation equivalent for 2025. Okay, fair enough.

Thank you.

Thank you. I will now hand the call back to Johan for closing remarks.

Okay, I thank you very much. That's an hour and a half. So I wish you all the best. If there's any more questions, we're open. So just ship them in and I'll see some of you in the coming days. So thank you for participating. Thank you. Have a good day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.