Svenska Handelsbanken AB (publ)

Good morning, everyone, and welcome to this presentation of Handelsbanken's result for the first quarter of 2025. The first quarter showed an operating profit of 8.1 billion, which was very stable compared to last quarter last year. The return on equity was 13%. Compared to the same quarter last year, the NII showed resilience. And fee and commissions grew on the back of positive development, again in the savings business. The costs have come down significantly over the year, down 7%. This led to the cost-income ratio improving year-on-year to 40.7 in the quarter. Net credit losses again for the fifth consecutive quarter amounted to net credit loss recoveries. In times of volatile markets and uncertainties about the macro outlook, it's always important to remind about the low funding and liquidity risks in the bank. These are continuously handled in a prudent manner in order to safeguard the bank from potential unknown factors such as market disruptions or a rapid change in the macro environment. And on top of the low credit, funding and liquidity risks, the capital situation is robust, with the CET ratio still above the long-term target range. This, all in all, puts the bank in a solid financial position. On the back of prevailing uncertainties regarding the geopolitical landscape and the macro outlook, the anticipated dividend is calibrated to a level resulting in a CET1 ratio of 18.4%. which means 50 basis points above the long-term target range of 100 to 300 basis points above the regulatory requirement. The anticipated dividend for the first quarter of the year hence amounts to 5 kronor per share, or 157% of the earnings generated in the quarter. Now, if we look closer at the financial summary of the first quarter compared to the previous quarter, ROE amounted, as said, to around 13%. NII dropped 2% when adjusting for negative currency effects relating to the strengthening of the SEC. The fee and commission income was seasonally lower and dropped 5%. The NFT was unusually strong in Q4 and dropped back to a more normal level for the bank. In total, income dropped by 8%. Total expenses dropped by 5% and 2% adjusted for restructuring expenses, allocation to the octagon and FX. This despite the annual salary increase that always comes in play in Q1 for the bank. The cost to income ratio was consequently kept around 40% despite the headwinds in income. The net credit losses amounted to net recoveries of 54 million, or one basis point. The underlying operating profit was down 12%. If we instead compared to the same quarter last year, NII showed resilience and only declined by 2% despite the material cuts in policy rates in our home markets. Net fee and commission, on the other hand, increased by 5% with the key contributor again being the savings and mutual funds business. On the expense side, we saw an underlying reduction by 5%. The decline comes as an effect of the cost initiatives carried out over the last year. Net accrued loss recoveries were a touch lower than last year. So all in all, the operating profit was down by 2% and on an underlying basis by 4%. Now we zoom in to the NII development compared to the previous quarter. So the NII dropped by 3%, of which 1 percentage point related to currency effects from the strongest Swedish krona. The remaining decline of 2 percentage point was explained by negative margin effects due to mainly policy rate cuts. The remaining effects from volume development, day count and other effects were minor and more or less offset each other. Net fee and commission income increased by 5% compared to last year, with a key contributor again relating to the savings-related commissions, which increased by 7% compared to last year. We continue to see that the bank gains market share in the savings business, which has been the trend for many years now. The decline in saving relating commissions versus Q4 was mainly related to a negative day count effect and performance fee booked in the previous quarter. Payment fees increased by 2% year-on-year. The quarter-on-quarter development was related to seasonality with especially a slower customer activity on the card side. Other fees were up 2% year-on-year and fairly stable versus Q4. Now over to the expenses. 2024 was a year with intense internal work in order to first identify and then address efficiency-enhancing measures. Central and business support functions were trimmed and the use of external consultants reduced. The total staffing, meaning employees and external resources, was down by 7% compared to Q1 last year, and the total underlying cost dropped by 5%. The efforts carried out over the past 12 months have not only reduced the running cost base, but also strengthened the cost culture throughout the bank, which is essential for sustainable long-term efficiency, competitiveness and profitability of the bank. At the same time, we increased our efforts and resources in the areas where we meet the customers and are now in Sweden physically presented in more locations than a year ago. As a result of the elevated pace of IT development spend in the past recent number of years, numerous rollouts of both efficiency enhancing and business facilitating tools have been made available for our employees. In fact, the stream of new tools in recent years has never been higher. This on top of continuous upgrades in the customer interfaces in the app and in our internet bank. Of course, new digital tools are not increasing efficiency or generating business volumes simply by itself. The value creation rather arises from efficient and optimal utilization of these. Currently, the organization is in full speed in adapting to working on realizing the full benefits of the new tools. For example, in the fields of CRM, FCP, internal workflows, customer interaction in areas of signing and documentation, Microsoft 365, cloud solutions, et cetera. Naturally, this should lead to increased efficiency and improved offering and advice to our customers in the future. From a cost perspective, this also means that the running IT development spend can be kept somewhat lower as of now compared to the recent years. Now over to asset quality and credit losses, or rather the net credit recoveries. Over the past five years, which have included both a pandemic as well as stress situations for some corporate sectors during this period of sharp rate hikes, the bank has on aggregated reported total net credit loss recoveries over more than 220 million. This underscores the strength of the asset quality and the prudent approach to risk in the bank. The reason for this relates to the bank's limited risk appetite, the consistency in the underwriting, the preference for collateralized lending, and not least the local presence and connections through our branches. Also in this quarter, the management add-ons were trimmed down a bit, this time by 28 million to a remaining 121 million. Excluding the add-ons, the net credit loss recovers amounted to 26 million. The general view in the bank is that we simply do not like risk relating to external factors that we cannot control, such market disruptions or rapid change in the macro environment. Our business model is rather built around relationships long-term with customers, having strong cash flow profiles and managing of prudent credit risk over time. Therefore, we always strive at limiting funding, liquidity and market related risk as much as possible in order to safeguard the bank against whatever unknown external events that might occur. Over the past five years, few years, sorry, we've increased the already ample liquidity buffer to add even further protection to the bank And currently, the liquidity reserve amounts to around 950 billion kronor, representing more than a quarter of the balance sheet. And on top of that, there are unencumbered assets, which in practice mean an additional liquidity buffer in the form of unused room for covered bond issuance. Hence, the bank is in a strong position to swiftly adjust to market disruptions should such occur. And on top of low credit funding and liquidity risks, the capital situation is robust, with a CET 1 ratio 50 basis points above the bank's long-term target range, which is 100 to 300 basis points above the regulatory requirement. The solid financials put the bank in a position of strength, being one of the most trustworthy and stable counterparts in the industry. And the view is shared by the leading rating agencies who rate the bank the highest among comparable banks globally. Now a few words about the respective home markets. In our largest home market, Sweden, the development is stable. The cost-income ratio is around 30 and the return on allocated capital almost 15%. The bank has a strong market position in Sweden as the largest combined lender in private and corporate lending. And as we've seen in the statistics over the past decade, the biggest player in regards to net inflows into mutual funds. In Norway, we've seen significant improvements over the course of the year. The cost-income ratio has improved from 52 in Q1 last year down to 44 in this quarter. After a refocus period that was starting during the spring last year, the business growth is now more balanced between lending, deposits and savings. And cost initiatives are also starting to show in the numbers. In the UK, we have the most satisfied customers in the market. Volume growth, however, remains subdued with continued high amortization, but we see small signs of increased customer activity. The focus in the recent quarters have been on improving the efficiency, and we are gradually starting to see initiatives filtering through in the cost space in the UK. And finally, the Netherlands, which is our smallest home market of the group. Also in Q1, we saw business volume growth, especially in asset management and deposits. So to sum up, Q1 operating profit held up well compared to last year with NII resilience and lower costs. The cost-income ratio improved. Asset quality remains as robust as it should be for a bank with hundreds bankers' risk appetite and risk profile. The funding and liquidity risks are low and the capital position very strong. And finally, and not least, we continue to focus on making sure that our advisors in our branches are close to and easily available for our customers. This is something our customers really appreciate, especially in more uncertain times. So with those final remarks, we now take a short break before moving into the Q&A session. Thank you.

Thank you. Thank you for watching. Thank you. Thank you. Thank you. . . you . . . Thank you.

Hello, everyone, and welcome back to the Q&A session. This is Peter Grabe, Head of Investor Relations, speaking. And in the studio, we have Michael Green, CEO, and Carl Sederskjöld, CFO. As always, we would like to remind you that we appreciate if you ask one question at a time in order for everyone to get a chance to ask your question. Follow-up questions are, of course, welcome when it's your turn again. And with those words, operator, please, could we have the first question?

Thank you. And now we're going to take our first question. And it comes from Marcus Sundgren from Capital Chevron. Your line is open. Please ask a question.

Yeah, good morning. So I was thinking about your on capital. So you're targeting a buffer of three and a half percent. What risks are you having in mind when you target a buffer above the one to three that you have usually? I mean, it's not liquidity risk, I assume. And also, you're not worried about credit risks as you continue to make credit reverses. So what risks are we really talking about? And should we read this as your actual target is more of 3% to 4% than 1% to 3%?

Well, good morning, Marcus, and thanks for the question. No, you shouldn't read that into the decision. You know that we, after the COVID outbreak, obviously, we were at some time at plus 6 percentage points in CT1 gap. And at that time, we kept reiterating that our normal target range is one to three. And it's obviously been a case of how do you move yourself within the normal target range. We took the first decision to move ourselves down to plus four during last year. And now we take the second step to move ourselves down to three and a half. And we are on a trajectory to move into the normal target range. So we just think that was quite a good timing to do it nowadays. We are, as you say, we're extremely pleased with our balance sheet with the asset quality, with the liquidity situation. We can obviously see that there's a bit of muted growth. So we think it's quite a good timing actually to take this step now. But we keep reiterating that one to three is our normal target range.

And what risks are you keeping additional capital for them? It's been a matter of... It's not business growth.

No, you've heard us obviously saying that When we were at plus six, we didn't see risks that made us keep the buffer at plus six. It was rather a metric of how to move yourselves down into the one to three percentage points. So we will prioritize our long-term shareholders, and they are quite pleased with owning the bank and leaving some cash in the bank, returning 13% in ROE. So we feel no stress, but we keep reiterating that we will move ourselves down to one to three.

Okay. Thank you.

Thank you. Now we're going to take our next question. And the next question comes in the line of Andreas Harkinson from SCB. Your line is open. Please ask a question.

Thank you, and good morning, guys. On slide seven, looking at the stock numbers, I mean, you made a very impressive reduction here now against underlying own stock. It's down three, and consultants are down even more than that. Could you tell us a little bit from what areas are you finding these people? And also, do you still believe there's room to do more in this area?

Thanks. Yes, thanks, and good morning, Andreas. As you say, we've taken down our total staffing levels by 975 people, and that's been a combination then of staff plus consultants, obviously. And what we've said is that what Michael initiated during the start of last year was obviously we made an analysis of the central support functions. We managed to merge a few of them. We managed to take away a few resources there. So that's one key component. The other one is that we've obviously for quite a few years, we have invested quite heavily into our IT. We have invested in core systems. We have invested in CRM capabilities. We have invested in Microsoft 365 and quite a few actually of digital advancements, which is obviously making the possibilities to work much more productive in quite a meaningful way. The conclusion of that one is that we've been able to move down our IT investments to some extent. And thereby, obviously, that's quite a meaningful impact as well. And the majority of that one is taking away consultants, which we needed to move through the uplift we needed to do for a few years ago. And then thirdly, which we might see nowadays, is that people are starting adapting to the better technique and possibilities we have, and thereby we can work a bit more productive. So the majority of the program-like actions, if you call it that way, they are done. We've managed to go through them last year. We will have some more room to do in UK because they are lagging a bit due to their processes. then second, we do expect actually we are in quite a good position to keep cost under control and keep progressing in creating more productivity. If that shows up in more business, we'll be very pleased. And otherwise, we think we have an organization which will gradually adjust. Okay. Thank you.

Thank you. Now we're going to take our next question. And the next question comes in the line of Magnus Andersson from ABGSC. Your line is open. Please ask a question.

Yes, good morning. I have a question about the performance in your home markets outside of Sweden. I mean, they are all, as you account for it in your business accounting, are we showing worse or worse than them? than the Swedish market. And even if we disregard of the capital allocation, which might play a role here, if you look at cost income ratios in the UK, it's the highest cost income ratio in a long time, even before rates have started to normalize. In Norway, you are pretty flat at 2023 levels, 10% ROE, and you're at around 10% in the Netherlands. So I'm just wondering, is there any room for similar type of efficiency and housing measures as you pulled off in Sweden, or how are you else going to address this? I mean, the UK, everything else is equal. But could it be quite disastrous when rates start to come down, for example? That's my question.

Thanks, Magnuson. Good morning. Well, I think for us, obviously, we know obviously that over a long time we built new home markets. Normally, if you move back like 20 years, the way we built our home markets is we opened a branch. The branch manager decided how to approach the market. Normally, we started with lending clients and which borrowed money from us. obviously the regulatory regime has changed quite a bit in the picture. We've changed as well. And what we've spent quite a lot of efforts into is obviously to build a position in both UK, Norway and the Netherlands that make us be able to accrue a balanced business. And I think we've been doing quite a lot of actually positive moves here. We are in a situation now where if I talk UK first, We obviously built by being the most stable bank and by the distribution model we run in UK, which is obviously differentiating us vis-a-vis many of our peers. We have been able to build extremely good client relations. We have the best of client satisfaction. We have accrued a lot of savings, mainly in deposits. We are focusing a lot on improving the asset management side. And both of these aspects are obviously needed to meaningfully move upwards in ROE, even though we obviously printed extremely strong ROE in the UK in the last years. Norway, we have invested a lot in over the last years. We built a private segment now where we have increased the number of clients by more than 40,000. So that's a heavy improvement. And that puts us in a position where we can run a much more balanced business model. Norway has made a lot of positive movements during the last year. But as we've said, obviously, it will not go over a quarter. It will take some time. But I'm really pleased to see the growth we've seen in the Norwegian business model, which has been then obviously volumes in deposit taking and in assets under management has far succeeded the growth we've seen in lending. So thereby, we think we are well positioned to move forward there as well. And Netherlands, obviously, we placed a lot of focus in integrating now the asset management side. And we come some way. We have more room to go there. But we think, actually, we are in quite a good position, both to start accumulating absolute growth, but also rotating the business to a more ROE-friendly mix. So I would actually think we are quite well positioned right now.

Okay, so just to follow up on UK as it's the most important. So what you're saying really is that you're now at the 54% cost income ratio. You're not going to address the cost base, but rather try to build on income, hope for growth to return and increase the fee-related part.

I think it's both. I think it's both. Michael, jump in then. I think it's both, actually. First of all, we are obviously pursuing the same actions in UK as we've done in Sweden. But the process in UK has been we needed to go through a more process with involving the staff in order to cut staff. And thereby you will see this metric coming through now in the coming quarter. So we will definitely work with cost and we will keep on doing that one. then it is a necessity to start growing. We have 85,000 clients in the UK. We think we can grow that number quite meaningfully with the offering we have. Thereby, we have invested quite a lot in IT to bring on the leverage of the branch staff. And then, of course, as you say, we need to improve on the asset management, and we do quite a lot of actions there as well. So it's both, actually, both cut in cost and increase income. Yeah. Okay, thank you.

Thank you. Now we're going to take our next question. And the question comes from Nicholas Magbath from TNB. Your line is open. Please ask a question.

Thank you. So follow-up on questions related to FTEs. Looking at the FTE trend in the Swedish operations, honestly, I guess when it's down almost 4% year-on-year, How should we think about this decline? Is that reflecting autonomous decisions within the branches or more some centralized communication or steering method? Because I think previously you said when FTEs rose in the branches in Sweden, that this reflects branches adapting to improve business outlook. So just wondering if this is reflecting the reverse now when we see FTEs are falling.

I think there's a few things we like to see in the figure over time. First of all, as you say, yes, we've cut down, obviously, the support functions, so we merge them. So that has some implications on this one. So that we like to keep on seeing, productivity gains within the support functions. The second, which we highlighted during the year, is that, of course, we want to improve, first of all, the ratio of staffing out in the branches where we meet our clients, And we want also to see that we're opening up branches or meeting places if we find good business there. And we've seen that over the last year. Having said that, I think the branches actually are, by culture, they're extremely adaptable to the momentum, to the business momentum. And what they've actually achieved during the last year, we've obviously rolled out a lot of tools, which is great. making them possible to run a much more efficient and productive branch. And then when we don't see the growth and the business momentum, they will adapt to that one. So we'll see what happens. I think both Michael and I would be most pleased if we see... business start returning and we see strong growth. And then we're very happy to see them growing staffing again. But we're equally pleased to see them adapt into the current environment.

Right. So if I just might add, it's Michael here. So, I mean, the work we've done to bring efficiency more in place in the central functions, we'll keep doing that. And how much the... what resources our branches need for their business, it's up to them to do. And as Carl said, they're very adaptable to the business environment, and they will adjust accordingly. So I'm very confident with that.

Perfect. Thank you.

Thank you. Now we're going to take our next question. And the next question comes from Sophie Petersens from JP Morgan. Your line is open. Please ask a question.

Yeah, hi. Thanks a lot for taking my question. In terms of net interest income, when I look at the operating division, net interest income was down in all the core divisions, but then in the other units, NII was actually up 215%. at 277 million this quarter. How should we think about the kind of run rate net interest income in this other unit business? And what's kind of a normalized level here, if you could comment on that. And then just a follow-up question on the cost line. Should we expect any costs from Octogonen going forward, given that the cost for octogone must be delayed this quarter. Is this now the new one, right? Thank you.

Well, let me start and then Peter, please fill in on the first of all, in the NII, this is actually one of the what you're highlighting is obviously the true outcome of this quarter. And this is one of the reasons why we don't guide and try to split it up on lending and deposit taking. and various segments within the bank. What's happened, obviously, is both of all, we have quite a good impact from the liquidity portfolio this year. That's obviously one component of running the internal bank. And thereby, if we do a lot, if we do the income or the NIR components could end up either at the treasury side or in the segments. What we do internally is that we shift out all the P&L generated in the Treasurer out towards the segments. And if we generate more money on the liquidity portfolio, that will be shifted out towards all segments, both our four home markets but also other central functions. And that's one part of what you've seen in the P&L during this quarter. And then, Peter?

No, I think that's the way you should look at it, that the result in Central Treasury – the excess results that sometimes arises, it's allocated to the business areas, so the segments, but also to central functions, and the central functions are part of the other units that you live to.

And your second question, Octogonen, I mean, we'll be extremely pleased if we square and surpass our peers, we'll be very happy to see Octogonen accrual increase so it will be down to the performance over the year to see what the cost base of octagon will be and you you can you can guesstimate that as well as we do yeah okay thank you but in terms of the net interest income just from the the kind of treasury department i mean uh like

It's just very, very difficult to kind of forecast with these kind of moves. So is there any guidance or any way that you can help us kind of think about the net interest income from this division going forward? Or, yeah, like anything you could point to, or even on a group level, like when net interest income will drop fast, And when do you expect NIL to start to improve? Because if you have like 215% quarter-on-quarter, it's very difficult to forecast.

Yeah. I think, first of all, my message is you shouldn't be too detailed on that table and try to guesstimate the various sectors there. Because what we say is that they will keep moving around between the sectors over the quarters. Quite similar to what you heard from other banks, obviously, in earlier calls, obviously. We obviously had a negative component of nearly $290 million from margins. And that's obviously due to us having roughly 25% of the deposit volumes on transaction accounts, which is obviously where we pay 0%. So even if Riksbank is cutting their rate, we can't cut the rate we pay to our clients there. So that's one core component, which will obviously have a negative impact on us. Then, as we talked about previously, we obviously have some timing effects, which is having the opposite component. And in Sweden, they are coming from the fact that In Sweden, we reprice deposits daily, but we reprice the lending monthly. And thereby, it takes three months before that has worked through the system. And then, obviously, it could actually take two quarters in an accounting perspective before we see the all as equal level. That's the component in Sweden. In UK and Norway, we actually have the opposite. We have notice periods there. So we are actually, the P&L we print right now is actually a bit lower than it will turn out to be when it's funneled through the system. So thereby, I think we will have some lag effects, and obviously, but you should see them. During Q2, we will have our normal trends if rates stay the same, but it won't be until Q3 you see the full impact of it. And then in the end, obviously, after that, the NII will be decided by volumes and margin development.

Okay, that's very clear. And maybe just on the net interesting, do you still make a lot on the U.S. carry trade with the U.S. uncertainty?

Did you call that the U.S.

carry trade?

I don't know if you call that the U.S. carry trade. I can say we have no U.S. carry trade, if that was what you call it. But we obviously have a liquidity reserve, and liquidity reserve of a long-term perspective is obviously an insurance. And in that case, obviously, we run with the view that that over time will cost us something or be close to zero. And right now, obviously, we are in a situation where we are making some money on the U.S. deposits we are accruing when we give them away to the central bank. We're pleased about it, but we can't take that for granted. And we haven't changed anything in our U.S. operations.

Is there any quantum... How do you think about the quantum of the money that you make on the U.S. liquidity portfolio?

No, that's one key component of obviously running the Treasury Department. And I'm sorry now, Sofia, I think you're done your question.

Yeah, sorry. Thank you very much. That was very helpful.

Thank you. Now we're going to take our next question. And the question comes from Namita Samtani from Barclays. Your line is open. Please ask a question.

Good morning, and thanks for taking my question. I just wondered, why did you issue more covered bonds in the first quarter than what matured, given there's no lending growth on your balance sheet? Or do you foresee some lending growth picking up in the next few quarters? Thank you.

Thanks, Amita, and good morning. I think it's fair to say you know us, you know that we are an extremely conservative bank, and we will always play it from the secure side. So we've obviously, being in such uncertain times, obviously, we've took the opportunity to pre-fund ourselves. And as you know, we have a tap-in market in Sweden, and thereby we've actually had investors which were interested in buying our covered bonds. So thereby it was actually quite a good timing and opportunity for us to scale up a bit in that area. But since you're asking, I think I can lay out the words as well and say that we've actually seen fairly fully functioning U.S. markets. We've been able to keep the exact financing plan on volumes. It's not been spread out over the days in such a smooth fashion as we've seen before. But over time, we've actually kept the pace which we wanted to.

That's helpful. Thanks very much.

Thank you. Now we're going to take our next question. And it comes from Bettina Turner from BNP Paribas Exxon. Your line is open. Please ask your question.

Yeah. Hi. Good morning. And thanks for taking my question. I just wanted to ask to go back on capital. I think you were very helpful with your comments there. you're using this temporary buffer to steer down to the 1% to 3% normal range. For this year, I think, does it make sense for you to assume that you will steer it to pull your dividend to the 3.5% buffer? So did you land at the 18.4% at the end of the year? Or do you think it's also possible that you will adjust the buffer again throughout this year? Thank you.

First of all, and thanks for the question. First of all, I think it's fair to say that we've said that our normal target range is one to three. We've said that we will communicate it quarterly. We've took the decision now to move it down half a percentage point. I think that's the only message I have. We've obviously took it down to 4% last year. Now we decide to take it down to 3.5%. And then we'll see for the remaining of the year. But we are in a good position, and we will obviously, you know us, we will try to do this in a smooth fashion and play to the long-term shareholders' benefit.

But for this year, it's fair to assume that you will steer the dividend that you learned at the 18.4% as of now, let's say.

I'd like to add there as well that we have the IRB overhaul, and we don't know when the conclusion from the IRB overhaul comes. But when it does, we obviously expect to see our risk-weighted assets to grow, but the CT1 ratio to be brought down, because we are penalized today by half a percentage point in Pillar 2 add-on. And thereby... If you're asking me if we will close the year at 80.4, I don't know. We'll see.

Okay, helpful. Thank you.

Thank you. And now we're going to take our next question. And the question comes from Shrey Srivatsava from CTO. Line is open. Please ask your question.

Hi, and thank you very much for taking my question. I just want to drill down a bit further into the UK, where I think in local currency you saw sort of 4% to 5% NII decline. Firstly, what's driving that? I know you mentioned some timing specs earlier. Secondly, I know you've been doing a lot of work with the broker channel, but if you look at household loans to the public, they've been in fairly consistent declines and loss. new quarters now. So I'd just like to ask what's the progress looking like on that and when can we start to see this reflection in numbers? Thanks.

Thanks, Frey. Good morning. I think first of all, we obviously made a lot of work to bring our lending growth back. What we can see right now is that we are both actually adding new clients when it comes to corporate clients as well as private clients. And that's actually quite a trend shift we've seen. And I think on the private side, one component, but just one component of that one, is the relations we built with the nationwide brokers. It also relations we built with the local brokers, because right now 80% to 90% of the U.K. mortgage markets are actually running through brokers, and thereby we needed to build that one. As of now, we have four... I think we, sorry, as of now, we have six brokers which we have onboarded. And we plan to have like 10 brokers onboarded at summertime. We think that's actually enough to move our growth back to being positive there. Time will tell. And obviously, with the very uncertain times, we could keep seeing amortizing grow from this level. But having said that, we think we are in quite a good position actually to start seeing both growth in number of clients transferring into growth actually in volumes. And obviously, this is work we've done for quite some time. And the next step of that one is, as we say, we are investing quite a lot in IT right now in UK. And the reason for that one is that we want to increase the leverage and the productivity of the branches and thereby be able to more or less double our client size. So that's the longer-term journey as well. And as you know, we are a very small bank in a very big market with by far the highest client satisfaction and an offering which is highly appreciated. So I think we are quite well positioned, actually, over time to start seeing UK get back to being a growth engine.

Okay, thank you very much. And the sequential NRI, did I know?

in q1 versus q4 um sorry the the the nii drop in in uk is obviously a consequence of of rate movement and margin compression there as well okay thank you very much very helpful thank you thank you and the last questions for today

It comes from the land of Marcus Sandgren from Kepler Chevron. Your line is open. Please ask your question.

Hi again. Just a technical one. On the day count effect, I have figured that two fewer days in this quarter versus last one is roughly 2% lower NII. I was apparently wrong. Is there a big mismatch between convention on assets and liabilities or what am I missing?

Yes, you're partly correct. The day count effect that we have talked about historically relates to the type of lending and the funding that we have in the bank, which are priced on an actual day count convention. So if the bank obviously earns a slight margin, if there are a few days in a month, then obviously there are a few days of earning this margin. That's the traditional one. That's the one that we disclose for the business segments. So that's the same, unchanged. And then you have another impact arising within central treasury. And you can either call it sort of a treasury margin or the like, or you can define it as a day count effect. And we have now chosen to do the latter because we believe it provides an increased degree of transparency for you. And this effect that arises in central treasury offsets the negative impacts that you would see in the business areas if you have fewer days. And as you touched upon, it's correct. It relates to different day count effects on the lending compared to our funding. So if you have a loan that's based on 30 days per month that the customer pays and you have funding that's based on the actual days in a month. So if I have a month of 28 days, you have interest based on two fewer days compared to what you get from the customers. And vice versa, of course, if you have more than 30 days in a month. And this effect arises in central treasury, and that's the one we're highlighting. So in sum, the day count effect is a touch above 40 million for two days, so around 20 to 25 million per day. And that's the number that you should use going forward when assessing the day count effect on a net basis.

Got it. Thanks.

The speakers turn over the questions for today. I'd now like to hand over to the management team for any closing remarks.

So, yeah, thank you for attending this call, and I hope to talk to you soon. And have a nice day. Thank you. Bye-bye.

Thank you.