Svenska Handelsbanken AB (publ)

Good morning and welcome to this presentation of Handelsbanken's results for the first quarter of 2026. We can conclude that the bank reported yet another solid quarter. Operating profit increased by 9% compared to Q4, and the ROE amounted to 14%. The main income lines, NII, and fee and commissions were stable. While the lending growth in Sweden was held back a bit by a general slow Swedish economic growth, it was again very encouraging to see that the lending growth trend in the UK and the Netherlands continued both on the household and on the corporate side. This has now been a consistent trend for more than a year. The savings business continued to perform well with market shares of net inflows into mutual funds far exceeding the market share in our books. in both Sweden and in Norway. Cost efficiency is always a top priority in the bank, and again, we saw expenses declining. The net asset quality remained very strong with more or less insignificant credit losses once again. The capital remains robust. The anticipated dividends for the quarter earnings were increased a bit in order to calibrate the CET1 ratio to 17.2% or 250 basis points above the regulatory requirement compared to the 285 basis points in the previous quarter. The anticipated dividends amounted to 2.93 krona per share. or 91% of the earnings generated in the quarter. When we look at the longer-term value creation for our shareholders, this solid Q1 report fits well into the picture of the bank's resilient business model. As illustrated in this graph, the growth in equity per share plus dividends has not only been consistently stable over the past decade, but also growing with an average of 14% per year. And if zooming in on the past five years, the average growth rate has been even higher at 15%. And not to forget, this has been achieved in a decade, which includes everything from negative interest rates, Brexit, a pandemic, warning in the Ukraine, inflation and interest rate spikes, stresses in the real estate sectors, etc., etc. This is what we strive at always generating for our shareholders and also what the shareholders should expect from a bank like us. This stability is, of course, not achieved by coincidence and not just of our way of working. It's a result of the chosen markets and geographies. Our four home markets share the following common traits. They are all stable democracies with large economies, rule of law applies, and the political and regulatory landscape are stable. It also helps if there are cultural similarities and shares of values. Not only the assets, but also the cash flow from our customers are stemming from stable Western European economies. In such markets, the Handelsbanken model has a chance to stand out with a unique offering and a higher customer satisfaction than our peers. It is, of course, also essential that there are large bases of potential customers with the right risk profile and that we have a demand for our offering. Hence, offering material scope for long-term profitable growth at a suitable risk level in stable markets. And just to add a small remark, given the recent themes into the financial markets, we have no exposures to private credit. Before going into the financials for the first quarter, just some comments on the recent business development in these four home markets. Starting with Sweden, which accounts for 76% of the profits in our home markets. Handelsbanken is the largest lender in Sweden when summing up household and corporate lending. It's therefore fairly natural that the soft general economic growth in Sweden translates into fairly flat lending volumes in the past quarters. Deposits are growing somewhat, but the key growth is clearly seen in the savings business, where we consistently for the one and a half decade have seen market share of net inflows into our mutual funds far exceeding the market share of our outstanding volume by more than two times. In the UK, we had a long period after Brexit with declining lending volumes, mainly due to customer amortizations exceeding new lending. since more than a year the trend has clearly shifted to a consistent lending growth quarter by quarter on both the household and the corporate side also deposits have increased over the past years as well as the savings business the uk is a market where the customer satisfaction really stands out the most when comparing with our peers in the market In Norway, we stated two years ago that we needed to see a better balance between lending, deposits, and savings, and the situation has improved since. While lending volume have dropped over the past year, mainly due to intense competition, growth has been seen in deposits, and in particular in the savings business. Over the past two years, the market share of the net flows into mutual funds in Norway has been more than two times the market share of the outstanding volumes. This means that we are deepening the relationships with existing customers and adding new customers, which for improved profitability over time. And finally, the Netherlands. Just like in the UK, the distance to peers in terms of customer satisfaction is particularly large. Lending growth has been very strong, as you can see, and despite the drop in deposit last year, the longer trend has also been positive. And what is even more positive is that we now see also, we now also register a sound growth in the savings business with steady growing asset under management. Now, if we look closer at the financials of the fourth quarter compared to the previous quarter, the first quarter, sorry, already amounted to 14%, and the cost-income ratio was 39.5%. In Q1, VAT refund of 1.1 billion was booked, and an adjusted basis, the RE was 11.7, and the cost income ratio 42.8. Operating profit increased by 9%, but declined on underlying basis by 3%. NII and fee and commission were marginally down. Headwinds mainly related to day count effects and FX. Income increased by 3%, but declining by 3% on an underlying basis. Credit losses amounted to 35 million or one basis point. Regular fees decreased as the previous quarter included a booking of a charge for the interest-free deposits at the central bank. Now if we switch over and look at the quarter compared to Q1 last year. NII declined by 13% and 10% adjusted for currency effects. The decline is related to lower margins in the wake of lower short-term market rates. Net fee and commission income, on the other hand, increased by 7% adjusted for FX effect. The key driver was again the savings business and strong inflows and positive market developments. All in all, total income dropped by 6% on an underlying basis. Underlying expenses dropped by 1% despite the annual salary revision that comes into force on January 1st each year, and also the general cost inflation. Last year, we had a net credit loss reverses, and the regulatory fees were flat year on year. All in all, the underlying operating profit was down by 12%. Now, if we take a closer look at the NII development compared to the previous quarter, we see that NII dropped by 1%. Volume growth contributed with 20 million in the quarter. Due to lagging effects on interest margins from lower short-term market rates in the previous quarter, the net of margins and funding contributed negatively by 67 million. Deposit guarantee fees were lower this quarter. The decline being explained by fees being elevated last quarter as the final bill for that year was received and paid. The day count effect due to two less days in the quarter and the currency effects due to a stronger krona on average is creating some headwind as you can see. Net fee and commission income dropped slightly in the quarter, the bulk of fee and commissions related to the savings business, especially in the mutual funds business. The positive effect on fees from the strong net fee inflows were, however, offset in Q1 by a negative day count effect as well as negative mixed effects with an increased share of the AAUM asset management in lower fee funds. Other fees were seasonally down. The high market share of net inflows into mutual funds have added significant customer asset management to the bank over time. As illustrated in this slide, the bank has now accumulated net inflows into Swedish mutual funds at almost two times the runner-up over the past decade. This success comes not only from appreciated offering and strong performance in the funds over the years, but also the bank's distribution capacity where advisors are close to and have deep relationship with our customers parallel to an appreciated offering and distribution in our digital channels. Now over to the expenses. That trend of increased costs was broken in 2024, and since then the expenses have trended down, despite annual salary revisions and general cost inflation. The bank is now in a good position in regards to cost efficiency. As illustrated in Q1, when costs continued down on both quarter on quarter, and year on year. It's deeply rooted in our culture and among our employees to always look at new ways of becoming even more efficient. Next slide show our asset quality and credit losses. Over the past decades, credit losses have been very low, which they should be in the bank with our risk appetite. Since the outbreak of the pandemic in 2020, the sum of all credit losses has been 50 million krona or on an average 2 million krona per quarter. And that includes the period from the pandemic, sharp swings in policy rates and inflation, the disruption of supply chains following the war in the Ukraine and Middle East, et cetera, et cetera. Still more or less no credit losses. If we compare the credit losses to our closest peers, the bank also stands out over the decade. In particular, in volatile times, difference in underlying asset quality has shown. In Q1, the credit loss ratio was one basis point. Perhaps needless to say, asset quality remains very strong. The bank is in a very solid financial position. Credit risks, funding risks, liquidity risks, and market-related risks are prudently managed, and the capital position is strong. The anticipated dividend in the quarter of 2.93 per share equals to 91% of the earnings in Q1, and is yet another step to gradually adjust the capital position in the bank. The CET one ratio now stands at 250 basis points above the regulatory minimum compared to the 285 basis points in the previous quarter. The bank should, however, always be considered one of the most trustworthy and stable counterparts in the industry. This is also the view by the lending rating agencies who rate the bank the highest among comparable rates globally. And this view was again confirmed and further enforced last evening by Moody's, who upgraded the bank's baseline credit assessment rating to A1 from A2. This put the bank in a very exclusive group of only a handful of privately owned banks globally with the highest BCA rating by Moody's. Finally, to wrap up, Q1 was a solid quarter with increased operating profit and ROE, although including a positive contribution from a one-off VAT refund. Q1 NII and fee and commissions were stable and cost declined. We see lending now growing consistently in the UK and the Netherlands and also in the savings business broadly over the markets. Our way of doing bank is appreciated by customers where they experience close relationship with us, and it's also seen in the external surveys in all of our well-chosen stable home markets. Asset quality remains just as strong as it should for a bank with our risk appetite, and the capital position is very strong, and we took another step down in the target range by anticipating dividend equaling to 91% of the earnings in the quarter. Finally, I'm also happy for our shareholders that have seen share price reach an all-time high during the quarter. And with those final remarks, we now take a short break before moving into the Q&A session. Thank you. Thank you. Thank you. you Thank you. Thank you. Thank you. Thank you. Thank you.

Hello, everyone, and welcome back. This is Peter Grabe, Head of Investor Relations, speaking. And with me, I have Michael Green, CEO, and Morten Bjurman, CFO. As always, we would like to emphasize that we appreciate that if you ask one question at a time in order to make sure that everyone gets a chance to ask their questions. With those words operated, could we have the first question, please?

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 the first question, and your first question today comes from the line of Magnus Andersen from ABG Sundar Kulja. Please go ahead.