Swedbank AB (publ)

Good morning, and thank you for joining our presentation of Swedbank's first quarter 2021 results. With me is our CEO, Jens Henriksson, and our CFO, Anders Karlsson, and our CRO, Rolf Markvart. We will begin as usual with our presentation, and thereafter you will be invited to participate in Q&A, where we would like to keep to two questions per person at a time to give everyone an opportunity. And with that, I'll hand over to you, Jens.

Well, thank you, Annie, and good morning to everyone and welcome to the presentation of Swedbank's Q1 report for 2021. Today, I am proud to present the report with an increased profitability during a quarter where the bank has moved forward despite the challenging time. It has been a tough quarter for many people, businesses and the economy. And the most important issue for the global economy has been and is this to COVID vaccines. In these tough times, we have continued to deliver a strong result. Swedbank continues to be one of the strongest performers among large banks in Europe with a return of equity of 12.8%. We are also efficient with a cost to income ratio of 0.44%. But the ratio is higher compared to what it used to be due to a high investment rate and a considerable effort spent on fighting financial crime. Our capital position is also strong with a reassuring buffer of 560 basis points to the Swedish FSA's requirement. Profit after taxes increased by 10% from the previous quarter. mainly due to lower costs and credit losses that were down by 50%. NII net interest income was stable and mortgage lending grew, but not in line with the market. NCI net commission income was stable as well. Our capital management business had a positive impact on NCI during Q1, whereas income from our card business was negatively affected by Q1. both seasonal effects and pandemic restrictions. Costs for 2021 are in line with plan. Our cost cap remains unchanged, 20.5 billion SAK and an additional 500 million for investigations related to Swedbank historical shortcomings. All in all, a strong result in tough times. But We have also faced challenges, especially in mortgages in IT. In Sweden, home prices have decreased, and the dynamics in the housing market is very fast, especially in large cities. Our Swedish market share does not match our ambitions, and we have to improve. We believe that we are well positioned when it comes to pricing, but we are too slow in responding to our customers' needs. We simply haven't kept up, and this is an area where we need to improve. Every day, Swedbank and the savings banks meet the customers through six million digital interactions, and the pandemic has accelerated the digitization process. Our customers are banking online more frequently and have higher expectations on our services to work smoothly. That has not always been the case. We've had incidents and disruptions with our services. And the equity so far this year has been below our target. And the disturbance in our equity trading platform have unfortunately been extensive. This does not live up to our customer expectations. They must be able to carry out the business and access the bank in the way they need to. 24 hours a day, seven days a week, 365 and sometimes 366 days. We are working hard to address the challenges we are facing. Our share in new mortgage lending in Sweden needs to increase. That's why we're increasingly focusing on meeting our customers' needs. And our strength, as you know, is a broad base of customers across the country, together with the savings banks. And we have made the loan approval process quicker to meet expectations, and have now cut the response time by 50%. We have reallocated resources and provide faster feedback to customers, both digitally and in person. And we proactively advise customers with an emphasis on creating deeper relationships and highlighting our full service offer for financial health, with savings playing a key role. And we are working actively to short queues and wait times in the customer centers. The collaboration with our real estate broker subsidiary, Fastia Spiron, has been recently been expanded to include special offers and integrated marketing, both in virtual and physical channels. The activities in Swedbank and the savings bank's IT platforms are record high, and the interest in equity trading is also high among Swedbank's and the savings bank's many customers. In order to future-proof the bank's IT platforms, we run a comprehensive program with a number of measures. It contains long-term plans to meet stability and availability requirements, but also here and now to minimize and manage incidents. We are investing in simplicity, availability, and stability, and when we reach customers, we also win business. As you know, we strive to be a low-risk bank, and we have addressed the historical shortcomings identified by the authorities and the Clifford Chance Report. But in the wake of such historic events, there are still investigations yet to be concluded. Nasdaq Stockholm, i.e. the Stockholm Stock Exchange in March, they concluded that... during the period 2016 to 2019 did not fully follow the market abuse regulation properly and the rules for the stock exchange. And the bank mainly shares the view of the stock exchange, and therefore we anticipate a fine. And that fine can amount to a maximum of 60 million kroner. In September 2020, the Swedish FSA is carrying out an investigation around issues that are parallel in time and matters with the Stockholm Stock Exchange statement. And the SFSA, the Swedish Financial Supervisory Authorities, can decide on a sanction, even if the Stockholm Stock Exchange gives us a fine. The investigation by the U.S. authorities is ongoing. And the bank doesn't have any new information about when the investigations may be concluded. I see that we take steps and close the historical issues, one after one, as the investigations are finished. And in order to do our part in the fight against financial crime going forward, the focus is now to have the bank on a low risk level. And we lower risk through continued structured work with KYC measures. And at the same time, we're becoming more precise, monitoring suspicious transactions when both automation and upgraded processes are beginning to fall in place. And we have, during the quarter, also decided to stop international payments via the Internet Bank to several countries with high-risk profiles. For swish services, we have tightened the rules to put a stop to new fraud patterns we are seeing. And it is also reassuring for me as CEO that significant credit losses so far has not materialized. Credit quality is very strong and credit losses decreased by 50% during the quarter. As of today, we've made provisions of more than 1.8 billion in addition to our models, a reassuring safety margin. We have continued in 2021 to adjust the bank to the needs of customers during the pandemic, both in how we work internally and how we support them. The capital markets are attractive in this new landscape for financing, both ECM and DCM. We assist corporate customers with issues of both traditional and green bonds and have strengthened our position considerably on the bond market. We have automated FX services to assist SMEs to secure their FX business. Corporate customers can now easily connect their accounting with our service in a digital onboarding process, which saves time both for the customer and us. And Rubur, which is the largest fund manager in Sweden, has also launched in Estonia, Latvia and Lithuania, where we see considerable growth potential and an opportunity to contribute to society's development and contribute to a culture of sustainable savings, all in line with our roots. It is satisfying to see that we continue to make our customers' financial life easier during the pandemic. And now, Anders, it's your time to go through the numbers and the quarterly development. So the floor is yours.

Thank you, Jens. Good morning, everyone. We achieved a return on equity of 12.8% in this quarter through improved profitability. Core income lines were stable. and a more normalized NGL level was offset by seasonally lower expenses. Asset quality continues to be strong and credit impairments decreased. The cost-income ratio ended up at 0.44. Compared to last quarter, the total loan portfolio increased by 5 billion, including a positive FX impact of 7 billion. Mortgage lending in both Sweden and the Baltics continues to grow in local currencies, while corporate lending within Swedish banking remains muted. And in LC&I, total lending volumes decreased by 4.5 billion, including a positive FX impact of 2.5 billion. While direct lending to clients was stable, there was a large reduction of exposures in other lending, Customer deposit inflows continue this quarter, increasing by $43 billion, of which $16 billion stems from households, and $10 billion that is of a temporary effect, stemming from one corporate client's pension premiums that will be invested shortly. Now, let us look at the quarter-over-quarter results, starting off with net interest income, which overall is stable. In Q1, we saw lower average lending volumes and excess liquidity placed with central banks being largely offset by lower funding costs as more expensive capital markets funding matured. Lending margins overall are stable. We see the increasing trend of customers in Sweden choosing to fix their mortgages in longer tenors continuing to weigh somewhat on the margins. FX and day count effects impacted NII negatively. And the deposit guarantee for 2021 will be around 550 million, taking the Q1 net effect down by 78 million. There was a positive adjustment for previous years of 100 million that was booked in the quarter. Over to net commission income. The asset management business continues to perform well as a result of the development in the equity markets, and we saw net inflows of 7 billion during the quarter. Income was higher even compared to a strong previous quarter that was further boosted by performance fees. Underlying card commissions continue to be on low levels, further impacted by quarter-over-quarter seasonality and more restrictions due to the pandemic. reminding you that there was a one-off payment to the savings banks last quarter. Commissions from brokerage and corporate finance decreased from a high level in the fourth quarter, which also benefited from a 40 million market make. Turning to net gains and losses. The NGL result was lower, but with good client activity. Last quarter included large positive valuation effects and favorable FX trading conditions. Other income continues to be stable. Higher income from associates offset lower income from other line items such as net insurance and assisted savings banks. Let's look at expenses before I hand over to Rolf. This quarter expenses were seasonally lower, quarter over quarter, and in line with our plan. I will now hand over to Rolf to talk about asset quality and the credit provisions that were made in the quarter.