Swedbank AB (publ)

Welcome to the Swedbank Second Quarter Report 2021. Throughout the call, all participants will be in a listen-only mode, and afterwards, there will be a question and answer session. Just to remind you, this conference is being recorded. Today, I'm pleased to present Annie Ho, Head of Investor Relations. Please begin your meeting.

Good morning, everybody, and a very warm welcome. In the room with me, we have Jens Henriksson, the CEO of Anders Karlsson, CFO, and also Rolf Mathquart, CRO. We have one hour to run through the presentation and the Q&A. So for this time, again, I will ask that we have a maximum of two questions from each person. And without further ado, I'll hand over to Jens.

Thank you, Annie. And it's good to meet you all here in the middle of the summer to talk about Swedbank's result for the second quarter. And it's a good result. Our revenue increases once again. It's the second quarter in a row it increases with more than 10%. In our home markets, restrictions have been rolled back gradually thanks to vaccinations and fewer COVID cases. And we see strength and growth with the increased economic activity. But there is still uncertainty around the spread of new virus variants. And at the same time, there is the discussion on inflation and how central banks will act. For us, Swedbank, growth, better profitability, and a clear business focus has characterized the quarter. Now, when we look at the figures, our net profit improved with 12% compared with the previous quarter. And our profit for the quarter was just about 5.5 billion kroners. Expenses developed in line with our forecast and the cost cap of 20.5 billion for 2021 and 2022 remains unchanged, now excluding the cost associated with the investigation by the U.S. authorities. Net interest income was stable. Mortgage loans are growing in both Sweden and in the Baltics, but corporate customers choose to fund themselves via the capital markets to a large extent. And deposits continue to grow. Net commission income was higher. East restrictions and increased consumption led to higher economic activity. And this produced higher revenues in our card business. And the continued strength of the stock market also contributed and our DCM and ECM business increased during the quarter. Return on equity for the quarter was 14.2%, and our target on RE of 15% remains unchanged. Now, our result has improved continually during the past three quarters, and this quarter is the strongest since Q3 2018, which happens to be before the AML crisis. Now, Swedbank shall be a low-risk bank, and confidence in us as a bank is the foundation for our relationship with customers and the market. In our brand service, we see that confidence continues to be strong in Estonia, Latvia, and Lithuania. And in Sweden, It has increased during the last years. However, we have more work to do before we reach the same level as our peers in Sweden. Credit quality is strong, and credit impairments are back at low levels. We have a conservative approach, and we keep a management buffer of 2 billion kronor. That's because we don't yet have an overview of all of the effects of the pandemic. Vulnerable sectors such as hotels and restaurants still rely on government support. Our capital position remains strong with more than 600 points margin to the Swedish FSA's requirement, and our liquidity position is strong. On the issue of card fraud, which is directly felt by our customers, we are seeing a decrease. thanks to new security solution and advanced monitoring. Card fraud has been cut by 40% so far this year. And online, the decrease is 55%. Swedbank is the bank for mortgages. And as I described last quarter, we have taken measures to win back market share. We have been faster at answering questions. meeting customers and providing feedback. And our availability was better during the quarter than at the start of the year. At the same time, the high level of activity in the Swedish mortgage market has spread across the whole country. Customers, they are renovating their homes and putting on additions. And this is the season for it, and it's also one of the effects of the pandemic. Our price strategy is unchanged. We are not the cheapest nor the most expensive. However, our total offering as a full service bank should be the best. We finished the first quarter with a market share of new mortgages of 12.7% together with the savings banks. And in May, it had increased to 17.4%. And this, as you know, should be compared to a back book of 23%. Our ambition is that we shall reach our own back book market share of 18% in new sales. And in May, it was just about 14%. And we continue to implement measures. And even though we don't have the market share numbers for June, our mortgage volume in terms of kroner reached an all-time high. In the Baltic countries, our business maintains its strength in competitive markets, and we are the market leader. Our share of new mortgage lending continues to surpass our back book of the mortgage market. For more than 200 years, Swedbank's driving force has been to better enable our customers to make sound and sustainable financial decisions. put it simply, to promote financial health. To get there, the bank has made its largest investment in digital infrastructure and new savings platforms in collaboration with FNZ. The goal is to provide customized advice for all customers in all channels and create opportunities for new, simple services for savings and investment. We are a digital bank with physical meeting funds. And the number of new Swedish retail customers that onboarded fully digitally increased by 17% compared with last year. And in the Baltic markets, more than half of all the new corporate customers are now onboarded digitally. And saving digitally is popular. Monthly fund savings started in the app. where the Internet bank has grown by nearly 50% in Sweden. And the demand for robust funds in Estonia, Latvia, and Lithuania has been strong. And since March, we see that assets under managed have increased from although very low levels, but they have increased and four-folded, a good alternative to savings accounts. And it's Great to see how digitization and new technology delivers simple services for our customers. Biometric identification, account aggregation, and new corporate services are just a few examples. Our vision is a financially sound and sustainable society. And we have signed the UN Principles for Sustainable Banking. And we also set targets for our contributions to the UN's sustainable development goals. And in 2021, we will grow Swedbank's sustainable funding, among other things. Today, we have an unbroken chain of green finance stretching the whole way from the bank's own funding via green bonds to the client. And we offer loans for production of renewable energy, green construction, and green mortgages. And our green asset register continued to grow as existing green mortgages were included there during the quarter. And now it amounts to a total of 38 billion kronor. And during the quarter, we issued two new green bonds amounting to a total of 15 billion Swedish kronor. And when it comes to equities, our pioneering work with green equity has contributed to the creation of the new standard for green equity. NASDAQ green designation, which was presented by NASDAQ and me in the quarter. And we see continued interest in the green equity designation. And as you know, earlier this year, we updated our climate policy. We decided to no longer directly finance unconventional extraction of production of fossil fuels or prospecting of new oil or gas fields. And in May, The International Energy Agency, IEA, published a report that shows that our climate policy is a step in the right direction. They say the same thing of us, namely that no more new oil or gas funds should be there if we're going to reach net zero emissions by 2050. At Swedbank, we continue to integrate sustainability in everything we do, and that's a basis for good results. And talking about good results, Anders, that is what Anders will talk about. So a detailed description of the results. Anders, the floor is yours. Thank you, Jens.