Swedbank AB (publ)

Good morning, everybody, and welcome to the presentation of Swedbank's third quarter 2021 results. My name is Annie Ho, Head of Investor Relations. With me in the room is Jens Henriksson, Anders Karlsson, and Rolf Marquardt, our CEO, CFO, and CRO. We will begin with a short presentation, followed by Q&A as usual. But with that, I think I hand straight over to Jens to begin our presentation.

Thank you, Annie, and welcome all to the presentation of Swedbank's results for the third quarter. Again, a strong quarter with focus on the business. The quarter has been characterized by a stepwise journey towards a new normal. In Sweden, restrictions are being lifted and many are returning to their workplaces. In our other home markets, Estonia, Latvia and Lithuania, there are still restrictions in place. For the last 20 years, I have, in one capacity or the other, attended the IMF annual meetings. So also this year, although digitally. And if I would summarize it, I would say the global recovery continues, but the momentum has weakened. There is a worry about inflation. It seems to be temporary, although rising energy prices, shortages of semiconductors and higher commodity prices combined with matching problems in the labour market could create longer-lasting problems. There are also risks associated with how and at what pace government tapers support to households and companies. and the pandemic is still far from over. In these uncertain times, Swedbank stands strong. Today, I'm proud to present another strong quarterly result. For the second quarter in a row, our profit after tax is 5.5 billion kronor. Net interest income is stable, and net commission income increased once again to record levels from increased asset management income and higher activity in the card business. Costs are in line with our forecast and our cost guidance of 24.5 billion SIK, excluding the expenses related to the US investigations, they remains 2021 and 2022. In the third quarter, Swedbank had a return on equity of 13.6%. And as you all know, our return is impacted both by caps that accrue during the year and that the quarter of the profit of 2019 and 2020 has not yet been paid out to the shareholders. But next week, that can change. The Board of Swedbank has asked for an extra general meeting to decide on the proposed dividend on SEK 7.30, a proposal in accordance with the bank's dividend policy. Our capital and liquidity positions are strong, our earning capacity as well, and we have a buffer relative to the updated Swedish FSA's minimum requirement of approximately 480 basis points. Our credit quality remains strong and we maintain a management overlay of approximately 1.9 billion kronor. The continued work to improve governance and controls gives results. We have received a green light from the European Central Bank on the new organization of our Baltic banking operations and availability in our channels increased again during the quarter. Our customers shall have access to us 24 hours a day, seven days a week, and be able to bank with us whenever or wherever they want. Swedbank is the bank for mortgages. In Sweden, we were together with the savings banks market leaders in June, July, and August. Our market share through our own channels exceeded 19% in August, and that surpassed our existing That is just 2%. And as usual, we do not get the market share figures until a few weeks before month end. But volume in September was at the same level as August, an increase of 65% compared to last year. We have shortened the time from loan commitment to closure. We have reduced the time spent in queues, and the collaboration with the Fartighetsbyrån, our real estate agency, has improved, and our pricing strategy holds. We are neither the most expensive nor the cheapest, but we have the best full-service offerings. We maintain our position as the leading mortgage provider in Estonia, Latvia, and Lithuania. During the quarter, we have continued to meet our customers' needs as the economic conditions change. We are supporting businesses with credits, rich financing, and to a larger extent, helping them raising funds from the capital markets. For our 7 million private customers, we continue to develop and expand advisories. And this takes place in all of our channels and is being added in more parts of the business, generating a higher share of digital sales. Throughout the bank's history, we have been at the forefront of technological development, using new technology to make our customers' financial life easier. And honestly, we are the original fintech company. We have worked in the mass markets since the 1820s. We had bank buses and bank boats. Minuten with cash from a machine was the first ATM in Sweden. We began to offer online services almost 25 years ago. And now our customers carry the bank in their pockets around the clock using the most frequently used bank app. And we launched it 10 years ago. Customer satisfaction for both the internet bank and the app is high, and we work continuously to improve our customer relations. During the quarter, we made it possible to freeze and replace a debit card through the Swedbank app. We have launched more detailed information on card transactions in the mobile bank. It's a good way to quickly detect fraud. And more than 90% of savings and pension transactions in the group are now made using digital channels. Sustainable savings are attracting many customers, and especially the young. And to improve their mobile customer experience, we've developed a financial glossary especially for them. And in Swedbank's fund platform, it is now easier to make climate-smart decisions. We have introduced a label that shows the funds rate when it comes to ESG and CO2 risk for example, all available in the app. To address climate-related risks in a bank, we collaborate with the Swedish Meteorological and Hydrological Institute, that is the contact point in Sweden for the IPCC. We want to understand how the effects from climate change, such as flooding, can impact the real estate sector. The EU's taxonomy will change the prerequisites for the banking sector, it will lead to increased transparency and comparability regarding the sustainability of both lending and investment. And correctly designed regulations contribute to sustainability being an integrated part of the bank's offering. And the financial sector has a central role in the transition required to reach the Paris Agreement's climate target and the UN's Sustainable Development Goals. And we continue to develop our advice to companies that are in transition. A clear example of that is that during the year, we have arranged two green bond issues per week for corporate customers. And Swedbank Robor now manage assets close to 2 trillion Swedish kronor. And the goal is to manage it in accordance with the Paris Agreement by 2025. And in Estonia, we want to build a sustainable savings culture Customers who turn 18, they offer the free Robofond share as a birthday present. Talking about Estonia, we are very proud to be operating in Estonia and Latvia and Lithuania, where we continue to see a positive development. Three countries with rapid economic growth that already has surpassed the pre-pandemic GDP levels. For Swedbank, three home markets that for many years will grow faster than Sweden. The share of people owning their home is low but rising. Demand for financial products such as mortgages, insurances and savings increase as prosperity grows. And we work to increase awareness about sustainable personal finance and interest in Robur's fund is growing. We are the largest business bank in Estonia and the largest bank for private customers in Estonia. Estonia, Latvia, and Lithuania. And we have a long-term commitment to financially sound and sustainable society in Estonia, Latvia, and Lithuania. And during the quarter, we received proof that we are doing the right things when Svembank again was named the most loved brand in Estonia, Latvia, and Lithuania. With this love, I give it over to you, Anders.

Thank you, Jens. Now let's go into the details of the quarterly results, beginning with lending and deposits. Compared to last quarter, the total loan portfolio increased by 15 billion SEK in local currencies, excluding a positive FX impact of 2 billion. Mortgage lending in both Sweden and the Baltics continued to grow on the back of strong markets and a continued business focus. In particular, Swedish mortgages increased by 13 billion quarter-on-quarter, maintaining the all-time highs in new lending seen over the second quarter. Corporate lending remains muted and quarter-on-quarter volumes were stable. We see some growth in Swedish and Baltic banking. While in large corporates, we continue to see demand for bridge financing and capital market funding from our customers. Customer deposit inflows slowed, this quarter increasing by 19 billion, excluding a positive FX effect of 3 billion. Corporate deposits in Baltic banking decreased, driven by customers with large deposits that are charged a fee. And in Swedish banking, we saw a decrease mainly from the public sector. Total deposits in Baltic banking was flat in local currency terms if we exclude the impact of a new pension reform in Estonia, allowing individuals a one-time opportunity to withdraw funds from their future pension. Now looking at the revenue lines, starting off with net interest income, which is stable. The underlying NII increased by around 70 million as a combination of increased lending volumes, overall stable lending margins, a continued pressure from deposits, and effects from group treasury. The treasury result benefited from internal pricing changes, interest rate risk management, and lower funding costs. The negative margin impact on the Swedish mortgage portfolio was only about one basis point in the quarter, and it was compensated by higher volumes. During 2021, higher NII from volume growth in Swedish mortgages has so far offset margin pressure. Going forward, we continue to see certain tailwinds and headwinds that may impact NII. Volume growth and lower funding costs will continue to support NII. On the other hand, excess liquidity in the system is still weighing on NII. There could be continued margin pressure in Swedish mortgages if the market pricing dynamics prevail and the trend of customer choosing fixed loans continues. Then it will be dependent on market rates and security development going forward. Over to net commission income, which is again at record high. The asset management business continues to perform very well, and year-to-date income has increased by 30% compared to the same period last year. The development in the equity markets continues to be supportive. Ruber's Swedish fund business saw net outflows of 3 billion, partly due to outflows on the state-run premium pension platform, while the outflows in Baltic banking was due to the pension reform in Estonia mentioned earlier. Underlying card commissions improved sequentially quarter- having benefited from the summer months and increased consumption levels from a gradual easing of COVID-19 restrictions. Income from FX transactions from foreign travel is improving, but still lagging. Corporate advisory commissions were seasonally lower, reminding you that Q2 was positively impacted by a large 5PO deal. Turning to net gains and losses. Underlying NGL was at the normal level. The NGL result was lower as there was a positive 100 million valuation effect in the second quarter from shares held by Fastid Spiron in Hemnet, which had IPO'd. A few words on expenses before I hand over to Rolf. Expenses were on a similar level as last quarter, as were AML investigation costs, which amounted to 96 million. Cost control is a key priority, and our overall cost development is in line with our plan. Our cost guidance of 20.5 billion for underlying expenses this year and next year I will now hand over to Rolf to talk about asset quality and the credit provisions that were made in the quarter.