Swedbank AB (publ)

Good morning, everybody, and welcome to the call. My name is Annie Ho, Head of Investor Relations here at Swedbank. And also on the line today, we have Jens Henriksson, our CEO, Anders Carlson, our CFO, and Rolf Markvart, our CRO. As per usual, we have one hour for the call, where we'll start with a short presentation, followed by Q&A. So without further ado, Jens, please begin.

Thank you, Annie, and good morning to everyone, and welcome to the presentation of Swedbank's result for the fourth quarter 2020-2021. And it was a quarter with stable underlying business and continued good economic growth in our home markets, supported by both expansionary fiscal and monetary policy. And It was once again a quarter dominated by the pandemic. And right now we see high level of sick leave and absence among our coworkers. The spread of the virus led to renewed restrictions. Inflation continued to rise, driven by increasing energy prices, high demand and bottlenecks. Global growth is expected to remain good. even if, as you know, the IMF recently revised down their outlook. But rising inflation, continued spread of the virus, and geopolitical tensions is creating great uncertainty. In these times, Swedbank stands strong. Net profit for the quarter was 4.8 billion kronor, or 4 kronor and 30 euro per share. Net interest income was stable, and commission income was yet again record high, driven by both asset management and capital market advice. Costs, excluding the investigation expenses, rose on a seasonal basis, just as planned, compared with the third quarter. And full year 2021 costs were just below of our cap of 20.5 billion kroner. Our return on equity was 12%. I can now sum up the result for 2021. And it is the second best result in the history of Swedbank. Income rose faster than cost. And cost control is a key priority within the bank. And full year return on equity is 13.2%. Our target of 15% return on equity remains, even if the new bank tax is a factor. And I will, before the end of the year, present the plan how we can reach that target. Swedbank's capital and liquidity position is strong. Our dividend policy of 50% of profit remains. And our strong position makes it possible for the board of directors to suggest the AGM a special dividend of two kronor. And combined with our ordinary dividend, we suggest to distribute 11 kronor and 25 euro per share. Dividend to our shareholder is important. We then have a buffer to the Swedish FSA's requirements. 460 basis points. Credit quality remains strong. For the full year, there were credit impairments of 170 million kroner. And we maintain a management overlay of 1.8 billion kroner because of the uncertainties related to the pandemic. Our run-off portfolio has since 2015 decreased from 23.5 billion kronor to 3.5 billion kronor. Our work with stable and resilient IT platform continues and availability has increased this year. And the work to strengthen compliance and risk control continues at a high pace. we have recruited a new chief compliance officer for Bank of Ireland as the present one is retiring. Our cost cap of 20.5 billion kronor remains for 2022, excluding the investigation cost. And during 2021, we closed all Swedish investigations regarding our historical shortcomings in the AML-CTF sanctions area. And as we have communicated all along, the US investigations are ongoing. They are in different phases and we can still not estimate any potential fines or when the investigations will be concluded. All in all, the foundation of Swedbanks becomes more and more solid. And this makes it possible for us to deliver good results for the benefit of society at large, our customers and the shareholders. And I see several opportunities where we can grow. The first one is mortgages, where the markets remain strong. We have the market leading position in new mortgage lending in Sweden. We were number one in the Swedish mortgage market in June, July, August, September, October, November, and December. And the measures we took to come back after a weak start in 2021 delivered. We have been closer to the customers, worked proactively, and met their needs faster and more efficiently with the right price. Swedbank is the market leader in mortgages, in all our four home markets, Sweden, Estonia, Latvia, and Lithuania. Secondly, we are a digital bank with physical presence. And in 2021, we added more than 50,000 new customers through digital self-service solutions. Our customers become more mobile. More daily banking functions through the app creates efficiency and free up time for expertise advice online, via customer centers, and in our branches. Saving and advice is our core business. And during the last year, we had a big inflow of deposits. Customers are seeking expertise and safe solutions to grow their savings. We therefore trained our advisors. And the savings business is characterized by intense innovation. We have, as one example, tested a new model for occupational pension solutions to companies. Customers have been able to access advice in our digital channels with the transition to remote meetings with advisors. And there we have listened and reasoned with customers face-to-face and given them customized advice. Everything digital, everything seamless. And the cooperation with an outsourced infrastructure together with FNZ leveraged our position. And during next year, we look forward to launch services and products that builds on the new savings platforms. with a target to multiply the number of advisory sessions. Third, Swedbank does not have a separate strategy on sustainability. Sustainability is the core of Swedbank's strategy. We've taken a clear position on climate change, not because we are climate activists, well, actually some are, but because we have an obligation to our owners, clients, employees and society at large. Sustainability is business. In the fourth quarter, we decided to no longer directly finance new oil tankers or refineries for fossil fuel. And we take steps to contribute more to the UN Sustainable Development Goals and the Paris Agreement to reduce carbon emissions. We give advice and support to our customers in their transition to increase sustainability. We make more and more better business. We offer products that simplifies and improves their transition. We are number one among a ranges of corporate bonds in Kronor, both traditional and ESG bonds. And during the quarter, our green portfolio grew with 12%. And we continue to be at the forefront in our own funding. We were the first Nordic bank to issue a green bond in US dollars. And as a result, we have sustainability funding for the bank in euros, sterlings, kroner, and just as I said, dollar. And for the second year in a row, we are included in the Dow Jones Sustainability Index. And we keep working hard towards our vision of a financially sound and sustainable society. Swedbank Robor is Sweden's largest fund company. And during 2021, assets under management grew by 20%. And total assets under management surpassed 2 trillion kronor during the quarter. And Swedbank Robor continues to create values for savers, and 13 funds have the highest Morningstar ratings in terms of performance. In 2021, new fund sales in our own channels were the strongest in seven years in Sweden. And this year, we aim to do even more in our own channels. The fund offering is completely green with a high sustainability level. And Swedbank Grover is keeping pace with its target that all assets under management aligns with the Paris Agreement in three years and to reach net zero by 2040, a result of active management. Savings in Swedbank Grover funds launched in Estonia, Latvia and Lithuania during 2021 grows steady, although from a low level. And we look forward to increase that business. And fourth, moving to the Baltics, or as I prefer to call it, Estonia, Latvia, Lithuania, we have a solid and long-term commitment to Estonia, Latvia, and Lithuania. And we are working constantly to improve our offering. And in some areas, we are even at the forefront in the bank. Our customers in the Baltics can now easily obtain a mortgage in a fully digitized process. In the corporate market we see new business, our customers grow more financially sophisticated. The economies grow fast and so does the need for financial services such as funds, insurance and e-commerce solutions. And thanks to our roots in the savings banks movement, we know that the ability to build sound and sustainable personal finances improves with more knowledge. In 2021, we held 900 lectures on finance for young people, and customers could choose from more than 200 online seminars. And they showed great interest for finance and sustainability with a focus on savings, pensions, investments, and budget planning. And I'm again proud of the strong trust we have in Estonia, Latvia, and Lithuania, where Swedbank ranks as a top brand. And by that is the time now for our CFO, Anders Karlsson, to dig deeper into the numbers. Anders, the floor is yours.

Thank you, Jens. Yes, let's go into the details of the quarterly result, beginning with lending and deposits. Compared to last quarter, the total loan portfolio increased by 23 billion, excluding a positive FX impact of 3 billion. Mortgage lending in both Sweden and the Baltics continues to grow on the back of strong markets and continued business focus. It is particularly pleasing to report that Swedish mortgages increased by 13 billion for the third quarter in a row. Corporate lending increased by 8 billion, driven by growth in Baltic banking and property management in LC&I, of which 5 billion was a transfer from Swedish banking. Customer deposit inflows continued this quarter, increasing by 31 billion, excluding a positive FX effect of 3 billion. Now looking at the revenue lines. starting off with net interest income, which is stable. The underlying NII decreased by around 36 million, as higher average lending volumes were offset by lower lending margins. NII from corporate lending margins declined by around 20 million, mainly from lending portfolio composition changes during the quarter rather than price pressure. NII from private mortgages in Swedish banking increased somewhat as increased lending volumes mitigated decreased margins. Deposit margins improved in the quarter as more clients were charged for deposits in LCNI and Baltic Banking. The Group Treasury NII decreased somewhat due to less favorable conditions in the short-term money markets. The benefit from cheaper covered bond funding was offset by senior and 81 issuance. Other NII effects in the quarter includes a positive effect from the ECB liquidity facilities in multi-banking and a negative one-off effect in the leasing business. Before talking about factors impacting NII, let me take one step back. and remind you that in the last two years, deposits have increased by 307 billion, and lending have increased by 73 billion, a factor of four. The development of NII will, of course, depend on the combined development of manufacturers such as lending growth, potential central bank actions, development of base rates, customer preferences, as well as the competitive landscape. With our current liability composition, we will benefit from increasing short-term rates, reminding you of the flooring of corporate loans on the asset side. Over to net commission income, which is yet again at a record high. Underlying card commissions were seasonally lower quarter over quarter, and we saw dampened card activity over Christmas period as COVID restrictions returned. There was a positive impact related to the second half of 2021 from MasterCard of 64 million. Income from asset management increased slightly by 43 million. supported by market development and performance fees of 34 million. Robert's Swedish fund business saw net inflows of 7 billion as a result of annual transfers of funds from the pension authority and improved sales, primarily in our own channels, which are more profitable. Corporate advisory had a strong quarter due to participation in a number of IPOs and market maker fees of 28 million during the quarter. Turning to net gains and losses. NGL was at a low level this quarter. The fixed income markets has been difficult throughout 2021 and the market volatility in late October and the beginning of November particularly impacted client trading. while group Treasury and Yale was impacted by negative valuation effects in derivatives used to manage interest rate risk. Other income was stable quarter over quarter. Looking at the annual development, this has been a steadily increasing source of diversified income. A few words on expenses before I hand over to Rolf. Expenses were as expected, higher quarter on quarter, driven mainly by seasonality in staff cost, IT expenses, business consultants, and marketing. Cost discipline continues to be one of our key priorities. And this has enabled us to end the year with underlying expenses in line with the cost cap of 20.5 billion. AML investigation costs amounted to 355 million in addition to this. As Jens mentioned, our cost cap of 20.5 billion for 2022 underlying expenses still stands. And we reiterate our best guess of AML investigation costs for this year of 500 million. From next quarter onwards, the new bank tax will be implemented, which will be around 1 billion gross for 2022. I will now hand over to Rolf to talk about asset quality and credit impairments.