Swedbank AB (publ)

presentation. My name is Annie Ho from Investor Relations, and with me in the room today is Jens Henriksson, our CEO, and Rolf Marquardt, our CRO. Anders Karlsson, our CFO, has a bad cold today, so he is joining us online. Let's start, as per usual, with our presentation and then follow up with Q&As. With that, I hand over to you, Jens.

Thank you, Annie. In a time of war, uncertainty and green transition, Swedbank stands strong. Our business is stable and profitable. We contribute to growth and financial stability. We are a reliable partner. With uncertainty, the global economy remains resilient. According to the IMF's World Economic Outlook, the global economy is expected to recover slowly after the recent year's crisis. To restore price stability, rates will stay high for longer. In Sweden and Estonia, household consumption has decreased and growth has slowed down faster. Lithuania and Latvia have done slightly better. Inflation has slowed down but remains too high in all our four home markets. In these uncertain times, Swedbank once again delivers a stable profit of 9.1 billion kronor, with a return on equity of 19.3%. In a highly competitive market, our lending margins on mortgages continue to decrease. At the same time, our net interest margin increased. net commission income increased and expenses decreased on a seasonal basis and the cost to income ratio improved to 0.30. Our credit quality is solid and we are confident in our conservative and thorough lending process. customers seek the bank's expertise and take actions in response to the current environment. Our exposure to everything property-related is in line with the bank's strategy and risk appetite. Total credit impairments were 350 million kroner during the quarter due to a worsened macroeconomic outlook, stage migrations and recoveries. Our post-model adjustment over and above what the models show now amounts to 1.5 billion kronor. The capital buffer is 370 basis points above the requirements from the Swedish FSA. Swedbank has a strong liquidity position and we have continued to take advantage on our strong position in the funding markets. I'm proud to say that we were the first Nordic bank to issue a social bond. Our corporate business develops well. We are focusing on profitable engagements while maintaining low credit risk. In Sweden, overall lending was stable. In Baltic banking, it increased in line with our ambition of Swedbank 1525. and loans for the green transition to renewable energy are performing strongly. We want to have the best full service offering for our customers and improve our leading position on mortgages in all our home markets. The Swedish housing markets continue to be slow and prices fell slightly. In the Baltic markets, real wages have increased and the mortgage portfolio grew. Our green mortgages for sustainable housing in Estonia and Latvia are very popular. A higher cost of living is leading to lower deposits. In Sweden, we raised rates for all private customers. Monthly fund savings are stable, as is Ruber's position as the leading fund company. In Estonia, Latvia and Lithuania, we foster a culture of long-term savings with a favorable interest rate on our e-savings account EasySaver that also has unlimited withdrawals. Our customer promise is to make our customers' financial lives easier. And we are seeing high demand for support and advice on both the private and corporate sides. And we are investing to be even better. And the number of visits to our digital service Financial Health remains at a good level. Of the more than 2 million phone conversations with customers handled by the bank every quarter, over 40% are now processed through a new cloud-based communication platform, which has rolled out in Estonia, Latvia and Lithuania. And within a month or so, it will be Swedish banking's turn. At the same time, we are starting a new customer center in Unio. We are now streamlining our organization with a focus on improved availability for all our customer segments, all in line with our plan to deliver a sustainable return on equity of 15% in 2025 and onwards. To increase availability and customer satisfaction, we plan to establish a new business area for premium and private banking customers and transfer all corporate customers which have a dedicated advisor to the corporate and institutions business area. We work hard to improve availability for all customers in all channels. With that, I give the floor over to you, Anders, and I hope that you are better and can keep your voice when you go in more detail through the numbers. Anders, the floor is yours.

Thank you, Jens. And first, I do apologize for my voice. Profitability at Swedbank continues to be strong. We report a return on equity of 19% and a stable earnings per share quarter on quarter. Let's go through the financials in more detail, beginning with lending and deposits. The total loan portfolio increased by 12 billion, excluding a negative FX impact of 6 billion. Total private lending in Sweden was broadly stable, Overall trends remain the same, with limited new mortgage market volumes, net negative flows from the savings banks, and elevated levels of extra amortizations. Total corporate lending in Sweden increased by 1 billion, excluding a negative FX effect of 1 billion. In Baltic banking, both private and corporate lending increased by 3 billion and 9 billion respectively, excluding FX. Customer deposits decreased by 12 billion, excluding a negative FX impact of 8 billion. Private deposit decreased both in Swedish banking and Baltic banking, by 6 and 1 billion respectively, excluding FX. Migrations into term deposits continue, particularly in Baltic banking, albeit at a slower pace. In Sweden, the reduction in deposits was driven by continued higher household and interest expenses. Corporate deposits in Sweden decreased by 3 billion, mostly in transaction accounts. And corporate deposits in Baltic banking decreased by 2 billion, excluding FX. Turning to the revenue lines, beginning with net interest income, which increased 133 million quarter-on-quarter, mainly driven by Baltic banking in terms of increased deposit margins and lending volumes. Slightly higher lending margins in CNI, Daycount and FX. The increase was partially offset by higher funding costs from continued migrations in the deposit base, although at a slower pace. and proactive wholesale funding within treasury. Year to date, NII has increased by 69% compared to the same period 2022. In terms of outlook, our macro research team forecast that the ECB will hold rates at current levels and they forecast potentially one more rate hike from the Riksbank before stabilizing into next year. With market rates likely to be high for longer, thus NII levels are now structurally higher. We will continue with our proven pricing strategy where we strive to strike a balance between volumes and margins for lending and deposits subject to origination standards, market rates, market growth and competition. Over to net commission income, which increased by 51 million. Card commissions and payments were stable, Asset management benefited from global stock market performance as well as FX and day count. And securities and corporate finance were seasonally lower. Turning to net gains and losses, which was higher. Six income and FX sales and trading performed well on the back of high client activity. while positive revaluations from funding-related swaps offset negative valuation effects from CVA and DVA. Other income decreased by 60 million. Higher income from the savings banks was offset by lower net insurance valuations, higher claims in the Baltic Banking P&C business and slightly lower income from Entecard. Total expenses came to 5.6 billion. Underlying costs are developing according to plan. Quarter on quarter cost decreased mainly due to lower business consultancy, and marketing costs over the summer, and the cost-income ratio ended at 0.3. Regarding costs going forward, we have talked about how inflation is lingering for longer than previously expected, and that large vendor contracts are up for renegotiation. While this implies that interest rates will likely stay high for longer, it means that the cost headwind we face is prolonged. So this year we assess that it will be around 1.5 billion. Now over to you, Rolf, to talk about asset quality and credit impairments.