Swedbank AB (publ)

welcome to Swedbank's fourth quarter and year end 2023 results presentation. My name is Annie Ho from Investor Relations and with me in the room is our CEO, Jens Henriksson, our CFO Anders Karlsson and our CRO, Rolf Markvart. Let's begin with our usual presentation and then follow it up by Q&A. Jens.

Thank you. Thank you, Annie. And good morning, everyone. Swedbank stands strong in turbulent times. We are now leaving 2023 behind us, a year that has been characterized by concerns about both external and internal security, climate change and a weak economic development. It is a time of continued war in Europe and a terrible conflict in the Middle East. The global economy, though, finished 2023 stronger than forecasted. Decisive actions by central banks have prevailed and we saw both inflation and GDP decline in all our home markets. The Swedish economy was characterized by weak domestic demand. The first half of 2024 will be tough for both households and businesses before things start to improve in autumn. Looking ahead, I am optimistic, not the least because of strong public finances giving fiscal space in all our home markets. Swedbank delivered a very strong result of 34 billion kronor for 2023. Net interest income grew by 54 percent for the full year, even though margins on mortgages were under pressure. Commission income was up by 7 percent due to rising assets under management and increased incomes in cards in payments. Special bank taxes and higher profit has raised our tax costs significantly. For 2023, we are paying more than 13 billion kronor in tax. During the year, we have continued to invest in the bank while maintaining strict cost control. Expenses rose as planned and our full year cost to income ratio ended at the 0.33. This gives a return on equity of 18.3 percent and an earnings per share of 30. The high profitability gives us the opportunity to increase investment this year and the next with one billion each per year. A sustainable bank is a profitable bank. Half of the profit is being used to strengthen the bank, thus creating customer value. The other half is being distributed in accordance with the bank's dividend policy to owners, savings banks, insurance companies, pension funds, private owners and foundations that in turn give back to society. Last week, I was honored that together with the principal participate when the Swedbank owner foundation in Skåne donated money to Malmö University. Our dividend contributes to society and therefore I am proud that our board proposes the annual general meeting, a dividend of 15 kronor and 15 euro per share. Swedbank has a conservative and thorough lending process which contributes to solid credit quality. Credit impediments are stable both for the full year and the quarter. Our property related exposure is in line with the bank's strategy and risk appetite. Customers are active and asking for the bank's advice and they continue to take measures in response to market conditions. We have a strong capital generation capacity and capital position with a buffer of 3.9 percentage points above the regulatory requirements. Our liquidity position is strong. Our digital availability in 2023 was stable at high levels. Our investments in new technology and new ways of working have produced results. Cyber threats remain a reality and the need for an effective total defense is on the agenda. We are well prepared and the public and private sectors are working close together. The bank has stepped up its fight against criminality and I'm pleased with a successful collaboration within the Swedish Anti-Money Laundering Intelligence Task Force where Swedbank held the chairmanship during the year. The mortgage business in Sweden made progress in line with our strategy. We have added new volumes despite a weak market. We reduced fixed mortgages in December while maintaining our attractive full service offering. In Estonia, Latvia and Lithuania, the mortgage portfolio continued to grow in tight competition. We kept our market leading positions in all our four home markets. The increased cost of living has reduced savings in Sweden. In the Baltic countries, it has increased on the back of higher real salaries. We follow the market and offer our customers competitive interest rates in all our home markets. Corporate customer activity in northern Sweden was good, while Swedish corporate customers in general were pessimistic about the economy. Lending decreased due to weak economic development and our continued focus on profitable business in line with our plan 1525. In the Baltic countries, the sentiment was more stable. We gained market share in tough competition. Swedbank shall have the best full service offering and high availability in all channels is a prerequisite for making our customers financial life easier. Our new customer center in Umeå is up and running with 50 new advisors who provide service and advice and meet customers remotely. And our new communication platform is rolled out through the group, making our customers financial life easier. And this is an investment as a shortened waiting times during the quarter. In Sweden, mortgage applications can now be completed digitally using bank ID and mortgage customers in tenant owned apartments can receive an evaluation of their apartment through an effective digital tool. Better for the customer and better for Swedbank. Climate change is the biggest challenge of our time. As a bank, our main impact comes through our customers and together with them, we are taking important steps in the green transition. Right now, this morning, we published Swedbank's transition plan for the climate, where we describe how we will reach our credit portfolio targets. By 2027, our ambition is to at least triple the sustainable loan volumes. In addition, we shall increase the share of ESG bonds out of the total where we act as an advisor to at least 40 percent. Over time, fossil fuels will be phased out. Already today, our sustainable offering with zero margin green loans in Estonia, Latvia is a success and during 2023, lending based on the offering amounted to 370 million euro. For many private customers, sustainable personal finances are in focus with inspiration from training apps. We have rolled out the concept of financial health in Latvia, in Lithuania and based on their personal data, customers can easily check their results and the performance of their savings, investments and pensions. We assist and coach with advice on what they can do to improve their financial health and the rollout of the new advisory platform during the year will enable all our customers to strengthen their financial health. Swedbank is there for our customers in both good and bad times. We are a stable and proactive partner and we help our customers with guidance, advice and financing. And with that, I give the floor to Anders Karlsson, who will deep dive into the financial results. Anders.

Thank you, Jens. Let's round off a great year by going through this quarter's result. Profitability at Swedbank was strong, despite the large one off in the form of an extra dividend from our Estonian subsidiary, triggering a tax expense. We report a return on equity of 16.9 percent and an earnings per share of seven point thirty eight kronor. Looking into the details, beginning with lending and deposits in the quarter, we saw large effects, effects negatively impacting our lending and deposit volumes with 13 and 16 billion respectively. The underlying total loan portfolio decreased by 13 billion total private lending in Sweden was stable. Swedbank's own channels continue to perform through increased mortgage lending flows. However, other 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 decreased by 16 billion due to combination of factors, including corporate repaying revolving credit facilities ahead of year end and continued focus on increasing our profitability and risk management. In Baltic banking, both private and corporate lending increased by two billion each. Underlying customer deposits decreased by 31 billion. Private deposit increased in Baltic banking by 10 billion, while Swedish banking saw a decrease of eight billion. Corporate deposits in Sweden decreased by 41 billion, entirely driven by movements in short term money in base rate linked transaction accounts. Underlying corporate deposits were stable and corporate deposits in Baltic banking increased by 11 billion, mainly due to the annual flow of government funds to state companies. Turning to the revenue lines, beginning with net interest income, which increased by 428 million quarter on quarter, mainly driven by the rolling effects from the gradual repricing of during the quarter, while the deposit side repriced immediately as communicated last quarter. Positive adjustments of 106 million due to the receipt of the final deposit guarantee fee decision and 84 million from a methodology change in CNI origination fees were partially offset by FX effect of 61 million. As Jen said, NII increased by 54% over 2023. In terms of outlook, our macro research team predict that there are a few more months under the current rate environment before rates start to gradually be reduced towards a new normalized level. Going forward, we will continue with our proven pricing strategy and actively work with our administratively priced core products on both sides of the balance sheet. While there will be headwinds, such as higher funding costs of which deposit volumes and margin development is an important part, there are also some potential tailwinds. Deposit migrations to term accounts seem to be flattening out in Sweden and deposit volumes in the Baltics continue to be stable. Wholesale funding costs will gradually decline, albeit with larger outstanding funding volumes. We as a business have been working very hard to increase customer interactions. This momentum will work to our advantage when rates come down and the prospect of lending demand returns both for private mortgages and corporates. Over to net commission income, which decreased by 108 million. Card commissions were seasonally lower, while the asset management result was impacted by slightly lower average stock market performance as well as the Swedish krona strengthening in the quarter. Securities and corporate finance benefited from annual market maker fees of 40 million, turning to net gains and losses, which was strong. Fixed income and FX sales and trading performed well on the back of high client activity, and treasury benefited from positive revaluations from funding related swaps as well as lower interest rates and credit spreads in the liquidity portfolio. There were some negative DVA valuation effects in CNI. Other income increased by 48 million. Net insurance increased by 210 million, driven by positive revaluation effects in Baltic banking, which more than offset seasonally higher claims. Entercard posted a negative result, primarily due to higher impairments, while income from other associates and the savings banks were stable. Total expenses came to 6.4 billion in the quarter, representing our typical seasonality pattern. Throughout 2023, we have been working with the same strict cost discipline as in 2021 and 2022, during which we kept costs right in line with guidance. This will continue. And with that in mind, we recognize that we have increased profitability to a level where we have room to temporarily adjust our investment agenda. We have therefore decided to invest more into business enhancing projects and to speed up essential development in order to strengthen the bank. Such activities will include enhancements of the bank's data capabilities, speeding up the implementation of the Omni-channel communication platform, IT resilience improvements, modernizing payments and card issuing infrastructures, and last but not least, fraud prevention. These temporary investments amount to roughly 1 billion extra per annum for two years. Furthermore, cost headwinds relating to salaries, IT maintenance, and newly renegotiated contracts will continue in a similar magnitude to 2023, as we have talked about before. But parts of it will be managed through increased efficiencies, and hence we expect a net headwind of 1 billion on our underlying costs. So for 2024, expenses starting from the 2023 level excluding the fines, we project that 2024 costs will increase with roughly 2 billion, of which 1 billion is of temporary nature. Now over to you, Rolf, to talk about asset quality and credit impairments.

Thank you Anders. Credit quality remains stable. Our customers show resilience, and the credit impairment ratio in the quarter was eight basis points. But we also see some impacts from the economic downturn and high interest rates. In Sweden, past-due loans increased somewhat but are still at low levels. The 60 days past-due level for Swedish mortgages increased by one basis point to 11 basis points during the quarter. A slight increase was also observed for Swedish corporates. In Baltic banking, past-due loans and other risk indicators were stable. In the fourth quarter, credit impairments ended at 363 million. The updated macro forecast increased provisions by 174 million. Rating and stage migrations added 584 million. This is mainly explained by a few exposures in manufacturing and information and communication. Amortizations and repayments, on the other hand, was 523 million, mostly related to a handful of exposures in property management and manufacturing. Credit migrations were partly offset by a release of 140 million from the post-model adjustment. The remaining post-model adjustment is now 1.3 billion. Individual assessments were 414 million, almost completely explained by a few single cases. The Swedish property management sector has continued to increase. The Swedish company has continued to adapt to changing conditions and has, considering the circumstances, had a stable development during the quarter. The bond market has lately also shown signs of easing up with recent issuance. Using the reported Q3 financials of the 20 largest customers, the debt service tolerance ratio, that is the break-even interest rate, increased to 8%. The average interest coverage ratios declined to 2.6 and we note that the decrease is now leveling off. When stressing these exposures with an interest rate of 7%, on the debt that is maturing over the next 12 months, the average interest coverage ratio goes down to 2. None of the 20 largest companies are below 1. So against this background, we are comfortable with our credit quality. So back to you, Anders.

Thank you, Rolf. Turning to capital. Our capital position continues to be strong with the CT1 capital ratio of 19% and a buffer to the requirements of around 390 basis points. Our capital requirements increased by 12 basis points, mainly due to an increase of the counter-cyclical buffer from 1 to .5% in Estonia and 0 to 1% in Lithuania. Risk exposure amount ended at 847 billion. The rollout of the large corporate PD model caused re-ratings of customers, adding 17 billion of credit risk. As a natural consequence of this and due to lending volume changes, the Article 3 add-on decreased by 18 billion. Operational risk increased by 16 billion due to a higher average historical total income, impacting the annual recalculation. The capital target range of 100 to 300 basis points remains. And with that, I hand over to you, Jens, to conclude. Thank you, Anders.

We now leave 2023 behind us, a year that has been characterized by concerns regarding both external and internal security, climate change and weak economic development. In these turbulent times, Swedbank stands strong. We've been there for our customers due to our resilient profitability. We have maintained strict cost control, a strong capital liquidity position, solid credit quality and a return on equity of .3% during 2023. And this makes it possible for Swedbank's board to propose a dividend of 15 kronor and 15 ö. A dividend that does good in society through savings banks, insurance companies, pension funds, individual investors and non-profit foundations, which in turn give back to the local community. Our societal engagement also means being there for young people and spreading knowledge. During 2023, we have, together with the savings banks, educated 128,000 young people through the Young Economy Initiative in Sweden. In Estonia, Latvia and Lithuania, we have reached more than 280,000 young people, parents and teachers that have attended educational sessions on household economy. A sustainable bank is a profitable bank. And during 2024, I look forward to keep on delivering on our strategic direction of Swedbank 1525 because our customers focus is our focus. And with that, I give the floor back to you, Annie.

Thank you very much. Let's open the Q&A session then. And before I hand over to the operator, may I just remind you to try to stick to two questions per turn. Operator, please.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time. The first question comes on the line of Andreas Akkonsson with SEB. Please go ahead.

Yes, thank you and good morning, everyone. So two questions then. If we start with the NII outlook, if we take the Q4 NII and annualize it, we end up at 53.3 billion. And then, well, we'll see where we're going to be with rates, but it seems like rates are going to be cut maybe for the first time in the middle of Q2. So given that starting point, could you tell us a little bit how you think the NII is going to develop over the year? I mean, we look at consensus around 49, which is then a big decline. What's your feeling on the sensitivity? Let's start with that question.

Thank you, Andreas. I will not guide you on the numbers, as you probably are aware of. But you know the dynamics of our balance sheet. If I look at it from a short-term perspective, moving into Q1 this year, there are a couple of tailwinds. Primarily, you will see the full effects of the roll-in of the repricing in Q4. On the other hand, you have headwinds in terms of funding also rolling in with the same effect. Looking ahead of that, assuming rates will start to fall, the way I think about it is that we have a balance sheet in the Baltics, which is very powerful when rates are moving up quickly. And in Sweden, we have a balance sheet with large volumes of administratively set rates on both sides of the balance sheet, which is powerful in climate when rates are coming down. That is why I'm saying that we will actively work with the administratively set prices on both sides of the balance sheet. But I will not give you an NII outlook and guide you on the numbers, Andreas.

That's fine. It's just that the thinking is interesting and helpful. Then on costs, I have to ask you. FTE rose quite sharply in the second half of the year. Consultancy costs went through the roof in the fourth quarter. And then you now give us this extra $1 billion for two years. It's not so many years ago we used to talk about costs in $16 billion, $17 billion per annum, and now we're up to $25 billion. How much do you think of the cost increase we're going to see in the next two years? What I think is a good cost that could actually start to generate revenues for you, how much is it just catching up, making sure the bank is running?

Could I start off with that and I give the floor to Andreas. If you look at the number of people we've increased, first to remind you that we do not have caps on this, but we do work with the costs. But if you look at the number that we've hired, 60% of the increase during the year is customer-facing people. You see, the last quarter we're talking 90% that are customer-facing people. So what we are doing is that we're delivering according with 1525, namely increasing availability and making sure that we're there for our customers. Anders, you want to follow up?

Yes, thank you, Andreas. First of all, these initiatives or investments that we are talking about speeding up are already running. Many of them are beneficial for the bank when the economy turns. I gave you some examples in my speech, but coming back to this, the omnichannel communication platform will be essential for us to increase availability, which is key. We are developing -to-end processes that will make it faster for the customers and more efficient for us. We are investing into resilience, which is modernizing the platforms, going to cloud instead of running it on-prem. The whole idea behind these temporary investments is to speed up, not something new started, and they are geared to preparing the bank. I can promise you that there are clear plans for running off the costs on these temporary investments. Then on the FTE, and then I'm just reminding you what I said in Q3, we had an underlying headwind in 2023 of around 1.5 billion. You can imagine that that continues into 2024. At the same time, we are guiding you on a net increase in underlying costs of 1 billion. There are constantly efficiency takeouts that we are progressing on.

Good. Just quickly on following up on costs, how much of next or this year's cost would you say is related to AML work?

I would say that's very hard to say because now AML work is something that the 17,000 people in Svebengal works with. What we are seeing is, of course, we are on that level now where we can work much more on optimization. That's a trend that will continue. We'll continue to make sure that we are good on this. If

you would set the DOJ tomorrow, would there be some variable cost that would come out?

Andreas, what I talked about now are the two AML costs. One cost is the cost related to the full work in the bank. I can promise you there are not 70,000 people engaged in being looked into by the US authorities. We have there, and we're talking about roughly 300 million a year running for the cost of these US investigations.

Thank you. Andreas, just to clarify on the consultancy spend, you're perfectly correct. There is a seasonal pattern, as you know, since it's going down in Q3. This year, it's higher than usual. The prime underlying reason for that is that we are really speeding up the tempo when it comes to the IRB project and also kicking off a large data transformation project. That is the prime reason why you see the increase. To remind you, if you want costs to be temporary, you will continue with using external resources rather than hiring more people into the bank.

Perfect.

The next question comes from the line of Nikolas McBeth with D&D. Please go ahead.

Thank you. First question, if you've got anything to say about the progress, timing and potential conclusions from the US AML investigation.

As you all know, we are in discussion with three US authorities. It's the Department of Justice, Securities and Exchange Commission, and the Department of Financial Services in New York. Most of you probably remember that when I was the new CEO, I told you that I talked with colleagues that had been in similar circumstances. They told me that the process like this usually takes three to five years. I now have been CEO for a little bit more than four years. So in that sense, we are getting closer. But it is a timeline that is fully decided by the US authorities. Once again, I do not know whether we will get any fines. If we do get fines, I cannot estimate the potential size of those. We have been as transparent as possible during this process. When something material happens, we will continue to adhere to that principle.

Does that suggest you have the hopes to reach a

settlement in 2024? I'm not saying anything about hopes. I'm just saying that this is a process that we are not deciding on. It is the US authorities that are looking at us. We follow along. I thought that was very clear in the answer.

Okay. Then second question, please. If you could provide any outlook for bank taxes and resolutions in 2024 and 2025?

Let me say a few words on bank taxes. I'm going to be a little bit more extended because this is a very topic of the day. Let me go through our four home markets. First, Estonia. There has been talk about bank taxes, but the government has decided not to impose further taxes due to the negative effects for the Estonian economy. As you can see in our results, this quarter we decided on an extra dividend from the Estonian subsidiary of 250 million euros. That triggers a tax of net 50 million euros. Since there is a general tax reform coming in 2025 in Estonia, it incentivized a front loading of dividend payout for the bank while it also strengthened public finances in Estonia during this year. Now moving further south to Latvia, the government has imposed a temporary bank tax for 2024 of 2% on mortgages. We expect a net increase of our taxes of around 30 million euros. Now further south, in Lithuania, there is and has been for a while a specific bank tax of 5%. On top of this, they rushed through a hefty investor tax on the NII that applies for both 2023 and 2024. And the increased net tax for us is around 100 million euros per year. You've seen that in 2023 and that will happen in 2024 as well. In Lithuania, the Banking Association has filed a complaint to the European Commission and in Latvia that is still under discussions. And I share the opinion of the ECB that bank taxes reduces the incentives to finance the real economy. And by coincidence, that is just what you heard Anders talking about. Let me finally remind you and maybe I don't need to remind you but I do it still that banks are an important part of our society. What we do is that we channel our customers' hard earned deposits to lending, thus empowering people and business to create a sustainable future. And to do that, we need to be profitable. And as I repeatedly have said, a sustainable bank is a profitable bank. As a bank, we are a proud taxpayer that contributes to the financing of welfare and security in our home markets. What we do not like are sector-specific taxes, discriminatory rules and retroactive measures. What we do like is equal treatment, a rule-based system, an investment climate that fosters growth, financial stability and green financing. Sorry for taking that long time but it was an important subject.

I appreciate it. Thank you for the answer.

The next question comes from the line of Magnus Andersson with ABG. Please go ahead.

Yes, good morning. First, a follow-up there on costs. I guess your message is that you will take 1 billion extra at 2024-25 and then in 2016, costs should fall by 1 billion. But we've seen, as Andreas alluded to, the cost base having been ramped up quite significantly since 2018, sometimes with so-called temporary measures that haven't proved to be that temporary. So how sure can we be about costs really coming down in 2026, i.e. that some projects are not becoming delayed, etc.? Have you put in a kind of security buffer in your budgeting in terms of timing? Also, related to that, will you split out the extra investments in your reporting going forward so that we can follow the underlying cost base? That's my first question.

Thank you, Magnus. It was a long question with many questions in it. And as I said, the temporary investments have a clear runoff plan to start off with. It's about speeding up things that we are already doing within the bank, so there are not new things added to the investment agenda. That's sort of the first answer to your question. Secondly, I don't have a clear view on how the headwind looks for us in 2026, so I think it is too early to talk about that. But the intention is clear that the one... Well, you

broke up there, Anders. We didn't... At least I didn't hear your second answer here. You broke up completely.

Okay. Do you hear me now?

Yes, I hear you now.

Okay. So you heard the first part, which is that it is no new projects. It's more about speeding up the ones we are running. Secondly, on your 26 question, there are runoff plans. These millions are supposed to disappear. The question of exactly how the cost base will look in 2026 with underlying costs is a bit too early to talk about. But the intention behind these things that I talked about now is that it should be temporary. Will you be able to follow them thoroughly through the quarter? Not really, since they are already up and running and it's about speeding up. What we will do is inform you about the progress when we do important... Take important steps. That's for sure. And then, Magnus, I'm not sure if you had another one that I didn't catch.

If... I can just... That's clear. I just had another follow-up there on costs. On the billion, one billion, it sounded like it's a lot of... It's primarily IT related. So my question is, is one billion, is that the net number? Are the gross investments larger? Are you capitalizing a part of it? So the gross investments are larger than one billion, which means that you would amortization later on.

It's a very limited part that will be capitalized. So it's net one billion.

Okay. And the lines impacted IT expenses, I guess, other purchase services primarily. While it shouldn't be that much of income, is that correct? Or overhead count increase, is that correctly understood?

There shouldn't be much of a headcount increase related to this. That's correct.

Okay.

Thank you very much.

The next question comes from the line of Sophie Pettersens with JPMorgan. Please go ahead.

Yeah. Hi. Here is Sophie from JPMorgan. Thank you for taking my question. So just going back to the net interest income outlook, if I look at your Baltic net interest income, it used to account for 20% of your group net interest income. Now it's around 36%. It has increased almost three and a half times over the past two years. So basically, I mean, when I look back at your presentation that you gave in December 2022, what you're saying is that on the asset side, everything basically adjusts with base rate, but on the liability side, most of the liabilities are really transaction deposits. So we should not really expect, or well, I guess the deposit beta will be very low. So kind of with lower rates, is it fair to assume that rates will kind of go, or NII will go down, similar to the way it went up? So if rates go to 2%, is it fair to assume that it will just go down by, like, I don't know, a similar amount as it went up? So that would be my first question.

Thank you, Sophie. Yes, you're correct in the Baltic banking balance sheet that the asset side will to a large extent automatically reprice when rates are falling off. You are also correct that it is a limited part of the liability side where we are paying an interest. It's around 35% of the deposit base where we can do something. When it comes to the Baltics, it's much more about volumes, commissioning income. It's a low penetration, as you know, both on the asset or lending side and on the savings side. So that's correct. That is why I talked about our balance sheet on group level. Baltic banking is a very powerful balance sheet when rates are moving up quickly, while the Swedish part of the balance sheet is quite powerful in a potential negative when rates are coming down due to the fact that we have so large volumes of administratively set rates on both the asset and liability side. To answer your last question, it's a symmetric sensitivity for rates coming up or going down. As we speak, a minus 50 basis point shift would impact the group with minus 3 billion and the Baltics with 1.3 billion, with the normal underlying assumptions that we have in that calculation.

Basically, what you're saying is that if rates go down by 200 basis points, which is the base case on a group level, we should expect an interest income to come down by 12 billion. For the Baltics, that would imply a 5 billion plus decline. Overall, 12 billion out of which 7 billion is in Sweden and I guess 5 billion in the Baltics.

That's in theory with the simplified assumptions that we have in the calculation. What will happen in reality is for you to play around with.

Then just my second question would be how should we then think about the 2025 costs? Should we assume that the 1 billion underlying cost inflation that you're seeing next year will be again in 2025 or can you lever that 1 billion of underlying cost inflation? Maybe also related to costs and just going back to the financial crime prevention, there has been a lot of very impressed articles over the past three months in Sweden about banks facilitating criminal activity and being the target of a lot of criminals in Sweden. How should we how much of that 1 billion do you really spend on financial crime prevention? So what proportion of that 1 billion is done financial crime prevention and 2025 cost guidance?

Thank you, Sophie. I will not guide you on the 2025 cost. It's far too early for that. As I said in my speech, we will continue with our restrict cost control. So that's the answer to your question.

Okay, but you can't give any levels on the financial crime prevention, how much of the 1 billion? Is it majority, minority, more than 50, less than 50, like just so that we have an idea?

No, I cannot specify that for you. It's a lot of initiatives and again, this is to speed up already running projects.

But are these already running processes and projects that related to money laundering and financial crime prevention to a large extent or is it just a small part? I guess the idea, my question is really to get a better understanding, is this 1 billion are just related to the financial crime or if it's more investment in the business, like is the financial crime a small part or is it a significant part? It's based on the local press over the past month or two months. I mean, there is weekly stories about how gangsters are taking advantage of the Swedish banks and I guess it's quite worrying and also how much pressure are you getting from the regulators to address this issue?

Well, Sophie, it's Jens here. I agree, it's a major problem for society as such and we need to do our part to help prevent this because this is money that in the end goes to criminal gangs. Part of it is, and we're not going to specify it because what we're doing is that we are front loading and doing more. And Anders in his introduction talked about data management, about pushing through the sort of communication platform, we talk about the payments and we talk about crime. So I'm not going to go there and specify, I can just say it's a hot topic on all Swedes' minds and it's not only gangsters. I get stories by pensioners who said that they've lost confidence in society. We need to be tougher here and this is an important area when I meet the pension's organization and the Minister of Financial Market has, as I said, pushed through this kind of effort.

Okay, that's clear. Thank you.

Thank you. The last question for today comes from the line of Namita Santoni with Barclays. Please go ahead.

Thank you. I've got two questions, please. Firstly, now that rates are stable in Sweden, are you seeing any signs of any mortgage price competition in Sweden? And secondly, Anders, just going back to your comments on net interest income, your comments imply to me that Swedbank is aiming for lending growth, but I see limited growth at the system level, both in Swedish mortgages and corporate lending. So could you explain how Swedbank could achieve loan growth? Thank you.

Let me say a few words on private mortgages. First, the obvious thing that we are the market leader in all our four home markets and you also see continuous growth in the Baltics. In Sweden, the market is at a standstill. During 2023, the full Swedish mortgage market, I'm not only talking about Swedbank, I'm talking about the full market, grew by around 15 billion, that's less than a tenth of what it grew in by 2022. The positive thing is that for Swedbank, where we have optimized more, we have shorter waiting times, those people that you see sort of in the FD side are now answering phones, being there for their customers and we have attractive offerings. This means that we have an upward pointing trajectory and in the quarter, Swedish private mortgages sold through our own channels increased by 2.7 billion kronor. But what we see is an outflow from the savings banks because their business model in many ways is the same as our, a lot of deposits and they have funds to have money enough to fund them themselves. On margins, you're right, it is a tough competition and this quarter we see that our margins on mortgages are down in Sweden once again with one basis points and if you looked on the Swedish FSA, two years ago they talked about that the margins were 143, I think it was, and now it's down to around 40 basis points. So in that sense, it's a dramatic drop. We also have to remind you that our net interest margin that comes from both sides once again is up this quarter from 167 to 168 and this is leverage in our proven business model and pricing strategy. And as I said now, for more than a year, in this volumes and I see Annie that you're trying to round off so when I got the floor, is that okay with you?

Yes, absolutely.

Because there's a good way to round off this because thank you all for attending and thank you all for as always asking good and difficult questions makes us better and thank you for being owners. We are extremely proud of the confidence you're showing us and getting back to sort of the mortgages, this is an area where we can talk more about and I'm looking forward to in what is it 19 minutes from now, a quarter past 10, we will meet you again and where we will present our progress update on Swedbank 1525 and I really hope that we meet there again and during those 90 minutes time for a coffee and some visits. Take care.