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 the 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% for the full year, even though margins on mortgages were under pressure. Commission income was up by 7% 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 kroner 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 a low 0.33. This gives a return on equity of 18.3% 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 our 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 to solid credit quality. Credit impairments 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 the 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 then 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 that has 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 a total where we act as an advisor to at least 40%. Over time, fossil fuels will be phased out. Already today, our sustainable offering with zero margin green loans in Estonia and 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 and 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 results. 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% and an earnings per share of 7.38 kroner. Looking into the details, beginning with lending and deposits. In the quarter we saw large FX 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 corporates 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 2 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 8 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 roll-in effects from the gradual repricing of lending 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 Jens 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 We'll 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. Entecard 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.