Swedbank AB (publ)

Good morning, and thank you for joining us today. My name is Maria Kahneman, and I recently joined Swedbank as head of investor relations. I have a long background in banking, so I've already had the pleasure of getting to know many of you investors and analysts. I look forward to reconnecting and interacting with you. I am very happy to be here and to welcome you to our second quarter results presentation. With me today is our CEO, Jens Henriksson, and our CFO, Jon Lidefelt. Jens and Jon will start with the presentation, and then there will be an opportunity to ask questions. Jens, I hand over to you.

Thank you, Maria, and a warm welcome to the bank, and a warm welcome to all the people calling in. Swedbank has once again delivered a strong result. We are creating value for our customers and shareholders in both good and bad times. The global economy continues to be marked by uncertainty. Geopolitical tensions and trade conflicts weigh on prospects for global growth. During the quarter, the European Central Bank and the Riksbank cut their policy rates while the Federal Reserve held it unchanged. Economic activity was strong in Lithuania, while developments in Estonia, Latvia and Sweden were weaker. The government has cut their growth forecast for the Swedish economy in half for this year compared to their prior forecast in May. Despite a challenging economic situation, our four-hole markets stand out positively. Growth in Sweden, Estonia, Latvia and Lithuania is expected to be higher than in both the Eurozone and the US in 2026. Strong public finances, low government debt, real wage growth, innovative companies, profitable banks, and lower interest rates mean that our home markets remain well prepared for the future. In these uncertain times, Swedbank stands strong. Today, I can report a return on equity of 15.4%, an earnings per share of 6,99 kronor for the second quarter. Net interest income decreased during the quarter due to falling interest rates. Net commission income fell as a result of lower average stock market performance. Seasonally higher card commissions contributed positively. Costs remained at the same level as in the first quarter. Our cost to income was 0.36. Strict cost control is producing results. Swedbank has a conservative and thorough lending process. Our credit quality is solid and during the second quarter we reported credit impairments of 150 million kronor. We have a robust ability to generate capital and a strong capital position with a buffer of 4.5 percentage points. Our liquidity position is also strong. At our investor day in June, we presented our business priorities and financial plan until 2027. Swedbank 1527. Our plan is to continue to deliver a sustainable return of equity of at least 15% with a cost-to-income ratio that does not exceed 0.4%. Our plan focuses on three main areas. Strengthen customer interactions, grow volumes and increase efficiency. We have a proven business model, clear business priorities and a strong foundation. In the business area of Swedish banking, we will increase our availability and do more business. In premium and private banking, we will grow our customer base while ensuring that each advisor meets more clients. In corporate and institutions, we will expand our corporate business increase the number of customer interactions, and strengthen our market share. And in Baltic banking, we will maintain our leading market shares and continue our long-term efforts to promote a savings culture. Svalbank is the leader in mortgages in all of our four home markets, and we maintain that position in tough competition. During the quarter we cut our mortgage rates. In the Baltic countries we see an increasing demand due to lower interest rates. But the demand for mortgages remains muted in Sweden. During the quarter Mortgages through our own channels in Sweden increased by 3.5 billion kronor. Consequently, our front book market share has increased compared to the first quarter. But we want to grow further. In July, Swedbank announced the acquisition of the fully digital mortgage company Stabelo, a digital native. This is an important step in developing the mortgage business and better meeting younger and more digital customers. Within Swedish banking, we are optimizing our ways of working with a focus on increased availability and improved customer experience. Customers should seamlessly be able to meet with Swedbank across different channels. And during the quarter, we have further improved our availability via phones. Deposits increased in both Sweden and in the Baltic markets. And during the quarter, the development in savings, insurance and pension was positive. Corporate lending increased in Sweden and within our Baltic business. In Sweden, our corporate business is strong. We have increased our market share in lending, and our proactivity is producing results while maintaining our high credit origination standards. We see good activity in the real estate sector and manufacturing as well as among small and medium sized enterprises. In Estonia, Latvia and Lithuania, we maintain a strong momentum and we see an increasing demand for credit related to the energy transition. Additionally, we have seen higher activity in Norway and our partnership strategy is working well. Within corporate and institutions, we are establishing two new client teams in defense and in food production. Two important sectors for the society and the bank, both from a business and sustainability perspective. Our vision is a financially sound and sustainable society, and the business case that the sustainability transition presents is clear. The sustainable asset register continues to grow, and during the quarter it increased by 6 billion kronor, reaching 142 billion kronor. Moreover, during the quarter, half of the arranged bonds were classified as sustainable. This is a business opportunity. A sustainable society also involves financial health. More people should be able to build up their finances and get the financial knowledge they need to feel secure in their everyday lives. And last week I had the pleasure and privilege of meeting Swedbank colleagues in Riga in Latvia who gives lectures to young students on motivation, inclusion and values. And through the initiative Moot, they reach over 12,000 young people every year, helping them to grow into confident, caring, and motivated individuals. And this is one of the many initiatives we value highly, because our work on financial health is particularly important during these uncertain times. And with that, Johan, it's your turn to deep dive into the financials.

Thank you, Jens. Before I go into the details of yet another solid quarter, let me just remind you of our financial plan presented at our investor day on June 4th. The plan will result in a continued robust capital generation by maintaining a 60 to 70% annual dividend payout ratio and a normalized capital buffer of 200 basis points, we will achieve a return on equity of at least 15%. The cost-income ratio shall not be above 40%. We have no intention to hold more capital than necessary. The right capital target level is ultimately a judgement call. Increased profit over time through business growth and efficiency improvements to mitigate cost headwind is key to ensure long-term shareholder value. The overall loan portfolio increased by 21 billion. Mortgage volumes in Sweden increased in the quarter by 2 billion. the savings banks reduced mortgage volumes on our balance sheet with 1.5 billion. Hence, volumes sold through our own channels increased by 3.5 billion as a result of our increased efforts on customer interaction and availability. Corporate lending volumes in the Swedish business areas increased by 11 billion. We saw continued positive development in terms of customer activity across several sectors as a result of our increased focus on corporate business in Sweden. In Baltic banking, lending continued to grow. Private lending increased by 4 billion, driven by mortgages. Corporate lending increased by 4 billion in the quatum. Customer deposits increased in the quarter by 27 billion. The increase was mainly driven by retail deposits in Sweden, partly impacted by seasonal inflow of tax returns. Corporate deposits in Sweden increased by 2 billion. In Baltic banking, private deposit volumes increased by 7 billion, while corporate deposits declined by one billion. Net interest income decreased in the quarter by 572 million, driven mainly by lower interest rates. As expected, the phase-in of lower customer rates was partly offset by lower customer deposit rates. Reduced policy rates impacted earnings from central bank placements negatively. Lower funding costs, as well as higher business volumes, had a positive impact on NII. The policy rate cut announced earlier in the year has now largely been materialized in our NII in Sweden. both the Swedish and the European Central Bank cut rates towards the end of the quarter. Hence, there are further repricing dynamics in play. As we have previously talked about regarding timing effects and NII sensitivity, in general, the Swedish loan book takes around three months to reprice and the Baltic loan book six months. At the same time, the liability side reprice faster. Hence to conclude, the positive effects from policy rate cuts on the liability side materialize earlier than the negative effects on the asset side. We will continue with our pricing strategy on both sides of the balance sheet and maintain focus on the balance between volumes and long-term profitability. Net commission income decreased in the quarter. Card commissions were seasonally higher, while asset management commissions were negatively affected by the stock market performance in the quarter. Let me remind you that asset management commissions are generated by daily fees. and was negatively impacted by the large stock market declines we saw early in the quarter. Net gains and losses were strong in the quarter and amounted to 856 million. Income was strong, driven by high business activity in fixed income and FX products. Revaluation effects were net positive in the quarter. Other income increased by 39 million, driven by revaluation effects within net insurance. Underlying insurance income was stable, as was profit from partly owned companies. Total expenses were flat in the quarter and amounted to 6.1 billion. Staff costs decreased, mainly driven by the lower number of employees. IT and consultancy costs increased in the quarter. Let me also remind you that we had a one-off in the first quarter of 113 million related to the Estonian Education Foundation. Hence, marketing costs are lower in Q2. The quarter included VAT recovery for 2018 of 174 million, similar to the 205 million in the first quarter, which was related to 2017. We have also, after the quarter ended, been notified of a VAT recovery amounting to 197 million for the year 2016. We have also requested VAT recovery for the years 2019 to 2023. The cost guidance given for this year is 26.5 billion. Actual costs will be lower due to not at least the VAT recoveries. The temporary investments of 2 billion for 2024 and 2025 were also somewhat front-loaded, with more than 1 billion in 2024. And we expect the 2025 level to be around 800 million. Furthermore, due to strengthening of the Swedish krona, costs have been around 140 million lower during the first half year. These effects sum up to around one billion lower actual cost for this year. We will revisit the full year cost guidance in conjunction with the Q3 report. The hiring freeze has now been phased out as previously mentioned. We have a strong governance model in place to ensure we maintain our strict cost control and focus on efficiency improvements. Our collaboration with the savings banks include cost sharing for IT development and administrative services. The savings bank's share of the cost is included in Swedbank's total cost, and you can see the corresponding income as services sold to the savings banks under other income. Bank taxes in the quarter will lower, driven by retroactive adjustments in both Latvia and Lithuania. Credit quality remains solid. During the quarter, credit impairments of 150 million were reported, mainly within Swedish banking and Baltic banking. The post-model adjustment decreased by 129 million and amounted to 594 million. I feel comfortable with our strict credit origination standards and the solid collaterals that secure our lending as we operate in times of high uncertainty. REA increased by 12 billion and ended the quarter at 889 billion. This is mainly driven by lending growth, which added 7 billion, and FX effects of 3 billion. Our CET1 capital ratio was 19.7%, meaning we have a buffer of around 450 bps above the requirement. And with that, back to you Jens.