Swedbank AB (publ)

Good morning. Thank you for dialing in this morning. I am Maria Kahneman, Head of IR here at Swedbank. Welcome to our second quarter results. I'm joined today by CEO Jens Henriksson and CFO Jon Lidefelt. We will first listen to their presentations and then you will have an opportunity to ask questions. With that, over to you Jens.

Thank you Maria. Swedbank has once again delivered a strong result in uncertain times. The global economy continues to show resilience despite geopolitical tensions. Last week, the IMF projected a modest slowdown in global growth this year. Technological development and especially AI is offsetting some of the negative effects from geopolitical tensions. The global economy is being pushed in opposite directions. Our economists estimate that the GDP of Sweden, Estonia and Latvia will grow by around 2% this year. Lithuania is expected to see stronger growth by around 3%. In these uncertain times, Swedbank has once again delivered strong results. And the quarter was characterized by a clear customer and business focus. Profit for the quarter amounted to 7.2 billion Swedish kronor. If we exclude the extraordinary costs related to the restructuring program announced last quarter, return on equity amounted to 15.5% and the cost-to-income ratio to 0.39%. earnings per share was 6 kronor and 37 öre. Credit quality is solid. Credit impairments were 313 million Swedish kronor, corresponding to six basis points. Swedbank has a strong capital and liquidity position, and our CET1 capital buffer amounts to 2.6 percentage points. During the quarter, both Fitch and Moody's raised Swedbank's credit ratings. In their decisions, they highlight the bank's strong capitalization, good credit quality and stable risk profile. Yesterday, Swedbank reached a settlement with the New York State Department of Financial Services, DFS, to pay $50 million for failure to disclose information to the authority on two occasions, once in 2016 and once in 2018. With this settlement, all investigations into Swedbank's historical shortcomings have been concluded, and we can now put this behind us. Our customer promise is to make our customers' financial life easier, and we continue to deliver on our plan, Swedbank 1527. It's a plan with a clear customer focus to strengthen our customer interactions, grow our business volumes and increase our efficiency. As part of this, subsidiaries have been moved into the business areas to further increase focus on business and customers. And the bank's savings business have been moved into a unified organization. Swedbank Robur and Swedbank Forsäkring, our insurance company, are now part of premium and private banking. And the name of the business area has thus been changed to Wealth Management. During the quarter, we had strong lending growth and the activity in advisory was high. And we have a clear business momentum across all our markets. Through high availability and stronger business focus, we can further support our customers with financing, savings and advisory. Our proactive work contributed to high activity in the mortgage business during the quarter. And during the first two months of the quarter, we captured around 20% of total market growth in Sweden in our own channels. And this reflects our goal to grow more than or at least in line with the market. We also saw continued strong growth in Estonia, Latvia and Lithuania, and our mortgage portfolio increased by 3% in local currency. The high level of activity is also reflected in the positive development in our savings business. growth was driven by strong net inflows and positive market development. And the net inflow to Swedbank Gruber was 22 billion Swedish kronor. And among strong competition, two additional Swedbank Gruber funds were selected to the Swedish premium pension system. And this reflects the strengths of our offering. The bank's corporate business continues to develop well. Our clear customer focus is producing results and corporate lending grew by 18 billion Swedish kronor. The growth was driven by several sectors and mainly by the real estate sector. We also saw high demand for bond issuance. And in continued times of uncertainty, we support our customers and the activity in corporate advisory increased. The interest in sustainable products remains high. Around 40% of the bonds we arranged during the quarter were classified as sustainable. And our sustainable asset register now amounts to 179 billion Swedish kronor. We constantly work to develop the bank and our customer offering. And we see that AI solutions used within the bank are producing clear results. For example, we recently introduced an AI solution that will be rolled out to all employees during the year. Oaken, as it's called, will contribute to higher quality, security and efficiency, and not the least, cost control. And speaking about cost control, I'll hand over to our CFO, Jon Lederfelt.

Thank you, Jens. We deliver a strong quarter characterized by high business momentum and continued focus on long-term shareholder value. The return on equity was 15.5%, and cost-income ratio 0.39, excluding the extraordinary costs, including the 860 million in extraordinary costs during this quarter. Return on equity was 14.2 and cost-income ratio 0.43. We are delivering on our plan Swedbank 1527 and the restructuring program presented in Q1 is progressing according to plan. Lending volumes increased by 2% during the quarter, supported by strong activity across all core markets and business areas. In Sweden, mortgage volumes originated through our own channels increased by 7 billion. In total, mortgage volumes increased by 8 billion. The positive trend in corporates and institutions continued with 16 billion of loan growth. In Baltic banking, growth momentum remained strong. Mortgage volumes increased by 4 billion and corporate lending by 2 billion, supported by demand across sectors. Deposit volumes continued to trend positively during the quarter. primarily driven by private deposits. In Sweden, private deposits grew. In general, corporate deposits also increased, but was offset by a decrease from a few larger institutions. In Baltic banking, private deposits grew by 14 billion kronor, mainly due to the Lithuanian pension reform, which also impacted corporate deposits negatively. Net interest income increased by 1% compared with the previous quarter, mainly driven by higher market rates in Baltic banking and the generally higher business volumes. Lending margins continued to be pressured, while deposit margins increased. FX and day count effect had a positive impact of 127 million. Funding costs increased during the quarter, primarily driven by higher market rates early in the period. This was partly offset by higher income from central bank placements. As a reminder, changes in mortgage rates typically flow through to our lending portfolio with a lag of approximately three months in Sweden and six months in the Baltics. Overall, our interest rate sensitivity is as expected, with the effects on funding materializing ahead of the asset repricing. Net commission income increased by 7% compared with the first quarter. Asset management commissions benefited from strong stock market performance, positive FX effects, and high net inflow of 22 billion. Total assets under management increased to 2.9 trillion. Payment-related income continued to develop well with seasonally higher cards income. Insurance income was lower, mainly though due to the annual profit sharing from insurance partners that was booked in the first quarter. Net gains and losses was high in the quarter with strong underlying customer driven result characterized by high business activity primarily in fixed income and debt capital markets. Net gains and losses was further impacted by positive treasury revaluation effects. Other income increased by 23% in the quarter, mainly driven by stronger result from the insurance business in Baltic Banking due to claims normalizing and positive revaluations. Results from associated companies improved. And as a reminder, our collaboration with the savings banks includes cost sharing for IT development and administrative services. The compensation received from the savings banks is recognized within other income, while the corresponding costs are included in our total expenses. Costs developed as expected and in line with previous communication. We incurred 860 million of the announced 1.3 billion extraordinary costs for 2026. Adjusting for this, underlying costs follow the usual seasonal pattern and are somewhat higher in the quarter due to the annual salary revision in the Baltic countries. Our cost guidance of 27.5 billion for 2026 is unchanged. It is excluding extraordinary costs and effects. As we said in Q1, By the end of next year, we expect our FTE level to be around 16,800. This is an effect of the restructuring program where we are strengthening our foundation for future growth, enhancing efficiency, supporting capital generation, and our ability to deliver attractive and sustainable returns to shareholders over time. In 2027, We will continue to have an elevated investment level related to this. But as the synergies will start to materialize, I expect them to offset the additional costs in 2027. By the end of 2028, the changes are expected to be fully implemented, delivering a lower cost run rate of 1 billion Swedish kronor. Asset quality remained solid. Total credit impairments amounted to 313 million, or six basis points. Macroeconomic assumptions were updated during the quarter, adding 108 million. Rating and stage migration added 462 million and was primarily impacted by a few corporate customers and by the updated macro assumptions. As a consequence of the updated macro scenario, the post-model adjustment is reduced by 109 million and now amounts to 161 million. Individually assessed provisions decreased, primarily related to a limited number of corporate customers where Stage 3 exposures have been resolved. Entercard added $116 million to total impairments, driven by model adjustment. Overall, we continue to see a resilient credit portfolio, supported by prudent underwriting standards, strong collateralization and a well-diversified lending book. Our CET1 capital ratio at quarter end was 17.4%, corresponding to a buffer of 260 basis points above regulatory requirements, highlighting our strong capital and providing substantial flexibility to support customers' growth and shareholder value creation. And with that, back to you, Jens.