TF Bank AB (publ)

Good morning and welcome to today's broadcast. You are with us TF Bank with the CEO Joakim Jansson and CFO Mikael Meomutel. After the presentation we will open up for a Q&A. If you call in, please press star 9 to raise your hand and then star 6 to put on your microphone. It is also good to ask questions via the form. And with that I say with the word to you, have a good one.

Thank you very much. We can now summarize a quarter with a controlled growth level where we have managed to secure good margins. We see above all an improved credit quality. This in combination with the fact that customers have spent a little less than normal. A result of the conjecture resulted in a growth of 5% in local currency. Summing up the activities of the quarter, we get a good cost control. A final operative result of 191 million SEK. This is a 47% better than the corresponding period the previous year. In comparison, however, you must consider the cost of restructuring that the concierge had at the corresponding period the previous year. The conversion of the bank continues. The credit card becomes an increasingly dominant business line. Also geographically, there is a change when an increasingly large part of the business is run outside of the Nordic and Baltic. And above all, it is in the credit card and e-commerce segment that drives the EPS growth at the concern level. It is especially pleasant that the revenues grow faster than the costs and that the -I-data continues to improve. The business model scales well. During the quarter, we have seen a continued stabilization of credit quality. What you need to keep in mind when analyzing the credit flow rate is that TF Bank has undergone strong changes for several years, both in the form of business and geographical mix. During the quarter, we have solved and emitted a T2 instrument to optimize the capital structure after the conditions that are now possible. Mikael will return to that in his presentation. During the quarter, we have moved an absolute majority of the concern's existing supplies to the subsidiary company Reddm Capital. And a deal on the sale of about 80% of the company has been reached with Electrum and Erikselin properties. This is an important step to bring the bank back to a clean balance sheet policy. We aim to close the business before the year changes. We can turn to page 3. The quarter's organic growth, i.e. local currencies, is 5% and is now 20%. The credit card TF Bank's growth engine grew by 13% during the quarter and 58% -on-year. e-commerce decreased by 3% during the quarter in local currencies and also -on-year by 5%. We should see the light of the fact that the businesses in Poland and Balticom are in a run-off and that the seasonal pattern, where the quarter is now coming, will be very strong in terms of growth. Consumption growth with 2% during the quarter in local currencies and 4% -on-year. We can get through. If we look at market to market, we can start with Germany and Austria as the geographical core in the growing part of the bank's credit card business. We continue to see a strong demand on TF's credit card and we expect a strong volume growth during the coming quarter. In the German market, we are also preparing to launch Avardas credit offering under Q4, i.e. in the e-commerce segment. This will happen to Nordic traders and besides it gives us an entry into the German market, we also see that this will be a strength for our sales in the Nordic market, since Germany is an attractive market for Nordic e-commerce. The credit card business in Norway continues to grow well. In the Nordic market, there is also a focus on maintaining profitability and credit quality in the construction loan business, when funding and risk costs have peaked. We have continued to keep the volume in the Nordic market to keep the credit quality extra high. We have continued to focus on our business in e-commerce in Avarda, where we consider ourselves unique by being a well-known label alternative. Now we are fully focused on the coming period, which will be a strong sales season and our pipeline also has great potential in its new sales. The same profitability focus as in the Nordic market applies to Estonia, Latvia and Kletauen. In all three Baltic countries, the credit quality is stable and we are working to optimize the portfolio to maintain the strong results. As mentioned earlier, we already have a credit card in Spain and the next step in our geographical expansion has been to test the Italian market, which we did during the quarter. We can go to page 5. Then we look at segment by segment and start with credit cards. The loan portfolio in the segment has increased by 8 billion and the segment grew by 55% compared to the same period last year. We continue to grow in the form of a number of new credit cards and only in Germany we grew with 53,000 number of credit cards, which is an increase of 74% compared to the first three quarters last year. We also see an improvement in the K-credit in the segment, which shows that the business scales well. In this case, when we grow so much, then the conclusion of scalability is extra valuable to us. As mentioned, we have also launched the product in Spain and Italy. We can go to page 6. In the e-commerce segment, we see the effects of the stock market having had a calm period during the year. There is a lot of macro that works in the sector. In the Baltic countries, we have paused new business from the beginning of the year and since earlier, the business is in Poland in runoff. This contributes to a lower growth in the segment. We see that the effort we have had with the re-setting of the business continues to be seen in the result calculation and the profitability remains strong despite the fact that the trade has had a tough period. As I said earlier, we are now fully focused on the coming period with a strong sales season and our pipeline has great potential in its new sales. We are also preparing to launch the Avardas Kvitter offer in the German market. We are of course very humble in front of the challenge of taking over the German market, but we also believe that this will be a strength for our sales in the Norden. Can we turn to page 8? In the consumer lending segment, we have consistently kept the growth rate down with the focus on defending margins. As I said earlier, we have been restrictive in order to monitor credit quality and margins, which means that we continue to see a very strong profitability in the segment. We also see a general stabilization or even an improvement in credit quality, and this applies to all markets. Now I leave it to Mikael for the presentation.

Thank you. If we go to the next page, we can first look at our moving revenue. We can see that it has risen to 1625 million in the third quarter. It is 18% higher than our previous quarter in 2023. The main three forces that Joakim mentioned are our increase and our continued growth for the loan portfolio in the credit card segment, but also a high margin of income in e-commerce, which has also had a positive effect. If we look further at our credit losses, they have risen to 205 million. The third quarter credit loss level has been stable in the last quarter and rose to .1% in Q3. And as in the previous quarter, the concern's credit loss level is affected by a mixed effect, since our growing credit card segment has both higher margin of income and higher credit loss levels than our other segments. If we look further at our risk adjusted revenues, we can see a continued increase. We also see a slightly improved risk adjusted margin, which rose to .5% in the last quarter. If we look to the next page, we can look further at the moving revenue of the company. We can see that they have increased by 1% to 229 million in the third quarter. The low growth rate in -on-year is explained by the fact that we took costs for the conversion of 16 million in the third quarter last year, just as Joakim mentioned in the introduction. If we look further at our risk adjusted revenues, we can see a increased cost by 9%, which shows a scale value in the business model. If we compare with the other quarters, it is important to note that we have the semester period, which always means lower costs for staff and consultants in Q3. The concern's credit loss level at 37% in Q3 will therefore be somewhat higher in Q4. As you can see in the diagram, the KU-data for the credit card segment has dropped to 34% in the last quarter. The positive trend mainly depends on the scale of the business model. But here we can also say that a part of the improvement depends on somewhat lower direct marketing costs within the segment. If we look further at our largest segment, consumer lending, we have a KU-data that has decreased to 30% in the quarter, which is primarily related to lower renewals and lower costs for central functions in the bank. If we look at our third segment, ICO and Resolution, we can see that the KU-data has decreased to 55% in Q3. Here it is mainly for the effect of the semester and an improved income margin, which has always had a positive effect on the KU-data in the quarter. Let's move on to the next page. Let's look at the bank's moving result, which increased by 47% to 191 million in Q3. The driving force behind the growth in profit is mainly due to the increasing moving revenue from the growth in the loan portfolio within the segment of the credit card, but also the powerful improved moving result for E-commerce Solution, which has also had a positive effect on the numbers. If we adjust the cost of the restructuring to 16 million in Q3 last year, our moving result increased by 31%. If we look further at the profitability of the bank, we had a drop in the capital of .5% during the quarter and the profit per share increased to 6.53 crowns. I would like to point out that the three quarters have a seasonally strong profitability and we are very much in favor of the costs being normalised again during Q4. Let's move on and look at our segments. Let's start with the credit cards. The moving result increased by 70 million in Q3, which is 66% higher than the equivalent quarter last year. Here, above all, it is higher revenue from the growing loan portfolio and a scale for that which gives a lower share which contributes to the segment's drop in the allocated own capital increased to .6% per quarter. If we compare with Q3 last year, the segment costs for direct market have also decreased a little and a larger number of credit cards have now been reduced. I would also like to mention that during the third quarter, a low number of allocated credit cards in the segment were at record levels, just as Joakim said, which also sets a stable foundation for our future growth. As we mentioned earlier, Q2 has launched credit cards in Spain and we have also launched credit cards in Italy during Q3, just as Joakim mentioned. But as always, it is very important to remember that when TFBank launches new products, we will do it carefully and grow in a controlled manner. We move to the next page and look further at the e-commerce solution segment. Here we see that the moving result increased by 29 million in the third quarter, which is 99% higher than the equivalent quarter of 2023. Here, above all, it is revenue margins that have improved significantly in the last year and the positive trend continues even in Q3. However, revenues decrease somewhat in absolute numbers compared to Q1 and Q2, which is explained as a somewhat lower loan portfolio. The segment's allocation of allocated own capital increased by 30% in Q3 and was affected by some of the positive seasonal effects that I mentioned earlier. I would also like to say that during the fourth quarter, the expected volume and costs will increase, which will also mean a somewhat lower profitability rate in that segment. Let's look further at the segment's credit loss level, which is subject to .9% in Q3. Credit quality in Sweden and Finland has been weak in the last quarter, and the decrease in credit loss levels during Q3 is primarily related to IFRS 9 effects. Let's move on to the next page and look at consumer lending. Here we see a moving result of 92 million, which is 3% higher than the equivalent quarter of 2023. Loan portfolio and the risk adjusted margin have been stable during the last year, and Cementes' allocation of allocated own capital increased by .9% in Q3. The positive segment is that the credit loss level has decreased in the last half year, and we see a stable or somewhat improved credit quality in several markets in the segment. If we move on and look at the financing, we can see that we take in the share of our loan in the German market, and launch new loan products in Spain, Ireland and the Netherlands. However, in the end of last year, a new loan volume of about 2.8 billion was generated, with the share in the Netherlands. During the quarter, we have also increased the share of fixed interest loans to 63% in total. Our current liquidity reserve rose to 21% of the loan balance during the quarter, and more than half of our liquidity value is placed in the state treasury, with a annual run time of up to six months. I would also like to mention that the financial sector has recently published a legal statement that clarifies the weights that should be applied to loans by the loan supplier when the key numbers NSFR and LCR are calculated. This statement is in line with the DTF Bank's interpretation of the regulations, and our key numbers are therefore not affected by the message from the financial inspection. If we move on and look at our capital relations, they have increased somewhat since the year-end, and during the quarter, the capital relations increased to 12.2, the capital relations to 13.7, and the total capital relations to 15.7. During the third quarter, the capital base was affected by 109 million, which relates to the fact that the capital technology regulatory system requires a higher reserve for the fall of the funds compared to what the reserve does. I would also like to mention, as Joakim also said, that the coming separation of the EDM capital is expected to mean a capital relief for the DTF Bank when this agreement does not need to be counted on the capital base. During the third quarter, we have also introduced a supplementary capital instrument of 100 million, and in connection with this, we are emitting a new instrument of 100 million crowns. We therefore maintain an optimized capital situation with a safe distance to the regulatory capital crown on all three levels. Finally, I would also like to mention that the Finance Inspection has introduced its recurring overview and evaluation process, and when the process is complete, we will communicate their decision on pillar 2 requirements and pillar 2 guidance for the DTF Bank. With that, I leave it back to you, Joakim. Thank you very

much. If we look forward, we can see that we continue to transform the agenda, and the DTF Bank will become increasingly dominant in the business sector. The DTF Bank is today much more of a European credit card and payment platform than a Nordic consumer loan institute, and we continue to develop our European loan platform. As I said, during the quarter, the absolute majority of the concern's current demand is moved to the subsidiary company RDM Capital, and we have entered a sales agreement of about 80% of the company. The business is expected to be completed before the end of the year, and more information about this is in the press release that we sent out a few weeks ago. We passed a loan of 20 billion in the quarter, which was a limit in our current financial goals. And in the background of the activities that are now being carried out with RDM, no new financial goals are presented now, but we have decided to come back to this question after the business is completed and the evaluation process of the financial inspection is completed. After the launch of the credit card in Spain and Italy, we are now looking forward to launching Havarda in Germany. This will strengthen the geographical profile of the bank even more when a much larger business is spread in Europe. Now we move on to questions and answers. Thank you.

Thank you for that presentation, Joakim and Mikael. As I said, it's time for Q&A. If you call, please press star 9, flick up this hand and then star 6 on your microphone. Starting with the first one, we have Jens Halén from Carnegie. Please, you have the floor. Thank

you very much. Just a few short questions, it was a strong report. If I can just ask you on the time, we calculate the effects correctly both in time. We have this 100 million BATSOC effect and then we have these 1.3 billion in NTL REA. That does not happen now before the change of year when you do this business, but it is step two when you switch to the elect.

That's right. So the DEM is part of the consolidated situation before the closing of the business that we expect to be before the year's change. And after that, these volumes will not enter the consolidated situation

of TFBank. Okay, but if this happens during the year's change, then this effect will happen both on the 100 million and REA, but will disappear at the same time before the year's change.

Okay,

excellent. Then question two with these, so we will definitely be happy to answer this with Q4 reports. Yes,

that is the early possible data and then it also restarts what the assessment of the institution does also with regard to how much is happening in the concern and how fast they want to move forward and execute their development process. They may also want to see the outcome in December, it restarts later.

Okay, but that's good. Then a question about the costs, which we would have overestimated. Before we use the current cost increase rate and Q3, which we start to extrapolate, is there anything here that is a positive effect? I know that you had a positive effect last year and the effect on the salary cost of Q3, but it is underlying, is there anything here that is positive that should not be used as

a basis? No, I don't think our employees had extra much vacation this year. It could have been if we had extra high turnover rate per staff, but it is nothing that was noticed that it would be something special that is specific for this year.

Then I have a question about the very strong.

Yes,

that's good. Then on the credit losses, at least on your view of how it looks in the book, if you see any kind of distribution effect on the quality, the rents have started to fall, but at the same time, you have mentioned, and Michael mentioned today, that the Swedish economy has been somewhat weak. But looking forward, do you see that we should have some kind of peak on negative credit migration? Or how do you see it?

We have experienced that that turn has already happened for a quarter, that negative migration has stopped. Then there is what pace that is going in the other direction. We have seen such signs, especially in consumer lending, in general, I would say. Then the other segments are a little slower. So it depends a little bit on the character of the business and also the geography. Maybe Michael can explain that.

Just to remember one thing, also from our perception growth, also if we now increase e-commerce, which is obvious because we have Black Month or Back Week, and also support our growth rate in the card business, then the new rows of IFRS are also affected. Then you do not generally believe that the level of credit loss has increased, because it is a lot about the effects of the service that affect IFRS, which in turn also affects the net loss rate. So just think about that too.

Absolutely. Then the underlying positive, how fast it goes, we will see. And then the last, it is a bit the same thing on the funding costs, which in general have peaked, when you have a lot of fixed interest accounts. Do you see that after they are re-tested, we should see a positive net effect? Or, and this is what I wanted to ask, do you also see a pressure on the loan payments that we may not see from outside?

So in general, we are more quickly moving in terms of interest on the loan side. But it is always a competitive situation, in both legs, so to speak. But generally, that is how it usually is. And especially for our business, we have business in many different countries, then we have a greater opportunity to allocate capital, both over geographies and product areas, which makes us maybe a little more, I don't know, but maybe a little more, have a greater opportunity to be stable on our loan margins than if we didn't have it. We have more market products to play with,

simply. But if we take that basis, where you have always allocated capital during all the years, where you see the best waste, with the falling costs, and then we see how quickly the interest rate is going to be repriced. But my view should still be quite positive from the 25th and the middle.

Absolutely, and we have said that earlier this quarter, that we see that we are now at the height of financial risk costs and we will have a positive profit when they decrease, because our foreign exchange rates are not as sensitive in time and

space. Thank you very much. I had a lot of questions, but it was not very short. Thank you very much for

the answer. Thank you. Then we move on and then we give the floor to Emil Jonsson from DNB. Here you go, you have the floor.

Thank you very much. I will start by asking, you have so far been focused on growing about -5% in organic loan growth every quarter. That's about where you have been, and have been paying attention lately. Do you think you will be able to keep up with this growth rate for another three years, given your size?

That is incredibly difficult to say. What we see is that we have no problem with getting new cards in the market. We also see that when we get new cards in the market, the underlying customer segment changes a lot. We see that we find new generations of the same type of customers, which means that we see no loss in that part. Then, of course, as you say, in the course of us fighting against a larger base, it is of course harder to maintain the same percentual development. But we see no loss in the fact that we get new cards in the market and that our risk strategy can continue to grow the book on only existing customers. Then there is the question of whether we can do more. That is the next question. But we have not allocated capital to be able to maintain margins and ensure that we have the right customers and the right risk level. Then we are comfortable with the pace we are now holding, and that is what we plan for.

All right. During the quarter, the ECB has started to come down a bit. I wonder, on the credit card, how have you so far adjusted the loan rates? How have you paraded the interest rates? Is there any difference between the front and back books?

Yes, absolutely. When it comes to our terms and conditions, we have different generations that are affected in different ways by ECB's interest rates. There is not one answer to that question. It is a mix, in some cases, and at certain times we are forced to follow along. And at certain times we are not. So it is a blended effect. But it is not that we must, to 100% of all our cards in the back book, follow along. And when it comes to the front book, we have the opportunity to set the price.

Okay. Have you made any changes to the front book?

No, not what I am coming up with. I cannot answer that for sure, but it is nothing that I have reflected on. Michael, have you reflected on that?

Not in the front book, but the question of the interest rates. We have not done anything about that, but there are some batches earlier that had terms and conditions that follow ECB's interest rates. Absolutely.

Alright, interesting. And on consumer, have you lowered the interest rates there as much as the respective tax returns? No,

however, we work all the time, dynamically in every market. And it is all about navigating the interest rate picture, both from the competition and also to catch the right dogs. So it is a control tool for us in many ways. There are markets where we have lowered the interest rates, but it is not directly linked to the general interest rates. Then we also have interest rates that are also targeted against ECB's tax returns. So it is also a very split picture. We are in so many markets where it is only about consumer interest rates. So the product looks a bit different per country.

Alright, thank you. And now, given that all the radio transactions are going through, you have sold off all the NTLs you have on the balance. If you were not going to do any further sales in the future, and not to do any further flow contracts, how long do you think it would take to build up a similar year's NTL portfolio again? Is it one year, two years? How long would it take? I can

answer the simple part of the question, so Mikael can take the hard part. First of all, we have not sold off all the NTLs, but we still have a certain amount of technical character left. There is no value in moving, but in the Polish market, it also requires special conditions that we do not have in the radio. It is an absolute majority, so we are 90% positive. And then the simple part of the question, given that we had moved everything, it would take at least three years for the backstop to come back, if we were not going to sell anything more. How fast does it grow? Mikael can answer that.

It

is

also quite simple, because if you just look at how we have grown, we have grown somewhere with a little over a billion in these plantations, but then we are talking about grass, so you have to think about reservation. It takes a good while to grow this, of course, over time. But again, we will work very hard to work with our clean balance policy, with the two forward and outflow contracts. Then we will not accept any prices, of course not, because you are an business person, that is the whole thing. But we have the ambition to work with it as much as we can.

I understand. Just to make sure that we have a grip on one-off effects from the retail sales. We went through the effect on REA and the effect on backstop sales, but given that there has not been any major change in the purchase price, we are at least getting some positive REA profit when the purchase goes through. What kind of results should we expect to see? Is it net-resultate financial transactions, or what should we expect to see?

That was completely correct, what you said, that in that case something is going to come out. But I am very much in favor of the difference mechanism that exists in this transaction, if the transaction is completed, but if it is a little higher, then it should be higher.

You have got that right. A last question, you also mentioned that you see an improvement in consumer credit quality. Can you say something about which country that looks like it has improved the most, and which one that has improved the least?

Most and least it is difficult, but what I can say is that I think that the Baltics were very early, early affected and early out of this crisis. Then there is a seasonal sensitivity in the Baltic economies, which is mainly linked to their energy prices, which are higher during the winter half of the year. We are just now in the most sunny part of the year, but just now when the household is in front of a period with increased costs. So the Baltics were early out of this crisis. I think Sweden and Finland have been pretty slow out of this crisis, and have been in greater need of tax cuts. In Sweden, it is linked to the financial structure of the household, of course. And the Finnish economy has been very affected. There we have seen a tendency for improvement in late time. Then underlying markets in Germany are also a little sensitive, and the German economy is also largely dependent on tax cuts from ECB. So there the household is also a little more sensitive and late out of it all, I would say. But on the other hand, from our perspective, we have a growing book in Germany, where we go from being a brand new marketer in 2017 to being better now. So we have a underlying improvement in our credit quality, which is fighting against this macro in Germany. But if we were to be equally good in overtime, we would probably see a decrease in credit quality. And also if we look at our competitors in the German market, we see that they have had a decrease in credit quality during this period, while we have had an improvement. And that means that we have learned a lot during the years that have been more effective in the German market that are fighting against macro. So that is the answer. Sweden and Finland are absolutely the countries that have had the hardest to get the last out of it all. And the German economy is also in need of getting a little easier on the

household. Alright, that feels logical. One last question. You have previously talked about that there has been too little pricing on the foreflow market. When do you think that you as the earliest could make new foreflow contracts? Is there a technical effect that you should take into account? Or when should you say that as the earliest?

It is hard to say how the market looks like. But what we can see is that there are at least two companies in the Swedish market that are looking to become the so-called SCR next year. And that is Hoist and Alektum, who have communicated that. And that means that those companies will be able to work with deposit funding and will be able to work in that case if they become one, without a backstop contract. From that perspective, there are two companies that have the opportunities in the market. Then, in the competition situation that is on that market, it is difficult to say, but it is that change that can happen regularly next year.

Emil, you have been very humble in relation to the fact that T-Bank has had few foreflow contracts in the last year or the last year and a half. But if we had had foreflow contracts, how would we have had the opportunity to build up Rediem? So you have to think a little carefully with just thinking that we have not done it because we did not get a good price.

I think that is a good point. That was all the questions I had. Thank you very

much. Thank you. Then we will continue and leave the floor to Patrick Bratelius from ABG. Please.

Hello, can you hear me?

Yes, Emil.

Perfect. Good morning. A few follow-up questions from my side. If we start with the costs. If I am not looking at the numbers completely wrong, it looks like in my model, this is the first time we see falling costs sequentially in Q3 compared to Q2, despite the fact that it sounds a bit like there were no abnormal events that happened in the quarter. So there is no catch-up effect here that you should expect in Q4. Can you try to quantify a normalized effect we can expect in the next quarter in the form of lower marketing costs in Q3 and so on, so we get the basis right?

You can at least think that we did not only have a seasonal effect, but we have seasonal effect in a seasonal period with less consult costs, we travel a little less and we have the seasonal effect. So everything else is the same, you need to come up with a two-digit number at least to find a normalized level, but you can also do the calculations afterwards. Then it is so that absolutely we have worked a lot with costs and so on and maybe have a slightly lower cost base and a slightly lower cost increase than what you might have first thought. But there are several seasonal effects that we have seen every season and why we did not see it last year was because we had a restructuring reserve of 16 million.

Fair, then we have a better understanding of what we should expect in the next quarter, and if we continue a little on credit cards, then you will grow in Spain and Italy. Can you develop a little how you think in these markets and how you come to the point of the geographies in front of other geographies and how to think about priority growth ambitions in relation to the German market, for example?

Both Spain and Italy are large markets due to the size of the countries. I always put in perspective that TF Bank entered Germany in 2017 and the scale first started to change in 2021-22. It is with those times that you have to look at it, and when we evaluate a new market, we do it on a lot of different parameters. And of course, now afterwards, you can say that Germany was successful, but when we look back at the evaluation parameters that we had then, we had several factors that we considered to be very complicated, but that we have managed to navigate. And that's also the case when we look at both Spain and Italy, they are two very different markets, but we see several factors that will be very complicated for us. Then it is also true that these markets are not constantly over time, but there is also a great development over time. So the reason why these markets are large markets, we see that they have the potential to develop over time. If you think about it, three, four, five years from now, that we can have a real volume in these markets. All the stars are not in the right place for both markets, they do not do that in any market, but it will be complicated. And that we choose away other markets, it is rather so that you can see that in many markets there can be competition, there can be price regulations, there can be access to data, customer behavior, there are so many different factors that we consider when we choose away markets. But both Spain and Italy feel that they can have potential over a longer time horizon. As we think, when we build a new market, it is of course that we invest in that market, but we have no We have no We evaluate the data and that evaluation must also be over time. So that's where we are. And we do not see that the establishment of these markets will affect our development in Germany in the coming one to two years.

I understand, because there is a European competitor to you who, like you, has also gone into Spain and Italy, but since 2024 has chosen to pause its expansion in the countries because they thought they did not get good scalability and the credit loss level seems to be a bit high. Are there any parameters you have seen as early indications when you started to double-check these markets?

No, but it's nothing that is too early, of course. And I mean, this is a long game, what you are doing. And I know competitors who have been in a good mood and have paused in different markets, but who are also getting started again. It is also about developing markets like that. We have a narrow niche and it is also about developing markets. So it will take time. We are very soft about that.

I understand. If we go over to e-commerce, it will be launched here in Germany, but at the same time in runoff with e-commerce in Balticum and Poland, there are some lessons from these failures, if you will say so, from these geographies before the launch in Germany that you take with you and that you can share with you. What

you should know when it comes to our... The e-commerce activity we had in Balticum and Poland was not part of Vardas' activity, but we had developed it in our other banking infrastructure. So it had completely different conditions. So what we are doing now is that we are rolling out of Varda, a company that was founded in 2015, completely born in the ground. I would say that it is very technically outstanding. A very good partner for our traders to develop a white label alternative. So it is something completely different than what we have had in those countries. And one reason we chose to pause, for example, and close down in Balticum was that we did not want to invest in the old infrastructure. So it was also a generational shift in technology and what platform we wanted to invest in when it came to our business in e-commerce.

And then you should just be humble to say that you did not reach the profitability of 25%. No, you did not, so we chose to allocate our capital somewhere else. Just being humble to say that.

Yes, that is completely fair. But if you then link back to the comment that you may have seen earlier effects from higher interest rates on credit losses in Balticum, that they come out faster. Is there no potential to launch a Varda solution in the Baltic market that you have been in for a while and feel well?

Yes, it can absolutely be over time, but what you have to be careful of is the potential in those markets. We really love our business in Balticum and it is very important to us and we are very proud of it. But what you should know when you make investments in those markets is that they are quite small geographies. So even if we have an infrastructure that is incredibly general and reusable, there will be local adjustments in some extent that require a certain scale for it to be interesting. And then maybe the Baltic countries are not country 3, 4, 5, but they may come in 6, 7, 8 when we establish new business in credit cards and e-commerce. But we really want to be in those countries and we have a very nice business. But we are aiming primarily at larger geographies.

Yes, I understand. Thank you. And just one last question in conjunction with the SREP from the FI. Is there any reason to believe that you will get some changed capital requirements that you

can

think of?

No, but what you can say is two things. It is a pillar 2 requirement and we already have a pillar 2 requirement today. Others have decided not to count on such a thing, but we already have 1.1 percent. Then you will get a guidance and we do not know that guidance, but we already have a pillar 2 requirement today. So that the FI comes back with the same pillar 2 requirement, we do not know, but we already have 90 today at 1.1 percent. It is important to know.

We can not predict the decision of the authority in question, but it is up to you.

Okay, that was all from me. Thank you very

much. Thank you. Then we move on to the question time and we have received some written questions from David Roset at SEB. And the first question sounds like this. Can we expect that a P2R or P2G decision from the SREP process will be announced in conjunction with the Q4 report?

We will announce it when we get it, so it is not related to the report, but when we get it, we will announce it.

Absolutely, and when the inspection now chooses to come to a goal, we can not say that. But we do not have the intention to sit on the decision, but we will publish it as soon as possible.

How does the process of moving the P2R loan to an independent unit go? Will it only be Nordic loans and in the thought of selling off?

No, we do not even have the conditions for that activity, so all of these questions are too time consuming to answer.

And a final question here. If we look at funding, is there still focus on the loan or planing a double-tour in senior loans?

We are open to all types of funding and diversification is positive, but we will also do it with cost control. And so far we have not done that, but we have worked with the market to optimize our capital structure and via loans to optimize our funding structure.

Then I thank Joakim and Mikael for all the answers to the questions, and then I leave over to you Joakim for some final words.

Yes, but I want to thank you so much for your time and wish you a good day.