Danske Bank A/S (DANSKE) Earnings Call Transcript & Summary

Good morning, everybody. Great to see you, and welcome to Copenhagen, and welcome also to those of you on the live stream. It's great to see you. It's our first investor conference in quite a while. We're really happy to host you here. My name is Carsten Egeriis. I'm the CEO of Danske Bank. I'm also joined by my team. You'll get to hear from quite a few of them this morning. I've been in Danske Bank for just about 6 years, and I've been CEO for just over 2 years. And when I think about the last couple of years, the last couple of years in Danske Bank has really been about fixing some of the issues and challenges of the past. It's been about creating commercial momentum. And it's been around building an organization, a leadership, an organization that's really set up to take Danske Bank forward. We believe that we have significant potential in Danske Bank, well beyond what we're delivering today. And that's what we're going to talk to you about today. We're going to commit to delivering a 13% return on equity by 2026. We're going to do that through a focused growth strategy that's focused on how we allocate capital, how we deliver returns, how we increase productivity in the business, how we get cost out, and how we generate capital for investments and for distribution. So we look forward to talk to you about that for the next 3.5 or so hours. I'm just going to hand it over to Claus Ingar, who's going to take you through the agenda, and then we'll get into the presentations. Thanks again.

Thank you, Carsten. And also a warm welcome from my side. It's good to see that so many of you have made it here today. I think we are approximately 60 people here in the room, and we have approximately 200 people virtually participating. We have an exciting morning ahead of us, and I have been looking forward to present today's agenda for you. As you can see, Carsten Egeriis will kick off. He will start by setting the direction for the day and for the future. And after Carsten's presentation, our CFO, Stephan Engels, will continue with our financial targets for 2026. Then we will have the first round of Q&A for 15 minutes followed by a short break, where you will have an opportunity to grab coffee or water outside. And after the break, we will focus on the strategic plan and priorities in each of our business units, where Berit Behring, our Head of Large Corporate and Institutions, will kick off; followed by Johanna Norberg, Head of Business Customers; and Christian Bornfeld, Head of our Personal Customers. Finally, our COO, Frans Woelders, will provide you with an update on our digital and tech priorities that are a key enabler for our commercial agenda. We will end the day with a 15-minute Q&A with the members of the executive leadership team, where you will have plenty of time and opportunity to ask questions. Before each of the Q&A sessions, I will be back on how you will be able to ask your questions. And that said, we wish you a very nice morning with us. And back to Carsten for the CEO presentation.

Thank you, Claus. And let me start by talking a little bit about who we are. I'm going to talk about where we've come from and then talk about where we're going. And we are essentially a Nordic bank. 95% of our business comes from the Nordic, Denmark, Sweden, Norway, Finland. We are a top 2 corporate bank in the Nordics. If you look at market share, we're a leading retail bank in Denmark, and we are a solid third retail bank in Finland. And we believe we're positioned in very attractive markets and attractive customer segments. I'm going to talk to you more about that, but also that we have a legacy of having a customer-first approach of having a legacy of digital innovation. We are placed in some of the most exciting markets, perhaps in the world, when you think about banking. And just to mention a few examples from a macro perspective, the Nordic economies have grown nicely over the last few years, also versus the rest of the euro area. We have a set of markets with low unemployment, with low levels of public debt. We have digital leadership in the Nordics, so strong digital infrastructure, and that is really helpful when you do banking, when you engage with your clients. And we're going to be able to invest even more in digital. We're going to talk much more about that throughout the day. Sustainability. We have absolute sustainability leadership in the Nordics, a lot of interesting companies, a lot of interesting clusters, focus on green technology on renewable energy. And we, as Danske Bank, we're going to take a leadership role in helping our customers and clients in the green transition. Again, something I'll come back to. We operate in some very attractive markets. We operate with some very attractive, interesting customers. Let me just take you through each of the business units briefly. Large corporate institutions. We have been ranked #1 in Prospera customer satisfaction for 7 years in a row in large corporate institutions. We bank some key Tier 1 customers in both institutional banking and large Nordic corporates. And Tier 1 here means that we are these clients and customers' core bank. And that also means we have an ability to deepen relationships to do business with these clients. In business customers, we bank a little bit more than 200,000 customers throughout the Nordics. A very large proportion of these customers are mid-corporates that are large, that have more advanced needs, that have international needs. And when you look at the corporate business and institutional customers, we believe that we have strong advisory capabilities, strong product capabilities to service exactly these segments. We are #1 on transactional banking, on cash management, FX. We have lead tables -- we have lead positions in the league tables on advisory, on sustainability. And that also shows when you look at our general banking income in these 2 segments, they are at all-time highs, and that's a testament to being able to do more business with these clients through the cycle. In personal customers, we have a little bit more than 3 million customers across the Nordics. Again, a large part of these clients are clients with more advanced needs and also private banking customers. And here, again, we pride ourselves in the advisory capabilities we have for these segments, the product specialists that we have that support these customers, right, to the Denmark and mortgages, life and insurance, pension and Danica and also our Asset Management business that provides both investments to the institutional segment and to the personal segment. If we look at our business profile, we have a good mix when it comes to our income mix between net interest income and fee, a little bit more than half is from net interest income. But we've also been able to grow our fee income over the last many years. Again, a testament to the ability to do more business with our customers, as I just laid out before. The income mix is also pretty evenly split when you look across our personal customers, our business customers and our large corporate institutions. And the country mix, although, of course, it's heavily focused on Denmark, is also well diversified across the Nordics with roughly half of the income coming from the other 3 Nordic markets. We have a strong financial profile. We have a strong capital position. We have a strong liquidity position. We have low loan loss rates. We have high post model adjustments, which puts us in a good position in case the macro environment should deteriorate. When I became CEO, my main task was to focus on building a stronger and a more resilient bank. And we've made some pretty fundamental changes in the bank over the last few years. Let me take the control environment first. We have, last year, made a resolution with the U.S. and Danish authorities on the Estonia AML case. We have found a solution to our debt collections case. That's in full execution mode now. We've invested substantially in our financial crime capabilities, where more than 80% of the way done with the financial crime execution plan, that we also deliver regular updates to the regulators on. And we have invested substantially in compliance, in risk management, in cybersecurity over the last few years, a stable, a resilient, a strong bank. We've also taken quite a lot of defocus and refocusing and de-risking actions, so we've taken quite a lot of participation choices over the last few years. We have sold our insurance businesses in Norway and in Sweden. We have exited our Baltic retail and commercial businesses, our Russia retail and commercial banking business. We've sold our Luxembourg private banking business. We've done a joint venture on the MobilePay business. So quite a lot of participation choices, again, to refocus as a Nordic bank. We've also taken action on the credit side. So if you look, for example, at our commercial real estate exposure, we have not grown our commercial real estate exposure over the last 5 years. We've kept it broadly flat. We've done that on purpose, not to go into the cycle. We've, in fact, reduced our commercial real estate exposure in Sweden, if you look at the last few years. We've also refocused our market operations business, our fixed income business. Post last summer with the big moves in rates, we decided to take less overnight risk and have a fixed income business that's more focused on helping facilitate flow with our corporate and our institutional customers. We see that showing strong results both in Q4 last year as well as Q1 this year and into Q2. What you'll also see in each of the business unit presentations later on today is, we've also refocus the way we think about our customer segments and how we service those customer segments so that we really invest and differentiate ourselves in the segments where we believe we can really make a difference. And again, the business unit heads will take you through that in much more detail later in the day. We strengthened the organization. Just last year, we changed our organization from 2 business units to 3 business units to be focused on business customers, personal customers and large corporates and institutions to get more commercial focus into our executive leadership team and to have even more focus on these distinct 3 segments. We've also changed a substantial part of the leadership. Just in the last couple of years, we changed 5 positions in the ELT. Most of the ELT is, in fact, quite new, but with substantial experience within financial services both in the Nordics as well as in Europe. We've also focused a lot on our culture and on how we engage our organization and increasing the engagement in our organization. And you see here, and we use the Ennova survey. Employee engagement motivation has increased substantially over the last couple of years, and we really believe, and I truly believe that with engaged employees, you will also have engaged and happy customers. And if I then look at how it's going from a commercial perspective, we believe that we do have more engaged and happier customers. We believe that we do see stronger commercial momentum in Danske Bank, and this is not just from increases in interest rates and the tailwinds we have from that. It is also relative performance. If you look at large corporate institutions, we have grown our lending and our market shares in our C&I business at low capital consumption. We are a leader in many of the league tables, including also within sustainable finance. Business customers. Here, you see the fee income line. The fee income line has grown quite substantially over the last period. Again, a testament to doing more business with our customers, getting closer to our customers and doing more business with our mid-corporate customers that have more advanced complex needs. Johanna will talk to you more about that later. And then the personal customer business, perhaps the business that has been most challenged over the last couple of years, we see many pockets of where the business is showing momentum. So we are taking market share in bank lending in Denmark. Now we also see nominal good growth there. But also in terms of customer flows within the Danish business, we have now stabilized custom flows, but we also see segments within our personal customer business in Denmark, where we are gaining customers. So if you look at both the changes we've made from a control environment, from a culture perspective, from a de-risking perspective and then the commercial momentum that we're seeing, you also see that coming through in our financials. And we are well on track to exceed our financial targets set for 2023. The cost-to-income ratio has come down nicely. We have more to go. I'll talk to you about that in a little while, and the return on equity has also gone in the right direction. So let me talk to you now about where we're going. We commit to delivering a 13% return on equity. And if you look here at the right-hand side, 13% return on equity by 2026, underpinned by a CET1 ratio above 16% and with a cost/income ratio around 45%. We also commit to generate substantial capital over the planned period. We believe that we have the potential to pay dividends in excess of DKK 50 billion over this plan period. We also, therefore, today, announced that we will do an accelerated dividend on our first half 2023 earnings at the higher end of our 40% to 60% dividend policy, and we'll do that as part of our Q2 results subject to Board approval. And then we continue to have the ambition to further distribute capital, of course, subject to market conditions and our capital position. So what will underpin these targets, 3 main things. One is growing in the segments where we can really differentiate ourselves. So being a Nordic leader in business banking and wholesale banking, being a leading retail bank in Denmark and being one of the leading retail banks in Finland. We're also going to have much more focus on how we allocate capital and how we look at returns in the business areas that we want to invest in. I'm going to talk to you about that in a minute. And we'll continue to have a focus on bringing down costs and increasing productivity, not only in financial crime and compliance, but across the whole business. And then as I mentioned, we believe that we have a business that will generate strong capital, and it's a business with a low-risk profile, a stable risk profile through the cycle. Let me take you through the businesses and how we think about the businesses that we want to play in. So when we started our strategy work 6 months or so ago, a key important thing for us was how we prioritize our investments, our focus, where we really believe that we have strong markets, where we're well positioned where there is good growth and good profitability. We also, as part of that exercise, looked at which businesses do we need to refocus, which businesses do we need to do things differently in Asset Management and PC Sweden or businesses that we believe are attractive, but where we will refocus in terms of our business, and Christian and Berit will touch on that. And then we also have a business where we don't believe we can scale the business profitably. And that is why we also announced today that we will exit our personal customers business in Norway. I want to just underscore that Norway is a very important market for us when it comes to business and large corporate and institutional business where we'll continue to focus, but personal customers will be a business that we will exit, and we are in advanced strategic process and options in terms of what we're going to do with our PC Norway business. When you look at what will differentiate ourselves within each of these business areas that we've decided to focus and invest on, it's going to be around advisory. It's going to be around how we really differentiate ourselves on digital solutions, digital services. It's going to be around sustainability and our leading role as a bank on sustainability. And then it's going to be around focusing on continuing to be a simple and efficient secure bank. I'll take you through a few examples here. So advisory first is really at the hallmark of what we do. It really defines Danske Bank. We have, again, a unique breadth and depth of local expertise. I took you through that at the beginning of the presentation. So for us, it's really about how do we free up more time for these advisers to spend more time with our customers, to get more customer meetings, to help them where it really matters. And an example here from personal customers is how we've been able to decrease the share of meetings per adviser on everyday banking by helping them self-service on digital solutions and then increasing the number of meetings that each adviser has. And we have a goal to do this in each of our business segments, and this is just an example of the traction that we're seeing in personal customers. On the digital side, we believe we have a strong starting point. We have an award-winning mobile app for our personal customers here in Denmark. We have a leading district platform and leading cash management platform across the Nordics to support our customers. Again, we've been focused on how we can deliver digital solutions where customers can self-service. On the bottom left here, you see another example of how our customers today more than 50% open their bank account on the mobile app. Again, that frees up time for our advisers to do other things. We've also looked at all our customer journeys. And the goal is how do we automate, how do we digitize all our customer journeys. And lending, of course, is a good example of that. Here, you see an example of business lending where we want to increase the amount of lending that goes through digitally. And as you can also see, although we've made progress, there is significant opportunity to do more. Sustainability. We believe this is one of the big challenges for our generation. We believe, as Denmark's biggest bank and one of the leading banks in the Nordics, that we play a very significant role in helping society and helping our customers with the transition. We have set ambitious plans on this. We believe we have one of the most ambitious climate action plans in financial services. We announced our climate action plan in January. We've set very clear targets. We've mapped our whole lending book. We've signed up for SBTi targets. We've set 2030 targets and how we will, together with our customers, reduce CO2. But importantly, this is about how do we make a difference for our customers, how do we look at this commercially as a bank? And that's, again, back to how do we make sure we have the best, most competent advisory when it comes to sustainability, how do we ensure we have relevant products. And here, you see in the bottom right that we are leading when it comes to both sustainable investments and sustainable finance. We're going to continue to invest in these capabilities. We think that this will make a difference for our customers. Simple, efficient, secure. It'd be reminiscent of me not to say we understand our cost/income ratio is too high. It's not where it needs to be. We need to get our cost-to-income ratio down. We have a strong starting point. We have one IT platform. We will make investments in digitalization and automation. And what we present today as part of our plan is we will invest incrementally DKK 1 billion a year on digitalization and automation. This is investment and growth plan. But those investments come from savings. Those savings we will see through operational efficiencies as well as [indiscernible] on financial crime under mediation. But Frans will talk to you more about how we think about our investments in digitization and in our technology setup. And Stephan will talk to you more about how we look at the operational efficiencies where we're committing to take [indiscernible] operational efficiencies over the plan period. We see this very much as in line with what we've already shown that we can do over the last couple of years. So when you look at underlying costs in the business, we have been able to reduce underlying costs, again, through some of the examples I gave you before, digitizing, automating, improving end-to-end journeys in the bank. So with that, let me just sum up. We commit to a 13% return on equity. By 2026, we believe we have substantial opportunity to generate capital, to invest in the business, to distribute capital to our owners. We're going to do that through a much more focused strategy where we're focused on capital, on returns, on increasing productivity in the business. So thanks very much. And then I will hand it over to our CFO, Stephan Engels.

Yes. Good morning, and also a very warm welcome from my side in sunny Copenhagen. My name is Stephan Engels. I'm the CFO. I'm with the bank now for 3 years, and that has been interesting years, to say the least. So before we go into some detail, I want to make some personal remarks. One, I think you have seen the ambition, the energy and then the commitment that we have mobilized across the bank, which will be important to get us where we want to be. And let me also add, after a couple of decades as the CFO, I'm convinced that we can unleash the potential of this group over the coming years. Carsten touched upon the financial targets already. So for '26, we want to go for 13% ROE and a cost-to-income ratio of 45%. And I will provide you now some further detail on how we aim to deliver. I will start with updating you on where we are financially right now, followed by a walk-through of our main assumptions as well as the building blocks. Now, as a result of our dedicated work to meet our financial ambition of the previous ROE plan, we have made good progress in many areas since 2016 -- 2019, sorry. Let me start mentioning 3 main takeaways. We have a trackable, clear commercial momentum on income generation in all business units. We have had a clear focus on cost with tangible results, not at least in FTE reduction. And finally, we have been building momentum in profit and capital generation at the same time as we have maintained a strong credit quality, providing a solid background for future growth and distribution to our shareholders. We are on track to meet our ROE and cost-to-income targets for '23 set in 2019 as part of our previous plan. What you see here is adjusted numbers in order to exclude the effect from the Estonia settlement and the goodwill impairments. Normalization of interest rates have provided a tailwind for our net interest income, most notably in Denmark and Finland, which have been more severely impacted by the negative rates than Sweden and Norway. Of course, higher central bank rates have had a sizable impact. However, I think it's important to note that the NII has also been supported by own initiatives, optimizing pricing primarily during the period with negative interest rates, alongside our improved income, our disciplined approach to cost also contributed to financial performance. The headwind in the period came from capital, in particular, as we have continued to add to our capital position despite the impact from the resolution with the authorities, which took effect last year. Yes, despite all the challenges we had to master over the last couple of years, we are increasingly delivering performance as solving legacy issues also frees up capacity to focus on our income and cost challenges and start turning those into momentum. Now what is the plan? It's all about keeping trajectory and accelerate both on income, and let me be absolutely clear, also on cost. Now how are we going to accelerate our commercial momentum and profitability in the next period? Firstly, we will strengthen our focus on growth. We are further increasing our income by acquiring new and growing shares of wallet with our most attractive segments where we believe we can win. We are continuing our momentum of streamlining the bank, pushing down cost to serve, focusing on areas such as digital self-service and advisory productivity, and normalization of costs for our ongoing efforts to fight financial crime and a significant reduction in cost of solving legacy issues will also enable us to free up resources, which instead can be partly invested in growth and accelerated tech renewal. Secondly, while growth is at the top of the agenda, we are ensuring this growth is both profitable and sustainable. We are becoming more stringent and dynamic in allocating capital towards hurdle rate areas, supported by the introduction of a new resource allocation model, including allocation of buffers currently held at group level. Our Nordic retail business will be refocused in our business with personal customers in Denmark, Finland and Sweden. Hence, we will not allocate new investments to our personal customer business in Norway as a consequence of today's announcement. We will provide you with an update on the specific process in connection with our release of the interim report for the first half of '23. Thirdly, we will be -- we will maintain a strong capital position with the ability to distribute consistently over time. Following a period of de-risking and simplification of the bank, we are now bringing back shareholder distributions. Our capital distribution policy remains unchanged, and we see potential to distribute dividends above DKK 50 billion on earnings from '23 to '26, equivalent to 60% of net profit on an aggregated level, which I will comment in more detail in a few minutes. While macroeconomic assumptions behind our plans are important, for sure, I will not dwell on these for too long. Instead, let me talk you through the interest rate dynamics we see in the planning period. We expect short-term rates to peak towards the second half of this year. And by the end of 2024, we expect to have rates returned to around 3% and longer term between 2% and 2.5%. We continue to see an interest rate sensitivity of around DKK 700 million after 12 months and a 25 bp parallel shift scenario, but we also expect tailwind after 12 months as assets and bond portfolios reprice. This means that after 24 months, we expect the annualized NII impact to be around DKK 1 billion. This is important, especially when considering our NII beyond 1 year. So despite headwinds from deposit margin compression following the interest rate development, NII will benefit from repricing of these balance sheet items. And finally, in terms of wage inflation, we expect an elevated level of around 3% on average in the Nordics and a somewhat higher level for operations in Lithuania and India. We do, however, expect wage inflation to scale back somewhat towards the end of the period. So what does all this mean or our financial targets? As already highlighted by Carsten, we have had ambitious yet realistic targets, which we will closely evaluate our performance against during the coming years. An overarching financial ambition is a committed target of 13%, and for sure, we have an aspiration to exceed. In terms of cost efficiency, we target a cost/income ratio of around 45%. Our previous CET1 target of above 16% in the short term and above 20% and our total capital target remains unchanged. And we expect to operate with the shareholders' equity of around DKK 170 billion at the end of 2026. In respect of capital distribution, we have a potential for dividend payments for more than DKK 50 billion, equivalent to approximately 40% of our current market cap based on the earnings from 2023 to 2026. In this context, as said before, we are pleased to announce that subject to BOD approval, we intend to restart dividend payments in connection with the result for the first half of this year. And we are targeting the higher end of the 40% to 60% dividend policy range based on the net profit for the first 6 months in '23. On top, we have a clear ambition for further distribution, which will be subject to our capital position and market condition. In this context, we expect to revisit our capital target, once we have reached the final solution for discontinuing our Norwegian retail business until when this exposure will be reclassified as assets for sale. Now let us look on how we arrive at our ROE target. Based on the progress in commercial momentum and profitability we have seen, we assume a starting point in line with our current guidance between -- of a net profit of between DKK 16.5 million and DKK 18.5 billion for this year, corresponding roughly to a 10% to 11% ROE. We've [ broken ] down the development, no surprise and basically 4 main drivers: income, cost, risk and capital. For all main drivers, I will elaborate in more details over the next couple of slides. However, it should be clear that further progress on income generation is a key element and how we will meet our target. We expect an uplift in income from all major income lines, benefiting from continued growth and from focused dedicated business initiatives and again, based on prudent macroeconomic assumptions. For the cost component, firstly, we expect substantially lower remediation cost. And secondly, according to plan, normalized level for expenses related to financial crime prevention. Thirdly, improved operational efficiency, mainly within PC and [ T&S ] will ensure that we will become a more efficient bank. These effects together will then more than mitigate the inflation level and allow for increased investments both digital as well as nondigital that will play also an important role in driving productivity. Finally, we expect lower cost of risk to add positively to the enhanced profitability, whereas higher level of equity and gradual implementation of the new Danish banking tax will be a drag. While our business areas will further develop on the key growth and profitability levers contributing to our group return on equity. I want to highlight a couple of key messages. We are deepening our relationships with existing clients and better addressing their financial needs to grow share of wallet and income levels. As Carsten mentioned, we will do this by freeing up advisory capacity being more proactive in reach-outs supported by data and analytics and focused product offering. We want to capture more Nordic business outside of Denmark. While Denmark is our home market and an important battleground, we see significant potential in growing both our retail and corporate businesses in neighboring countries, for example, in Sweden. We want to become more efficient in our relationships, increasing our customers' use of self-service tools to reduce manual work and to a greater extent, use virtual meetings and centralized teams paired with the most streamlined core tech platform. We have seen improved profitability in all business units since 2022, and we expect a higher and sustainable level by 2026, contributing to our ability to meet the group target return on shareholders' equity. From an income line perspective, the contribution from net interest income will continue to grow along our macro assumptions. And in addition, business initiatives facilitated by our targeted investments will further add positively to volume growth. As I just explained, when I elaborated the underlying assumptions, we expect short-term rates to come down during the period, driven by an expectation for lower inflation compared to current levels while we expect the repricing of the balance sheet items to mitigate pressure on deposit margins from lower short-term rates. We also expect higher fee income to contribute to profitability by 2026. The underlying drivers will be normalized income from the housing market activities and as well as the recovery in capital markets-related fees and generally higher activity. Related -- and we will also work on issues like new pricing structures, and as I've said before, the initiatives for commercial momentum in the business units. Finally, we expect a positive contribution from our trading and insurance activities driven by further normalization of market conditions. When we look at the cost development, we expect to arrive at a cost in 2026, slightly below the level from last year. Before I comment on the moving parts, let me be totally clear that meeting our cost target is absolutely essential for this plan and thereby is a key priority for me and the full management team. In our plan towards 2026, we expect an overall inflation of 3% for our cost base. We expect inflation and wage inflation, in particular, to be a clear headwind more than previously due to higher run rate for wages as exemplified by the new wage agreements in Denmark that will take effect this year or next year. As mentioned, we expect to significantly reduce the still elevated cost for remediation and legacy cases. In addition to that, we will be able to reduce cost related to the financial crime remediation plan to a normalized level, obviously, subject to the finalization of this plan roughly by the end of this year. Cost efficiency initiatives will continue and mainly be driven by benefits from strategic investments, primarily efficiencies in T&S and PC that I'm sure Christian and Frans will comment on later. It's important for me to emphasize that a prerequisite for our investment spend clearly is that we can deliver on the light blue boxes that you can see on this slide. While we remain focused in keeping our costs in check through structural efficiencies, we remain convinced that targeted investments are crucial for the long-term value of this bank. Hence, we will increase our total investment envelope by 1/3, DKK 0.25 billion through a combination of reinvested savings and additional investments. As we increase our total investment envelope, it is important to note that we are increasing the share towards strategic change from roughly 35% to above 60%. These investments will be focused on developing new systems, platforms, products and further strengthening our long-term competitive edge, exemplified by the new segmentation model, digitalization of customer journeys, automation as well as partner integration. Now let me -- and 3 key takeaways, combine what we have seen so far in terms of development for the cost/income ratio. Starting already this year, we expect a drop in cost/income ratio despite higher inflation. We believe that we can continue to improve these ratios towards 2026, and the main drivers for this will be cost efficiencies and higher income that will enable us to more than mitigate inflation, increased investments and cost of growth. Before we go to capital, let me spend some words on how cost of risk will impact the path towards 2026. We have included an assumption for around 8 bps on an average for the period until 2026. This level is identical with the average observed loan losses back to 2016, which, to a high degree, was impacted by 2020 due to PMAs related to the pandemic as well as a significant reduction in our exposure towards oil and gas in that period. The guidance we have for this year is obviously higher than what we have included in our plan and is still based on the risk for further model-driven changes, which have yet to materialize. We have overall derisked our credit exposure to different industries, including commercial real estate, and we have a further ambition to adjust in high-risk sectors. Finally, we believe we are well positioned with PMAs of DKK 7 billion. And finally, the impact from capital on the 2026 plan and how we plan to approach our unchanged target level of above 16. It's clear from what we show on this slide that we remain committed to 2 important things: dividend distribution to the higher end of our range and an ambition to further distribute capital subject, obviously, to capital position and market conditions. This is based on the assumptions that we only expect a minor increase in REA in line with growing our business and only a small impact from regulatory changes. Let me summarize, as shown previously. We have a dividend payout potential of more than DKK 50 billion based on earnings from '23 to '26. Now let me summarize how we see the financial performance over the next 3 years. There's no doubt that we have a good starting point coming from an improved commercial momentum. And very importantly, from structural changes to our income generation, we see as a result of the return to more normalized interest rate environment. Adding to this is a positive cost story, without impact from our recent different legacy cases that now allows us to invest to more drive commercial momentum even further. This will enable us to reach a return on shareholders' equity of 13% on prudent assumptions and in parallel improve our operational efficiencies significantly compared to recent years, coupled with a clear ambition for capital distribution. And our plan for dividend payments in July based on the earnings for the first 6 months, we have a solid plan and I'm fully confident in our ability to execute. Thank you. And I will be joined by Carsten and Claus for Q&A.

Well, we will now have the first part of the Q&A, and we will just do a little bit of add-ons to the tables here on the stage, before we kick off. [Operator Instructions]. So by those instructions, we are ready to go. I think we have a question from Jakob Brink from Nordea.

On the dividend or interim dividend you're announcing today, we have asked to previously that there was any chance of a share buyback in 2023. And I think the answer has been consistently no. Has that also changed now?

No, I think as we have called out what we are doing for the first 6 months of this year is basically paying, call it, an accelerated dividend. And you also know that we have just solved our case with the DoJ. So we are still protecting very much our capital base. And as I called out, following the closure, obviously, hopefully, of the exit of Norway towards, call it, the mid of next year, I think that is a more prudent point to revisit both the capital target as possibly any forms and models of distribution of capital.

Thank you. And I think the next question came from Johannes from HSBC.

Johannes from HSBC. One question on your Swedish and Norwegian businesses and private clients. I was a bit puzzled that you want to exit Norwegian business, where probably the market situation is completely different to Sweden in some respect by one large competitor where you can probably gain from antitrust things. And in Sweden, you have even a smaller market share, and you stayed -- or I said you want to keep that business. Why did you make that decision? And probably the last question is in terms of partnerships, why did you decide to keep all your insurance business as part of the group, while it adds complexity and volatility to reporting and everything else?

Thanks for that. On Sweden, I'm going to come back at the end today because I'd like you to hear from Christian Bornfeld. He's going to talk a little bit about the positioning in the different markets. But the high-level answer on Sweden is, we believe that personal customer in Sweden is a very attractive market. It's a much bigger market. And we believe that we have a more focused business model that will allow us to grow in that market. So therefore, we would like to invest in it. But I'm going to let Christian speak to it in the presentation and then you can come back if there are further questions on it. No, on our insurance businesses, I mean, we have sold our insurance businesses in Norway and Sweden, where we are subscale. We like our Danica insurance business. Danica is a very important part of the group. It's an important product, both for corporate clients, but also for our retail clients. And in fact, we believe that we can do even more to unleash more potential both ways between Danske Bank and Danica.

And then I think there was a question from the table in the corner. Thank you.

[indiscernible] from ABG Sundal Collier. When it comes to your income and cost assumption, you are very firm on the cost side that you will reach that levels. What about the income side, what is sort of the potential for not being able to actually get to the 3% growth here? And what should we then think about your targets in 2026?

Yes. I mean from the income side, I mean, we believe that these are our prudent assumptions around growth, so roughly a 3% lending growth and just below 1% on deposits. Starting point, of course, being 2023, where you see somewhat subdued growth. So we feel good about those assumptions. The other drivers of income are, of course, that we believe that we will be able to increase the fee line, again, 2023 being somewhat subdued and then some normalization of fixed income and insurance. And then of course, there's the puts and takes on the NII sensitivities where although, of course, there are headwinds on rates decreasing, and we had an assumption that will decrease to a sort of structural interest rate of around 2% in this plan. There is offsetting to those headwinds from, for example, fixed loans that aren't hedged today rolling off and being replenished by higher margins and also our structural hedge, where we have low-yielding assets running off being replenished by higher-yielding assets. So those -- that would be how I would see the different moving parts.

Okay. Thank you. And then I think we have a question coming in virtually Madhav from JPMorgan. Can you -- can we have the line open? Can you see us? Can you hear us? Please unmute. Please state your Question. Okay. I think we have a little technical issue here. So maybe we will continue if there is any further questions. Johan Ekblom.

Just to come back on the capital. I mean you kind of said what equity base you assume, but for us just haven't brought out our calculators yet. What's the assumption in terms of RWA growth and potential regulatory impacts with Basel III finalization. And then I guess related to that, what capital optimization measures are available. I remember years ago, we talked about potential of kind of making the Danica impact more efficient? Is that still on the table?

Yes. Let me start with what you asked about regulatory. You know that we are holding a pretty sizable REA buffer on group level, which we believe will basically solve our transition into the Basel III finalization or Basel IV, whatever you want to call it. So I don't expect a headwind from that really at group level compared to where we are right now. We will start allocating these buffers on group level towards our segments, and you will see some of that later to make sure that we have efficient and proper steering and also proper pricing. So that's one. The second part, I think, in general, our focus really is on getting our structural profitability solved. We are addressing the capital distribution issue, whether there is further potential to optimize one or the other thing remains to be seen. And again, this is also a subject to discussion with the regulators, which currently is more focused on how do we set our capital target and stuff like that. So I wouldn't say it's completely off the agenda, but I wouldn't pencil too much in.

Okay. Thank you so much, Stephan. And I think we have Madhav from JPMorgan back here, he wrote his question to us. So I'll just read it out. Can you please elaborate where the 3% loan growth comes from considering the weak loan growth outlook? And the second question is also where does the NII growth come from considering NII is falling?

Yes. So I mean loan growth, you should assume between 2% and 3% loan growth in our corporate businesses. And at the higher end, 3.5% to 4% loan growth in personal customers business. So that's roughly how we see it. And again, we believe that 2023 is relatively subdued, but that the initiatives that we have, both from digital, from advisory and marketing and other initiatives will support those loan rates, and we don't believe that those are out of line with what we have been able to deliver historically. Then I think on the NII, maybe you want to talk about, is it the -- where the NII growth comes from considering NII is falling. There's maybe the NII sensitivities if you want to touch on that?

So there's obviously different components in the NII part. One is from lending growth that Carsten just talked to, which is in a simple way, the 2% macro that we believe is the growth rate going forward, plus an additional percent with targeted initiatives, where we believe that we can grab market share and customer share of wallet without being aggressive on pricing. So that's one part of the NII. The other one is the more dynamic view on what happens to a complex bank balance sheet as it rolls over time. And that the very simple math is if you take what Carsten also talked to fixed assets that will reprice and the bond portfolio that will reprice. In a way, you need to look at this like there have been many years of, 0, 0, 0, 0 interest rate, then we have a huge spike which definitely drives deposit margins very quickly and then that spike goes back to 2. But while all that happens, also these assets and bond portfolios start to reprice, obviously, not to the peak but to the long-term rate, which we expect to be between 2.5% -- 2% and 2.5%. So that dynamic provides quite some uplift in the, call it, post 12-month sensitivity that we normally talk about for net income -- for net interest income, sorry.

Thank you, Stephan. And [indiscernible] over here has the next question.

Yes. Two questions, if I may. First one, Stephan, you mentioned the DKK 170 billion of equity in '26. I guess that means something like 90% payout ratio towards '26, which was also what you showed in one of the slides. What are you building is add-on? Is that how to get to 16%? Or is that -- is there a reason for the optimism. And then secondly, on your NII, maybe if you can touch upon your deposit beta assumptions going forward, competition, I guess, especially in the Danish market for deposits?

Yes. Let me start with the beta assumption. So that is a bit of commercially sense information. So I'm not going to give you too much detail, but let me say that much. The modeling that we are driving, obviously, has a beta assumption that also, from our point of view, will rather creep up a bit over time as customers get used to more higher rates and will start going into, by the way, some of the very attractive products that we have on offer and that you can even digitally move your money into. So I think the deposit beta in general, should be going up, but I would also agree if -- I'd also be willing to say that so far our assumptions have been proven prudent. So that's that part. The second part on capital. Again, the DKK 170 billion capital assumptions for 2026 is obviously driven by REA. And obviously, this REA model does not include Norway anymore. So that will help us get into a lower nominal capital base to begin with. Then it remains to be seen, and I have to be a bit vague on this, how we make use of these capitals, but it's also very clear there is an ambition to distribute and we need to, let's say, give it a year until we can really get to more detail on that one.

Okay. Thank you so much, Stephan. And I think we have the next question coming in online. Martin Birk from SEB has a question.

Just a quick question on capital. I guess, Stephan, you also alluded to the settlement with the U.S. authorities. What does it mean for excess capital distribution that Danske Bank has been placed under probation? That will be my first. The second question also goes on capital. And that is regarding the DKK 12.8 billion contingent liabilities that you guys have in your Q1 report. How should we think about that in relation to the capital distribution? And then finally, did I hear correctly that you said that you would revisit the -- well, the 16% CET1 target post a retail bank divestment?

So many questions. Let me confirm that we believe and we are in a very good dialogue with our regulator, but we believe that delivering the financial crime plan in the -- at the end of 2023, exiting or completing the Norway process will give a very natural and very good starting point for us to discuss the capital target. So DKK 12.8 billion contingent liabilities you are referring to the civil claims, I assume. So far, we have no indication whatsoever that we will need to do any provisioning of any kind, and that's what we have also consistently said since the beginning of this, and we keep on vigorously defending us against these claims. So I wouldn't think there is a link to capital. Then the third question -- what was the first one, sorry?

You said -- I think on Jakob's question, you said that you would revisit the 16% CET1 target post a Norwegian retail bank divestments.

No, I think what the capital target will be post or with the finalization of the discussions with the regulator, I haven't given a hint of that. Sorry, if I was not precise.

Just to add, I think what you were saying, Stephan, is that it's likely that we'll be in a good position to understand the outcome of our Norway exit by mid-next year and the associated release of capital, and then I think you just mentioned. And by the way, in a year's time, I think we'll also have much more clarity on the capital targets given the ongoing discussions, so I think Martin that was that. It's reasonable to think that in a year's time, we'll be able to have much more clarity on the capital ratio and therefore, also on potential excess capital distribution. And it so happens that it's not unlikely that timing will also work around Norway, but you shouldn't necessarily see those things as together could happen quicker on Norway.

Okay. I think we have another question coming in online. Riccardo Rovere from Mediobanca. Riccardo, can you hear us?

Yes. Can you hear me?

Yes, loud and clear.

I have two, if I may. The first one is again on NII. I was looking, Stephan, at your assumptions back in the plan -- the macro assumptions back in the plan. You have roughly 1/3 of the benefit of rates, which at some point in '25 is going to disappear rates, I assume to peak at 3.5%, something like that and go back to kind of 2% more or less. So 1/3 of the benefit should go away. Before you stated -- and you stated that the deposit EBITDA is going to go up at some point without quantifying, I understand that. And you also stated that the bond portfolio repricing will somehow contribute. But the size of the bond portfolio is it's literally a fraction of that of the deposit base. I mean, the bond portfolio from the numbers I have in front of me is about DKK 500 billion or so. The deposit base is DKK 1.2 trillion, DKK 1.3 trillion. So I find a bit difficult to understand how something worth DKK 500 billion can compensate for the negative of DKK 1.2 trillion, DKK 1.3 trillion. Is there anything else on the asset side that is going to reprice that has not repriced yet? This is the first question. The second question I have on the capital, the 16% target, which was supposed to be short term. I mean, this has been always your narrative, now is kept unchanged. When you say capital target will be somehow revisited in mid-'24. Does this apply to the 16% too?

Yes. So just to confirm, we expect to get into a very constructive dialogue with our regulators. Outcome is always open. But by mid-2024, we believe that we should have come to a shared view between us on what the long-term capital target should be. Until then, we'll keep the current target of above 16%. So that's one. Then on the NII sensitivity, I think the way you need to look at this is basically there is, and I think we've disclosed that in Q1, there is basically, call it, DKK 150 billion of assets in the hold-to-maturity book, which is used as an interest rate hedge book. And there's another DKK 150 billion across Sweden and Finland on fixed rate loans that will reprice over the coming periods. The average duration of both parts is, call it, roughly 3 years with the slightly different underlying dynamics, but that is the number to work with unlike what does it give me from my previous example, getting from 0% to 2% if you assume that as the long-term rate. And then again, the -- we expect the rates on the short-term side to peak between now or to peak basically around year-end. Nobody knows exactly when it will be and how it will look like, but that's still an expectation, and then only gradually come down towards the end of '24 more to a 3-ish level and then gradually go down from 2% to 2.5% in the long term. If you mix all that up together, then you should roughly arrive at our numbers.

Yes. And, Riccardo, I just think you should be careful about taking the total deposit book, which you mentioned versus the hold to maturity book and the other assets because I think the most relevant comparison is the more operational assets in retail banking and business banking, which is, of course, substantially lower than the number you mentioned. I think we had quite explicit disclosures and that is part of our Q1, if you want to see the details.

Okay. Thank you so much. Is there any more questions from the room? I think we have one from Namita.

Namita Samtani from Barclays. I just had a question on your compensation package because clearly, it's going to be linked to the 2026 ROE target. But what about '24 and '25, what exactly is it linked to? And how will you be assessed?

This is probably a question for the Chairman, but I -- we have in the whole executive leadership team, we have 2 compensation packages. One is on short-term incentive, which is up to 30%, which is based on a sort of a balanced scorecard of different goals, including financial, nonfinancial, et cetera. And then there's a long-term incentive, which is basically based on total shareholder return versus a basket of our peers. So I would imagine, but the Board hasn't set the '26 targets that we would probably continue with some sort of mix like that. So I think, of course, the financial targets is one component, but the long-term incentives, at least in all the years I've been here, is fixed on versus a basket of our peers in total shareholder return and therefore, is less specific on any one number.

Yes. And if I can add because I felt that was the inherent question, is this a hockey stick model. It is not.

I wouldn't even presume to think that, that was an hockey stick model.

No.

Thank you so much. We have to cut off for the first Q&A session here. We will have a short break now, and we're back in this room around 9:45, and there will be a Q&A session afterwards of 50 minutes. So there will be plenty of time and opportunity to ask questions. Thank you, everyone. Enjoy the break. [Break]

Okay. Welcome. Welcome back everybody. I think we are still missing a few people in here, but kindly ask you to find your chair, and then we will kick off. Okay. Welcome back from the break. I hope you have had a chance to refresh yourself a little bit. We will now kick off with the second part of today's agenda. And this is where we will focus on our strategic plan and priorities in our business units. And to start with, I will introduce Berit Behring, Head of our large corporate and institutions. Please Berit, the stage is yours.

Thank you, Claus. Good morning, everyone. I have really been looking forward to today. So the leading Nordic wholesale bank. That is my ambition and that is also my team's ambition. And we have, in recent years, been on a journey to become a full-scale wholesale bank, built on strong customer relationships with local market expertise and also full transaction banking and full investment banking capabilities. But now it's time to shift gear. And today, I will take you through our plans. I have been in Danske since 2007, and I was part of the old C&I management team that defined the LC&I as we are today. And I would just like to start to spend a few minutes on that journey because I think it's important. It shows that my team can execute on ambitions even in competitive areas and in challenged circumstances. And I do remember back then, the discussions we had in the team and where we started with, okay, so what is our strength? What is our DNA? What is our stronghold to build on for the next few years. And the first thing we had identified was that we had a very strong customer-first mindset. But we also, in the team were convinced that relationships, trust will be even more important for the future. And for that reason, we decided to elevate our senior banker role, the relationship manager, gave them a stronger mandate. We made them totally product agnostic, and we gave them full customer profitability responsibility. Our customers feel today, they have a strong senior coverage with fast and easy access to top management in the bank. And as Carsten already said, we have now been rated the Nordic #1 by Prospera for 7 consecutive years. The second stronghold we identified was we also knew we had the best cash management system. And we know it is lending money and good daily banking that makes relationships sticky. And we have worked on this competitive advantage, and we are today the house bank to many more customers compared to just a few years back. And we also have a leading profitable institutional franchise, built on very strong capabilities in secondary market products. And also here, with the elevation of the senior banking role, we have now built really strong senior relationships with our Nordic institutions. But we also back then knew there were some areas where we did need to invest. And at the time, we were not a full-scale investment bank. So the first area we decided to invest was in our capital markets capabilities. And this was both to capture the customer demand for diversified funding, but it was also to work with our own profitability. Capital was becoming more expensive with new capital regulation, and we wanted to be competitive. We were not the only bank going in this direction. And this also meant entering into a super competitive field with the large international investment banks as well as the strong local boutique firms only focusing on capital market transactions. And therefore, it makes me so happy today when I actually see that we are supporting and helping so many of our customers with strategic advice in their important and transformative transactions. And you can see us in top of the league tables in DCM, in ECM and in M&A. And it has also worked on our capital efficiency. We have also, during these years, reduced our share of low-returning capital from above 50% to now below 30%. We also identified that we wanted to grow. We wanted to grow because we wanted to diversify our credit risk in our portfolio. And we also wanted to utilize this good cash management system and build scale on that system. And as a Swede, I'm a little bit extra proud over the development on the strong growth that we have seen in Sweden, but we have actually grown our core relationships in all 4 countries in the Nordics during these years. And we have grown profitably, and with balanced basis. And last but not least, sustainable finance. I think the most important capability to have for the future. And also here, you see us in the top of the league tables when it comes to bonds, when it comes to loans. And as Carsten already said, we have the most ambitious climate action plan in the Nordics. So we did do what we set out to do. But I think most importantly, this is a very good starting point for the next 5 years. So what will we do in the next 5 years? If you should remember anything, when you go home tonight about LC&I, it's 3 things. We will continue our growth journey with a focus outside Denmark. We will strengthen and leverage our One Corporate Bank platform, and we will deepen our relationships with our Nordic institutions. So the continuation of the growth journey will mean that we will further diversify our credit book. We will be even more focused on the large international corporates that have a very strong Nordic anchor, the kind of corporates where we can be the full service provider -- financial service provider for our customers. Our One Corporate Bank platform, I seriously think that we have underplayed this asset for years. Danske Bank took -- years ago, when Danske Bank acquired foreign banks, the difficult decision to migrate those banks entirely into our system, One platform. And it is on that platform, we have built our cash management system. And for our corporate customers, that is a fantastic product. And this strategy around, I have together with Johanna Norberg, Head of Business Customers and our 2 respective management teams have worked together to make sure that we maximize and leverage this asset. And thirdly, deepen our relationship with our Nordic institutions. So now we will build on these strong secondary market capabilities that we have and now also the strong senior relationships with our Nordic institutions. We will support them on their increasing demand for alternative with a focus on green investments and also there increased demand for liquidity. This will mean that we will diversify our income and increase our income coming from institution going into more fee income and more NII. And also, as you can see on this slide on the right-hand side, we do expect income growth from the corporate customer segments in all 4 Nordic countries as well as improved RoAC. And from our institutional customers, we see a more substantial income uplift and unchanged RoAC. Thanks to very strong focus on capital efficiency. But let me take you through these 3 growth levers in a bit more detail, and I will start with the growth journey. The growth journey focused outside Denmark, and where we see most potential in Sweden. And we know how to grow. We have grown by 20% our customer base just since 2021. And I think it's important to emphasize, it's not just about lending money. It's actually not just about lending money and doing the transaction banking. A few weeks back, Sobi, Swedish Orphan announced their USD 17 billion acquisition. We did the full advisory, the full financing package together with Morgan Stanley. And you should, going forward, expect to see more of that from us, especially in Sweden. We have actually also grown our customer base in Norway. In all sectors with a focus on renewable energy, except for, as Stephan already mentioned, oil and gas, where we have taken a deliberate decision to reduce our exposure. Going forward, we will support all our customers even more on their sustainable transition. And that will also mean that we will reduce our financed carbon emissions intensity even further. We have also increased our capital-light fee income from both capital markets and daily banking by 30% since 2020. And going forward, we will focus even more on customer profitability, and we do expect to see further growth from both capital markets as well as daily banking. And I just want to remind you, with daily banking, it is the same products in all 4 countries. So if we do a cash pool for a Finnish corporate, it's actually exactly the same as a cash flow for a Norwegian corporate. And you can see, we will grow by at least 40 new customers before 2026, and that corresponds to a growth rate of roughly 5% annually. So the second focus are One Corporate Bank platform. We are the only bank that has a true Nordic platform and there are many proof points on this. But as an example, we are the cash manager for Denmark, for Sweden, for Finland and for Ireland. And even if these examples represent mainly domestic cash management solutions, we have been able to scale those solutions between the different countries just because we have One platform. And now we will be able to invest to maintain this competitive advantage. And I will now focus on the middle of the slide, the 3 dark blue boxes because that is where we will channel the main part of our investments. So the first one is about improving efficiencies. That is basically taking our internal processes, digitize them, automate them, but it's also about increasing adoption rates. The second part is about integration. We want to make it easier for our customers to integrate directly with our system, District. And this will make our customers' daily life easier, more efficient and it will make our system more sticky. And thirdly, it's about increasing our cross-sale and our [indiscernible] business by being more proactive and relevant with data and information. So we give our advisers and product specialists better information so they can bring in the right specialist at the right time. We do have the data. We have a lot of transactional data, but we need to utilize it better. And going forward, you should expect to hear a lot more about how we, in Danske Bank, will utilize our data. But as I said before, this work has been done together with business customers and we will come back later and show what this means for business customer segment. But you can already here see that we will increase the annual daily banking fee and annual growth rate of 5% or more. And this is a shared KPI between LC&I and BC, and that is just to make sure that we always do the right prioritization what is right and best for the bank, but I can guarantee you that we have our own targets -- below the 5%. So moving into the third part, deepening our relationships with Nordic institutions. I have and my team have some of the strongest relationships there are with Nordic institutions. So when Tryg decided to acquire RSA insurance, that was a big transaction, DKK 37 billion. That transaction meant that our senior banker, he needed internally to coordinate with corporate finance, with equities, with equity capital markets, with debt capital markets, with loan capital markets, with FX and with issuer services as well as keeping me and the rest of ELT comfortable with a pretty large exposure. So why did they choose us? They choose Danske because we have the local market expertise for those transactions. So when Barbara, the CFO of Tryg, after the transaction said, it has been a pleasure to have Danske Bank on team Tryg for this extremely important and transformative transaction. I know we have what it takes to make the largest and most complex transactions in the Nordics. So now we want to use these strong relationships we have because we have more. And we want to build on the strength we have in our secondary market capabilities. We are strong in fixed income, in equities, in FX and in asset management. And as you can see in the light blue box on the slide, we will now capture the growth opportunities coming from our institutional -- Nordic institutional customers in their shift towards more illiquid and green assets. This means that we will increase our exposure in project finance and in leverage finance. We will also support our Nordic institutions in their increased demand for liquidity, and we will increase our exposure in collateralized lending with less liquid assets. We will have high focus on cost and capital. So we will invest in streamlining our markets platform, but we will also invest further in our originate to distribute capabilities. I think it's important also to see the connection with our corporate strategy because increasing our project finance and with focus on renewable energy will also support the growth journey we have on our corporate customers. And we will be at least top 2 in the league tables in the Nordics around capital markets. So I will end where I started. We will be the leading wholesale bank in the Nordics. We had a strong Q1. Stephan already mentioned that in the beginning. But this is a long-term plan, and this plan has normalized interest rates, normalized impairments. We have a strong business case and we will improve our profitability. Our income uplift will mainly come from growing in Sweden, incurring ancillary business income from increased and improved corporate digital abilities and the deepening of our relationship with Nordic institutions that will increase income and also diversify income towards more fee income and more net interest income. We will invest in both digital and people. Part of that will come from our own cost savings. And when I look at the people side, we talk about competencies that is originated distribute competencies, project finance, sustainability and advisory. The gray bar also shows you that there was also one of the questions. We had some regulatory headwinds. So we will see some increased capital requirements, but it also illustrates to some extent our increased appetite for project finance and leverage finance as well as collateralized lending. So the three things to remember today about LC&I, they will continue on the growth journey. They've strengthened and leverage the One Corporate Bank platform to drive ancillary business, and they will deepen the relationship with Nordic institutions and diversified income coming from those customers. It's not a revolution. It's rather an evolution. We have a proven track record, and now we are really ready to do it again. Thank you very much for listening. And now I'm very happy to introduce my dear colleague, Johanna Norberg, Head of Business Customers.

Thank you, Berit, and good morning, everyone. It's still morning, isn't it? So I'm actually really excited to be here to talk about business customers, but also to talk about, of course, our 5-year strategy and how that is tied into what Berit already presented in the LC&I strategy when it comes to the large corporates. And I've been in the business customer segment since the get-go, since this was formed just 2 years ago. And I came with over 20 years of experience from LC&I, both from the customer side and from the product side. And as you might already know, business customers, we serve all small and mid-corp customers, all the way up to turnovers of around EUR 150 million. We, Danske Bank, have among the fastest growing profitability in this part of the market. And that is something that I'm really proud about that we have managed to produce just during these 2 years, and this is something that we're now also going to accelerate on. And we will do that in a segment that is really important and really attractive in the Nordic. Why is that? Well, let me explain. So this segment employs nearly half of the total working force in the private sector in the Nordic. And it stands for almost 60% of the income. So of course, the segment does not only attract our attention, but it really attracts attention also from competitors but also newcomers knocking on the door. And as you can hear, this is a really important segment when it comes to future growth and future job creation. And that is also why I'm also glad to be here to outline our 5-year strategy. And I would like to show you a bit where we are today. And compared to many of our competitors, we are one of the few truly pan-Nordic banks in this segment, and we are a market leader in Denmark. And then we serve all these small and mid-corporate customers with success, and they are really attractive. But as you can see on the 53% markup here, the income per customer significantly increases when the needs becomes more advanced. And this is something that you will notice being a red thread throughout this presentation today. And as pointed out in the dark blue banner at the bottom, we serve all these customers, as Berit pointed out, on 1 digital platform, namely district. And this, I will come back to a bit later in the presentation. But how did then we in business customer address this highly competitive area? Well, I sat down with my management team a couple of years ago, and we took some really important actions to put business customer in a much stronger position. And now I would like to explain how. So first of all, let us focus a bit on the upper side of this page, namely our stronghold. And we have some really good inherent strongholds that our customers can make use of. And just to give you a couple of examples, if you as a customer and business customer, you want to trade and FX or you want to issue a green bond, you partner up with Danske Bank because we have the top-class product suite. And just as you can see on the top-right corner of this page, and this is just to mention a few we are #1 in FX, and we are #1 in DCM issuance. And then we combined this really strong product suite with top advisory capabilities. And we are constantly improving in the way that customer sees us, and we are top 3 in the, in all our market area, and we're already currently, we're #1 in Norway and Finland. If we then go to the bottom part of this page, so what did we then decide 2 years ago and building on these strongholds, we then did some improvements to bring costs down and income up. And let me just outline a few of them. Firstly, we segmented our customers a bit differently because one size simply didn't fit all. So if you were a customer with quite advanced needs, you have the same coverage model as a customer with less advanced needs or even basic needs. So we've underserved the customers that really needed us the most. So we decided to resegment our customers in 3 master segments: small corporates, mid-corporates and mid-corporates with advanced needs. And this was not easy. We went through 20,000-plus customers and made sure that they had the correct coverage model, and this was a really large achievement just a couple of years. And then we tune the service model to really fit our customers' needs. The second thing that we did, that was on the digital side. So we took some of the capabilities that our advisers and our staff function had on our platform. And then we turned them when we gave them to our customers. And just to give you a couple of examples in Sweden and Denmark today, you can open your account, you can order your products and you can do simpler credit application, as Karsten pointed out, all by yourself on our digital platform district. And as you can see, on the right-hand bottom side of this page, we then manage with combination with the stronghold that I mentioned before, with not only these 2 actions, we managed to get profit income up and cost/income down. And as you can see, we have some really good momentum now and it's that momentum that we're building the strategy for the coming 5 years. And we are doing that on 3 different levers, and I would like to show you them. And before I go into each and every one of them with a deep dive, I just want to briefly mention them, all of them. And firstly, we're going to focus on customers with advanced needs. And the reason it's quite simple here because their needs are broader and then they're simply much more profitable, and they really match our stronghold. And now we will go one step deeper, and we'll also focus on customer within international needs. And the reason is simple as well, they also really fit our strong goals, and they are even more profitable. Then when it comes to small corporates, we will continue to grow by scaling our platform district. The second one is then together with LC&I, as Berit mentioned, we'll continue to invest in our digital capabilities on our 1 corporate bank district. And this is to bring down cost but also to improve customer experience and grow income with digital supported cross-sales capabilities. And then thirdly, on the advisory side, both the human and the digital advisory side, we will continue to improve and on sustainability that increasingly get more and more important for our customers. Of course, this is a good opportunity for us to capture the green transition. And this we will not only do with advisory, but also with further development of products but also partnerships. So let's deep dive on the first one. So why do we want to go for customers with international needs? Well, they do not only fit our strongholds, but they generate twice the income size, and we already have slightly elevated market share in this area throughout our markets. So we have a bit of a small advantage. Then also compared to more domestic tilted customers, they use 10% more products, and they generate almost 15% more ancillary income. So mid-corporate with advanced needs, they are profitable, but mid-corporates with advanced needs. They are even more profitable, and this is regardless of size. So as you can see on the value levers here in the middle, when it comes to customer acquisition and increased cross sales, it is in these 2 segments that we will focus. Then to add to this, our small corporate side, and this is really a new pocket of excitement for us because just 3 years ago, this segment was not profitable. Then with our new fee structure, on top of the elevated interest rate levels that we have right now, and future -- and our future ability to continue to scale district, this segment will also drive income up and cost to serve down. And small corporates, they are an important enabler and feeder to the upper segments. And we are committed to our customers during their entire life cycle. Then when it comes to geographies, all 4 countries for business customers are profitable. But Sweden is attractive just given the market size and therefore, also the larger pool of customers with international needs and also back to Berit, where she and LC&I and I will also focus on Sweden, so we see some good synergies to do this together in Sweden. Then Finland, we see really good opportunities short term, and that is basically mainly due to the competitive situation that we have over there right now. So I just want to sum up this segment quite quickly here. We want to focus on the most profitable customers, those with advanced needs and international needs, and small corporates, we will scale digitally. We will do it in all 4 countries with a special focus on Sweden and on Finland. And as you can see on the right-hand side of this page, by doing this, we'll be able to lift our income with just north of DKK 1 billion. So this was the segmentation. So let's take a look at the 1 corporate bank and how that will drive profitability and drive growth. On this page, I think you recognize you feel at home. And Berit also talked about 1 corporate bank, but I think this is really worth repeating because this is a joint offering for all corporates in the bank. And I would like to zoom in also on the digital side in the middle. But before I do that, I just wanted to explain why 1 corporate digital platform is so important for us in Danske Bank. Well, as a customer grow and expand, they do it on 1 platform. They do it on District. So they don't change platform when they grow out of being a mid-sized corporate residing in a business customer into being a large corporate into LC&I. They do it on 1 platform. They do it on District. The same goes when you as a customer grow from being only a domestic home market customer and you grow into one of the other Nordic countries. You do it on 1 platform, you do on District, everything very efficient and convenient. And this is highly important when investing for increased efficiency and reducing cost to serve. So as an example, we are going to add 1 API to our system or if we're going to add on self-service to our system, we do it once. We do it for all countries, and we do it for all customers. So extremely important to drive profitability and growth, but also customer satisfaction. So now let me continue and then deep dive on what will keep us having this winning platform. And it's these 3 areas that also Berit touched upon. What I wanted to do a little bit more of deep dive on. So improved efficiently. And as Berit said, this is really to invest in further end-to-end processes to digitize our end-to-end processes. So meaning when a customer set up this cash pool, she will do it with no delay and she will do it all at once. Secondly, by investing in increased integration, so when a customer wants to access their bank, Danske Bank, they do it from their platform of choice. And that could be District, our platform or it could be their own ERP system. Then thirdly, we want to invest in enhanced cross sales meaning when a customer have elevated action on our platform when it comes to international flows. This will trigger a lead. This lead will trigger on experts to reach out and advise on international expansion. And this leads me to the left-hand side of this page, where we will continue to leverage together with the LC&I, further product development, but also for us in DC to leverage on the experts residing in LC&I, both on the product side but there are also other experts. And this, together with investments in our digital platform will give us an annual growth of 5% of daily banking fees. And as you remember, this is a joint effort together with LC&I and the common goal. So now you know where we want to go. You also know what we want to do with our digital platform and what will then tie this together. Well, that's advisory. And that is a leading advisory and sustainability capabilities, and that leads me to the last deep dive on differentiating advisory. And as mentioned before, we have a strong advisory, and this is also that we will continue to focus on and continue to build it upon because when a customer then grow, and expand or if a customer want to invest in a new, let's say, green production site, expert advice, and we will be there for them to give that expert advice. This is really the foundation of the DNA that we are building the strategy on. And if you look at the middle of this page and what we're going to focus on in the future on the advisory side, well, that is to execute this further segmented segmentation and really attach also a relevant value proposition to the segmentation. And with our digital-enabled service model, we will reduce cost. And this combination will not only drive profitability, will also drive customer satisfaction. And by 2026, we want to increase -- we want an increase of 15% of customers that are highly satisfied with our advisers. Then also a really important part of our advisory and this really occupies more and more of our customers' agenda, and that is sustainability. And here, we already have a head start with really strong products on top of many of the league tables, and that is we are strong in green lending and green bonds. And also, we have been training our adviser and expert for quite some years now. And then just in January, we then launched our climate action plan. And for the future, we will continue to invest in products. As an example, the sustainable linked loans that we now use a lot in LC&I among LC customers. We also want to use it more broadly for BC, especially the commercial real estate side. And then we will continue, of course, upskilling our adviser and effort, and then we're also going to enter new partnership. As an example, if you, as a customer, you need to know your starting point when it comes to CO2 emissions. That, we will help our customers with by partnering up, and that will also give us the opportunity to advise our customers in their transition and also finance their transition. So this is hugely important to protect business but also to capture new business. So that's what the walk-through of what we're going to do in the coming years. And I just wanted to remind you what we want to do. So first, we will lift income by going with customers that are the most profitable when it comes to customer acquisition and increased cross sales. We will focus on mid-corporates with advanced needs and international needs, and we'll go with smaller corporates where we can obtain scale. Secondly, we will reduce cost. And this will be due by investing in our digital capabilities. And just as an example, we will reduce the onboarding costs with up to 25% by 2026. And then thirdly, we will keep on differentiating us and keep our winning position by supplementing the all-digital model with a continuous focus on advisory and sustainability. All in all, with a normalized interest rate's level, also taking into account the upcoming regulatory capital requirements also coming our way, this strategy will drive our profitability towards 21% and our cost/income levels to below 40. Thank you for listening. And now a warm welcome Christian Bornfeld for personal customers.

Thank you, Johanna. So are you ready for the next one? Okay. So first of all, my name is Christian Bornfeld. I head our personal customers business. I joined the bank a year ago. coming from, well, after having worked outside of the Nordics for a couple of years on technology and innovation and banking. This turned out to be a great time actually to join the bank, both to help the team turn the commercial momentum, as I think you've already heard, but also to deliver on some of the big initiatives that we have ongoing and last but not least, to set our direction towards '26 and beyond. It's not that often, maybe every 3, 5 years in a company like ours, that you actually get to the luxury of taking a big step back, doing analysis and deciding where we're going and how will we get there for the coming years. So it's been great to be part of that. And I look forward to sharing some of the key conclusions that we've made on these points with you during the coming 20 minutes. And I think you will see that we really have utilized this opportunity to become a more focused and a more personal bank going forward and also delivering solid returns. But let's start by talking a little bit about our starting point. We are, as the other business units, a pan-Nordic business unit. We are present in all 4 countries in the Nordics, and we have a solid base of attractive clients or clients in attractive segments. However, our position does differ quite a bit across the different countries. On the one hand, you have Denmark and Finland, where we have a very solid position in the market, being clearly the #1 in both Retail and Private Banking in Denmark and the third largest in Finland within retail banking. So a strong solid position. Compared to that, we have smaller market shares in both Sweden and Norway. On the other hand, in those countries, we have proven acquisition models. We used to build customer portfolios of homeowners and academics. And especially in Sweden, we have close historical ties between personal customers and business customers. But clearly, these different positions that we have in the markets call out for what sort of commercial positioning do you want in these markets. And I'll certainly come back to that in just a second. But before I do so, let's just talk a little bit about our strongholds. Our strongholds and personal customers are, I would almost say universal, at least they have been with us for quite some time. The first one is advisory. We continue to be recognized by our clients as being very strong in advisory, which is reflected in the scores that we receive after every meeting, but also more and more through external sites and comments like what we now receive on Trustpilot. The second stronghold for us is actually the societies that we operate in. We are lucky, we operate in very digital societies, and we have an even more digital customer base in Danske Bank, reinforced by our award-winning mobile banking app. So a great place to compete and evolve the bank. The third one here is actually also really important. We have powerful subsidiaries, and we have strong partners that we work with every day. This allows us both to diversify our income base. It allows us to innovate not within a product but across products, and it allows us to provide a broad offering to our clients, which again, supports our desire to provide holistic advice and be relevant for our clients. So again, 3 very important strongholds that will continue to be an ingredients for success for us going forward. Now the last 3 years of the bank's history has been tough, to be honest, and it has hits the personal customers business probably more than anyone else because we are so much in contact with the everyday person and society, and Carsten mentioned that earlier. We have spent quite some time on remediation activities, and that caused a shift of attention sometimes from customers and commercial focus. Luckily, over the last 12 months, we've made significant progress. And as Carsten mentioned, we're making good progress also on the financial crime plan. And step by step, we will be able to focus even more on customers and be able to look forward rather than backwards. During the last years, the team has not stood still. So still, there have been great achievements in this area. We have managed to stabilize the customer base in Denmark after it's been going gradually down for quite some time. Now we've lately started to see a net growth in our key segments. That is a very positive development and shows momentum and also that we are regaining trust from this important client group. The next thing we've done is that we have streamlined and evolved our service model over the last years, and you can see that coming through in the number of people that we have in personal customers through digitalization and frankly, also good cost discipline, we've been able to reduce the number of people working in personal customers, while at the same time, increasing the share of employees that actually work with clients on a daily basis through advice. So still, some strong developments despite a hard period. So the starting point, I would say, today is actually a lot better than it was just 2 years ago, but there is so much more we can do. There is so much more potential in this business. And as I said earlier, we've had the luxury now of really taking a step back and doing analysis the last, well, I would say, 9 months, and we have used that time wisely. We have done a thorough review of the business model across both retail and private banking. We've done this from an outside-in perspective. We've been out talking to more than 20,000 individuals across the Nordics to understand what do they need from a bank in the future. We've spoken to numerous experts, real experts and self-proclaimed ones as well, I think, but many people who are wise in the direction banking is going and also in broader trends happening across society. We work closely with our subsidiaries and partners. And of course, we've done lots of data analysis on the client base we have already. This has given us a great starting point for [ designing ] where to play and how to win. And again, that relates back to the choices that you will see we've made in regard to geographies where we will be active and the customer segments that we will focus on going forward. So let's start by the choices we've made on the geographical footprint. It's important to say that this analysis, as I said, has been done top-down. So we first looked at the structural profitability of the individual market. We've looked at our starting point, our strongholds and also our ability to invest during the coming years to compete in that market. This is where these conclusions come from. Denmark, probably not a big surprise. We are big. In Denmark, we like our position here. We have a well-established base, and we want to cement that further during the coming years. We want to continue to be a broad bank from a broad set of society in Denmark. Now that being said, we will do that in a more targeted way, and I'll come back to that in just a second when we talk about how we focus even more on clients. Finland is a profitable business. This has been helped by, of course, the developments in the interest rate environment just the last year or so. But already today, Finland is a profitable business for us. In addition to that, we see various client expectations evolving, and we see various market dynamics in Finland, that again, mean that we see more opportunities also for us going forward. So we will continue to be committed to Finland, with full focus on both retail and private clients, private banking clients with more advanced needs. In the Private Banking segment, we will be a little bit more selective, but a clear focus still to win in Finland. Sweden. Sweden is, by far, the largest market that we have in the Nordics when it comes to retail banking and not least private banking. It's also the market where we see the lowest market concentration, and within the segments we want to focus on, it's also the place where most clients actually change banks every year, giving us some opportunity to maneuver and also find a specific sliver that we want to focus on. So what we've decided is that we want to refocus our Swedish business. The last years, we have been working closely with partners and with sometimes aggressive pricing to win homeowners and academics in Sweden. We will now shift to have a more broad perspective, win broader relationships with specific clients, namely upper retail clients, private banking clients and especially also those with links to the business customers of Johanna. So business owners, that have a relationship with us. We feel this speaks well to the position that we can see in the market but also to the DNA of the organization. This is where Sweden as an organization comes from and it's a place where we can leverage the synergies across the different business units. Two, make us even more comfortable we have actually piloted a number of these concepts during the last months, and the results are promising, which gives us even more confidence that we can win with this recipe in Sweden. And lastly, Norway. You've already heard about Norway a couple of times in the presentation today. We have made a -- well, let me first of all say, we have built actually a quite strong client portfolio in Norway over the last years. And if you look at our numbers, we've managed to grow that portfolio quite steeply. We've done that again through focus on homeowners and with again, strong pricing towards academics. That leaves us today with a good customer portfolio there and actually some quite skilled employees as well to serve them. But when we work through the numbers and done the analysis on what it requires to win in Norway also in the longer term in a sustainable way, the investments are too big and the time frames are too long to establish that. So based on a broader review and assessment of the investment opportunities we have across the group, we've decided we will not invest in the Norwegian personal customers business going forward. And as a consequence of that, we've decided to exit personal customers in Norway, and we are in process of finding a solution for that. And as been mentioned before, we will update you further with the first half results in end of July on how we're doing there, but we have a plan or a plan is emerging. Now it's important for me to also say that, of course, this is a process. It's a decision we've taken, and it's a process that will happen over the coming quarters. And therefore, we remain as committed as ever to serve our clients every day, and we are as committed as we've been until now also to our employees in the Norwegian organization for which this is, of course, a hard decision that they have reached today. If you take a step back and look at these geographical footprint, decisions we've made, I think they show that we are -- have been relatively decisive, and it does give us a basis for more focus. We can now work with 3 countries instead of 4. We have a lower level of investment required to evolve the PC business, which also means lower execution risk. And finally, we can release capital in Norway over time, as we've already mentioned. So important choices on the geographical footprint. Let me now switch to our focus on customers. So again, on the customer side, we've used the extensive research that I mentioned before, being out talking to individuals, talking to all the experts doing the analysis. And based on that, we see a couple of things. One is that if you look across the Nordics, actually all of us because we are all personal customers in this room, we have the basics, the basic needs for banking. There's not a lot of difference, not across age groups, not across nationalities. But as soon as we sort of start looking at the broader needs of these segments or of the customers, we see actually distinct differences. And what we've seen is that especially 3 parameters are determining for that. One is natural, which is the size, complexity of your balance sheet as a household. The 2 others are the life stage you're in, and the family composition you have. And especially the last one on family composition surprised us a little bit, but it is a very important determining factor. And why is that? It's because it guides what you also see on this slide, the key life events and the broader needs related to those customers. We've used this insight to, first of all, develop what we call a segmentation engine, which defines 9 specific segments for personal customers going forward, and actually below that, 23 specific subsegments, so a quite detailed model. The advantage of having this now is that it allows us to design value propositions that target these specific segments and become a better bank for each of them because it's a different bank that's the right bank for each of them. The other thing it allows us to do is to focus our growth by selecting which of these segments within which we want to grow. But again, let me be clear, we will be a bank for everyone. There will be a value proposition for every customer but we've made conscious choices on which of these segments we want to see the growth going forward based on the potential we see, but also our strongholds. And that means we made a clear decision to say we want to focus on clients with more advanced needs. So you can think this way in the segmentation model and also customers who have a preference for holistic advice. So not necessarily to the people who want to do everything themselves. People who appreciate a strong partner through their life. From the other observations, we've seen through the analysis, you can see some examples here on the right-hand side. We found some other insights that we know we need to incorporate in the way we serve our clients going forward in personal customers. There are 5 here. I'll just touch briefly on 2 of them. One is -- actually bullet #2 up here, is that the need for advice in the system changes a lot over time. And as you can probably appreciate, in personal customers, we have advanced private banking clients and family offices who we talk to several times today. And we have clients that we probably need to talk to every 3, 5 or even 10 years in the future. So there's a big variability in when we need to talk to clients. That needs to be incorporated in our model going forward. We need to be able to observe and predict when clients need us, and we need to be available as soon as the need arises, something that we need to ensure is there. The other one I wanted to highlight is #4 on this list, is that many of the needs, and you see the example here from, on the slide on the needs here to address. Many of these cannot be addressed with just conventional banking products. We do need to look broader. This is both interesting from an income point of view, but it's also a necessity just to be relevant in the future within the personal customer space. And here, you can think about traditional extensions like legal advice, insurance, which we already do, but we can do a lot more, but also emerging needs that we see coming out from our customer at the moment, especially in areas like health and well-being, where again, we have strong capabilities in Danica today that we can utilize to address this need much better. But how to develop such a personalized model without adding too much cost and complexity. And we think we found a recipe for that. The recipe is a very simple way. There's of course more detail behind this comes in combining 2 complementary elements. On the one hand side, and that's what you can see on the left-hand side here, a proactive and adaptive engagement model. So how to engage with clients. And on the right-hand side, a broad but configurable offering. So let me just add a couple of words to each of them. On the engagement model side, we need to be proactive. It needs to be a proactive engagement model. So we need to, based on data, be able to see key life events but also new financial opportunities emerging for the client and reach out to them proactively with an aim to give them the best service, but also actually to give them peace of mind because many times, there will not be anything they need to be concerned about, and they can go on and live on to a happy life with their families. But productivity is a key element. The next thing we need to make sure is that we have an engagement model that reflects the preferences we see across the Nordics, and that means a very strong mobile offering. Now I said before, we have a good starting point here. But again, we can do so much more. We have said that we want our mobile banking app going forward to be the digital front door to the bank. So of course, access to daily banking needs, but also to insights through holistic overviews and also instant access to assistance and advice when the clients need it. This digital front door will also be the access point for what we will continue to have as a differentiator, which is our expertise and our empathy, which, at the end of the day, can only be delivered by humans. So from that point of view, we will still have advisers standing by, ready to talk to people when they need it, and we will still have relationship managers for very specific segments. This model will allow us to be more available to clients exactly when they need us, but also took us more interactions with clients than what we've had until now. All of this while also being more efficient. So this model will, of course, use more chat bots and AI, but it will also drive much more efficiency into meetings. You saw the trend that we're on, but we already have quite mature ideas on how to provide better tools to our clients but also to our advisers to make sure that we can prepare, conduct and follow up on meetings in a completely different way going forward. So that's the engagement model. On the other side, we had this offering. So as I mentioned before, we've done the segmentation. We've built about value propositions for each of the segments, including what product needs that we'll have in the future. And there are a couple of our insights come out of that. One is we have way too many banking products already or we have clearly enough. That is not where we need to develop a lot more, actually where we have the biggest gaps in is -- are in areas where our subsidiaries and our partners can help us to provide these broader offerings to be relevant in areas like homeownership, which is also our key play when it comes to things like sustainability, but also in areas like health and safety, as I mentioned before. So overall, a good sort of combination of these 2, we believe, is sort of the magic for the future. Maybe just worth saying as well on the configurable offering side that, of course, just providing a lot of products, we try that as well. That's like stepping into a supermarket and just looking at shelves that is not a personal bank in our belief. So therefore, we have also worked on defining base offerings and add-ons for every segment to make it easy for the customer to choose the right thing and probably also build a slightly broader relationship with us for the future. So all of this, of course, sounds logical. I hope, but sort of logical. So why are we not overly doing this? And why are other banks not already doing this today. Now I can say from my own experience also working with other banks, it's not that easy. This is not how most banks were set up. Many of them were set up by product or hard-coded the way that they want to serve clients, typically with a relationship manager or an adviser sitting in the center of the universe. This is recalibrating, rewiring a bank, which can be hard, especially if you have complexity that has built up over time. Now, the other thing that this requires is strong digital and data capabilities, which Frans will talk more about just a second Unfortunately, we actually have quite a lot of those elements already in the bank, and we are actually doing pretty well there. but we need to do more. Actually, you've heard me say that a couple of times now. We have identified our 200 specific areas where we believe we need to evolve and improve in order to deliver this sort of experience to our customers in the future. So let me just talk about how we will make that happen. So of course, developing this personal bank, this vision that we've created requires investments. We also need to deliver this across 3 countries, with slightly different commercial focus and with local integrations, adaptations to do that. Now at the same time, the needs are quite similar across the Nordics. So one of the things we've seen also working with our own teams is that when you start putting people into a room, they actually say, this is exactly what I need in Finland or this is exactly what I also need in Sweden. So the commonality is actually bigger than you think. And therefore, the reuse across is still quite strong, but it requires very strong execution discipline, and that's also why most banks have not been able to do this. We have a secret weapon or an important point here is our common platform. This is something that most other banks don't have. It allows us to develop once and to deploy into all the countries with a marginal additional investments of 10% to 20%, and this is one of the key assumptions and basis for how we can invest and get impact in the way I will show you later on. It also allows us to, from a personal customer point of view, get quick access to the investments that we're doing sharedly in our data platform, AI, cloud capabilities, again, something that Frans will talk about. To make this happen, we built a comprehensive plan, which you -- is highlighted at a very high level here on the left-hand side of your slide, which covers 2 types of investments. One is digital investments. So of course, a lot of this is digital and needs to be powered by digitalizing data, but also commercial investments. So we will also invest in our people and the expertise that we need to have. We'll invest in marketing, we'll invest in our partnerships going forward to make this model work. On the digital side, I want to emphasize we're sequencing our investments, and we're doing that for 2 reasons. One is to make sure we get the optimal value out of our investments. And that for us means investing first in Denmark, then rolling into Finland and then into Sweden. The other advantage of sequencing is that it keeps us disciplined and loyal towards our common platform. We avoid creating fragmentation or diversions from the common solution by having a forceful sequencing. So overall, a strong plan to evolve PC going forward. Let's quickly look at the financials coming out of this. So we have defined a number of strategic initiatives, which I've sort of summarized during the last couple of slides, but they financially come back to our numbers along these 3 key value drivers. One is being more efficient in our relationships. So being even more efficient in the way we serve clients, even though we'll be more relevant and be more contact with them. The second one is to broaden our relationships with them based on the new value propositions. And the third one is to develop new client relationships. What you should take away from this is also the percentages here. So you will see that 80% of the value we create from the strategic initiatives comes from our existing customer base, so doing more with them and being more efficient. Only 20% of our value drivers are related to developing new client relationships, and that should give you, at least it gives me more comfort in our ability to execute this plan. Now finally, when we turn this in financials, obviously, during the years, we will see a good development in our cost/income ratio, in personal customers. This is driven by, of course, higher income from the normalized interest rate environment, which we've already touched on. its impact from the strategic investments I just talked about as well. So from that point of view, the cost/income ratio of below 50% is a clear commitment. On this side, it will also drive an increased ROAC for the PC business, which will make PC a strong contributor to group ROE in the future. So overall, a solid plan with strong implications for our profitability going forward. So let me here at the end, just summarize very quickly. We've done a very thorough review of the PC business. That means both retail and private banking to set ourselves up for success for the future. We've done that based on 5, and we've taken out 5 key elements of that. One is, we'll be a lot more focused personal customers business unit going forward. You've seen that from the choices we've made on the geographical footprint. You'll also see that from how we focus on clients going forward. Much more personal bank, people, our customers will feel us a lot more in the right way in the future. based on the analysis and the segmentation and the value proposition I mentioned before. We will be a lot more proactive bank. We will be there when our clients need us, and this will be essential to be competitive in the future. We'll be much more digital. We will have your front door in your pocket going forward when you think about personal customers. And finally, we will be more holistic. We will provide holistic advice based on a broad offering developed and delivered together with partners and subsidiaries. All of this on a common platform delivered with very clearly disciplined sequenced evolution plans, investment plans funded by the efficiency gains we give, with that we also deliver through this plan. So overall, future-proofing personal customers while delivering solid financial returns. So thank you all for your attention. And I will now hand it over to my good friend, Frans.

Thank you so much, Christian, and good morning, everyone, here in Copenhagen, and good morning also on the live stream. My name is Frans Woelders. Let me introduce myself a little bit and give you my background. So I have a technology background, and I have started my career in technology, about a 25 years ago, I moved into banking. And I covered in all of my positions and the whole value chain in banking. So I've been running large-scale operations. I've been heading IT as the CIO. I've been running a retail business as a CEO being Chief Digital Officer. Before I move to Danske Bank in 2020 now a bit more than 3 years ago as a COO. And in this role, I'm responsible for technology, for our business operations, for procurement for premises. Now you've heard all of my colleagues talked about the really importance of digital and the role digital plays in the subsequent business strategies. And let me bring you to life and consolidate what we're going to do in digital and what we're going to do in technology. And how we are driving business outcomes. And one thing is key is we're not doing technology for technology, we're doing technology to drive business outcomes and for the benefit of our customers. But before I go there, let me share with you the great starting point, the great position we're starting from. And you also heard my colleagues talked about it as well. But this is truly a unique starting point is the unique asset that we have. We have a single platform, a single instance of a platform across all the markets that we operate in and across all of our customer segments. That means from retail customers up to private banking customers, but also from sole traders up to large corporates. They're all being served from a single platform. That means seamless scaling up and potentially down, preferably up throughout this platform without any further changes. And we have an award-winning mobile app, the front door, as you heard Christian say to all services. But in business customers, we have another very big stronghold, which is our District platform. That is award-winning when it comes down to cash management solutions across the Nordic markets. So it's a great position to start from, also from how our customers are rewarding us here. Then we're able to service customers at scale. We're processing over 1 billion card transactions, more than 37 million log-ins for our customers every month. So we're really able to run this operation at scale. And it's trusted. It's reliable. And now we have also largely API-enabled this platform as well. So this is all a good position to start from, but we've also worked on this over the last couple of years. And share me -- let me share with you the results that, that has given us and what we've done over the last couple of years. So on the left-hand side of this slide, you see that we have been able to bring our technology run cost or infrastructure costs down with 6%. And we've also increased our investments with 15% over the last couple of years, and we've been increasing our productivity in technology with 15%. So reduction in infrastructure, mainly by using -- making a better use of the infrastructure that we already have on our private cloud, but also starting the journey onto public cloud and into SaaS, Software as a Service solutions as well. And we'll be definitely coming back to that because that is something that we will embark on further going forward. As these costs are driving down, and basically, you want to spend [ a ] little money on that and investments as possible because what you want to do is invest and invest in the future. And again, we have been increasing our investments over the past couple of years and invest in digital solutions and in efficiency of the bank overall. That has led to more releases into production, basically, that is a measure, right, how you can measure how efficient you are as an organization, what is it actually that on solutions you are able to bring to customers with an up to as 32%. An important thing here is at the bottom of the slide. I'll come back to that, is that we have introduced agile at scale across the whole of the organization. Let me give you a couple of examples in those 3 areas of what we've done. So an example of reducing our costs in infrastructure, in [ around the bank ] is from our finance in our internal finance processes where we have moved applications for mainframe into private cloud and subsequently, when public cloud providers are definitely on a journey and now reliable and safe and secure also moved applications into public cloud. It has allowed us, because it has lower maintenance cost, it has allowed us to move in more investments into strategic change in this area with up to 53%, and it also has reduced our cost in this area with 19%. Then an example of increasing investment and that we're really focusing these investments towards what our customers are requiring. And Johanna has already talked about District and the importance of business customers for our business. And what we -- what we've recently opened up for our customers is what we call marketplace. You could call that the Danske Bank app store, where customers can pick and choose the products that they require, but also partner products. As an example, we have a partnership with Axeptia Fintech for credit solutions and liquidity improvement for our customers. So basically, it's a platform. It's a marketplace where it's both our products on offering as well as our partners. And that is a true screen shot, but difficult to read, I think, from this distance. Then a third example, and I already mentioned that, is the improvement in productivity. So we now have almost 4,000 of our colleagues working in multifunctional team, both from business and from technology in over 350 teams across the bank. So this is really about integrating business and technology. It is a really important point because basically, this is our colleagues and my colleagues working altogether to the right outcome is not the what we had in the past is [indiscernible], here is what we want to throw it over the fence and please do something good with this. No, these are integrated plans and executed in multifunctional teams. So this is a bit looking backward and showing you some of the proof points in the past. Now we're -- what are we going to do next? What is our plan for the future? And I'm going through 3 different angles to this. digital, which I consider everything that touches customers data and AI; and the third is technology. So basically, if you open up the hood, what do you see inside and where are we investing in? So in terms of digital engagement, and you heard my colleagues talk about this, we've already have a leading digital solution in mobile banking in District, but we want to continue to have 1 also towards 2026, and that means continued investments in that area. And what we're going to build is a single integrated channel across those different customer segments to make sure there's a consistent customer experience, but also that the underlying technology is the same and it means lower maintenance costs. I think that is most important for you to remember in this space. Then, of course, this is also serving the segmentation model that Christian was talking about any digital engagement that we are building out for our customers. And obviously, this also means a further expansion of self-service capabilities so that basically we get the best out of our expert advisers, and they spend their time in the best possible and value-add way. Then secondly, integrated finance, what we call integrated finance. We already offer open banking to our customers. And I just mentioned to you examples of partnership offerings that we do that we do as well. But the next phase in this is increasing the level of partnership offerings, making sure that we have the right offer in place for the life events for personal customers or important events in the life of businesses. And that we are there for them at the right moment, that also, we think, is really important, is that we are able to integrate our platform with our customers' platforms. So one is, they will always have the option to access our products through, for instance, the district channel. But if they do want that, and there is definitely a request for that is integrate our platform APIs directly into their ERP systems. And we have already had the basis for that with all of the APIs that we have developed so far. I'll come back to that a little bit more. So towards 2026 on the right-hand side of this slide, continuing leading digital solutions, that's one. And the second is extended partner offerings and integration with clients. What we need for that as well, really important. You've heard my colleagues say as well a couple of times is data. And we sit on a lot of data as a bank. But then it's also about utilization of that data. And where we want to use this data is to provide better advice to our customers. And that is either through advisers, and so making the data available to our advisers, but also straight to customers through our digital channels. We also require the data to do the proper segmentation. As you heard Christian talk about, right, it's really important that based on the data we have a full understanding of our customers so we can use it in order to segment. It's not something that a customer would know, but for us, it's great to reach out at the right time and at the right moment to certain customer segments. Then what we need for that because every bank sits on a lot of data, but it is now making the data available. And that's why an important piece of our investments will go to a new newly developed data platform based on public cloud. And why would you want to do that on a public cloud? Why don't you want to do that yourself? It's -- one of the key importance here is that if you look at what public cloud providers are providing these days the billions, the hundreds of billions of euros that they're able to invest in technology. Even though we're a sizable bank, we can never, of course, afford to put much -- that amount of money into our infrastructure. An advantage of that is if you think just what happened over the past couple of months in terms of the developments in AI, they have been massive, right? So we all think that generative AI in AI is going to change our lives is going to change the world. And also, we think it's going to change banking as well to the good when it comes down to productivity and to automation and further for the digitalization. Coming back to the public cloud point here is that public cloud providers will provide AI capability as part of the package. It's not something that we need to develop, but we can use it once we have the right setup on public cloud. So targets for '26 is proactive, targeted digital advice and faster time to insight because the data is readily available in the right way. Now digital data. Next element is really kind of looking under the hood, and I've revealed a little bit of that already, but what are we going to do on technology. So as I said, we have largely API-enabled our platform already. We have more than 240 APIs up and running. And we expect that we require about 300, which is what we expect to reach at the end of this year to completely open up our core banking platform. The next step is we've embarked on that already, but we created the foundation for that is then start moving applications from our own premise to public cloud and to Software as a Service solutions. You could also call that the letter you could also call buy overbuild, don't do everything ourselves, but look at what is the best of breed in the market and implement that. So in that way, we will infuse this platform that we talked about, my colleague talked about, and that is the great basis, we will infuse that platform with the latest technology. Then second on this slide is -- one is, you could argue, a nonnegotiable. And we have doubled the investments in security over the past 3 years, and we will continue to increase our investments into this space to keep our customers and the bank safe. And we will also introduce zero trust principles for that. That basically means don't trust but verify in every transaction and every user and every customer. Then last thing on this slide, really important, of course, this is about improvement of efficiency. And you've heard Stephan talking about that as well. And technology and services as the organization is called that I'm leading is really key to bringing those efficiencies to the bank and reducing one, is technology run cost, and also increasing the productivity of our developers as well. So 20% up in further productivity increase where we actually think with the latest developments on AI, we're even on the low side here. and then a 15% reduction of technology run cost towards 2026. We have already a competitive setup with near and offshoring locations. And we will also be towards the future be using more technology partnerships in order to also execute on our plans over the next couple of years. We have robots running. We've almost have 250 robots running in our operations space, and we will definitely continue on that road, and make those robots even more intelligent at what they do. So I'll probably leave it with this on this slide, and then I'll bring you to the next 2, one, is summarize where we're going to invest and what we're going to invest. So in summary, customer engagement platform, integrated customer channels, continue to do customer journey digitalization and invest in a 1 corporate bank, that is investments straight going into business strategies. In order to do so, we need to do a couple of things on the technology foundation that I just mentioned. We're going to invest in public cloud. We're going to reduce the legacy that we have some of, like every bank of our age, size and history. And we continue to invest in security as said, and we will significantly increase our investments in data and analytics. So looking at the investments here on the right-hand side of the slide, and it has been shown by Stephan already, but let me give you a little bit more flavor to this. So we're currently investing about EUR 3 billion a year in technology in digital, which will increase to EUR 4 billion. And we partly do that by the savings. I mentioned to you one of the savings that we are expecting in terms of cost reduction and reinvest that in further investments. And what it also will bring is that currently, we have about 35% of all of our investments in technology available for strategic change as we call it, because you also need to maintain systems, do compliance and all of that. And we expect that 35% to then increase to 60% becoming available by 2026 for strategic change. So summarizing, I hope, I think we've made clear what a great position we're starting from with the single platform, the single instance platform across all of our markets. And all of our segments, which is a truly unique setup and competitive advantage. Then the second is, we have already invested. We have continued to invest over the past couple of years in digital and technology. But now with the additional investments that we're going to do, we're going to accelerate even that. And then last but not least, I also think -- hope and think that are made clear that we're investing in technology and digital for the benefit of our businesses and driving truly business outcomes, business growth but also profitability due to a higher efficiency. So on that note, I'm going to hand over to you, Carsten, and then after that, go into Q&A.

Thank you, Frans. And I think we're going to go straight into Q&A. We're running a little behind time. But we hope that this gave you a good feel from each of the business units from technology and services on how we will support the plan. to get to our 13% return on equity for 2026. So I'm really going to invite the presenters up here, and then I think we'll just get some chairs up and stuff like that, have a coffee, and we should start the Q&A in a minute or so.

So while we are waiting for the last guest to be seated, let me just repeat the procedure around the questions. It's same procedure as last time. [Operator Instructions] So I think we can we can kick off. And we have one question actually coming online from the last round of questions that we were not able to take, and that is from Sophie Peterson at JPMorgan. Sophie is asking whether there is any financial targets pre-2026 we see 2023 and 2026 targets, but nothing to bridge in between. Any color on revenues and cost development in 2024 and 2025 is much appreciated.

Yes, I'll take that one quickly. As I mentioned before, I think on ROE, you can apply a somewhat more or less straight line trajectory. We need to keep a little bit in mind that 24%, given the rate -- interest rate expectation might not be a strong improvement, but in general, more straight line and no [ hockey stick ].

And then I think it's fair to say that [ '24 ] guidance and outlook will come as part of our year-end results as is always the case.

Okay. We have a question from Carsten [indiscernible]. .

One of the subjects that you haven't given much focus today is on compliant costs in the broader sense that's a pretty, I think, because we are at that time where the old plan were promising big decrease. So my question is, are you still committed to this decrease. And how is the status on automatization, et cetera?

Thanks, [ Carsten ]. Yes. And you're right, we didn't spend that much time on it, but it's in the bridges, and that's there just to confirm that we are absolutely still committed to normalizing our financial crime costs. The biggest part of the financial crime and compliance cost sits within the first-line compliance organization. where you may remember some of you that we committed to get the cost from DKK 2.3 billion at the top down to DKK 1.5 billion by 2025. There may be some inflation headwinds to that, but the trajectory and the goal is to get the cost normalized at those levels. Again, notwithstanding slightly higher compliance inflation rate. And the costs are coming down in line with both fixing a lot of the legacy issues, but absolutely also by automating KYC processes, our due diligence processes, how we look at transactional monitoring, improving false positive ratios and so forth. So that's absolutely a commitment and we feel good about the traction.

Thank you so much, Carsten. And I have a couple of names here that have raised their hands. I think the first one is Jacob Brink.

First question on Norway, could you maybe be a bit more specific about the profit and capital impact from exiting or selling. Let's just say it's sold at book value. So what's the risk-weighted assets that are tied up and what's the profit you're making in Q1, for example?

I can certainly give you the -- I mean, the areas are about, I think, DKK 48 billion, DKK 50 billion and the capital is about DKK 6 billion. I'm not sure we go into the details on the [indiscernible].

Given the process is going on, we would shy a little bit away from giving that detailed information. But as we said, we're going to update you on Q2. And again, keep in mind, reclassifying the assets into -- under IFRS means that we need to book them at the lowest possible value. .

Just to make clear, the DKK 6 billion, is that then assuming, or is that then including the 5 percentage points? Is there a risk buffer? Or is that at current -- okay.

No, that would be just for that business. So you're right, there could be opportunity in terms of different approach to the way the systemic risk buffer impacts the rest of the Norwegian business, so to speak?

And then just last on Norway, even though you don't want to give a profit number, is it fair to assume then, I guess, it must have been sort of mid-single-digit return on capital after tax.

It's fair to assume it would have been in the absolute lower range of profitability. Yes.

Okay. And then just final question. On the slides of large corporate and business banking, I think you have pulled together the impact from higher loan losses or normalized loan losses and capital. But I noticed, especially in large corporate, I think it was a 9 percentage point or so reduction in the return due to that other bucket. Is that because you're pushing a lot of capital from personal banking into -- or from group into LC&I and Business Banking and why?

Yes. I mean, most of, you can go into detail, Stephan, but I mean most of the gray boxes to show the allocation of the [ Basel 3.1 ] hit or whatever you want to call it, that sits centrally out into the businesses. And on top of that, there is also tax, but also why the LC&I business has a bigger great boxes because you also have a substantial goodwill component the goodwill from our sample purchase, which all of it sits in LC&I. I'm not sure we give the number on the goodwill, but...

No. But it's important to note, and I think that's what we said earlier. We are holding these buffers on group level, and we want to make sure that we push them now into the segments to make sure that also pricing and other components of the business, get the right inputs in their models.

So just a last follow-up on that. Are you then changing the return targets for these businesses, high to lower? Will that to go out and raise prices significantly to achieve the same. .

No. I mean these the return plans that we have here and the hurdle rates that we have here is in effect continuing to be competitive, thinking about the business, the way that the businesses have outlined, Clearly, we're always going to look at how we can reprice more smartly, how we can look at capital allocation, how we can optimize capital which is also what we've done in the last couple of years. But the returns are the returns that we believe we can deliver by continuing to do what we're doing, including with a different sort of tweaks and priorities that we laid out to [ today ].

Okay. Thank you for your questions, Jacob. And I saw a raised hand from the table behind Jacob. .

Hakar from DNB Markets. Just to follow up on Norway. What you see -- do you see potential negative effects of what's left of the Norwegian business from exiting personal customers? I was thinking, for instance, on the recruiting side or on customer acquisitions in the business area.

Probably -- because I think we don't believe that there is any impact on our LC&I franchise. -- the business banking business is the most obvious one where you could question are there impacts there. But I think, Johanna, maybe you can speak to that part.

Now we, of course, we've looked into it extensively in this work. But the business customer segment in Norway is a quite solid stand-alone business on the business customer side. And of course, we could have some common customers, business owners, that is also personal customers, but it's very well contained. And in our strategy when it comes to growing together with customers with advanced needs and international needs Norway is a really important market for us and also that context. So it stands alone solidly.

So not having private banking franchise in Norway will not say, impact your growth potential there?

No, that is not the way that we see it on the upper segment, the customers with the most advanced needs and international needs.

I think it's also important to remember, we are historically a business, corporate and institutional bank in Norway, right? That's the legacy. That's what we've been good at. We've shown that we can grow with our customers being focused on that. And and as Johanna, also said, therefore, we don't see a material impact. You also mentioned on talent, I think will continue to be an attractive employer in the business in LC&I space, I think it's by and large, different talents that we're looking at in that part of the business, and we feel good about our ability to hire the best and brightest in those business areas.

And we have a couple of questions coming in virtually. But before we take them, I saw as Asborn Mork raised his hand before.

A couple of questions from my side. You mentioned Norway, we should expect a solution for Norway a news in connection with the Q2, but there was 1 business unit. You did not mention today in Northern Ireland. What should we expect there? To what degree are your financial targets depending on something there? Are they also -- do they also have profitability targets towards '26.

Yes. So we feel good about our Northern Ireland business. It's the biggest bank in Northern Ireland. It has strong scale. It's #1 on customer satisfaction, both in retail and commercial banking. It's long past -- and with the changes we've seen in interest rates, it's a very robust business model with strong profitability. We haven't focused on it today. Clearly, it's not part of focused Nordic strategy, but we continue to manage the bank well. And in fact, we like what we're seeing in terms of profitability. And certainly, Northern Ireland is incorporated in the overall targets that we've spoken to you about today.

All right. Then if I may, to Stephan, on the profitability targets, given the capital release potentially from Norway, given the other moving parts we will have on capital distribution. I was just a little bit uncertain what we should actually use to calculate going forward? Is that the DKK 170 billion of equity by '26 that you will deliver the 13% on? Or is it also a moving parameter going forward?

No. The assumption is 13% on DKK 170 billion, and that includes the distributions, including the Norway component that we have talked about. We are starting this year more like, call it, 160-ish 164-ish, so you can do a little bit of an averaging out over the year, but [ DKK 170 billion ] is the number for '26.

All right. And then final question from my side, 3 years ago, you mentioned -- you talked a lot about the better ways of working, which should impact 5,000 people. There's a lot of redundancies or potential redundancies or efficiency gains at least. I guess some of the things you mentioned today, France is a result of that. But could you give us a little bit of an update on what we should expect going forward? Is there more to come from that? .

Yes. Thank you for the question. And indeed, I'll refer to that on one of the slides that what we've seen arriving from that is a 70% higher productivity and increased efficiency by this [ 350 ] teams working together. So we still think because the maturity of a model like that, and we implemented it early [ 21 ] it takes some years to further mature, but it is also a curve that is going like this, right? So it will be -- continue to be one of our cornerstones in terms of our delivery and efficient delivery. But I think we've seen most of the efficiency coming from that model. But it is working as intended. I hope I also made that clear.

Okay. And then let's move to some of the questions that we have got online. Let's start with Riccardo Rovere from Mediobanca.

A couple, if I may. The first one is on credit losses. The 8 basis points. Just wanted to be sure that in the 8 basis points, you are assuming the use of the post model adjustments, so technically the DKK 6 billion or more than DKK 6 billion, so technical would be more than 8 basis points? And the second question I have is just to be sure, the all the numbers that we see cost and income revenues in [ '26 ], they do exclude the contribution from Personal Banking in Norway from retail operations in Norway. So just want to be sure about that.

Yes. Yes, we can confirm the latter. And the 8 basis point should really be seen as a through-the-cycle loan loss rate. We have a substantial amount of post-model adjustments within our allowance today. But you would expect post model adjustments to be used in case of severe stress. And then you imagine that you would replenish post-model adjustments over time in good times. So I think I would look at the 8 basis points of loan loss risk, again, as through the cycle, including sort of an allowance account that's roughly where it is today, including continuing to have a fair amount of post-model adjustments.

So Carsten, you basically saying that the post-model adjustments will continue to be part of the furniture forever.

I would assume that you would always have a level of post-model adjustments. I think that's very common across banking. As we all know that models cannot include all risks. Clearly, now post model adjustments are probably slightly higher than they would perhaps be in times where you're in a stress because the post-model adjustments that we're looking at now are, of course, in place because we have significant uncertainty. So I'm not saying that you would have the same level of post-model adjustments, but I would imagine that you would always have a level of post-model adjustments. And that's why I guide to 8 basis point loan loss rate is a fair assumption through the cycle with our risk profile.

And let's have the next question coming from Madhav from JPMorgan.

Madhav Dev from JPMorgan. So I have a couple. So first, if there are going to be any goodwill write-downs before 2026, given that you have DKK 6.1 billion of intangibles. And then second, on personal customers, particularly Slide 56. So there is no mention of pensioners there. So are you not focusing on pensioners? I mean, is that not a profitable customer segment for you?

Steve, why don't you do the goodwill piece and Christian, you do the insurance question.

Yes. The goodwill piece is relatively simple. We do not expect any goodwill write-offs for the planning period. .

In regards to the segmentation model that you referred to, absolutely, retirees are an interesting segment for us for better or worse or luckily for us, I guess, in the societies we live longer and longer. And there is an active also economic situation as you sort of move out of your working life into the next phase of your career. And we see more and more of sort of intergenerational, also interesting financial opportunities that we can address. So certainly, those segments are also core for us. And I'll also say we have a good exposure to those segments already today.

Okay. The next one on my list is, I think it was ABG.

[indiscernible] from ABG. Just a couple of questions from my side as well. The first one is on the LC&I. You had some illiquid assets and collateral and product financing lending needs you wanted to do. How should we think about the margin versus loan losses in such a lending book? That was my first question.

Yes, and thank you for the question. What we are striving towards is to be able to support our Nordic institutions. And they are moving into more illiquid and alternative investments with the strong focus on sustainability. And that will mean that we will also increase our exposure on project finance and leverage finance. But we definitely -- and you could also see on the bridge that will demand some increase in our capital consumption, but we are also investing further in our originated distribute and how we want to measure our success here is fee income. So we definitely don't intend to keep it on our books because exactly as you allude to, the profitability to keep it on the books is not where we would like it to be. So this is more to just get other business going as I also showed in the presentation.

Okay. Very clear. On the cost side, it seems like all business units have an uptick on the cost or investment in cost, while you on a group level, have a downtake on costs. But of course, the IT had some downtick. Could you shed some more light to the question, that's a question also have on the cost side, just so we understand how you actually should bring the cost just to DKK 26 billion by 2026, since I still have some questions there.

No, I think just to recap very briefly on the main building blocks in the cost slide, there's the remediation cost going out, there's FRP normalizing, and there is additional cost initiatives that will drive cost down. So the majority of those will have its impact in PC, which is what you have seen in Christian's part and in TMS, which is Francis part and which as a business segment is not a segment but rather headquarter. I think most of you call it, whether it's headquarter. .

Perfect. Just on the Norwegian process, could you say something about this is one bidding process? Or is a bidding process? Is it 1 buyer? Or how should we read that sort of conclusion, first of July?

No, I think you should realize that we're far progressed in looking at options. This is a piece of work that we've been looking at for a while, together with the rest of the strategy work. And I'm not going to promise that we have a final conclusion by the 21st of July, but that will give an update on the 21st of July on where we are. But I'm not going to go into more detail on the rest of your question.

Okay. I think I saw a raised hand in the back of the room before if that we have Jacob Kruse from Autonomous.

So just a couple of questions. First on the cost, you still have a very big group functions divisions, which hasn't really been covered, which is about half of your staff base at the moment. Is that being addressed? And could you just outline a little bit what those staff are in terms of AML, IT, et cetera? And then my second question was just on the NII bridge between today and 2026. So if I get you correctly, you have the DKK 150 million plus DKK 150 billion of strategic balance sheet items, which will reprice by about 2%. So roughly DKK 6 billion of NII gains from that. Then you have the loan growth of 2% to 3%, which I guess is another DKK 1 billion to DKK 2 billion. So is the balance here -- so how big is the kind of headwind that you're building in? And what is it relative to? I just have that part seems a little bit opaque to me. .

Yes. Should I?

Why don't you start with NII, piece.

Now again, I think the first remark would be I wouldn't expect that the full DKK 300 billion that you rightfully mentioned will reprice completely to 2% because the average duration is 3%, so there is some in -- but to completely reprice the portfolio, we'll probably take a couple of years more. So I would shave a little bit off your 0% to 2% assumption best to begin with. . And then why are now getting back into this, how do I explain the dynamic income development by applying partly static assumptions -- but simply speaking, the uplift from the DKK 300 billion, call it more at [ 1.5% ] rather than probably [ 2% ] will compensate for the peak that you see on the short-term rates that will drive and that would compress deposit margins probably starting in '24. And that is the main building blocks. -- headquarters.

Does that answer net interest income? And then on the head office costs. So the head office costs, of course, include both technology and services as well as the financial crime piece as well as substantial part of the remediation costs. So I think we talked about roughly DKK 1.1 billion of remediation costs this year. We've spoken about the DKK 2.3 billion to DKK 1.5 billion directionally on financial crime. And then we've spoken about roughly DKK 1 billion of operational efficiencies, which large parts of that will also be found within that area. So that's how you should look at the moving parts. If I would expect the staffing number to come down, yes, you should expect that a significant amount of these costs are linked to FTEs, both on remediation as well as on financial crime. And also, as you've seen, for example, the example that Christian gave that as we automate and digitize you will also see FTE improvements over time as we free up time and capacity, customer self-service more and so forth. .

And I would add that in addition to the more idiosyncratic matters that we were talking about with remediation and CRP, then TMS, obviously, is also part this headquarter position. And I think you saw quite some of Frans clear ideas on how this is going to progress going forward.

Okay. Thank you so much, Jake, for the questions. And let's jump to a question coming in online. Martin Birk from SEB. Can you hear us, Jacob -- or sorry, Martin.

Yes, I certainly can. Okay. Question on swedish. Could you hear me?

Yes. Loud and clear.

A question on Swedish personal on Swedish personal customers. I assume this also means a canceling of TCO and SACO partnerships? And what are you guys going to do with the sort of nonpremium personal bank that will be that will be left in Sweden? That would be my first question. .

Do you want to take that?. Yes. Thanks, Martin. So you mentioned 2 of our important partners on the acquisition side in Sweden, TCO and SACO. We believe that these partnerships can serve us well. And especially on the SACO side, I think that aligns pretty well up with the client segments that we're also aiming for going forward on the retail side. So will continue to work with these partners and to develop those partnerships. Will they need to be adjusted in some ways, likely they will over the coming year as we refocus the business in Sweden. But this is something that we are initiating with our partners during the coming period.

Okay. But there has to be sort of customers also outside the TCO, the SACO partnership that are not being the premium retail bank strategy.

Yes. So just also to be clear, we are -- of course, we have a strong acquisition channel through these partners today. But one of the benefits of our Swedish business today is we also have a quite strong organic acquisition model. So compared to our Norwegian business, for example, we have a lot more customers start coming into Danske Bank outside of these union partnerships in Sweden. So we feel quite comfortable that our organic acquisition model will work in Sweden.

I guess when you talk about market share in different countries, there is sort of a rule of thumb that says that you typically need to have a 10%-ish market share in order to, to run a profitable bank. And you're still going to be some -- you're still going to -- you still have a long way to go in order to reach that in Sweden. So when we look forward, we're still going to see Danske Bank being a challenge bank challenge bank in another way in Sweden? Or how should we think about that? .

Yes. So I think, first of all, of course, we know rules of thumb. But as most rules of thumb, I don't know if they are natural laws or anything. We would love to have 10% market share in Sweden if it's in the right segments, and we believe we have a plan now where we can actually achieve 10% market share within specific segments, the ones that we find attractive. So we're comfortable with the plan, and we will follow it very closely also during the coming years to show how we perform.

Yes. And Martin, just to underscore as well, if you look across our businesses today with the changes that we made we're close to your rule of thumb in all of our businesses, except Sweden, personal customers Sweden. We believe that personal customer Sweden is a market that's interesting where we have some interesting product propositions where we have a more distributed and diversified distribution potential and where we believe that we can grow. So that is the one area where we want to invest and where we want to see our business growing, whether the magic number is 10% or something else. We actually believe that in the plan period, we are planning with that we don't get to a 10% market share, but we can do this business profitably within the hurdle rates that we've introduced earlier.

And I think in that context, it's useful to note that the rule of thumb probably assumes a country-by-country separate platform, and that is where our 1 platform approach will come in handy to say it that way.

Okay. And then just maybe a final question and a more broad question. I guess over the past half decade you sort of have been alluding to that sort of M&A was post a settlement. How has that changed now? Are you looking more opportunistic as potential targets? And could you potentially also to be acquiring additional stuff in the Nordics.

I mean the plan today is clearly an organic growth plan. But we also present, I think, a business that generates substantial capital both for distribution, but also for investments. And I'm not going to rule out that there won't be interesting acquisition opportunities within the business areas that we've decided to focus on it that we presented to you today.

Thanks for your questions, Martin. And I think we have a question from the front table here.

Fredrik from BNP. I have a question on -- specifically maybe to Johanna. I can hear a lot of the strategy going forward is to focus on the Swedish market, both on PC and DC. But you also mentioned that some of the larger or the midsized corporate clients international needs. Could you elaborate a little bit on that? Or what kind of international needs do you see with the client segment and in what areas in particular? And maybe to you, Christian, as well because that defines, of course, deepening the relationship with the PC and BC clients? What kind of partnerships do you look at, in particular, not to go too deep.

So firstly, as also outlined in my presentation, all 4 Nordic countries are profitable countries that we will do execute the strategy on when it comes to the customers that or the most advanced needs and its national need. Then of course, we can see now that just with the larger country, the opportunity to find a larger pool of course, larger in Sweden. And when it comes to customers with international needs and the first step, it is, of course, Nordic countries, growing within the Nordic area. So Danish countries growing into the other Nordic countries and the other way around. So that is our main focus to go into the [ single ] strategy period.

Yes. I think on the partnership side, I mentioned a number of examples in my presentation as well. I think for us, the first priority is to make sure that we have a very strong coverage on what you can sell basic banking needs, which I think we can cover very well from the group and then the adjacent sort of things like pension insurance and so forth, where we have partners in place today in Denmark, but also in the individual Nordic countries, and we want to do more with them. In addition to that, as I mentioned, we have plans on additional types of partnerships in -- especially in areas that link back to home ownership but there are also other areas in the pipeline. I think that's all I want to say today because we are in progress sort of discussions with various partners.

Just on international, it's clearly also mid-corporate customers that start trading across Europe or with the U.S. or what have you, right, that have FX needs that have other advisory needs where we will help them here in the Nordics with those needs. And that is where the key segmentation understanding when that happens, what the triggers are and then being able to be the proactively for those customers where the value proposition is.

Okay. And we -- I think we have 5 minutes left of our Q&A. [indiscernible] has raised your hand.

A couple of questions on the digital part, Frans, I guess there are some limitations regulatory-wise in terms of what we can store in cloud and what you need to store locally. How does that impact your sort of cloud strategy, and then you spend a lot of time today focusing on the 1 platform. What are sort of the discrepancies between that and moving to the cloud, which I guess your competitors will be able to do as well going forward?

Yes. Thank you for your questions. Maybe -- on the first one, this is mainly related to data that would flow outside of the EU, obviously, and we don't have any plans to do so. And any public cloud provider that we will that we will partner with, we will make sure that the data sits in the -- safely in the EU. So that's for the first part. The second is, I think it's really important that when we're talking about the single platform, that means the core banking platform that is a single instance. And you could think about it as that you would have the core banking platform and a number of satellites all linked to that platform. And what we're looking at is to move some of those applications into public cloud and then get the benefits of that. But they won't run stand-alone because I think that is an issue that many other banks actually have. They will be connected to the same single platform. I hope that answers your question.

Okay. Is there -- there is a question from Namita -- and then I can see 1 from ABG afterwards. [Operator Instructions]

Just a question on the tech investment spend of DKK 4 billion in 2026. Why [ DKK 4 billion ] the right number? I think I'm just trying to understand how you got to that number more it should be [ DKK 5 billion ] or [ DKK 10 billion ]. And secondly, just on the Danish mutual fund business. How are you intending to turn around the market share losses because they've been significant for some time. And it's quite transparent that competitors are taking down for good share.

Just on the overall -- so the DKK 4 billion is the overall investment envelope that we have. And I think we made clear it's both tech info, but it's also digital and how we service digitally our customers, our digital solutions and so forth. Today, we have a run rate of DKK 3 billion. We're increasing that to DKK 4 billion. So there is no signs around that it has to be DKK 4 billion, but it is a substantial amount of additional investments both that we're freeing up also because spending less resources on compliance and other regulatory needs of one, you're freeing up from the DKK 3 billion; and two, we're deciding to invest more to basically deliver the plan that we've taken you through today. And here, it's really important that I hope we get across that we've spent a lot of time on this plan bottoms up on looking at these investments, and looking at how much we want to invest in these different pieces and looking at the competitive environment, look at how we believe we can differentiate and when -- so this DKK 4 billion is well grounded in a plan where we believe that we will be able to differentiate and win in these different segments. On the AUM question. I think maybe, Christian, you -- clearly, it's both institutional and retail. I think retail is really one of the most important focus areas for us. And I think, Christian, maybe you can bring to life what we're doing now.

Yes. So no doubt, it's a keen focus area for us is to improve our distribution muscle when it comes to investments within the retail space in Denmark. And there has been some, you can call it, we've been a little bit behind on some of these things. We are enabling both advisers to have better meetings, but also we have recently launched new digital solutions that help people to get started with investments and there's more to come over the summer, which we feel will close that gap and put us in a much more competitive position. I don't know, [indiscernible] do you have anything to add?

I think it was well said. But I think it's an important part of our business, definitely.

Okay. And then we have a question from ABG. .

Yes. Just to square a question around the above 30% ROE versus the business units, '18, '21 and '29 . So where is the remaining capital and what kind of a drag is on the Danica and maybe Northern Ireland probably very profitable. So how should we read that sort of is much between 13% -- or above 13%, sorry, on the rest of the business units.

So the main bridge between business unit and group is obviously tax. So you need to deduct tax than water segments. And then there is a couple of billion unallocated capital still at group level from different bits and pieces, Pillar 2 buffers and other stuff that kind of drive the difference. .

You would not give you that -- all of that Pillar 2 buffers to the business units. So taking price correctly.

Not all of them, specifically those which we think are transitory.

And we said 13%. And then I think the CEO always said rightly so, of course, we'll try to outdeliver the 13%, but it was 13%.

Okay. And then going to the last question from Johannes from HSBC.

Johannes Thormann, HSBC. Again. On your risk cost guidance, can you bridge the difference between the up to 14 bps this year, how much will this be driven by post-model adjustments. Do you plan any bigger effects from there to get to 14%, how volatile will be the 8 bps seen during the next year, should we rather see like 14% and 6%? Or is it more -- a bit more steady? And the post-model adjustments you showed in Q1 of DKK 1.9 billion for commercial real estate. Is this enough to cover any problems, especially for the Swedish part of your portfolio? How big is that? And are there any other boring sectors in your view currently?

Yes. I think a couple of things. We guided towards an up to DKK 2 billion of credit losses, right, down from DKK 3 billion...

DKK 2.5 billion.

DKK 2.5 billion. And down from DKK 3 billion. So DKK 2.5 billion. We're not seeing any asset quality deterioration at this stage. The guidance of up to DKK 2.5 billion was based on a very uncertain economic environment, right, that we still feel that we're in, in fact, we don't believe that we've seen the full transmission mechanism of higher rates. We also don't believe that we necessarily understand the ramifications yet. And we also believe that there are pockets of risks out there just like the ones we solved with the bank crisis that we saw in the U.S. in February. But the [ DKK 2.5 billion ] guidance is not reflecting any asset quality deterioration that we see in our portfolio today. So if we don't see it, clearly, that will not be. Then you had a question around how volatile should we think about this? Unfortunately, the case is that you will -- it will be quite volatile that, and I think that's also what you saw on the slide that in good times, you see almost no loan loss races and then when a pandemic hits or macro tensions that's when you book the losses. And that's a little bit the nature also of the way that the allowance modeling works. Our view is that we take a very prudent and proactive approach to minimize that volatility by ensuring that we also have appropriate post-model adjustments in place. Then I mean, in terms of to what extent and the total real estate PMA is probably slightly above the number that you give there. it's very difficult to say, right? Because right now, we feel comfortable with what we have. We're not seeing any actual material deterioration. But clearly, with a guidance of loan loss rates of 2.5%. I would have thought that a material part of that would potentially come from the bigger pockets of risk, which predominantly would be around the real estate sector. Again, we're not seeing that at this stage, and we feel quite comfortable with the way we've managed our commercial real estate book. I think I mentioned we haven't grown that over the last 5, 6 years into the cycle. And in fact, we've also reduced our Swedish real estate exposures. Did that cover?

Yes. Probably if there's any other industry sector .

Yes. I mean other sectors, again, I think we're pretty broadly diversified. And I don't -- in the SME segment, you will have some segments trucking such as construction and the building and development that value chain and then the retail value chain, we've also seen struggles there. But that's nothing new, so to speak. I mean, we've seen that for some time. So when you look at sort of the higher bankruptcy levels that we see across the Nordic countries today, I would say it's driven by retail and building and construction, but still at the low end even though the variance is high. .

Okay. Thank you so much. It's 3 minutes past 12. So we have all most kept our time schedule for today. Thank you for your many good questions. And before we leave back to Carsten for a final comment.

Yes. Just really a big thank you from myself and the team. Danske Bank really appreciate you all coming to spend. I have today with us and a special thanks to many of you who have also traveled then to be with us here in Copenhagen and also a big thanks to all of you on the live team. As always, if you have any questions, Claus, [ Engel ] and his team will be ready to help and support you. So thank you once again. .