DNB Bank ASA (DNB) Earnings Call Transcript & Summary

Hello, and welcome to the DNB Q1 2021 conference call. My name is Rosy, and I'll be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] I will now hand you over to Head of Investor Relations, Rune Helland, to begin today's conference. Thank you.

Thanks so much, and a very, very welcome to DNB's first quarter investor call. Present here in Oslo from the group's executive management are in addition to the CEO, Kjerstin Braathen; the CFO, Ottar Ertzeid; the Head of Personal Banking, Ingjerd Blekeli Spiten; the Head of Corporate Banking, Harald Serck-Hanssen; Head of Group Risk, Ida Lerner; and Head of Wealth Management, Hakon Hansen. Ottar with start with a short summary from the quarter before we open up for the Q&A. Please Ottar.

Thank you, Rune. We have seen a strong start to the year. Going forward, we expect the performance to be supported by the recovery of the Norwegian economy. We expect growth to pick up from May with an expected mainland GDP growth of 3.7% this year and 3.5% next year. Norges Bank has stated that the Central Bank expects to increase the policy rate at 6x 25 basis points each towards the end of 2024. Looking at our development in the first quarter, we see positive loan growth from personal customers in the quarter with 0.6%. The high loan growth for SMEs continue with 2.3% adjusted for FX, while large corporates see -- saw a slight decline in volumes, reflecting strong debt capital markets and originate-and-distribute activity reflected in the record high commission and fees from investment banking. Loan growth in large corporates is expected to pick up, and we thus continue to expect around 3% to 4% annual total loan growth. The healthy growth in deposits continued with 5% in the quarter. This will be increasingly valuable. It is the forecasted police rate hikes by the Central Bank. Net interest margins and volume-weighted combined spreads for the quarter are impacted by the unusually high growth in deposits compared to loans and also the mix between housing mortgage loans versus corporate loans, while the underlying development is quite stable. Looking at net interest income, the first quarter had some effects from FX of NOK 106 million and 2 fewer interest rate days as well on top of the resolution fee from Poland. We saw lower funding costs in the quarter, reflecting the improved deposit to long situation. In regard to commission and fees, the first quarter is usually slower than the higher activity in the fourth quarter. While this year, we saw a 5.5% growth in commission and fees compared to the fourth quarter and almost 18% year-over-year with a quite broad-based contributions from real estate with 14% growth; investment Banking, almost doubling of fees; asset management fees growing 20%; and also both in nonlife and life insurance adding to the growth in fees and commissions. We see a still negative impact on the money transfer and banking services line due to COVID situation, but overall, commission and fees have developed more positively than expected. During the quarter, we saw net reversals with regard to impairments of NOK 110 million, reflecting the robust portfolio quality and the gradually improved macro forecast since the first quarter last year. For personal customers, provisions were close to 0, while for corporate customers, we saw net reversals of NOK 135 million. Offshore remains the most challenging segment, and we took additional provisions in that segment. This was more than offset by reversals within oil and also in shipping, particularly container shipping. We reiterate that the portfolio is robust and well diversified, but please bear in mind that loans will vary from quarter-to-quarter. The healthy capital generation continued in the quarter. 50% of profits added 30 basis points. And overall, common equity Tier 1 increased full 50 basis points to an all-time high level of 19.2%. The headroom above the regulatory expectation is also at an all-time high of 320 basis points. This headroom gives ample room for our cash offering for Sbanken, which will reduce the ratio by approximately 100 basis points. To sum up the quarter, we believe operating performance was strong. Return on equity came in at 10% despite the policy rate of the Central Bank still being at 0 and despite negative effects from the pandemic on fees from money transfer and banking services. The 2019 dividend was paid out in March and without this extra equity in the quarter, return on equity would have been 10.5%. The Annual General Meeting this week gave the Board of Directors authorization to pay out the 2020 dividends of up to NOK 9 per share in the fourth quarter of this year. Overall, earnings per share came in at NOK 3.65, an increase of 60% from the first quarter last year and the strong capital build with an all-time high headroom is facilitating the cash offer for Sbanken, which is expected to be accretive for return on equity and earnings per share. Should open for Q&A, Rune?

Yes, please.

[Operator Instructions] And the first question comes from the line of Adrian Cighi from Crédit Suisse.

This is Adrian Cighi from Crédit Suisse. 2 questions, please, one on NII and one on the Sbanken offer. So on NII, you've mentioned the decline Q-on-Q from the deposit inflow. Do you have any sort of guidance or color as to what you expect this going forward in 2021 before the rate -- potential rate increase from Norges Bank? And secondly, on the Sbanken offer, we've obviously had some time to digest it. Is there any more financial detail in terms of potential synergies, either on the revenue side or cost side that you can potentially provide us with?

Thank you for your questions, Adrian. Important to say that deposit growth is positive for our NII, but it has an impact on the margins. And you're right, we've pointed out that the main effect on the margin development is due to the asset mix and a higher growth in deposits versus loans. So it's hard, I mean, to guide that specifically on margins in the short to medium term, even not advisable. But what we can say is that we are pleased to see our ability to grow profitably in the market on the personal customer side. The annual pace is around 3% growth a year. SMEs is around 6% growth a year, what we've seen in the past 12 months. The majority of the movements on the margin is related to mix effect on products and growth in personal customers versus larger corporates. The remainder, which is a limited movement is more related partially due to the fact that there's a decrease in unsecured lending and some other effects. But I wouldn't say that we don't see any meaningful trends to speak about. And of course, we try to optimize and focus on profitable growth. With regards to Sbanken, I think we've been -- it's hard to give that much more flavor or we opted not to at this moment other than saying that this is a -- both strategically and financially strong rationale for the transaction. And now the focus is to wait the offering period and then the approval process, and we look forward to the opportunity to combine the 2 entities. But it is a strong rationale as the CFO has pointed out. So we don't give any numbers.

Your next question comes from the line of Johan Ekblom from UBS.

I just want to touch a bit on the very strong fee income. And I guess there's kind of 2 areas I'd like some or color on. Firstly, in the asset management space, you've now had a number of quarter of very strong net inflows. And I think you -- I can't remember the exact words you used but it was some colorful language about how strongly the savings business has been. So that's nice to see. But how sustainable is this? And can you give us some indication on how much are you outperforming the market? Should we expect very strong net inflows to remain maybe even less benign equity market environment potentially? So some comments there would be very helpful. And then I guess, secondly, if we look at kind of what drove the majority of the beat this quarter, it looks to be capital markets and kind of real estate markets related activities. And I know this has been an investment area for you. But how confident are you that you can sustain some of that performance? And I think linking back then to Ottar's comment that the fee income evolution is significant better-than-expected in the quarter.

I think with regards to the savings trend, you're quite right. We used a strong word to describe what we see as an exponential growth in this area. There are several factors driving this. The pension reform being one of them. The fact that Norwegians come from an extremely low level of saving and other type of savings products than their house or a pure deposit account in the bank being another. And I think the last year, the fact to very low interest rates and people spending less money being a third. Compared to other Nordic countries, Norwegians have very little money putting in the savings product. So there's a huge potential to continue to grow. So the third effect, you might pointed somewhat in the direction of COVID, whereas the 2 others, they remain longer term. And this is why we also talked about this area as one of our key targeted areas on our Capital Markets Day in 2019. So it may be that inflows and development will vary somewhat with asset pricing, but we certainly believe there is a stronger underlying trend with high-growth potential in this market beyond mere market fluctuations. With regards to fees and resilient sort of -- or recurrence in large revenues, I would also like to refer back to the Capital Markets Day in '19 and even what the CFO talked about during our extended Q4 presentation last quarter, that we are strategically targeting 3 of the areas that are performing this quarter. That is our investment banking capital markets activity that is sale of insurance products, and it is asset management. And certainly, there may be volatility and fluctuations from quarter-to-quarter, but these are areas where we see a stronger growth trends than what you would see in average. And that obviously also depends in our ability to execute. And I think that is one of the things that we've seen this quarter that we've seen very strong performance also across these 3 areas in relation to execution on market trends. As for relative market position, yes, on the asset management and savings part, I think we're growing more or less at the same pace as the market, keeping our market share as a leading player in most areas.

Perfect. And then maybe just the second thing. On the asset quality, clearly, a very strong performance this quarter. How do you think about the rest of this year as government support packages are withdrawn, et cetera, in terms of kind of thinking about full year loan loss range or how the rest of the year should compare to Q1?

Well, first of all, I think it's important that we don't really want to give any firm guidance on impairments going forward. But I think it's a few things that are important to bear in mind when looking at the government support packages here as well. First of all, they were very quick to get some instruments of a year ago, and we're also acceptable to all companies very quickly. They also had a very positive development in terms of the furlough schemes and all the cash compensations came in to support very quickly. So -- but it is important there because I know that we talked a lot about or it is talked a lot about the fact that some big companies out there that has been surviving only due to the government support. It is important to point out that it hasn't been utilized to the extent that was expected going into COVID-19, actually far less utilized than what we ever predicted. So that in itself is not a very big concern for us. But of course, we know that there will be still be fluctuations. There will be -- there are parts of the society or parts of the corporate portfolio that are more vulnerable. And as Ottar also pointed out, offshore remains to be a challenging industry. And of course, there are other parts that still need the activity levels to go up in terms of travel and so forth. But generally, I'm not concerned about the fact that the government support schemes will be taken away and what impact that would have on the large-scale of our portfolio.

The next question comes from the line of Sofie Peterzens from JPMorgan.

Here is Sofie from JPMorgan. So in your report, you talk about quite a lot of the capital reforms in Norway. Could you just outline if any capital headwinds that we should expect? And any changes to the capital environment? So yes, that will be my first question. And then my second question would be on also capital related. How should we think about the DNB strategy going forward? And especially excess capital, will it be deployed more in M&A and less kind of excess capital returned to shareholders? Or how should we think about DNB's vison in doing potentially more M&A in the Nordic space?

With regard to potential capital headwinds, FSA has a draw up proposal before the pandemic regarding internal models. They have taken this proposal out again and forwarded to the banking association for comments, and if implemented, that would have some negative effect. But it's still too early to say what the outcome of that would be. The banking association is of opinion this is fully covered already by regulatory technical standards and EBA guidelines from the European Union. Besides that banking package, the CRR2, CD IV will likely be implemented by the end of this year is the most recent guiding. We expect a little or some positive effect from that, but not material. None of these changes are expected to impact our ability to deliver on the dividend policy.

And you asked if there aren't any sort of changes in strategy related to capital allocation to speak about. Reinvesting into our business is important in relation to profitable growth where we're seeing 3% to 4% a year. We've always said that we are open to consider M&A opportunities to the extent they are building scale or strategically adding something to the operations but are very firmly committed to our dividend policy, and we'll continue to distribute excess capital back to shareholders.

Okay. That's very clear. And just maybe a follow-up on the M&A. In terms of M&A potentially going forward, will you continue to focus on the Norwegian market? Or would you consider anything in the other Nordic countries or elsewhere?

I think what we -- we maintain the comments we previously had on M&A. Even though we've provided an offer for Sbanken now, I think, again, I will reiterate, it should not be seen as a shift in strategic direction. I think this is very much in line with similar transactions we've done in the past, KLP on the pension contribution being one that we did also last year. This is a somewhat larger scale. But we would look at bolt-ons in relation to our current activity and on -- in some areas, that could mean like in DNB finance on the leasing side, you're well aware that we have a Nordic brand in most other areas, we have a Norwegian brand. I mean, we remain a dominantly Norwegian operation.

[Operator Instructions] And the next question comes from the line of Riccardo Rovere from Mediobanca.

I have a couple, if I may. The first one is given what you are seeing on the ground with regard to mortgages demand and real estate prices, how much rate should go higher, in your view, to cool the real estate market? That is my first question. The second question is on asset quality. If I think about 2015, '16 and 17, you charged a lot on oil and gas exposures at that time. And once reversals started, they went on for a couple of years. Now if I'm not mistaken, one of my previous calculations was saying that in the first 6 or 9 months of 2020, you're charging 6, 9 months roughly 2/3 of what you charge on the oil and gas exposures in 2015, '16 and '17. Now what should be different this time in respect of 2016 and '17 to see reversals stopping once they have started in the oil, gas shipping and all of these exposures.

Thank you, Riccardo. With regards to the housing market, no doubt, the lower interest rate has been additionally fueling that development in the Norwegian economy. But it's very important to say that this is not the main parameter towards which the Norwegian Central Bank is governing towards. Their main focus is on the activity level in the economy. And I suspect that they want to see the recovery continuing, and that is the key indicator. And they're at this moment, not concerned with the currency development nor the inflation level in the economy. Of course, it would have an impact on the housing prices. It's difficult to say exactly at what level, but maybe more importantly, to point out that growth in house prices have already slowed down. And for the last month, there was actually a negative development in Oslo. So the view regardless of interest rate increases that are expected is that the growth in house prices should level off and grow at less steeply than they have in the initial year of COVID. So that would be my comment to the first question. With regards to asset quality and reversals, I think you should be very careful in thinking about history as a reference for how it will be this time, but I will leave it up to Harald, maybe to comment on his view, being closer to the industry.

Yes. Thank you, Riccardo. You mentioned oil-related specifically. So I would like to emphasize that the net write-backs we have this quarter is influenced by the fact that we have 2 significant write-backs on oil-related exposures, which is the combination of what I would call good restructuring work and supported by the increased oil price. Most of the provisions we have, however, are on OSV, offshore supply vessels and oil rigs. And there -- although there was a slight market improvement in the first quarter, we're far away from any kind of equilibrium level where we could hope for significant write-backs. So I think we should not presume that the write-backs we had in this quarter will come, and it will obviously -- will continue to come. And obviously, as Ottar said in his main presentation, this -- the net loan loss provisions will vary from quarter-to-quarter.

The next question comes from the line of Martin Leitgeb from Goldman Sachs.

I have 3, please. The first one, I was just wondering if you could comment on Sbanken and the potential risk for customer attrition, just given the very particular brand positioning of the group in the Norwegian market. Is there any update, anything you have seen since the announcement? And how do you think about addressing that risk? Secondly, on interest rate sensitivity, I think previously, the guidance was for around NOK 1 billion impact for 25 bp hike. I was just wondering, given the comments on higher deposits, increase your rate sensitivity, given the deposit inflow in the quarter and also last year has your rate hike sensitivity increased? And related to that, just given Norges Bank's expectation of 6 rate hikes by end 2024, should we think about that in a kind of a linear way that every rate hike is similar in terms of impact? Or is there a higher impact starting from the current level and the impact tend to fade as rates hike? And lastly, I was just wondering if you could comment on the competitive landscape in terms of mortgage competition and competition for corporate loans in Norway, are the trends stable? Or is there any change either to the positive or negative in terms of the environment there?

Thank you, Martin. I'll do the first 1 and then leave 2 next ones to Ottar. With regards to Sbanken, I mean, we're still early days, just a couple of weeks ago since we published the offer. And let me start by saying that we were very prepared for there being a lots of opinions and discussions in the media about this. This is a typical transaction where a large entity is looking to buy a much smaller entity. And also in this case, an entity that has beefed up their brand on a challenger position. That being said, I mean, what has happened over the course of the 20 years that they have existed and accelerating, I would say, over the past 2 to 3 years, our positions have merged. And there is a lot more that -- there's a lot more similarities today than differentiators. Most of the customers, and bear in mind that a number of customers that have voiced opinions, we're still talking in limited number of customers, but they seem to have been Sbanken customers for 20 years, and they haven't maybe taken a closer view on how the offering on our side and other banks actually also have developed over the time. So if you look under the hood, there are quite a few similarities and complementarities, I would say, more than differentiators when it comes to the offering. We certainly believe that putting our 2 organizations together, thinking alike on digital innovation, being leaders in this area, both having mobile banking platforms that are among the top 3 in the country, this will be a benefit to customers. And what really matters at the end is really the quality of the offering. So I wouldn't say that this is a concern or that this is anything that in any way, alters the rational behind this transaction. Ottar, interest rate?

With regard to interest rates, we are not allowed by competition authorities to comment upon our planned future pricing. But we have stated that historically, a 25 basis point rate change and the subsequent customer repricing has had an impact on our NII of around NOK 1 billion. You are correct that the floor effect also, of course, is strongest when we are close to the floor, but we are not allowed to give any specific comments beyond that. With regard to the number, as I guess, you are familiar with the forecast of 1 rate hike this year, 2 to rate hikes next year and then 1.5 rates -- 1 to 2 rate hikes in the subsequent years. On the deposit side, the most important effect from the Norwegian krone rate hikes in personal banking and also part of the SME area where there are adjustable rates on deposits. So those are the areas to follow most closely with regard to rate sensitivity.

Couple of comments on the competitive landscape, Martin. Overall, I wouldn't say any big shifts being observed in the past quarter. Competition is fair. Competition is fair across our small customers, across corporate customers. Banks have ample capital. But the pace that we see of growth, which is the most important reference for us is the pace of 3% growth in personal customers, 6%, 7% in SMES. I mean that's the pace that we are satisfied with. And that shows that we are competitive in the market. But a lot of payers are active. What is important is that they continue to act rationally. And we do continue to see that. On the larger corporate side, of course, there is a highly liquid capital market, both on debt and equity side that are alternatives to debt, but there's certainly a lot of business that we have done, and we continue to see a high activity into the second quarter.

The next question comes from the line of Thomas Eskildsen from Handelsbanken.

Yes. I would like to go back to commissions to see if I would get further details on the development there. Clearly, the pension reform has some effect. But the question is really what -- this is more of a big effect here in Q1, and it should fade in the coming quarters or how we actually see the pension reform impact commission income? If we look specifically on the sale of insurance products, we can see that [indiscernible] was quite high here in Q1. So obviously, that must be the front tooth case starting to deliver more. But the question is also here that there's some seasonal effect or anything specific happened here in Q1?

Thank you. Good questions, Thomas. Pension reform, it's important to see that beyond the context of a single pension account. That is what happened this year. And what matters the most for us during the transition is that people do not, to a large extent, reserve themselves from moving since we have the market-leading position in having pension agreements with the corporates and the employers in Norway. And we are not seeing many customers reserving their rights in order to move. So the volumes are believed to move in accordance with the current market shares. The bigger shift that underpins the trend in the longer term is actually the shift in responsibility. Norwegians are used to the government really taking care of their economy in their older age, whereas now with the defined contribution, dominantly characterizing the market, this responsibility is really transferred over to us as individuals. So what -- I'll finish with this is that the value that people have in their pension agreements that I believe I would guess that today is unknown for 95% of us will actually be visible in the savings app for the 250,000 customers that use that. So they will see the money that they are managing, and they will follow it more closely. And of course, we spend a lot of time and effort to build competence, provide information into the market in order for people to take this responsibility themselves. Just a mere comparison to Sweden, you would see that they have a much higher part of their savings into products such as share funds and interest rate funds. So there's a huge way to go before we are anywhere near where other more mature markets are. In relation to sale of insurance products, the first quarter reflects that we have come further in the merger with [ Gjensidige ] that we have spent the, I'd say, second phase of this merger really to readjust and improve profitability in the current holiday and that we are now really seeing the results of the organization's ability to scale on the selling activity, and we expect that to continue.

The next question comes from the line of Nick Davey from Exane BNP.

2 questions, please. The first one, I think there was a comment made at the beginning about a hope for recovering corporate loan growth. And my question is, is just looking at this amazing trend of sort of stable loans and 25% growth in corporate deposits, I wonder if you thought there was a risk corporates to use that cash, not credit to invest in the recovery? And the second question, please, would be on costs, which has obviously been sort of volatile with a few moving parts in the last year. The question would be from this level in Q1, taking out the little summings, what are the main moving parts for the rest of the year? I remember you commenting last year, there were maybe a few hundred million NOK lower than normal in last year's cost saves because of COVID. But if you could just highlight any other moving parts for the rest of the year, that would be very helpful.

I think that's actually a very good question. I think our assumption is that there will be a slight decline in deposits as the uncertainty is reduced, and companies will enter into a high level of investments than over the last year. I don't think it will replace debt financing. I think it will be a combination. And if you look at the investments that will take place just in connection with the green shifts across the whole value chain, I'm pretty optimistic that -- and we know, obviously, from discussions with a number of clients that they are ready to pull the trigger as soon as we see more certainty. So I think that we're going to see a positive effect on the lending volumes, and we're probably going to see somewhat decline on deposits when the world normalizes.

And there is an increasingly strong development of investments from the corporate sector in the Norwegian economy, taken from a macro perspective, investment into the petroleum-related sector went down last year after a very high level in '19, will go down this year. And then they are expected to rise alongside investments across other sectors that are also on the round. So investment activity is really expected to be high going forward.

With regard to costs, there are 3 unusual elements in the first quarter numbers. You have NOK 58 million one-off positive effect from reversals of too high accruals for variable pay last year. And then we had 2 other effects netting each other out. One is the restructuring expenses related to our withdrawal from Poland being offset by temporary positive cost effects due to COVID-19 with regard to traveling training and some marketing events.

And for the rest of the year, are there any other things we should keep into consideration?

We are not providing any particular cost guiding going forward, but I just would reiterate that these are the unusual elements in this number. And with regard to cost inflation, of course, in Norway, the inflation rate is running at 3%, 2.7% core inflation. That reflects the expected recovery in the economy and then you stipulate quite operating in that economy doing well.

The next question is a follow-up question from the line of Riccardo Rovere from Mediobanca.

Just on risk-weighted assets. Should we expect any material negative risk migration in -- for the rest of 2021, given that the outlook you're providing on the economy in the country seems to be fairly reassuring and the fact that you have booked reversals in this quarter?

Well, as I said before, we don't give any guidance in terms of our object for impairments. But as we've stated, we have a solid economical outlook for the Norwegian economy, and that maintains. And also from -- if we look backwards, that has improved significantly now going forward as well. So we won't give any guidance, but there will be, as Ottar also pointed out, some volatility in terms of single customers migrating negatively or positively. There will be -- on the overall picture, we are very comfortable with our loan book. And as you can see, the personal customer segment just continues to perform extremely well from a loan book solution perspective. And we are in the recovery of the economy, that continues and that are effective.

Okay. Kjerstin, but I was just referring mostly on the risk-weighted assets. If risk weights are going to go higher this year because of negative risk migration, you think?

As I said we aren't giving any guidance on migration, but we haven't seen any trends so far that would indicate significant risk migration.

The next question comes from the line of Vegard Toverud from Pareto.

I have a question to the life company. The solvency has developed very positively during the quarter. And as far as I know, it's a bold threshold for paying dividends. Does that make a dividend for the life company possible this year and/or next?

The solvency is in commission of the life insurance company has improved substantially, as you correctly state, and is now at 146% even without transitional rules. We have stated that when above 140%, we are in a position where we might pay out up to 100% of annual profits. So this would be a discussion when we are at the end of this year, and we'll consider the accounts for 2020. But you are correct that we are at the end of the first quarter in a position where it's technically viable to pay out 100% of profits as dividends for 2020.

Just to -- so I understand the answer there. Could that come with the capital impact already in Q4? Or will that be based on the 2021 accounts with the capital impact next year?

The latter one. After Q4, we end up with a capital effect for the group in early '22.

Okay. And then just 1 little detail, if I may. The amortization seems to be very low in the quarter now or at least at the lower level. How should we expect the current level going forward?

With regard to all the group level or amortization fees?

No. Your group amortization costs?

There are no big changes planned or expected with regard to that line. We are no -- portfolio in particular.

Next question comes from the line of Maria Semikhatova from Citigroup.

A couple of questions. First, on costs, I understand you can't provide the exact outlook, but it would be nice to hear your thoughts on head count. We've seen continuous increase over the quarter. Could you just give us more details where you're adding personnel? And also, could you please remind how many people you have in Poland? And if you have any meaningful -- expect any meaningful impact from withdrawal on your cost base? And small comment, could you please confirm that the restructured oil and gas exposures that they are classified in stage 2 or stage 1 after this exercise?

With regard to head count, we are focusing on more on costs. So we are actually replacing external consultants, for example, on the technology side, within internal staff sitting together in the business area, which we believe is a more forceful and effective way of doing things. So we should look more on costs than on head count. With regard to Poland, that is one of the initiatives I talked about in February with the regard to structured changes, which will have a positive cost effect. We guided for overall effects of NOK 1.50 billion to NOK 2 billion in February over that 2-year period. And this is an example of the structural initiatives we take in order to deliver on those cost ambitions. And we'll definitely have an impact on FTEs as well.

On your final question in terms of the restructuring, the restructured companies remains in stage 3, also due to the new definition of default, which means that probation period ensures that they stay in stage 3.

The next question comes from the line of Jacob Kruse from Autonomous.

Just a quick question on capital. So if I take your risk report of Pillar 3, you have about NOK 35 billion of RWAs in Poland and another NOK 36 million of RWAs in the Baltics. I guess with the Polish one, should we assume that these RWAs are going to leave the balance sheet with you scaling back up Poland? Like could you just update on what your sort of intentions are for the capital that is paid up in the Baltics?

Some of the Polish exposures will be moved to Norway. So there will not be a similar reduction in the group's RWAs as we have in Poland in isolation. And we will also take a couple of years to implement this is withdrawal. It will be done gradually and hopefully quite smoothly. With regard to the Baltic situation, the situation there is unchanged. We strongly believe that there is a potential in that ownership. The new main shareholder is actually delivering very well in our opinion, on the profitability improvements they are targeting. So at the time, here we have our 20% holding in that time.

We have no further questions currently coming through. So I will now hand back to Rune Helland for any closing remarks.

All right. Thank you. We all know that you have a busy day, and we will not take up more time that's necessary. So thank you all for participating, and we wish you all a very nice day. Thank you.

Bye.