DNB Bank ASA ($DNB)

All right. Good afternoon, and welcome to DNB's pre-call close call for the first quarter of 2026. The objective of this call is to remind you of what we already have shared with the market and some relevant public available information that could possibly affect the Q1 results. There will be no new information during this call, and the script for the call will be published on our IR website. I will start with the NII and capital, and Anne will go through the rest of the P&L. On the NII, there are 2 fewer interest days in the first quarter compared to the fourth. So this is expected to impact the Q1 NII negatively by approximately NOK 240 million. On the lending volume side, we saw average growth of 1% in Q4. Keep in mind that Q1 typically sees a seasonally lower activity level than Q4. In the first quarter, we've seen the NOK strengthen impacting NII negatively. The FX split in the loan portfolio for the fourth quarter was 8% U.S. dollar, 7% euro, and 7% SEK. The second 25 bps key policy rate cut by the Central Bank in September of last year, and our corresponding customer repricing of a cut of up to 25 basis points on loans and deposits took effect from November 18, meaning that it will have full impact in the first quarter. With the Central Bank's latest policy rate decision today, where the key policy rate was kept unchanged at 4%, they published an updated expected future rate path indicating that the key policy rate will be hiked by 25 bps to 50 bps by the year-end 2026. The DNB Carnegie's Micro team expect two 25 bps hikes in 2026 in June and September, followed by two 25 bps cuts in '27 in September and December to stabilize at a turnover rate of 4%. We continue to see strong competition in the bank market. Other NII includes a number of line items. In the fourth quarter, almost all were positive and including a nonrecurring effect of NOK 171 million. As we have informed the market several times, we expect NII to be negatively impacted by a regulatory change related to tax accounts in Norway which came effective on January 1. The loss of deposit volume as a result of this change expected to have a negative annual NII effect of approximately NOK 300 million. Over to capital. In the fourth quarter, we reported a CET1 ratio of 17.9%, well above the NFSA expected level of 16.3%. Based on FX development in the first quarter, there will be a positive effect on CET1. We repeat the FX sensitivity of CET1. When there is a 10% change in FX, there is an approximately 20 bps change in CET1. Just a reminder, the capital cost of the 0.5% share buyback program we announced in February was taken in the fourth quarter. We have completed the program. The ordinary dividend of NOK 1.9 billion from DNB Liv will be booked in the fourth quarter -- in the first quarter, sorry. This corresponds to approximately 15 bps on in the CET ratio. And then over to Anne.

Sure. Starting with a general comment on net commission and fees and other operating income. Generally, activity levels tend to be lower in the first quarter compared to the fourth quarter, impacting fee levels negatively. And the reminder on net insurance result, this is negatively impacted every year in the first quarter after the introduction of IFRS 17 due to booking or recognition of expected losses arising from loss-making or onerous contracts. Moving on to financial instruments at fair value, starting with customer revenues in DNB Carnegie or FICC. This typically sees a seasonally lower activity level in the first quarter compared to the fourth quarter and is, of course, also impacted by market volatility. The mark-to-market effects on the AT1s and the basis swaps will be announced shortly after quarter end, as we usually do. And a reminder on the outstanding FX AT1s, we have USD 700 million outstanding and SEK 4.95 billion outstanding. Moving on to costs. Seasonally lower activity level than we typically see in the fourth quarter, all else equal, typically leads to a somewhat lower cost level in the first quarter. In the fourth quarter, we had nonrecurring costs of approximately NOK 200 million, driven by year-end effects impacting operating expenses, including Carnegie integration costs of NOK 50 million. As communicated previously, we expect to incur nonrecurring integration costs related to Carnegie of up to NOK 200 million in 2026. Salary inflation in Norway came in just below 5% for 2025. In its latest monetary policy report, the Central Bank expects salary inflation in Norway to come in at 4.5% in 2026. And a reminder on pension expenses. As previously mentioned, normalized pension expenses are expected to be approximately NOK 500 million in the quarter. And the closed defined benefit compensation scheme is primarily linked to the development in global equities. Moving on to asset quality. There's no change in our message on asset quality compared to what we presented at our fourth quarter release. The portfolio is carefully monitored, and we are still generally comfortable with the risk in the portfolio. As you know, impairments will vary from quarter-to-quarter, driven by potential changes to macro input factors in the ECL model and/or company-specific events as you've seen in past quarters. As we've said previously, given the elevated level of uncertainty driven by the global macro picture, it would be natural to see more company-specific events. And finally, a kind request or a reminder to please submit your consensus estimates to Rune by end of business on Wednesday, April 8. That marks the end of our call. We thank you very much for attending and wish you a nice day ahead.