Nordea Bank Abp (NDA-FI.HE) Earnings Call Transcript & Summary

Good morning, and welcome to Nordea's Fourth Quarter and Full Year 2025 Results. I'm Ilkka Ottoila, Head of Investor Relations. As usual, we'll start with the presentation by Group CEO, Frank Vang-Jensen, followed by a Q&A session with Frank and Group CFO, Ian Smith. Please remember to dial in to the teleconference to ask questions. With that, Frank, please go ahead.

Good morning. Today, we have published our results for the fourth quarter of 2025. We finished the year well with high fourth quarter profitability, higher business volumes and lower costs. It was a strong result, despite the uncertain environment and despite consumer confidence in our Nordic home markets remained muted. For the full year, we delivered a return on equity of 15.5%, in line with the commitment we made 3 years ago. Our performance reflects the momentum we have built since we set out to reshape Nordea in the autumn of 2019. We have grown our business with existing and new customers and improved our customer experience. We are much more efficient today. Back in 2019, we spent EUR 0.57 to generate EUR 1 of income. Now it takes EUR 0.45. We are much more profitable. In 2019, we ranked near the bottom of the world's 100 largest banks based on return on equity. Now we are firmly in the top 20 and among the best in Europe. And we are creating sustainable value for shareholders. Total shareholder return over this period amount to 322% or 26% per annum. I was especially pleased to see us end 2025 on a high note on one other very important metric, customer satisfaction. Our scores are now 4 to 10 index points higher in all 4 business areas and performance has improved relatively to peers. Our results show that Nordea is performing well. By most measures, Nordea is stronger than it has ever been. We carry that strength into our new strategy period for which we have high ambitions as reflected in our new priorities and financial targets. I'll briefly return to those later. Being a strong and resilient financial services group, we also have the capacity to support our customers effectively in the current unsettled global environment. While the geopolitical backdrop remains uncertain, our focus is on ensuring we are consistently there for our customers with advice, with our capital and with a broad range of financial service and a very strong balance sheet. We're well equipped if conditions shift, no matter which direction they will go in. Our diversification is a key advantage among. Our Nordic peers, we are the most diversified financial services group. Income, lending and profits are well balanced across sectors and across our 4 home markets. We also benefit from operating in our home region with strong economies and fiscal positions and stable political systems. These features help us to navigate through volatility and adjust to external shocks. The largest Nordic businesses are export-driven and will feel some impacts. Still, they distinguish themselves by their quality, innovation and deep tech and engineering know-how and very importantly, by the agility and ability to adapt. That formula has enabled them to establish competitive positions in global market positions that are durable over time. For all these reasons, even while risks to the global outlook remain and impacts are difficult to assess, I'm confident that our region is well positioned to continue performing strongly. With that, let's return to the fourth quarter and look at some of the highlights. Our return on equity was strong at 14.4% compared with 14.3% a year earlier. Earnings per share were EUR 0.34, up from EUR 0.32. Corporate lending grew by 8% year-on-year and deposits were up 1%. Mortgage lending increased by 1% and retail deposits were up 6%. Assets under management increased by 13% to a record high of EUR 478 billion partly driven by higher asset values. Net inflows were strong at EUR 6.5 billion. Total income was flat against the previous year. Our net interest income continues to hold up well, supported by higher volumes and our deposit hedge. As expected, in the declining rate environment, it decreased by 5% year-on-year and by 1% quarter-on-quarter. Some of that due to the policy rate reductions in Sweden and Norway in Q3, which has a full quarter effect in Q4. Net fee and commission income was up 3% with solid growth in savings fee income. Net fair value result was up 28% for the quarter. This was driven by higher customer activity and a stronger result in treasury and our markets operations. Costs decreased by 3% year-on-year, reflecting continued active cost management and stable strategic investment levels. Full year operating expenses were EUR 5.4 billion, fully consistent with our guidance. The Q4 cost-to-income ratio was 46.2%, excluding regulatory fees. Operating profit increased by 3% year-on-year to EUR 1.5 billion. Our credit and asset quality remain very strong. Net loan losses and similar net result amounted to EUR 49 million or 5 basis points, once again, well below Nordea's long-term expectation. Due to continued strong credit quality, we were able to reduce our management judgment buffer by a further EUR 17 million in the quarter. Our strong capital generation continued and our CET1 ratio was 15.7% at the end of the quarter. That puts us 1.9 percentage points above the current regulatory requirements. Given our strong 2025 performance, our Board of Directors has proposed a dividend of EUR 0.96 per share for 2025, up from EUR 0.94 per share for 2024. Today, we have published our outlook for 2026, which is the first year of our new strategy period running to 2030. For the full year 2026, we expect a return on equity of greater than 15% and a cost-to-income ratio, excluding regulatory fees of around 45%. Following our strong Q4, we were able to close our strategy period having met or exceeded all of our targets. Our initial return on equity target was greater than 13%. As the environment shifted, we lifted it to greater than 15% and ultimately achieved 15.5% in 2025. We delivered on our guided cost-to-income ratio, even with a significant step-up in strategic investments and maintained strong credit quality and capital generation. All of this enabled strong shareholder distributions, distributions over the 4 years exceeds EUR 17 billion. This clearly surpassed our initial expectation and was right in the middle of the updated target level. Let's now return to Q4, starting with a look at our main income lines. During the quarter, net interest income continued to hold up well in the lower interest rate environment. Our NII was supported by both higher business volumes and our deposit hedge. The deposit has contributed positively to our income year-on-year, increasing NII by EUR 99 million. As expected, the policy rate reductions affected deposit and equity margins. Our net interest margin for the quarter was 1.57%, quite stable following 1.59% last quarter. We saw an encouraging trend in business activity on the corporate side with lending up 8% year-on-year. Mortgage lending also increased but at a slower rate. The 1% year-on-year increase was driven by Sweden and Norway as housing market activity continued to slowly pick up. Retail deposits were up 6%, while corporate deposits were up 1%. Net fee and commission income was up 3% year-on-year, driven by savings and higher customer activity levels. The higher savings fee income was driven by higher assets under management with positive net flows in all channels and higher asset values. The good momentum continued in our Nordic channels with net inflows at EUR 4.8 billion, roughly equally split between retail funds, private banking and Life & Pension. Net flows from international channels were EUR 1.7 billion with positive net flows in both wholesale distribution and international institutions. Brokerage and advisory income was lower, resulting from lower debt capital market income. The clear positive in the quarter was a very strong income growth from our secondary equities business. Net fair value result was strong in the quarter, increasing by 28% year-on-year. That increase was driven by higher customer activity in foreign exchange and interest rate hedging. We also benefited from good performance in treasury and market making. Costs decreased by 3% year-on-year as planned and in line with our guidance. This reflected stable strategic investment levels and continued active cost management including a reduction in the number of employees. During the quarter, we continued with our strategic investments in several areas, including technology, data and AI. At the same time, we are driving operational efficiency and increased productivity. This is our continued focus, and it is leading to more efficient ways of working and a leaner organization. For the full year, costs were EUR 5.4 billion, representing a modest 1% increase despite the inflationary pressures. The fourth quarter cost-to-income ratio was 46.2%, excluding regulatory fees compared to 47.9% a year earlier. For the full year, it was 45%, and we are targeting to take this down to 40% to 42% by 2030. Our credit quality continues to be very strong. Net loan losses and similar net result for Q4 was EUR 49 million or 5 basis points, well below our long-term expectation of approximately 10 basis points. The provisions in the quarter, were driven by corporates with no industry concentration or specific trends. Due to continued strong credit quality, we reduced our management adjustment buffer by 1/3 of EUR 17 million and it now stands at EUR 276 million. We continue to deliver strong capital generation and maintain our robust capital position. At the end of the quarter, our CET1 ratio was 15.7%, 1.9 percentage points above the current regulatory requirements. We continued to deploy capital to support business growth and we also continue to use share buybacks as a way to return excess capital to our shareholders, where we do not find profitable uses for it. During the quarter, we launched and completed a EUR 250 million share buyback program, our fourth of the year. After that, in December, we launched a new EUR 500 million program which is expected to be completed by no later than the 8th of May. Given our strong 2025 performance, our Board of Directors will propose to shareholders at the AGM a dividend of EUR 0.96 per share for 2025 compared with EUR 0.94 per share for 2024. Additionally, the Board has proposed a distribution of the midyear dividend in 2026, corresponding to approximately 50% of the net profit for the first half of 2026. Let's now turn to our business areas. In Personal Banking, we continued to deliver business volume growth with customer activity, again, highest in savings and investments. Households continue to prioritize strengthening their financial positions, increasing their deposits by 5% year-on-year during the quarter. Many customers are also increased their recurring savings amount and they put more money into investment funds. Q4 net flows in our Nordic retail funds were strong at EUR 1.7 billion, up from EUR 0.7 billion we had in Q3. With lower interest rates supporting confidence, housing markets continue to improve gradually, but the pace remained muted. We increased our mortgage lending by 1% year-on-year. In Sweden, we continued to grow, our mortgage market share capturing 27% of the market growth in the period from October to November compared to a back book market share of 14%. Digital activity continued to grow with app users and log-ins up 3% and 5%, respectively. In our previous strategy period, we set a target to ensure all every day banking needs could be met digitally by the end of 2025. We have now achieved this goal, and it has contributed to a stronger overall experience and that record high customer satisfaction level for personal banking. Total income decreased by 3%, driven by lower policy rates. The lower interest income was partly offset by continued net fee and commission momentum, especially in savings, payments and cards. Return on allocated equity with amortized resolution fees was 15%. The cost-to-income ratio was 51%, improving from 53%. In Business Banking, we performed well, driving strong volume growth with the support of our strong digital offering. Nordic SMEs continued to adapt well to the operating environment with stable interest rates supporting higher demand for lending. I'm quite pleased with the increased business activity. Lending volumes increased by 6% year-on-year, led by Sweden, but with growth across all Nordic countries. Deposits were up 5%. During the quarter, we improved customer experience by simplifying onboarding and introducing a new digital tool to enable customers to get started faster. We want to be the leading digital bank for SMEs and a big part of that effort has involved making sure our customers' everyday banking needs are met by our digital offering. In 2022, around 40% of our customers' daily banking needs were covered by self-service functionalities. By the end of the 2025, we stood at 80% in line with our target. Total income for Q3 was down 3% year-on-year with higher volumes and higher net fee and commission income partly offsetting lower deposit income. Return on allocated equity with amortized resolution fees was 15%. The cost-to-income ratio was 45%. In large corporates and institutions, we had a strong quarter, driving double-digit lending growth and higher overall income. Lending volumes were up 10% year-on-year, with particularly strong growth, 20% in Sweden. Deposit volumes decreased by 3% year-on-year. We interpret lower deposit volumes as a sign of increased risk appetite and greater willingness to invest. Debt capital markets activity remained high, if a little lower than in previous quarters, helping us maintain our leading positions for Nordic bonds and Nordic loans overall in '25. During the quarter, we arranged close to 140 transactions for a broad range of issuers that brought the total for the full year to over 600. Our secondary equities business performed strongly and income grew by 26% year-on-year. Nordea markets delivered strong results driven by solid trading performance and increased client activity compared with a year ago. Total income was up 4% year-on-year, mainly driven by higher ancillary income. Net fee and commission income increased by 10%, driven by equities, asset management, products and lending fee income. Return on adequate equity was 15% the cost-to-income ratio improved from 42% to 40%. In Asset & Wealth Management, we drove further strong momentum with growth in all our Nordic channels and strong investment performance. Net inflows in our Nordic channels were EUR 4.8 billion, with private banking contributing EUR 1.6 billion of that. In private banking, we finished the year as we began, with solid momentum and customer acquisition and high levels of customer activity. Overall, customer satisfaction remained at a record high level. In our International channels, we had net flows of EUR 1.7 billion, which was an improvement quarter-on-quarter. About half of that was from international institutions and half from the wholesale distribution channel. Net flows in Life & Pension were EUR 1.3 billion. The performance was again strong across our 4 markets, and we further reinforced our position as Nordics second largest player. Gross written premiums in the quarter amounted to EUR 3.3 billion, up from EUR 3.1 billion a year ago. That took premiums for the full year to an all-time high of EUR 12.9 billion. Assets under management increased by 13% year-on-year to EUR 478 billion, driven by market performance and the positive flows in all channels. Our Empower Europe fund launched in June continued to attract interest during the quarter. It has now secured a net flow of more than EUR 500 million. The fund invests in Europe's energy independence, industrial revitalization and defense. We also saw renewed strong interest in our sustainable investment approach. One of our new BetaPlus funds launched in the summer is already the largest actively managed sustainable ETF in Europe. Total income was down 2% year-on-year driven by lower net interest income. Net fee and commission income was down 1%, driven by customer preferences from lower risk and lower margin products. Return on allocated equity was 30%, that cost-to-income ratio was 48%. All in all, this was a good quarter and a year of success for Nordea. We now have two very successful strategy periods behind us, and we are aiming high for our third. Looking across to 2030, our priorities are clear: To grow strongly in several attractive areas and drive faster than market income growth. To further strengthen our customer offering and to unlock the full potential of our unique Nordic scale. Our Nordic scale is a key source of competitive advantage for Nordea. We have already realized a lot of scale benefits. However, most of the gains still lie ahead. In this next phase, we will take a decisive step to unlock these benefits across Nordea. The priorities and targets we have set are ambitious, and we are fully committed to achieving them. We are targeting a return on equity of greater than 15% each year through to 2030 and significantly higher in 2030 itself. We are also targeting a cost-to-income ratio, excluding regulatory fees, of 40% to 42% in 2030. We are at 45% today and coming down to our target level will be a gradual process. Accordingly, we expect to deliver a return on equity of greater than 15% for the full year 2026 and expect a cost-to-income ratio, excluding regulatory fees, of around 45%. Rest assured that our plan will be executed with the same rigor and focus we have applied over the past 2 strategy periods. We do what we say. We look forward to building on our progress and realizing our ambition to become the undisputed best performing financial services group in the Nordics. Thank you.

Operator, we are now ready to take the questions. And as usual, please as a courtesy to others, could you please limit yourself to 2 questions max. Thank you.

[Operator Instructions] The next question comes from Martin Ekstedt from Handelsbanken.

So I wanted to first ask about the management judgment allowance. It decreased by only EUR 70 million this quarter against roughly EUR 50 million each over the previous 2 quarters, right? And additionally, only EUR 10 million of that decrease was an actual release. So given I believe you've said at the CMD that you will either use or release the around EUR 300 million buffer that you had when entering '26, over the course of this year. I just wanted to check, should we now see this smaller release in this quarter meaning it's going to be more back-end loaded, the full release in the year 2026 or are you simply seeing a different credit risk environment currently causing you to take a more conservative stance overall?

Martin, thanks for the question. You shouldn't read anything different in terms of our intention on the release of the management judgment buffer. We did, as you pointed out, release more earlier in the year. Actually, Q3 saw quite a big release simply because of a different change in credit conditions, sort of macro related, but no, the portfolio continues to perform well. And as you see with the -- again, a net release of collective over the period, generally, conditions are improving. So there's nothing to read into that. It's simply that we tweaked it in Q4. Our intent remains the same that over time, we will either utilize or release. And as we've said so often, in calls like this, but also in other [indiscernible] that the strength of the portfolio and also the strength of conditions in our home markets means that it's harder and harder to hold on to it. So what we set out at Capital Markets Day remains the case.

Okay. But just to clarify, I think you said that over time, you will either utilize the release, right? But I think at the CMD, you said over '26. Is that correct?

Yes. So that's what we said at CMD, no change.

Okay. Okay. And then just secondly, if I could focus on M&A for a bit. I just wanted to see when we should expect to see some new acquisitions from you. And it is still the base case that you'll be turning your M&A machinery towards Sweden now, as you've said in the past, after your couple of deals in Norway, right? So the Danske piece in Norway deal, I think it was announced in July '23, i.e., it was more than 2 years ago now. In the past, you said that you're aiming for roughly 1 deal per year, considering, was it 25, 30 bps of capital deal, does this also mean that we should see something larger perhaps from you on the M&A front given some time has passed now since the Danske [indiscernible] the Norway deal?

Thank you for the question, Martin, it's Frank speaking. We would like to do M&A as long as it's accretive to our business and helpful for our shareholders, but then we need a target -- available target. And it's -- you mentioned Sweden and it's right that we have -- in the new strategy of ours, we have a special strategic focus on Sweden and Norway but we want to grow in all 4 countries. So actually, we are, of course, interested in opportunities across the board as long as it fits well to our strategy. That's what we can say. And then these comes when they come, and you need two to do a tango. And right now, we have really not much to say more than unchanged ambition and we would like to use inorganic as a lever to grow Nordea as well.

Okay. So it's availability on target more than anything else. But does this mean also that you've now saved up some dry powder perhaps?

Yes, it's nothing to do with appetite. It's nothing to do with capital. It's nothing to do with us not having a clear view on where that we want to grow and who would we really like to team up with. It's basically about availability.

The next question comes from Gulnara Saitkulova from Morgan Stanley.

So the first question is on asset margins. At your CMD, you mentioned that you're not assuming any meaningful margin expansion. Is it reasonable to expect that asset margins will remain broadly stable in 2026? And how does your outlook on margins differ across your key geographies? And across the Nordic margins -- Nordic markets, where do you see the most margin pressure? And where do you believe margins can hold up or even improve?

Thanks, Gulnara. So yes, our base case assumption was that we're not relying on margin expansion. Obviously, very happy to see that come back. But I guess, conditions at the moment are as we've seen throughout 2025, still very thin volumes in the mortgage market and in those circumstances, we do see some of our competitors reducing pricing to try and chase business and things like that. So inevitably, that puts a bit of pressure on mortgage margins. Another feature we've seen, particularly in the second half of 2025 is we grew really, really strongly in corporate lending and particularly in our LC&I business, where our lending is at very much the sort of blue chip and it's been pretty competitive there. So those 2 dynamics have made margin expansion pretty difficult to deliver. So we continue to assume that we won't see margin expansion. History has shown us that when conditions ease and when demand increases as consumer confidence returns, we've seen an improvement in lending margins. And no reason not to expect that, but we do need to see that consumer sentiment improve and the market start moving again on the household side. I mean in terms of just different markets, there really isn't anything to choose between the markets in terms of what we're seeing on margins, particularly. Our competitors are active in most of those markets and where we're seeing them acting aggressively on margins, that's right across the board. But we do, I suppose, have good sort of -- if we split between where things are growing a little bit better, Sweden and Norway versus things being a little bit more flat in -- from a market perspective in Finland and Denmark. So I think that watching Sweden and Norway from a margin perspective is important. But I don't know, Frank, whether you want to add anything to that sort of perspective?

No, I think you expressed it very well. So no further comments to that one.

And another question on Sweden market share. In Sweden, you have been gaining front book market share. Can you remind us what is driving your ability to stay competitive and grow the front book ahead of the back book? And what do you see as the key levers and competitive advantages that Nordea has in Sweden? And looking ahead, how do you plan to sustain that momentum? And what are the targets that you are setting for the Swedish market?

So we are gaining market share, and that's across the board, I would say, in Sweden. And as you know, we have had a special focus on Sweden and Norway for quite long as we have relatively smaller market share than in Finland and Denmark. And back -- I think it's 7 years ago, we decided that there -- now we want to grow our Sweden on mortgages, and we want to grow slightly above our back book market share. And I think we have done that probably each quarter for the last 6.5 years, something like that. So it's nothing new. What is probably a little bit new is that we are growing quite much faster than the back book this year. So 22-ish percentage points of the front book on the mortgage market is where at least the last days that I have and that should compare that with the back book of 14.03% something. So the momentum is strong and -- but it's nothing new. And yes, mortgage is not rocket science. It's about getting many -- retail is about detail. So getting many things right, the customer interface, digital tools, the self-service, getting the entire organization teamed up around what is it that we aim for, how do we do it, ensure that the value chain is effective that we respond well, fast and so on. And then you need to get the pricing right. So we are -- I would say we are slightly above average. So we are not using the tools to buy. We try to position us price-wise where we should in the corridor, but a bit above the average. And that works very effectively. So I'm very happy with the progress the team has made, but that's not really anything new. And when it comes to the auto businesses, they had actually a very nice growth, so SMEs. And within SMEs, we have grown above market for long and continue to do so. In LC&I. In Q4, we had a growth within lending of 20% quarter-over-quarter or quarter -- Q4-over-Q4 last year or '24. So it's -- it's just -- and then corporate banking, by the way, is on fire as well. So it's -- we are just in good shape, and the momentum is great. I don't know if that answered your question, but that's probably the most I can say.

The next question comes from Magnus Andersson from Nordea.

It's Magnus Andersson from ABG. You haven't bought us yet as far as I know. Just beginning with a specific one, NII in Norway in Personal Banking was down 11% quarter-on-quarter in local currencies. If you could please shed some light on that? And also related to that comment on the competitive situation in Norway. I think we're getting quite negative signals. Secondly, just on your cost income ratio target, if you could say something about what kind of headcount outlook you have for 2026? And related to costs, anything on the restructuring charge you're supposed to book this year?

All right. Thank you, Magnus. Ian, should I start with the competitive situation and then you take all the difficult stuff on the details. Yes, so Magnus, I think Norway is a very competitive country. And it's -- that has almost always been the case. And it's just sometimes it goes even further. Right now, there is a very intense competition and that goes across the board. I think we're doing very well, honestly. But there is a consolidation going on now in the Norwegian market, where the savings banks are becoming fewer and bigger. And then we have the 2 large players, DNB and us basically taking the rest, and then you have a lot of boutiques especially within wealth and investment banking. So it is a very competitive market, but it's also a very interesting market as it's growing. And it's -- as we know, the economy in the country is super strong due to the stronger oil foundation. We're well positioned. We grow across the board. Wealth looks really good. SME, really good. Personal banking looks good on lending and really good on doing more business with the current customers, ours, which has been a strategic initiative, basically race up the customers and cover much more than of the needs than just lending. And that goes very well. They're doing a great job over there. And then we have large corporates and institutions are doing a great job, but it's a tough competition for sure. And that also explains a little bit why the lending is down. But it is -- remember, in Norway, we have our shipping portfolio for the group and shipping has been consolidating itself heavily, which have impacted and then it's a very dollar-based business, which, of course, also impact us. It's -- the dollar has weakened. But I would say, in general, we are very well positioned, I would say. But Ian, do you have anything to add to this more like the strategic assessment or the market assessment before you go into the details?

No. I think you've captured it, Frank. Magnus, so in terms of the detail, yes, we did see a step down in net interest income in PEB Norway in the quarter. I guess a few things are going on in there. I mean, the rate cut in September further reduced deposit margins and where we saw a full quarter impact of that in Q4. Then we've also seen, I guess, in response to the rate cuts, which have been a little longer coming in Norway, a lot of customers have been actively renegotiating mortgage rates, and that really started with the first rate cut and we saw the full effect come through together with a little bit of impact of the September cut in Q4 because we have the usual sort of 2-month lag. And then we only got a partial offset from Nibor because 3-month Nibor didn't move to the same extent. So just a bit of margin pressure in Norway that I think will be felt across the market. I'd be surprised if we didn't see the same things in our competitors there. But look, as Frank says, firing on full cylinders in Norway and really, really pleased with both what we're doing, being able to provide customers with other products and also working with our new customer base that came across from Danske. So I guess those are the moving parts in Norway. In terms of cost, that kind of thing, so yes, we did I guess, through good sort of active management, see the headcount come down during 2025. And as we see us continue to implement our Nordic scale initiative with process improvements, consistency, and indeed, as we start to see some of the early impacts of AI, we would expect to see FTE continue to come down. So I think that trend is set to continue. And then in terms of restructuring, no news to report there. We're still going through our necessary processes, consultation and other things like that. So I guess, to repeat what we said at Capital Markets Day, we don't expect it to be material on a full year basis, certainly lower than the provision we took back in 2019. And we would expect to book that in full in '26. But I guess my advice for now is, because I know some people have made a bit of a guess of what it could be, is I'd say leave it out of estimates for now. We intend to treat it separately from our regular performance KPIs. And when we give our detail, we can talk through it fully then.

The next question comes from Andreas Hakansson from SEB.

So let's start with a quick one, I think. It's following up basically on Magnus' questions on costs. The 45% cost-to-income ratio is all good. Could you just help us a bit? You talked about the 2% cost CAGR over time, but it might be a little bit forward loaded -- or front loaded, so should we think about a 3% cost growth to reach that 45% cost-to-income?

So Andreas, I mean I think the sort of broad consensus is in not a bad place. So somewhere between 2% and 3%, I guess. The things people should bear in mind when thinking about cost-to-income, first of all, do exclude restructuring from that. And then the other is that regulatory fees makes a bit of an impact on cost growth. I mean we've seen really good growth in deposits over the year. Our expectations is that might feed through into slightly higher resolution fee for this year, but we don't have any information on that yet. But otherwise, broadly speaking, I think estimates for cost growth for next year are broadly in the right place.

That's helpful. And then a bit country by country from me as well. And we covered the NII in Norway. But can we just talk a little bit about asset quality in Finland? I mean retail, I think, was at 20 bps, which is some level we haven't seen a retail banking for some time in the region and a business banking 35, so that's on that side. And then on the large corporate side, we saw quite an increase in impaired loans in large corporate in Sweden and Denmark, which was also, I thought, surprising. So could you tell us a bit about what's happening in those markets and in those areas, please?

Yes. So I mean, in terms of the large corporates first, these things are all relative, right? There is a fairly sort of low level of impaired assets across the book. And so where you see a particular situation arise that can have a sort of magnified short-term impact on the metrics. So there's nothing untoward or systemic going on with those movements that you've seen in Sweden and Denmark. In Finland, on both our SME book and on the retail side, we've got a slightly broader base book, a bit more consumer finance in there as a proportion than you see elsewhere in our business. And that tends to mean we have a slightly heavier burden in Finland from credit charges. And then we always have a bit of, I guess, a catch-up on write-off of impairs and other things towards the end of the year. So again, I wouldn't want you to take anything by a concern from that. But we do have a slightly different shape of the book in Finland compared to other countries.

Okay. Fair enough. And then on -- just on the countries as well. If we think about net interest income outlook for 2026, I mean, ECB/Denmark, hasn't cut since June and Sweden cut in September and Norway, we at least believe it will continue to cut a bit further. And with the competitive pressure you talk about, should we see that the NII in Sweden, Finland and Denmark is stabilizing relatively soon, and it will continue to go down in Norway, is that the best way of looking at things?

I think that's a good summary, Andreas. Our expectation, as you say, is for rate stability or sort of rate flat in all countries apart from Norway and then 1 or possibly 2 cuts in Norway. So exactly, as you set out. And what that does is provide a little bit of stability. Into Q1, we've got a lower day count. So arithmetically, that means that we'd see slightly lower net interest income for the group in Q1 this year than the quarter just passed. And then from there, provided that rate picture plays out as both you and I have described then it's about volumes and some impact from margins. And so we're confident that we'll be able to grow as the market grows. And so Q1, probably the trough for NII on a quarterly basis. And then with rate stability, volume should help drive from there.

The next question comes from Namita Samtani from Barclays.

I just had one. The margin on the asset management business. If I just simply take the asset management revenues divided by the average AUM in '25, it was around 42 bps versus 47 to 48 bps in '22 to '24. So I was just wondering why you think that's the case as flows have been in the higher-margin businesses like private banking and how do you think your asset management franchise stacks up versus peers?

Thanks for the question. So yes, we've talked throughout the year of some of those margin dynamics in asset management and also what we've been able to achieve in terms of flows. So I think to start with, really pleased with the flows, EUR 4.8 billion in our Nordic channels in Q4 and then 1.7% in international. So I think that continued sort of good performance in flows that we saw in Q4 is really encouraging. There's 2 things playing into the -- your arithmetic there on what's happening with margins. The first is, yes, we have seen a bit of a sort of move in preference in the market towards lower-margin product that continues to be plenty of pressure and competition from passive versus active. Our own response to that has been to I guess, plan for it and understand that that's what's happening. And to respond with new product launches and others. And as we said in our report today, some of our sort of BetaPlus products that has a bit of active within them, but also designed to compete with that passive threat, they've performed really well in terms of attracting new money. So a bit of overall margin per share that we see right across the industry. And then something that we saw quite specifically in 2025 is a bit of a preference amongst our customers for lower risk, but then also lower margin products. So if we look at our Life & Pensions business, for example, a strong customer preference for our fixed income products, which we're really good at. So there's a margin and a mix impact going on in there that has driven the effect that you've seen. We're really proud of our asset management business. It's performance, it's a range of products. It's customer preference, all of those kinds of things. So in terms of your question of how we think it stacks up, I think we're in good shape. We recognize that it's a very competitive world out there. And the best response to that is to have the best products and the best performance, and we think we stack up pretty well there.

And operator, I think we have time for one more question. Thanks.

The next question comes from Nicolas McBeath from DNB Carnegie.

So I had a question on the cost to income outlook for 2026. So you're expecting 45%, which is flat from 2025. While at the CMD, you talked about fall in cost to income every year until 2030. So has anything made you a bit more cautious about the near-term cost to income trend? Yes, so that's my question.

Should I take it in. Nicolas, it's Frank speaking. Our ambition has not changed. And what we are saying is around 45%. And of course, we are just recognizing that there is a lot of uncertainty and exactly how the year would play out, we need to be a little bit humble about but there's nothing negative that has happened, and our aspirations are not different to what they have been previously. So we just tried to reflect the start to the year and what is happening in the world, of course, can impact the momentum, but let's see. So don't put too much in that. Ian, I don't know, have you anything that you want to add to this specific question?

No, I think you covered it, Frank.

Do I have room for another question or do you have to wrap up?

Yes, you have -- so an extra one is fine. You did only one, so that's fine, so please go ahead.

Okay. So then if may I ask also what explains the strong growth and increase in market share that we see in the large corporate segment in Sweden and Finland? Are you competing with lower margins, taking up the risk appetite or what is the recipe here? Any particular segments that account for much of the growth we're seeing here?

So the risk appetite, no. So we are not changing our risk appetite. We are -- we have been there for so many years. So we do know that these things you shouldn't do, that's dangerous. Some will do. Some are doing it, but we are not. But of course, it's a very competitive market for sure. So you would like higher margins, but the market is as it is right now. So then it's about getting more of the customer's business, which we are. Sweden is simply -- we have changed a bit in the organization, leadership and also gotten agreed on the ambition level. And they are -- it's very visible, honestly. They are super ambitious. They're active. They are passionate. They're leaning in and that's what you see in the quarter. Then I -- we cannot deliver a 20% increase year-over-year for all years, but at least we can take a fair share of the market. So that's one. And the other one was about Finland. Now I think it's just about -- Finland has been a bit quiet. And we want Finland to be less quiet in LC&I. And I think that what we see now is a response to that. So no magic, it's just hard work, staying close to our customers and being on the beat.

Any particular segments?

In -- within LC&I?

Yes.

No. I think no, we are broad. So -- but of course, you cannot -- that will -- yes, we are broad. I would say, we are broadly focused. So there will always be -- in each country, there is always an industry composition that you have to understand, and you will be exposed to these industries then. But nothing really here that sticks out, I would say, not to my information at least. Ian, before we close, is there anything that you would like to highlight before we close the call? Anything we have talked -- not talked about or anything that you want to say?

I think we covered most of the key things, Frank. Maybe just a quick recap of the dynamics that we see going into 2026. So I talked about, we expect NII to come down quarter-on-quarter into Q1, mainly because of lower day count. And if we get that sort of fairly stable rate picture that we've been talking about, then I think Q1 '26 should be the quarterly trough. And after that, NII should grow in line with volumes and margin development. So -- and I think, again, with stable rates, a fairly stable contribution from the deposit hedge. I think as we look at the full year for 2026 on NII kind of expectations at the moment because of what we're seeing with margins and other things is maybe flat to slightly down for the full year. And I guess consensus is maybe a little bit on the high side there. But -- so that's NII. Fees and commissions, we ended the year quite strongly. We'd like to see those activity levels sustained and confidence is going to be key there with everything that's going on in the world. So I think '26, all being well in terms of activity levels, I guess, we expect NCI to increase. But estimating the pace of growth is probably a bit difficult at the moment. And then just a watch out for Q1. Q4, we had annual and semiannual fees of around EUR 26 million that won't be repeated in Q1. And so that was sort of lower day count, probably says that quarter-on-quarter, we might see NCI a little bit down. But look, I think a positive outlook for the year. And lastly, on costs, as I said on one of the questions, I think, broadly speaking, expectations for the full year in a decent place. For Q1, we might see a slightly higher resolution fee than the EUR 35 million we took last year, and we booked all of that in Q1, obviously, so makes it a slightly higher cost quarter than the average. And then we covered restructuring. As I said, I suggest people leave it out of estimates for now, and we'll get back to you when we have something to report, we'll exclude it from our KPIs for the year and as a guidance on size, just repeating what we said at the Capital Markets Day, lower than the provision that we took in 2019. So I think we've covered the key topics, Frank, and I'll hand back to you.

Great. Thank you so much. And all, thank you so much for participating. We are here for you. If you have any questions, please revert, but else, thank you for today.