Swedbank AB (publ) ($SWEDA)

Good morning. Welcome to Swedbank's Q1 2026 Pre-close Call. I'm Maria Caneman. I am Head of Investor Relations here at Swedbank. [Operator Instructions] And we would like to start by informing you that this call is being recorded. And the script used for this call will be published on the Investor Relations website after the call. So this call will focus on the events during the first quarter, relevant public data and macro trends in our markets, and we'll go through the macro indicators, P&L statement and comment on capital. We would like to highlight that we, of course, only answer questions related to already disclosed information as well as public available data. To start off, there are 2 days less in this quarter compared to the previous one, resulting in a negative impact on NII and NCI. And looking at average day count effects, it's around SEK 50 million per day on NII and SEK 20 million per day on NCI. On FX movements, as end of last week, that's 27th of March, the Swedish krona had depreciated from end December versus the U.S. dollar and the euro. On average, quarter-to-date compared to last quarter, the krona appreciated versus both the dollar and the euro. And for P&L, the average quarter-on-quarter development is the relevant number to track. The Riksbank policy rate was left unchanged at 1.75% during the quarter, and ECB kept its policy rate unchanged at 2%. As of 27th of March, on average quarter-to-date compared to the fourth quarter, the 3-month STIBOR was 9 basis points higher and the 6-month Euribor had increased by 7 basis points. We've seen quite sharp increases towards the end of the quarter where STIBOR end of period was up 22 basis points and Euribor 40 basis points. On net interest income, reminding you that our CFO said in the Q4 results call that the Swedish Central Bank cut the policy rate effective as of 1st of October and ECB's latest rate cut was in June. So by the end of the year, these policy rate changes were fully priced in. Hence, we should see the full quarterly NII effect of the rate cuts in the first quarter of 2026. Let's turn to Sweden first. Mortgage list prices in Sweden on fixings 1 year or longer were lowered on 17th February by 15 to 20 basis points and raised on 24th of March by 30 to 40 basis points. Furthermore, the mortgage list price on 3-month fixings was raised on 28th of March by 15 basis points. All this information can be found on our website, and I would like to encourage you to visit the website continuously as we show most of our offering there, and that's where the most up-to-date information is located. Actual mortgage prices fell by 2 basis points on 3-month fixings in the first 2 months of the quarter compared to a decrease of 11 basis points in the previous quarter. On deposits in Sweden, rates on 6 months and 1 year were raised on 23rd March by 20 basis points and 40 basis points, respectively. We pay 0% of transaction accounts as well as on e-savings accounts. And mortgage volumes and public statistics then -- Swedbank's volumes in the first 2 months of the quarter, excluding savings bank volumes on our balance sheet increased by SEK 2 billion or by 13.4% of the total market increase. Including savings bank, volumes grew by SEK 1.1 billion. Swedbank's total market share, excluding volumes by savings banks, was 18% at end of February. Savings Banks volumes added another 3.6 percentage points. The acquisition of Stabelo added around SEK 17 billion of mortgage loans when incorporated and will in conjunction with the first quarter report, and we will, in conjunction with the Q1 then report and comment more on the developments during the quarter as Stabelo is not yet included in the monthly public statistics. And on the corporate lending, for January and February, Swedbank's volumes grew by SEK 3.3 billion or by 13.4% of the total market growth. Swedbank's market share was 15% at the end of February. Retail deposits in Sweden grew in January and February by SEK 13 billion, and Swedbank accounted for SEK 6.2 billion of this, corresponding to 46.1% of the market growth. Corporate deposits in Sweden in January and February decreased by SEK 21 billion, of which SEK 13 billion in Swedbank. As of February, Swedbank's market share amounted to 18% for retail deposits and 13% for corporate deposits. Now turning to the Baltics. According to ECB data, total lending in January in the Baltics increased by 13.7% year-on-year, private lending by 12.7% and corporate lending by 14.8% Total deposits in the Baltics in January increased by 8.3% year-on-year. Private deposits grew by 9.3% and corporate deposits by 7.1%. Regarding retail deposit rates as of 27th March, we paid 0% in interest on transaction and Easy Savings accounts, unchanged from the previous quarter. The rates on all other accounts were kept unchanged compared to the end of the fourth quarter, except for 5 to 25 basis point reduction of fixings between 3 months and 6 months in Latvia and Estonia and a 20 basis points increase on fixings longer than 12 months in Estonia. Moving on to net commission income. And first of all, a kind reminder that asset management commissions are generated by daily fees. Looking at average volumes of the stock market development, which impact our asset management fees, up to 27th of March, and this is compared to the averages of the fourth quarter, the Swedish stock market increased by 9.6% in the U.S. market is 0.8% increase, and European stock markets increased by 5.8%. Also a reminder about the FX component where the Swedish krona by 27th March had depreciated versus the dollar on average compared to the fourth quarter, and this should, of course, be considered when translating the U.S. stock market changes. According to statistics from the Swedish Investment Fund Association, the Swedish mutual fund market had net inflows during January and February of approximately SEK 15 billion compared to an inflow of approximately SEK 80 billion in the fourth quarter. There were outflows in actively managed equity funds, while index funds and fixed income funds saw inflows. Swedbank Robur market share was 21.4% at the end of the fourth quarter of 2025, sorry. Regarding card commissions, in addition to the negative day count effect, card activity in the first quarter is normally seasonally lower than in the fourth quarter. And let me just remind you that our CFO pointed out in connection with the fourth quarter results that commission expenses are impacted by the large investments needed to transform the Swedish payment system. Moving on to expenses. As communicated in Q4, 2026 cost guidance is around SEK 27.5 billion based on the exchange rate of SEK 10.6 over euro. Please keep in mind the seasonal decline that we normally see in Q1 and the full quarter impact from the consolidation of Stabelo and Entercard. And furthermore, of course, that we received VAT recoveries of SEK 963 million for the years '19 to '23, those were received in the fourth quarter. Bank taxes in Sweden, the government decided on a base deduction as of '26 to the bank tax while delivering the same tax revenues. So the tax rate is therefore raised to 7 basis points in '26. And then there is the SEK 6 billion Riksbank reserve requirement for which interest is not paid, that cost up until June 2026, SEK 71 million has been taken in full upfront in the fourth quarter of '25 and as a bank tax. And in Latvia, we are into the second year of a 3 year with the tax on NII, while Lithuania, the previous year's NII tax, which ran from '23 to '25 has been abolished and is no longer in place in 2026. On asset quality, at the end of the fourth quarter, the post-model adjustments stood at SEK 131 million following the release of SEK 228 million, reminding you that the acquisition of Enticard added SEK 354 million as a day 1 effect on Swedbank Stage 1 credit impairment provisions and credit impairments, excluding Entercard was net reversals of SEK 60 million. And lastly, on capital, the balance sheet is affected by end-of-period FX rates, mainly via risk-weighted assets from the Baltics, which are denominated in euro. As mentioned earlier, by 27th of March, the SEK had weakened somewhat versus the euro. And that was all for the Pre-close call. I'll pause for a moment to see if there are any questions.

[Operator Instructions] We have a question from Magnus Andersson.

Just on Entercard, will you book a restructuring charge now in Q1 when you will present your plans for that business? And secondly, will you already now account for the consumer finance portfolio as discontinued operations now in Q1?

We will come back. That's what I have said, we will come back now in Q1 with an update on that and come back with the integration cost for Entercard. And we have not mentioned anything further on other than that we have decided to initiate a sale of the consumer portfolio. But we will be back in the Q1.

I think you said you would account for it as available for sale, which would mean that you take it as discontinued operations in the P&L, I guess, from Q1? Or could...

Yes, exactly. So we have said that we are initiating that process. So it will be discontinued, but we will update on the timing of these things in the Q1 report.

Yes. Okay. And secondly, just in -- you mentioned in Latvia, you lowered deposit rates from 3 and 6-month fixed rates. Have you received any reactions on that considering that Euribor is up?

No, nothing in particular that we could say something about at this point. Let's move on to Sofie.

So a quick one on the VAT refunds, do we have any visibility if we will get more VAT refunds in Q1? Or we should expect assume no VAT refunds this quarter?

Well, now we have received all the years. So it's only the kind of ongoing, and we have not said anything further, but it is about submitting that and then receiving an answer for that. So therefore, it's fair to not assume that this will continue. But of course, we have the year 2024 still, but that we have not commented on.

So kind of, we should assume no VAT refund in Q1?

I mean, yes, exactly. So we have communicated all the amount that we have received. So it's -- and then we will let you know when the last one gets submitted, but we are not yet there.

Okay. Okay. And then the Lithuania banking tax that has been abolished. Can you just remind us how much it was in Q4?

Let's see if I have the Q4 number for Lithuania in front of me here. In Q4, we had SEK 163 million.

Okay. And then my final question. You mentioned on the commission expenses that they are impacted by higher costs to reform the payment system in Sweden. How should we think about this commission expense? And is it just a Q1 impact? Or should we expect the impact to continue throughout 2026?

No, the way we spoke about it in the fourth quarter is because you've seen the increase during 2025. So there was a difference -- if you look at the beginning of '25 and if you look at the end of '25. So it's more that the run rate has now come up and is higher. So if you were to compare to Q1 last year, you will see a difference. And I think that was the point that our CFO wanted to make that this is a higher run rate. And let's move on to Andreas.

First question on your rate sensitivity. I mean we have a situation where the market rates are moving sharply, but policy rates haven't moved at all yet. Could you tell us your different NII in Sweden and the Baltics, how big portion of the sensitivity comes from market rates compared to policy rates? That's my first question.

Good question. I might have to maybe come back to you on that one. I mean we have the rate sensitivity as we usually presented in the fact book and where you see where the different components are, of course, policy rates are a big part of that depends on how we look at it. But maybe it will be a good timing for us to come back to that in the Q1 report as we now are. We were hoping to be in a place with more stable rates, but we're now back to more volatility in the rate cycle.

Okay. Yes, let's please go into that in the Q1 call. Then on Entercard, if you now move it to available for sale, should we already now make an assumption of the different P&L lines that falls out? So if we had it 1 month in December and now it should be nothing into the P&L? And is that now one line accounted? Or how should we look at that?

I think it's fair to say that we will come back with as much detail as possible on that in the Q1 result to be as helpful as possible because so far, it's been quite limited information from Entercard side on these different portfolios.

Sure, Maria. But you can imagine, I mean, if you're selling SEK 10 billion, SEK 15 billion of loans and if you're going to not include NII in the [ NII line ], your consensus number is going to be all over the place. So I think it's quite helpful if maybe not in this call, but you'll let us know before estimates are set if it's going to be on NII on other lines. Otherwise, you might beat or miss quite significantly.

Absolutely. We'll try to be as helpful as possible on that.

And then just back to the resolution and bank taxes in Latvia and Lithuania. I mean the bank tax in Latvia in Q4 was 0, right?

Yes, correct.

And that's not coming back now? Or what did you say that Latvia is on the second year you said, but if it's 0, is it going to go back up again, while Lithuania is, of course, continue to be at a high level?

Yes, exactly. So the Latvia still has it for 1 more year. But because there are these effects where you have to precalculate and then there are these discounts that you can reach, where if you reach a certain volume, you get a discount. So that means that it was adjusted to 0 in the last quarter. So you probably need to look at an average for the year rather than an individual quarter. So these are things we can't count on because we're not steering on that. We're not trying to reach a certain bucket of volume in this calculation. But as it happened, we did and then we got the discount at the end of the year. Let's see if we have another question. It doesn't seem like it, but we remain available for yet some time after Easter as well as we go into silent period on 13th of April, and our Q1 report will be released Wednesday, 29th of April. So thank you so much for attending the call, and we wish you all a nice day.