Nordea Aktie

Good morning, and welcome to Nordea's first quarter 2026 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 first quarter of 2026. It has been an unsettled start to the year once again. The conflict in the Middle East that escalated in March has created further geopolitical uncertainty and is driving volatility in the financial markets. It also has implications for short-term energy supply and inflation.

Sustained disruption to global energy markets may dampen economic activity, including in the Nordic countries. While the situation continues to evolve, it's something we are monitoring closely. Fortunately, the Nordic countries have a strong track record in navigating uncertainty.

The stability, fiscal strength and global competitiveness of our home markets make them some of the world's best places to live and do business. This is something I have talked about a lot in recent quarters. It is, in addition, worth noting that our region is also structurally well positioned in terms of energy resilience.

This is due to its substantial renewable capacity and Norway's role as a major energy exporter. We clearly saw the benefits of that stability during the last energy crisis in 2022.

As for Nordea itself, we are uniquely diversified across these attractive Nordic markets. Years of relentless strategy execution have made us stronger and more resilient than ever and leave us very well placed to support customers.

That strength showed again in our first quarter performance with solid growth in business volumes and high profitability. Return on equity for Q1 was 15.4%. The implementation of our 2030 strategy has started well.

One of our key strategic priorities is growth. And here, our agenda is focused on 6 distinct growth areas. We are seeing -- we are seeing good early momentum in Private Bank, Life & Pension, small businesses and cross-sales. We're also encouraged by the steady progress we are making in Sweden and Norway.

Our two other strategic priorities are to strengthen our customer offering and make more effective use of our Nordic scale. And execution on these is likewise off to a good start.

During the quarter, we launched a unified Nordic corporate credit and lending platform. We also took further steps in our deployment of a more scalable and resilient payments platform, all part of our drive to enable outstanding customer experiences and superior efficiency.

Let's now take a look at the first quarter and some of the financial highlights. Our return on equity was strong at 15.4%. Earnings per share were EUR 0.36, up from EUR 0.35. We were especially active in our corporate customers, with our corporate customers increasing lending by 11%.

Corporate deposits went up 2%. Households were active too though to a lesser extent. Mortgage lending was up 2% and retail deposits were up 5%. Asset under management increased by 9% to EUR 464 billion. Net fee and commission income was strong, up 6%, driven by growth across fee types.

Net fair value result was down due to lower market making income. That followed the sharp increase in interest rate expectations during March as the Middle East conflict intensified, which led to exceptional losses across certain desks. Total income was resilient with a 2% decrease primarily reflecting lower net interest income due to policy rate reductions and lower market making income.

We continue to manage cost with discipline. First quarter operating expenses were flat before foreign exchange effects. Our credit quality remains very strong.

This quarter, we fully deployed the remaining portion of the management judgment buffer we created during the COVID-19 pandemic. We reallocated EUR 116 million to further strengthen our modeled provisions, and we released the remaining balance of EUR 160 million, which was deemed surplus provisioning.

Excluding the release, net loan losses and similar net result for the quarter totaled EUR 61 million or 6 basis points. Our strong capital generation continued and our CET1 ratio was 15.7% at the end of the quarter, which is 1.9 percentage points above the current regulatory requirements.

With a solid start to the year and despite the increase in uncertainty in the latter part of the quarter, our full year 2026 outlook is unchanged. We expect a return on equity of greater than 15% and a cost-to-income ratio of around 45%.

Our Q1 net interest income was lower, as expected, reflecting the policy rate reductions and lower lending margins. Importantly, we moved beyond the low point in daily NII and returned to growth during the first quarter. This was supported by both higher business volumes and our deposit hedge.

Among corporates, we increased lending by 11% year-on-year, with all countries contributing. This was the first time we have had double-digit year-on-year growth in any quarter since 2022, and it underlines how Nordic businesses are very adaptable to the changing environment and are showing willingness to invest.

Corporate deposits were up 2%. That's modest growth, which we likewise interpret as a sign of increased risk appetite. Household customers also increased their activity with mortgage volumes up 2% from still muted levels. The housing market is picking up, though only gradually.

As in previous quarters, households have been more focused on strengthening their savings and investments. Retail deposits were up 5%. The deposit hedge meanwhile, continued to provide support to our income year-on-year, improving NII by EUR 55 million. Our net interest margin for the quarter was 1.57%, unchanged from Q4.

Net fee and commission income was up 6% year-on-year driven by growth across different fee types. The higher savings fee income was driven by the higher average assets under management and the positive net flows in investment products of EUR 1 billion, even with nearly EUR 2 billion of outflow related to dividend payments.

In our Nordic channels, we continued to see very good customer intake in private banking with solid net flows. In our international channels, we delivered positive net flows again despite increased investor caution.

Brokerage and advisory fee income increased, supported by stronger debt capital markets activity, and strong income growth, 11% from our secondary equities business. Higher customer activity also drove growth in payment and lending fee income, and we were particularly pleased to have driven good performance in the strategically important cash management area.

After a strong start to the quarter, March brought extremely volatile market conditions driven in particular by the developments in the Middle East, the resulting sharp increase in interest rate expectations resulted in losses in our market making operations in March, undoing the strong start to the year.

Consequently, net fair value result was down 22% year-on-year, reflecting the impact from those March market making losses, which we consider to be an isolated one-off. Customer activity was strong through most of the quarter, particularly in FX and interest rate hedging as clients actively manage risk. Activity in equities and securities financing also held up well.

Cost development in line with our plan and were flat year-on-year, excluding foreign exchange effects. Our strategic investment spend was stable and we are managing costs with our usual disciplined approach, taking the market environment into account.

Including FX, costs were up 2% year-on-year. The first quarter cost-to-income ratio was 45.5%, which was slightly higher than planned due to the exceptional market making losses in March. The underlying cost-to-income ratio was below 45%, and there is no change in our guidance that we expect to be around 45% for the full year.

During Q1, as part of our 2030 strategy, we announced restructuring initiatives to change the composition of our workforce. With our Nordic scale and with the impact of AI and process optimization, we expect to have fewer employees in the future than today.

The restructuring initiatives are set to affect around 1,500 employees across the group during '26 and '27 and from 2028 should deliver annual cost reductions of at least EUR 150 million. This is a part of our 2030 strategy and is in line with the target we communicated at our Capital Markets Day to deliver structural gross cost reductions of EUR 600 million by 2030.

In connection with these initiatives, we booked restructuring costs amounting to EUR 190 million this quarter. This has been reported as an item affecting comparability and is excluded from our 2026 financial outlook.

Our credit quality continues to be very strong. This quarter, we fully deployed the remaining portion of the management judgment buffer we established 6 years ago during the COVID-19 pandemic.

Over this period, the buffer has been continuously assessed in light of the macroeconomic conditions and in the knowledge that our loan portfolio performance has been consistently strong. Risk has been assessed to be largely reflected in our modeled provisions without the need for additional management overlays.

As a result, the buffer has been gradually reduced and is now fully deployed. On the remaining balance, we reallocated EUR 160 million in the quarter to further strengthen our modeled provisions, while EUR 160 million was deemed surplus and was released.

Consequently, net loan losses and similar net results amounted to a reversal of EUR 99 million. Excluding the release, net loan losses and similar net result for the quarter totaled EUR 61 million or 6 basis points.

We continue to have a strong capital position. At the end of the quarter, our CET1 ratio was 15.7%, 1.9 percentage points above the current regulatory requirements. Our strong capital position and continued robust capital generation support lending growth and continued shareholder distribution.

During the quarter, our AGM approved a dividend of EUR 0.96 per share for 2025, which was paid to shareholders in early April. Additionally, the AGM granted the Board authorization to decide on the distribution of a midyear dividend in 2026, which would correspond to approximately 50% of the net profit for the first half of 2026.

Turning to our business areas and starting with Personal Banking, where we maintained solid business volume momentum and customer activity. Despite the market volatility, customer savings and investment activity remained at high levels and household prioritized, strengthened their financial positions.

As a result, deposits increased by 5% during the quarter. Net flows were EUR 0.2 billion, still positive despite the market turbulence, though lower than in the previous quarters. Housing market activity continues to gradually pick up but remains slow.

Even in this environment, we increased mortgage lending by 2% year-on-year. In Sweden, we further strengthened our position in the quarter, capturing mortgage market growth well above our own back book market share. Customer engagement with our digital services continued to increase supported by our expanded offering of self services features in our mobile app and online.

App users and log-ins were up 4% and 6% year-on-year. And we are also seeing a growing share of savings and investment activity through digital channels. One of the areas we are targeting for growth is cross-sales. And we are seeing good traction, supported by successful product launches in savings and by more automated processes for account opening and onboarding.

Net fee and commission income increased by 6% driven by higher payment cards and savings income and net insurance result increased by 46%. Total income decreased by 5% year-on-year, driven by lower net interest income and the lower policy rate environment.

Return on allocated equity with amortized resolution fees was 16%, and the cost-to-income ratio was 53%. In Asset & Wealth Management, we maintained solid business momentum and delivered a resilient investment performance in difficult markets. Customer acquisition remains strong, reaching record highs in both Denmark and Finland and supporting net flows of EUR 1 billion in Private Banking.

In our international channels, we recorded positive net flows again in the first quarter despite increased investor caution due to the Middle East conflict. The wholesale distribution business has shown resilience since the middle of 2025 and positive flows in the current environment testify to the attractiveness of our product offering.

Net flows in Life & Pension were EUR 1.7 billion. We maintained good momentum across our 4 markets and further reinforced our position as the Nordics' second largest player. Gross written premiums in the quarter amount to EUR 4 billion, up from EUR 3.7 billion a year ago.

Assets under management increased by 10% year-on-year to EUR 185 billion. This was driven by market performance and the positive flows despite the sharp decrease in investor confidence in March. We continue to progress with our strategic ambition to offer an outstanding savings and investment experience across the region.

Among other enhancements made in Q1, we are now using AI to provide timely and relevant information to our customers about their investments they hold. Total income was up 1% year-on-year, with net fee and commission income rising in line with the higher asset under management.

Return on allocated equity with amortized resolution fees was 38%. The cost-to-income ratio improved by 1 percentage points to 43%.

In Business Banking, we maintained good business momentum and drove strong volume growth. Lending volumes increased by 8% in local currencies year-on-year, led by continued growth in Sweden and Norway and stronger activity in Denmark. Deposit volumes also grew by 8% with all markets contributing.

We continue to strengthen our digital offering across the Nordics, a key enabler of our growth ambition in the small business segment. In Q1, we launched a digital onboarding platform in Denmark and Norway, making it faster and easier for customers to get started with Nordea. A wider Nordic expansion is planned for the coming quarters.

We also kicked off the Nordic rollout of our new Business Insights service, which helps small businesses manage liquidity and cash flows more effectively. In Sweden, this was fully launched in Q1. The launch was well received, and the service will next be rolled out in Finland and eventually to all countries.

Total income was unchanged year-on-year, as higher volumes and ancillary income were offset by lower deposit income. Return on allocated equity was 18%. The cost-to-income ratio was 45%.

In large corporates and institutions, we drove strong business volumes as we supported our customers in the volatile market environment. It was a solid quarter on most income lines, but extreme market volatility in March negatively impacted our market making result, driven by the unexpected sharp increase in interest rate expectations.

That impact, which we consider to be an isolated one-off, led to a lower net result from items at fair value year-on-year, even though customer activity in advisory and risk management was otherwise strong.

Lending was up 14% year-on-year with all markets contributing. Strong demand from our secondary equities offering and higher lending fees and bond issuance activity supported 14% increase in net fee and commission income. Deposit volumes decreased by 5% year-on-year, but increased by 2% compared with the previous quarter.

Debt capital markets activity remained high despite the market volatility and we maintained our #1 position for Nordic bonds and Nordic loans year-to-date. We have arranged more than 190 debt capital markets transaction so far this year, so off to a strong start.

Primary equity market activity remains subdued, but our secondary equities business grew by 11% year-on-year. Total income was down 9% year-on-year, driven by lower net interest income and the decrease in net fair value result. Return on allocated equity was 15%. The cost-to-income ratio was 41%.

In summary, this was a solid start to the year despite challenging financial markets later in the quarter. While there is uncertainty around global growth, confidence among Nordic businesses has not wavered, underlining the resilience of our region.

Resilience is a critical asset and one that Nordea also demonstrates. As a large and well-established group, we are continually investing in capabilities that makes us even stronger, including in digital services, technology, security and risk management.

We're also very well equipped to support customers and all stakeholders, thanks to our unique market position and presence, leading offering and strong balance sheet. The higher business volumes in both lending and deposits are likewise encouraging and will support our income.

Our outlook for the full year 2026 is unchanged. We expect to deliver a return on equity of greater than 15% and expect our cost-to-income ratio to be around 45%. Our vision is to become the undisputed best performing financial services group in the Nordics. Thank you.

Operator, we are now ready to take questions.

[Operator Instructions] The next question comes from Gulnara Saitkulova from Morgan Stanley.

So on NII, if we assume that Q1 marks the trough for NII, could you walk us through how do you expect the trajectory to evolve from here, particularly in a scenario where the rate hikes materialize, and the key drivers between the hedge contribution pricing and the volume growth? That's the first question.

Gulnara, thank you for the question. So let's set aside potential rate hikes for the moment. What we -- what's driven the, I guess, the -- moving on from the trough in NII is that we've been able to add volumes.

And how we proceed from here for the rest of the year is really a question of volume development and margins. And we're pretty confident that we'll continue to add volumes over the course of the year and that's going to help move NII forward.

Margins are a bit more difficult. We continue to see pressure on the margin side, particularly on household, and as we've said consistently, a return to confidence that drives higher volumes is most likely the answer to that. So we're pretty constructive on NII continuing to improve. I think the outlook for the full year is kind of in line, maybe slightly better than 2025.

Now rate hikes, first of all, they've got to happen. So we need to see policy rates actually move before we see that impact our NII. So let's see if that happens. our latest market expectations are that these are going to impact the second half of the year rather than anything in Q2.

And then in terms of hedge, let's -- we'll work that through in terms of the timing and extent of rate hikes, not expected to see anything dramatic in terms of impact in 2026. So overall, provided we don't see something untoward on the margin side, you can expect to see a gradual improvement in our NII.

And a related question on the volumes. As we move through Q1 into Q2, have you observed any meaningful changes in the customer sentiment, particularly in the light of the geopolitical tensions in the Middle East? And given the current backdrop, how are you thinking about the loan and deposit growth across your markets into 2026?

This is Frank speaking. So I think our customers in the Nordics and across the countries has -- they have acted quite calmly, pushed through the deals. They have been active. There might have been a couple of weeks where it was a bit surrealistic what happened and how the rate changes and so how dramatic it went.

But there has been no change in behavior. And I would say that now we're talking about the, of course, the first quarter, but the end of the quarter and the beginning of Q2 has showed good activity.

I think we have -- and we have been speaking about it quite a long time that there comes a point of time where you just have to accept as a business leader that we are living in times where we will have to cope with a lot of volatility and uncertainty and unpredictability, but we cannot wait for -- continue waiting for the perfect moment.

We have to push now for growth our investments in the different strategic parts and whatnot. So I think that's what you see now. We -- of course, we are not forecasting 11% growth year-on-year on corporates rest of the year. But there's no indications that it will slow down significantly right now.

The next question comes from Magnus Andersson from ABG SC.

Just a follow-up there on the -- I think the corporate lending growth is what is striking all of us. I mean, in Business Banking, adjusted for currencies, you grow by more quarter-on-quarter than the market is growing year-on-year. And on the large corporate side, I guess, the numbers are not -- it's actually not adjusted for FX, but still, I mean, Sweden is super strong.

So could you say anything about sustainability of these growth rates on a quarterly basis. And also, I mean, you mentioned the new onboarding platform. It is Norway and Sweden growing, which you talked about at the CMD, but just the quarterly trajectory looks quite stunning.

And my second question is just on capital and share buybacks. You didn't launch a new program now. Is it because the previous program, which was just finalized, was expected to run until the 8th of May. And therefore, we will have to wait until mid-May before potentially you launch another program.

Thank you, Magnus. Let me take the first one and then Ian, the second one. So yes, of course, the growth rates of 11% within corporates is a high number, and I don't want to commit to that number each quarter going forward. But let me say in the following way.

So when growth is higher than expected and when we have larger credits, I get an overview on who they are and what is the purpose. And it looks very stable, honestly. It's super strong names. It's customers that we have been working with for a long time.

And then it can be -- you're just waiting for the opportunity to enter or we have agreed about doing something more together and so there's not really any silver bullet or any single deal that has pushed it very high. So that's one.

The second one, which is very positive, is that in a more broad based business banking. It's actually 3 out of 4 countries that are growing quite significantly. And it's a lot of different deals. I think what we do see now as well is that we start to see some of the proof points of our Nordic scale. So we have implemented, as you alluded to, the credit platform. We are making progress on our global payment platform as well.

These initiatives help in the speed, for example, on onboarding, and onboarding for the customers, especially the smaller ones on the corporate side, is super important. That is helpful. So we actually also have a data point we have not talked much about, but we have a data point now on our small businesses. We have, for years, struggled with some outflow. Last year, we turned it and this year has actually increased quite nicely.

And so I think the momentum is good. There is no silver bullet. 11% is a high number. So don't put 11% in year-on-year or quarter-on-quarter all the time, but I cannot see why we should not continue to show nice growth within the corporate side this year with the information we have right now. Ian?

Yes. And you're not feeling that you're sacrificing anything in terms of margins to achieve this growth?

I think that we are well positioned to continue to delivering greater than 15% return, and that goes for the corporate business as well, and we are not accepting any deviation to our return targets. And of course, the business knows that. So I guess, I'm answering -- I'm happy with what I see right now.

Magnus, it's Ian here. So you're all familiar with how we think about buybacks, and there's absolutely no change. And as I look at the market expectations for 2026 in terms of buybacks, they look -- it looks like a pretty sensible estimate versus how we're thinking about it. So no interruption to the progress there.

You're right, the EUR 500 million program we launched before Christmas, which is -- we hand over the control of that to the broker in terms of levels of execution and things finished a little earlier than planned.

Q1 was an interesting quarter from a capital perspective. As you see from our disclosures, we generated capital as normal, as you'd expect Nordea to do. And quite a lot of that was deployed into growth. And we saw a little bit of elevated market risk capital requirements, as you can imagine, emerging from what happened in March.

So it's one of the first times where we've seen those dynamics where we've deployed the capital generated into growth. We're still really comfortable with our plans for the rest of the year in terms of capital return to shareholders, and I say, I think the market's got that right.

We still see opportunities for growth out there. And so we'll work through Q2 and make our decision on the right time to do another buyback. And that's really when we've got excess capital that we're prepared to trim.

So things are proceeding as normal. I don't expect anything in the very short term but you can expect us to continue with our regular, consistent buybacks during the rest of '26.

The next question comes from Andreas Hakansson from SEB.

Well, I really want to talk about capital, but since Magnus covered that, we could move on. I think it's quite refreshing that we are talking about growth rather than just capital distribution.

But Ian, you mentioned that retail is still a bit tough on the margin side. Could you quickly because we -- in Q4, we were a bit worried about the NII in Norway and then we were a bit worried about retail asset quality in Finland. Could you just briefly go through the 4 countries, what you see in terms of volumes, margins and asset quality in each of the countries, please?

So let me start with -- and Andreas, let me start with asset quality, take that one off the table. No issues or concerns there at all. And so we can set that aside. I think the growth picture in each of our markets is, as always, a little bit different.

We still -- as you see from the publicly available information, we're still the market leader in Sweden in terms of capturing front book share. And in our other countries, things are a little bit slow. We do see underlying growth in Norway, particularly towards the end of the quarter.

So -- and this is really a function of the market and its slowness. Frank referred earlier in the conversation to the still reticent consumer, I guess. We had -- our economist certainly had high hopes towards the end of last year that, that consumer confidence would increase and that would lead to higher investment and consumption. We've had an unsettling end to the first quarter that I think holds that back a little bit.

And then in terms of what we're seeing on margins, still intense competition for those smaller volumes throughout. So we're having to be very much on our game in terms of managing our pricing. We've seen some positive price moves in Sweden, but we will have to see if that feeds through into margin improvements. And then very competitive in Norway, particularly among the savings banks. And so it's tough to increase margins in there.

When it comes to the Danish market, you'll have seen some of our pricing moves, which is in response to the competition there. I think we see a good response from customers. And we're hopeful that feeds through into the numbers and the performance, and then Finland, as market leaders there, we really want to see the market move a bit more in order to see whether we can improve our NII.

So that's on the lending side. Deposit is going well. Deposit margins are stronger than we had planned for and deposit volumes are good, and that's a really helpful contributor to NII. But there's no doubt that it's a tough market on the retail side and people are fighting for every, I was going to say, penny, but we don't have those in this market, every krona.

And I mean...

Sorry, but the sentiment in Q1 is better than it was in Q3 and Q4. So it's going slower than we would hope, but it is building somewhat and there's -- we sense there's more activity across the board. But it's different, as Ian mentioned, between the countries.

And even if we don't see central banks hiking across the board until maybe late in the year and next year, we've seen that the IBOR rates in all markets have moved up quite sharply. To what degree is that helpful for your NII in the near term?

So it helps a little bit on the treasury side. And I can imagine that it might encourage all of us to look at pricing because essentially that's what drives a big chunk of the cost of funds for us. So I can see that it might encourage a slightly positive development, but we really have to see the policy rate changes come through for it to start to move NII meaningfully.

The next question comes from Martin Ekstedt from Handelsbanken.

So first question, the staff reduction program that you've announced in Q1. So once implemented, this will deliver around EUR 150 million of annual cost savings, right, which is about 25% of the EUR 600 million of gross cost takeout that you mentioned that you see in November.

So as such, I was just wondering, should we expect 3 more cost reduction programs of roughly the same size in the years leading up to 2030, i.e., the end of your CMD plan? Or will other parts of the EUR 600 million of gross cost takeout be less lumpy, say, and less noticeable and come from other areas? That's my first question.

Yes. Martin, thanks for the question. No, we're pretty clear that we don't expect to launch another restructuring program. We tested ourselves pretty hard before launching this one about whether it was the right thing to do, both in terms of the way we manage our workforce and other factors. The reality is that we will need to reshape the workforce, particularly in technology. And that's where the focus of the restructuring has been.

And everywhere else, our cost reductions are expected to come from sort of regular management of FTE because we will see FTE come down, but that's not going to come through large restructuring programs and other initiatives such as infrastructure simplification and AI.

And of course, the restructuring is big. It's a very important contributor. And those EUR 150 million of cost savings, yes, they're 25% of the EUR 600 million gross, but we think of it as almost 40% of the EUR 350 million net that we're committed to. So that's a long way of saying what I said at the beginning. No further cost restructuring programs.

And for the remaining part -- Martin, it's Frank. So for the remaining part, of course, there are firm plans owned by a DLT member for each stream that will lead to these cost reductions needed to deliver on our promise of EUR 600 million gross, EUR 350 million net. So of course, there is an execution risk, but we know what to do, when to do it, how to do it, and we'll follow that development very, very thoroughly.

Okay. Very clear. And then my second question then around the release of the management overlay buffer in full. That surprised at least me a little bit that you released it in full already in Q1 against the backdrop of increased geopolitical uncertainty.

So could you tell us a bit more about how your thoughts went around provisioning in front of Q1? And what scenarios, if any, could prompt you then to start building up that buffer again?

And additionally, perhaps, if I may, in what sectors or segments was collected provisioning strengthened by that portion of the management overlay that was used now rather than released?

Yes, it's an important question, Martin. So first of all, we wouldn't be releasing if we thought we had any prospect of having to restore it at any point. The key thing is having looked at what remained of a provision that was established for COVID 6.5 years or 6 years ago, we concluded that there was a portion that was clearly surplus.

And clearly surplus, not just in respect of its original purpose, both from a thorough review of the portfolio, looking at stress scenarios, looking at our estimate of the impact of the energy prices caused by the escalated conflict in the Middle East.

So we've looked at this from every angle exactly as you'd expect. And each time we came up with of those EUR 276 million of provisions, we would keep EUR 116 million and deploying those into our IFRS 9 model. So no longer a sort of separately categorized provision and that EUR 160 million was clearly surplus. And then in those circumstances we released.

Now releasing provisions, we've been pretty clear, I think, that in 2026, we would take action on the management judgment buffer. We think it's now the right time to move on and we maintain healthy provision levels, good coverage and have addressed any small areas of concern in the portfolio but these have been small in terms of how we deployed that EUR 116 million.

Okay. So the EUR 116 million was not earmarked for any particular part of the portfolio?

It has a number of different components. My point is that it's not -- the bulk of it is not targeted at anything specific. It was really a granular EUR 10 million here, EUR 15 million here, that kind of thing. So...

The next question comes from Markus Sandgren from Kepler Cheuvreux.

So we've been talking a bit about cost savings. I was just curious, now it seems like there is new AI tools for cyber criminals. Is that something that you have -- that is changing your view on cost development? Or is that already taken care of, so to speak, in your program for IT development?

And secondly, I was thinking about also credit losses, as Martin was alluding to. Now with the strengthening of the provisions, the 10 basis points that you have in your business plan, is that just a conservative number? Or is that what you actually think you will have in the coming years?

This is Frank. Thank you for the question, Markus. So the first one regarding cyber. I would say there's nothing new here. It would be wrong to say that we fully understood the Anthropic question and understood what it will create.

But we have been all the time, very clear about that AI will grow and it will accelerate the growth when it comes to quality, and also what it would be able to do for us, for our customers, for our efficiency, for our shareholders. And so -- but of course, misused, it can also be used again against any company, any organization, any country you want.

And I think that what we see here is an example of that. That tool was not built for criminals, but it can be misused by criminals. And in wrong hands, it appears to be quite strong. We have always planned for that.

And the way we see it is that you have to continuously improve and strengthen your skills and your defense within cybersecurity, information security, you have to believe that the counterparts or the criminals will have the same capabilities or even better than yourselves, which means that you have to continuously invest significantly and that is what we have in our plan.

So I think no big change. I think it's just not a proof point how fast AI is developing and you must embrace it, you must deploy it. Doing so, you will get a tool that can be helpful for different purposes, and it can be defense, of course, as well. That's the best I can say. Ian, over to you.

Yes. Markus, so the way we think about credit losses is we have guided as 10 basis points as the, I guess, long-term expectation. I'll come back to what expectation means in a moment, but of the portfolio loan loss levels. Of course, within that, you have our household loan losses, which are much, much lower than that. And the corporate loan losses that from time to time are double digit, so between sort of 10 and 15 basis points.

The reality is, over the last 6 years, we've always been well within our 10 basis points, which says that the portfolio has been performing well and largely due to much lower levels than normal of corporate losses. So the corporate portfolio has been extremely robust.

At the Capital Markets Day last year in November, I said that despite that experience, I don't think I can stand here and say that we would always expect to see such low levels of losses and so renewed our guidance for 10 basis points. But we'll always strive to keep it well within that. So 10 basis points is the guidance. It's a composite for the full portfolio performance but our track record is much better than that.

The next question comes from Shrey Srivastava from Citi.

My first is if we do see 1 or 2 rate hikes materialize this year, how would you expect pass-through behavior would be to deposit customers relative to the much larger hiking cycle that we had a few years ago.

And my second one is, we obviously saw the news about Avanza's Danish expansion citing 5 years to be profitable. Is this something you factored in to your business plan? And if not, how does it affect your outlook?

Shrey, it's hard to prejudge what banks will do when faced with rate hikes, but I know you're asking for my opinion rather than a prediction. I can't see why -- I mean, particularly at these levels where we've looked at what we saw in the last rate hiking cycle, there was a reasonably high level of pass-through on rates at these levels.

When they were getting much higher sort of north of 350, that kind of thing, a much different story because I think you end up creating an unsustainable position. So I think it's reasonable to assume a fairly high level of pass-through at these levels. But we'll have to see when they actually happen.

And in regard to Avanza, fully as expected, no surprises. We have been planning for more of the platform players coming, and we are investing heavily in that area already and will continue to do so. So I'd say that, no, and it doesn't really make any difference to us.

The next question comes from Namita Samtani from Barclays.

The first one, just on net interest income. Can you help me think about it beyond 2026, please? Because the rate sensitivity for 2027 on Slide 19 looks flat based on the first quarter, and consensus has net interest income going up 5% in 2027. So do you think the volume growth can more than offset margin pressure and the negative impact from the hedge?

And my second question, I read this article in Borsen about Nordea's own employees opting out of having a pension with Nordea in Denmark citing IT issues related to integrating the acquisition of Topdanmark a few years ago. I just wondered what's being done to fix this? And why is the pension side in Denmark not as slick as what we can see, for example, in Sweden?

Let me take the first question about the paper that you read in -- apparently in Copenhagen. So our acquisition of Topdanmark's Life & Pension business is fully aligned with our plan. That business is an SME business, and we wanted to be an SME business.

It has taken some time to get it separated from the seller, which we knew, but it has been difficult from the seller to separate it as it should be delivered on its own legs and not integrated as the seller's systems.

That was delivered, as I remember, 12 months ago, and since has the job been about integrating it fully into our systems, and raising the quality and, of course, of the interface, so it meets the Nordea standards. And they are high, much higher than what this company came from on digital capabilities, which we knew. So no change.

Then there are some that are, for example, brokers that would like to see that we were attacking and more and more active on large corporates in Denmark. But that's not our focus, and it has never been our focus with this -- our intention with this company right now. So we're actually very happy with the acquisition, and it progressed well.

It has taken longer due to the seller's problems by separating the company, but we have full control now and are working with the plan to get it up to the standard that you should expect from Nordea. Then it might be that we one day will go to the large corporate sector as well, is very competitive, profitability is low.

It might be we will go there. And when we will potentially go there, of course, we should offer our own employees to be -- to put the pension scheme, which is a group scheme for Danish employees to that company. But it has been fine with the current company for many, many years.

So -- and we are not going to change anything for the sake of our own pension scheme as we are happy with that. So that's the facts around that acquisition. I think it was -- it came out a little bit different in this paper. Ian, over to you.

Yes. Namita, so on 2027 NII, we're not ready to actively plan for NII improvements and rate hikes at the moment. So I think it remains a scenario. And I think our Slide 19 is a good way to model the impact of that scenario. We've always been, I think, fairly consistent in showing those, the impact in both the first 12 months and then beyond of a 50 basis points movement.

So our guidance has always been based on how we thought about things at Capital Markets Day last year, which is that the drivers of net interest income will be volumes and margins. We were planning for volume growth, both on the asset and liability side and margin stability. So we weren't baking in improvements in margin and a fairly neutral position on the hedge.

I think that's still the right way to look at it. We do see, as I talked about earlier, some quite sort of tough margin pressure on the household side and we're absorbing that at the moment. But I think when we look out to 2027, growth in volumes on both sides of the balance sheet and margin stability is probably the right way to think about it.

And operator, we'll take the last question now.

The next question comes from Nicolas McBeath from DNB Carnegie.

So I was wondering, given the more positive view on productivity improvements that you mentioned through Q1 from AI, I guess, in particular, in software development, do you see potential to speed up the Nordic scale initiatives for these processes that you talked about in lending and payments, for instance, as we went through at the CMD last year? And do you see potential then to reach the cost-to-income target for 2030 before the time line given that you seem to become more bullish on this technology?

So it's a good question, right? So -- and I cannot give you a firm answer. But what I can say is that the quality of AI is increasing fast. And what also increased very fast is, I think, most companies understanding of where they can apply AI -- deploy AI.

And when you look at the use cases we have as a foundation for delivering on our Nordic scale benefits, they are on -- we are on plan and we will keep being on plan. But I do think that we can do even more.

It's very difficult not to conclude with what we see when it comes to quality and also different use cases we continue to learn more about. It's very difficult to conclude that we don't have more optionality than we had previously.

So then the question is how fast can you deploy it and how fast can you take out the cost. That's still up to be concluded, I would say. But it clearly looks even more positive when I look at it and we look at it right now compared to just half a year ago.

So we are leaning in. We also have to ensure that we understand the risks, and we are not taking too much risks, but we're leaning in and we are pushing now. And I think when I get questions about it, how I see it, my advice is embrace it, understand the risk, cope with the risk, but embrace it because it is quite impressive what it actually can do for you nowadays.

All right. I appreciate that. And then just a quick final question, if I may. Given the improved market conditions so far you've seen in Q2 and the decline in interest rates, would you expect much of the market making losses that you mentioned in March to be reversed in the second quarter?

Ian?

Yes. So Nicolas, what happened in March was very much a sort of isolated performance matter on a couple of specific bits of our market business. So we talked about desks in the euro and SEK area. We sort of closed out positions where we needed to and moved on. So I think the real question is are we back to normal levels of performance in our markets business following that pretty disruptive market incident, and the short answer is yes. So we're back to performing normally.

All right. Thank you all for participating. As usual, just come back to us if there's anything that we can do for you. So thank you. Have a nice day.

Dear Nordea shareholders and everyone joining us today, welcome to Nordea management Q&A ahead of our Annual General Meeting 2026. My name is Tuomas Forsell, and I will be moderating this event. Today, we are hosting Nordea's first fully virtual Annual General Meeting. During the first part of today's program, we will have a question-and-answer session with Nordea's management. [Operator Instructions] We will go through as many questions as possible during the session. The formal Annual General Meeting will begin later today, shortly after this event. I will explain how to join the meeting at the end of this session.

With that, it is my pleasure to give the floor to Nordea's President and Group CEO, Frank Vang-Jensen for an overview of the financial year 2025.

Good afternoon, and thank you for joining us. In my remarks, I will reflect on the past year for Nordea and also outline the ambitions we have for our new strategy period. However, I would like to begin by acknowledging recent global events, including the difficult and troubling situation in the Middle East. Together with the ongoing war in Ukraine and tensions around global trade, the conflict in the Gulf has underlined how quickly geopolitical tensions can escalate. Given all the uncertainty, the world economy has proven stronger than many expected it would. That said, there are clearly significant risks to growth today, and we are following those developments closely.

In times like these, resilience is a critical asset. Fortunately, the Nordic countries are well positioned with strong economies, political stability and a proven ability to adapt in challenging global conditions. The Nordics are also home to thousands of companies, many of them our customers that have competed and continue to compete very effectively in global markets through their commitment to quality, innovation and by being agile. These enduring strengths give me confidence that our region, one we have called home for generations, will continue to perform strongly. At Nordea, we are also well equipped to fulfill our responsibilities to customers, stakeholders and society with advice and capital and with a broad range of financial services and a very strong balance sheet.

Our diversification is a key strength. Income, lending and profits are well balanced across sectors and across our 4 home markets. And 2025 again showed the value of this very well-diversified model. We delivered strong results, achieving high profitability and driving higher customer activity and business volumes. Consumer confidence across our home markets remained understandably muted and markets were flat or growing only slowly. Even so, we grew volumes faster than most of our competitors. Income was pressured by the subdued markets and lower policy rates. We offset some of that pressure with strong cost management, including adjustments to our workforce. Earnings per share were slightly lower year-on-year, though the decline was smaller than for many of our peers, again, reflecting the resilience of our business.

Return on equity was 15.5% for the year, the third year in a row, it exceeded 15% and placing us among the leading European banks. The performance reflects the momentum we have built since we set out to reshape the business 6.5 years ago. We now have 2 successful strategy periods behind us. And in the second, running from 2022 to 2025, we again met or exceeded all targets. Over this period, we worked steadily to strengthen our competitiveness, putting customers at the center and focused relentlessly on serving them better. And that work is paying off. We have grown our business with both existing and new customers. Today, we are also a digital leader in financial services in the Nordics and are recognized as being among the best in Europe in this area. Moreover, we have strengthened through significant strategic investments in technology, data and artificial intelligence, growth and risk management. These investments reinforce our position as a safe and trusted financial partner.

Growth has been particularly notable in our strategic focus areas, including Sweden and Norway. In Sweden, targeted initiatives has helped us reclaim a leading position in one of Europe's most competitive markets. Alongside further gains in mortgage market share, we grew in private banking and in small- and medium-sized businesses. And in Norway, we have complemented organic growth with bolt-on acquisitions and grown significantly in several areas. Across the Nordics, growth has been broad-based, including in savings and investments, life and pensions, private banking and corporate banking. The strong progress in recent years is visible in our financial performance. We are more profitable. Our return on equity of 15.5% in 2025 compared with a return on equity of 11.2% in 2021. We are more efficient.

Our cost-to-income ratio of 46% last year compares with 48.3% in 2021 despite significantly increased investments in strategic areas. Credit quality has remained strong throughout the period with loan losses of 5 basis points, well below the long-term average. And capital generation has remained very strong. All of this has enabled substantial shareholder distributions amounting to more than EUR 17 billion, well above our original target. Our momentum in the early part of the period led us to raise our ambition from EUR 15 billion to EUR 17 billion to EUR 17 billion to EUR 18 billion, and we ultimately delivered EUR 17.4 billion. All in all, we can look back on a successful period for Nordea.

By many measures, we are stronger now than we have ever been. Our progress reflects the hard work of our employees, and I would like to thank my colleagues for their efforts. I'm also grateful to our customers and shareholders for their continued trust and support.

We begin our new strategy period, the third since our repositioning from a solid foundation and with high ambition to be the undisputed best-performing financial services group in the Nordics. Looking across to 2030, our priorities are clear. The first is to grow faster than the market while sustaining high profitability, and we have identified 6 distinct growth pockets where we believe we can outperform. The second is to lead with a compelling customer offering and the best digital experience. And third, we will deliver Nordic scale benefits for superior competitiveness and efficiency. Nordea's size and scale are a significant advantage for both us and our customers because we operate across all 4 Nordic countries, we can spread costs, share systems and invest more than smaller or more local players.

While we have already benefited from our scale, much of the potential still lies ahead. Efforts are focused on 4 everyday banking areas that matter most to customers, mortgages, corporate lending, savings and payments. The aim is to be better, faster and more consistent in better in these areas across the Nordics using technology, data and AI. For example, in mortgages, customers want a fast and seamless experience, and we will have 90% of the mortgage loan promises automated. In corporate lending, credit decisions will increasingly be supported by automation and AI, cutting decision times dramatically, in some cases, by up to 90%. In savings, improved digital tools and more streamlined products will reduce the time customers spend in advisory meetings by up to half. And in payments, more modern and reliable payment systems will make experiences smoother and reduce the need for customers to contact us for support.

In many areas, we will replace local processes with Nordic ones. And in doing so, we will strengthen our competitiveness and deliver better customer experiences faster and at lower cost. Supporting the transition to a more resilient society is very much part of our responsibility and purpose. Building resilience means taking action on a range of environmental and social factors that matters to us, our customers and the societies we serve. When it comes to the environmental impact from our operations, we have made good progress. Among other of things, we have reduced carbon emissions from our own operations in targeted areas by more than 50% since 2019. At the same time, we recognize that our greatest impact comes through our lending and investment portfolios.

By supporting customers in their transition, we can help reduce emissions and strengthen environmental and social performance across our portfolios and make a real difference across the Nordics. Since 2019, we have reduced financed emissions in our lending portfolios by 44%. That keeps us firmly on track to meet our 2030 target and on a clear path towards net zero by 2050 at the latest. Since 2022, we have also facilitated EUR 235 billion of sustainable financing to our customers, demonstrating our ability to contribute to the societal transition. Building resilience also concerns our own workforce and people in the communities where we are present.

And as an employer, we are committed to ensuring inclusion, equal opportunities and a healthy work environment. We believe diverse teams and inclusive leadership lead to better decisions and stronger performance. And in 2025, women held 43% of roles across our top 3 leadership levels in line with our long-term target. Our financial ambition is high in the new strategy period. We are targeting a return on equity of greater than 15% each year through to 2030 and significantly higher in 2030 itself. Accordingly, we expect to deliver a return on equity of greater than 15% for the full year 2026. We're also targeting a cost-to-income ratio, excluding regulatory fees of 40% to 42% in 2030. From today's level of around 45%, reaching that target will be a gradual process with progress accelerating as structural and cost reductions come through.

While we do aim to improve our cost-to-income ratio every year, there are still uncertainties in the world today that cause us to be prudent in our guidance for this year. Accordingly, we expect to deliver a cost-to-income ratio excluding regulatory fees of around 45% for 2026. Rest assured that we will carry out our plan forward with the same dedication, discipline and focus that have guided us through our past 2 strategy periods. When you make a commitment, we stand by it. Once again, our ambition is to become the undisputed best-performing financial services group in the Nordics.

Thank you, Frank. We will now move on to your questions. Joining us today on stage are, Sir Stephen Hester, Chair of the Board. Sir Stephen; Sara Mella, Head of Personal Banking; and Martin Persson, Head of Asset and Wealth Management. [Operator Instructions] While we wait for you to type, Sir Stephen, let's start with a question about today's AGM. Why did Nordea choose to go with this fully virtual form?

Well, we're actually quite excited about the virtual AGM. And there are some, of course, if you like, modernity reasons for doing it. The whole world is moving in a digital direction. Companies all around the world are increasingly holding AGMs in virtual form. And one of our big business ambitions is to be the most digitally successful bank in the Nordics and the Nordics itself is a digitally advanced region. Secondly, of course, there's an environmental reason. We'd much rather the people who care passionately about the environment and otherwise have burned carbon to come to our annual meetings can make the same points to us by online instead of having to burn carbon to come here.

But more importantly than both of those reasons is really an issue about fairness or let's call it, democracy. And that is to say that Nordea is in some ways, unusual that we are the only genuinely pan-Nordic bank and not just in terms of where our operations are and where our history is, but also where our shareholders are. The great majority of other companies have retail shareholders, in particular, concentrated in one country. Ours are across the Nordics in very large numbers. And so historically, by holding physical AGMs in just one place, we have de facto disenfranchised the great majority of our retail shareholders who live in other places and practically are not able to travel to the AGM. And there's no doubt that when you have a physical meeting and an online combined, the people online are at a disadvantage to the people in the room.

And so we think that this way, our shareholders in Denmark, our shareholders in Sweden and our shareholders in Finland are on a completely equal basis. They can contribute to our deliberations, not just in this meeting, but together with this virtual AGM, we will have a program of shareholder events physically in each of our countries over the next year to make sure that for those people who want to physically interact with management and some Board members, there is that opportunity also in a more relaxed and informal way than the formality of resolutions. So for all of those reasons, we think it's a good thing to do. We hope it goes well. And we, of course, will collect feedback from everyone afterwards to see how we can keep improving in future years.

Thank you very much. Let's then move to the chat questions. And Frank, I think the first one here is a follow-up for your speech here. There, you, of course, mentioned the 2030 strategy announced at the Capital Markets Day in November. How has the investor reception been since the November event?

Thank you, Tuomas. The reception has been very positive. So we have had enormous many meetings since the announcement of our strategy at our CMD in November. And the short story is that the investors of ours appreciate the very ambitious plan, the targets and that it is a strategic plan and not only an operational plan that is very short term that basically just will short-term cost or something. This is making a plan that will make Nordea even more competitive and even stronger and even more fit for the future. And it's building on a foundation that is super strong, and we know what we are capable of delivering.

So looking at the targets, which has been very much supported, you will understand that they are very ambitious. So we are targeting a return on equity greater than 15% through the entire period and significantly higher in 2030. And we're also are targeting an improvement of our cost income from 45% to 40% to 42% in 2030. And finally, our ambition is to grow the company. So it's a combination of growing the company and making even more efficient. And that will likely lead us to above EUR 0.02 per share EPS. So that's an increase of 45%, 50%. So all in all, very well received.

Thank you, Frank. We have another strategic question, Sara, the questions I think this might be more for you. AI has been mentioned as a key part of the 2030 strategy. But what can Nordea customers then expect for their services? What are the improvements by AI in the coming years?

Thank you for the question. AI will support us to enhance customer experience and be faster and more efficient with our processes that will benefit customers. Three things that I could especially mention. First is personalization. So we will provide even more personalized services to our customers. In practice, that is more relevant insights and offers and guidance to our customers real time, meaning that on the spot, they need it. We will also have faster and faster responses and resolution for customer asks and needs. First of all, of course, with the conversational chatbot for the customers who enjoy that and like that and prefer that, but also with our advisers and customer service staff because we will have AI assistant supporting our advisers.

And then third thing to mention is that customers will experience more frequent new digital services and upgrades to our digital services as our software developers will also have AI supporting them. So therefore, our release cycles to bring in new services, it will be more frequent and more often. So overall, I would say, faster and smoother banking experience.

Let's Martin, then move on to you. We here have a question about recently, Nordea updated some of its sustainability sector guidelines. Can you explain the reasoning for these current updates? And are you planning to continue expanding sector targets also to additional industries?

Yes. I mean, first of all, we run overarching portfolio lending targets that's on financed emissions. So that's important to state first, where we have promised to reduce our finance emissions by 40% to 50% by 2030. And by end of 2025, we have already reduced by 44%. Remember that all sectors of lending is included in that target. I think we're quite unique in the banking sector to have that inclusion. To support that overarching target, we also disclose with transparency individual sector targets. We have now -- today, we have shipping, we have agriculture, we have residential real estate and oil and gas extractions. February update was a good example as the question stated, where we make further transparency and disclosure updates. We have an annual will or annual approach to the updates. We constantly strive to become better and better for all our stakeholders, and that we will continue with.

Let's take one follow-up question, Martin, on this as well. You mentioned the oil and gas guideline as well, there's a question, how does this guideline take into account the impact of oil and gas operations for the indigenous people in the Arctic?

Yes. I mean, first of all, we share the importance and sensitivity with and around Arctic, right? That is also why it's important for Nordea to state that we have reduced our financed emissions by more than 99% since 2019. We now have a total lending to oil and gas extractions of 0.001%. So 1,000 of a percent. That is -- and also, as I said, the update we did now in February, where we roll out the baselines from 2019 to '24 and the target from '30 to 2035. So we are constantly reviewing and updating and yes, to become a better bank.

Thanks, Martin. There are a few other questions on this topic as well. But for the sake of time, this will be addressed also later in the session. So let's move on to a few other questions now as well. So Stephen, this, I believe, is a chair question. How do you, in the future, want to balance growth of dividends and share buybacks in your capital policy?

Thank you for that question. And of course, our policies in terms of distribution are flexible. We can change them over time. But I guess the way we think about it is first of all, we want to have the best possible business we can have to service our customers. And so if it's possible for us to profitably invest in better services, better technology, whatever forms of investment, we want to do that. If we can meet our customers' needs in bigger amounts, if we can grow with our customers, we want to do that. And in serving our customers well, of course, we then seek to make a good profit. And the first use of our profit is to continue that process of supporting customers of growing and investing in our business.

To the extent we have some left over, I hope it's not too much left over because it would mean we would be growing very fast with our customers. But normally, there's a good amount left over, and we think that we should pay the largest amount of that in regular dividends that our many retail investors can rely on. But there's inevitably uncertainties in our business. The demands of our business can go up or down, the profits can go up or down. And so a more flexible element can be taken care of in share buybacks. If there's money that we can't profitably invest in our business on top of the dividend, share buybacks is a good way of doing it. And so I would expect roughly the pattern of what we've been doing in recent years to continue, subject to how much we can profitably invest in our business, which is always our priority #1.

Thank you. Let's move on to a few current questions here. If we bundle 2 here. Maybe, Frank, I'll give this to you. How does the current geopolitical uncertainty effect. First, of course, Nordea, your business, and then also your customers?

Thank you, Tuomas. In general, of course, it's not helpful. It creates some uncertainty and uncertainty is not really helpful for growth. That said, when you look at the Nordic societies in which we operate, they are holding up very, very well. Our customers are in a good shape. They want to move ahead. We have seen the start of the year being very positive when it comes to believe in the future, investment initiatives and so and even the consumer confidence has increased. So I think we are in a very, very strong position and very resilient place of the world.

For Nordea, I would say that Nordea is built to be strong in all sort of kind of weather. And with the risk profile we run with, I would say that we are very well equipped to continue supporting our customers and also grow the company in the future. What happens at the moment, of course, in the Middle East, nobody knows how it will end. Right now, it's a question about energy prices. Over time, it might be a question about increased inflation and thereby what will that do to the growth as interest rates will come up and so as well potentially. But let's see, it can still change. And hopefully, we'll get some piece down there. So all in all, super strong position for Nordea and our clients.

Thank you. Another very current topic that I believe this is especially for your business area. New regulations for the Swedish mortgage market will come into force on April 1 this year, just about a week ago. How will this affect Nordea, your customers? Some of the questions.

We, first of all, of course, welcome that there is a bit of a release for the younger customers. So it's less of a down payment that they need in order to invest and buy a new home. And I think that will support the market growth overall in Sweden. And then we -- as I believe also other banks are questioning a bit of the change that existing mortgage customers when they would need to do, for example, top-ups on top of their existing mortgage that there, they can only lend 80% to their property value. So it's reduced 5% from 85% to 80%. And that, of course, there's a bit concern that is there possibly a delay to some needed renovations that customers would need to do or that they would need to seek for other type of funding, unsecured funding, which is, of course, more expensive for them. So hopefully, it supports the market overall and especially we're happy for the younger customers.

Thank you, Sara. We also -- Martin have a question regarding your business area, also for Sweden, but then also Nordic as well. How will Nordea secure a competitive edge in an increasingly crowded private banking market?

Yes. Good question. I think what we presented in the 2030 strategy is all about having super sharp value propositions that we invest in the digital customer experience. We also need to hire more advisers because we are going to aim for more than 15,000 more families to join our franchise and our fantastic offering. And we need to play, as Frank has already stated on the Nordic scale and efficiencies for the benefit of the customer experience and offerings and many, many more things. But we have -- it's all about being clear with the strategy and sticking with it. And we are already in full swing in the execution of what we have promised.

Thank you, Martin. Frank, let's take one for you. Next, bolt-on acquisitions are part of Nordea strategy. When can we expect Nordea to act? Could you enter also a market outside the Nordics?

So starting with the latter part. So our strategy is Nordic. So our home markets are the 4 countries in which we have operated for many, many, many years, and that's where we wanted to develop this coming strategy period. Our main focus is organic growth, meaning that we have a plan. We'll do whatever we can to execute on that plan, and that will lead to more customers, more business, higher income and more efficiency. If we can accelerate that plan by adding companies that will fit well into the Nordea family, we, of course, would be very happy to do so. We have done a number of bolt-on acquisitions in the recent years, and we very much welcome even more. But let's see what the future will bring.

Thank you, Frank. There is sort of in the same area, of course, within strategy, but Sara maybe I'll give this at least first to you. There's a question. Nordea has targeted Sweden as one of its key growth areas. How are you planning to reach your growth targets there?

First of all, I could say that we are very experienced in winning the Swedish market. We've done that for several years, and we definitely plan to continue on that. We will strengthen our brand, our customer service and our offers and offering to customers. And I think we are quite well -- we have an advantage, I would say, on 2 things, especially. One is that our digital services are really valued by the customers, especially on the mortgage journey that our customers have.

And then the second thing that I would highlight is that we have a fantastic culture in Sweden. We are very passionate and obsessed about winning the hearts of our customers. And that is something that has been a key thing in the recent years. And that is also something which is very difficult to copy by others. So we plan to continue in the same way in Sweden.

Thank you, Sara. I think you already covered part of the next question is for Sweden. But Frank, maybe if you want to follow here, what are the key directions where Nordea is seeking growth geographically and business area-wise?

So we have 3 main legs in our strategy. One of them is grow above market, so growth pockets to our countries. So we have especially our special focus, strategic focus on Sweden and Norway. We have 2 segments. These are small businesses and private banking, which private banking, Martin talked about. And the small business is an area that we will go all in on now and we'll claim our natural market share on these as well. And then we have what we call cross sales. That's basically about dressing up our customers, helping with all their needs and ensure that they feel the size and the quality of Nordea by being exposed to all the services that we have that is relevant to them. And then there's life and pension. These 6 areas we are investing in quite significantly, and we believe that we have the right to win in these areas.

Thank you, Frank. Let's continue a little on the theme, Martin, a follow-up question on this few as well. Nordea asset management is largest in field in the Nordics, but compared to global players, still room for growth. Does Nordea intend to claim to become a global asset management player?

Well, I would claim that we already are a global asset management in the leg of our international ambitions of asset management. So that we already are. But it's true, we are slightly smaller after current consolidation, specifically in the European asset management industry. But we are very happy where we are, and we are going to win in the fields of the strategy where we have defined fixed income BetaPlus and the sustainability families to be our very core in the strategy and that we are going to be very disciplined and supported with.

Thank you, Martin. Frank, coming back to you with bit detailed going back to Capital Markets Day as well in November. At the event in November, you said you expect an average annual cost growth to be around 2% in the run up to 2030. Should we expect 2% cost increase in 2026? And do you aim to grow income more than costs? I believe this is for this year.

So what we have said for 2026 is that we are targeting a cost income of around 45%. And then we have guided for what we call CAGR, so an average cost growth rate of 2% throughout the 5 years period. But what we also have said is that we expect the income to grow significantly faster than the cost and how it will play out each year then, let's see. But we are guiding for the first year now, and that's based on a cost/income ratio.

Thank you, Frank. Now at this point, I think we'll thank you for the questions so far to everyone who participated to recognize active shareholder engagement and dialogue, we have also agreed in advance to give AkademikerPension from Denmark opportunity to submit a prerecorded shareholder comment. The video will be then followed by a short statement from Nordea's Chair.

Dear Chair, Board and management. My name is Anders Schelde, and I'm Chief Investment Officer at AkademikerPension, and I'm today speaking on behalf of AkademikerPension. I'm here today to follow up on our constructive dialogue where we call for greater transparency on how Nordea's climate ambitions are reflected in practice. Nordea has set ambitious climate targets and demonstrated the ability to act on them. We recognize the achievement and the dedication. However, one question remains, how does continued financing of oil and gas align with these targets? In response, Nordea has launched a report enhanced disclosure for Nordea's oil and gas portfolio.

First and foremost, we appreciate the swift response to our request for greater clarity. The report shows clear progress, including a significant reduction in exposure since 2019 and a more focused portfolio, largely in upstream activities on the Norwegian continental shelf. The report outlines Nordea's rationale for continued financing, including reduced exposure, a more selective portfolio and the role of lower emission production and energy security. However, this does not fully resolve how continued oil and gas financing aligns with the bank's long-term climate targets.

From an investment perspective, this is where we see an important tension. The report highlights the importance of being clear and honest about climate risk that still exists about credibility and about responsibility. Nordea manages its commitments primarily at the portfolio level. Climate risk does not arise at the portfolio level. It materializes in individual decisions, transactions and exposures. That is where we see that long-term finance risk can build up. As investors, we need clarity on how your commitments influence financing decisions, especially in the sector with high transition risk. If climate targets are to be credible, they must also be decisive. There must be action behind the words, just as Nordea has already demonstrated in reducing finance emissions. We will continue our dialogue with Nordea as a constructive effort to ensure alignment between targets, decisions and accountability. Thank you.

Terrific. Well, I think if I might say that welcome and interesting contribution is, of course, one of the things made even more possible by this virtual AGM as we have, in this case, a Danish shareholder able to contribute to the meeting and to do so without using carbon emissions. Also, I would thank the contribution, in particular, because AkademikerPension have been a showcase of the engagement with Nordea of the willingness to give us their ideas, to exchange ideas with us, have helped us in certain aspects of enhanced disclosure, and we welcome that engagement from any shareholder. And so I welcome the contribution.

On the matter at hand, I think it's -- there's not in a way, too much more to say. We share the passion and the ambition for our societies and our world to decarbonize and to mitigate some of the worst effects that will otherwise occur from climate change. And we want to be in the vanguard of encouraging society to move in that direction. And we are in that vanguard. We are absolutely at the leading edge of our commitments for the future and of the action we have taken so far in reducing our financed emissions.

So we, in a sense, feel that we are the good guys in this respect. But we also have an even bigger duty to all of our customers and the societies in which they operate. And it is simply the case that our societies, the Nordic societies and broader across Europe are not able today to cut off in a fast and immediate way their exposure and their reliance on oil and gas. And we see what's happening in the Middle East underlying this. If it were not for Norwegian oil and gas, the Nordics would be dramatically poorer and so would Europe also and maybe not just poorer in a very dangerous situation. And so there has to be a transition. And in line with our responsibilities to our society and to our customers, we want there to be a transition, not a sudden cutoff.

And that's very much the way we are trying to lead. We believe that we will be in the vanguard of the transition, but we have to have our first responsibility to our customers and society as a whole. So thank you very much for the input, and we will, of course, look forward to continuing this dialogue.

Thank you, sir, Stephen. And this now concludes the management Q&A session. Thank you again for all your questions. To those whose questions we did not have time to address now, our Investor Relations team will be happy to follow up. We will now prepare to move into the formal Annual General Meeting, which will begin shortly. If you are participating online, please follow the instructions on your screen to join the meeting. We will take a short break now before the AGM starts. Thank you again, and see you soon.

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.

[Presentation]

Good afternoon, everyone, and welcome to Nordea's 2025 Capital Markets Day. I'm Ilkka Ottoila, Head of Investor Relations and I'll be your moderator for the day.

Today, we'll dive into the details behind our 2030 strategy with updated priorities and financial targets. We are excited to have the opportunity to talk about how we will take Nordea to the next level and create shareholder value.

Let me briefly go through the agenda, which will last for roughly 3 hours in total. We will start with the CEO session. This will be followed by 10-minute presentations, both from the heads of each of our 4 business areas. After this, we'll take a short 15-minute break. After the break, we will have a more detailed update by our Chief Information Officer on how we deliver Nordic scale benefits. And finally, our CFO, will conclude with a deep dive into the financials.

After the presentations, we will have a Q&A session lasting for roughly 30 -- I'm sorry, 60 minutes. And our program is planned to end slightly after 3:00 p.m. U.K. time. I'd like to give you very short instructions for the Q&A session. So you'll be able to ask questions in 2 different ways, in person here in London and also through the chat function on the webcast. We very much look forward to your questions and have reserved quite a lot of time for this. We will do our best to take as many questions as possible.

And finally, just a quick note, today's presentations include forward-looking statements. Relevant disclaimers have been included in the materials.

But now it's time to start the first presenter, our CEO, Frank Vang-Jensen.

Good afternoon, ladies and gentlemen, and welcome to our Capital Markets Day. Six years ago, we set out to change Nordea's direction, step up and improve our performance. We wanted to fix the basics, truly put customers first and become more competitive. By 2022, the turnaround was clear. The approach was working.

We then further raised the bar for performance with a goal to create best-in-class omnichannel customer experiences, deliver profitable growth, increase operational and capital efficiency and drive further value creation for our shareholders. I believe we have delivered very well.

Today, Nordea is strong and one of the best performing financial services groups in Europe. Over the past 6 years, we have delivered a total shareholder return of 292% or 25% per annum. Now we will take Nordea to the next level. And today, we present our plans to do that.

Let me start with a quick snapshot of Nordea. We are the largest and leading financial services group in the Nordics, with a universal banking model that spans 4 business areas. One, serving the everyday banking needs of individuals and households. One, a trusted partner for small and medium-sized businesses; and two, focused, respectively, on large corporates and institutions and wealth management.

Each business area offers a broad range of services supported by strong advisory teams. We have strong positions in each of our home markets in all business areas. No other bank has our pan-Nordic footprint, and that makes us unique and gives us scale benefits that cannot easily be copied.

Being the largest player in the Nordics, we also have the biggest investment capacity. That has been put to good use, supporting our growth, technology, digital services and risk management in recent years, enabling us to strengthen considerably.

Our scale also supports some of the lowest funding costs and credit losses among banks in Europe, which support a lower relative cost of risk and the lowest earnings volatility.

The diversification and resilience of Nordea is clear when we look at our business mix. Our income, lending and profits are well balanced across our markets and sectors. And this has supported high profitability with low volatility in our earnings.

Our average quarterly return on equity is higher than the Nordic and European average. Earnings per share volatility and funding costs are much lower. Together these strengths distinguish us from our peers. That is the foundation we continue to deliver from, and it is a strong one, not just because of what we do, but because of where we are. We are Nordic to the core, and our home markets are among the wealthiest and most resilient economies in Europe.

If you put the 4 countries together, they would be the 12th largest economy in the world. The Nordics, our society is built on trust and a strong culture of learning and innovation. They are also underpinned by strong social networks or safety nets, sorry, which give people the confidence to move forward in their life. And together, these foundations help promote economic and political stability.

The Nordics are fast adopters of new technology. They are highly digital and they are entrepreneurial and competitive. The largest Nordic firms, our customers have learned to find their way and scale up competing on quality and innovation. For them, it's not necessary about being the biggest, and some of them are, but being the best. And that approach has worked.

Over the past 2 decades, Nordic firms have outperformed their peers in the U.S., Europe and Asia in terms of TSR. All this makes our region an excellent market for financial services and a solid platform for Nordea's long-term growth.

Credibility and trust come from saying what you do and doing it. Since 2019, we have been working to rebuild and strengthen trust among all our stakeholders. We started by sharpening our focus on execution and accountability and laying down solid foundations. That was the first phase.

The second phase from 2022 has been about building on those foundations and continuing to improve our performance. The priorities and targets we set then were ambitious, but concrete and achievable if we executed well. And I believe we have done just that.

For Nordea, everything starts with the customer. And there, we have made real progress. Most importantly, customer satisfaction has increased among both households and corporates. A big driver behind that is our digital offering.

The experience is smoother, more intuitive and gives customers far greater control over their finances. We're now seen as the leading provider of digital financial services in the Nordics and one of the best in Europe.

Growth has followed. We have added more than 1 million new digital customers. Since 2022, all 4 business areas have captured market shares. And of our 4 home markets, Sweden has been especially strong for us. We set out to reclaim a leading position in Sweden, which is by no means an easy task. It's one of the most competitive banking markets in Europe. But we have built real momentum.

Our mortgage market share has grown significantly, and we have made solid gains in private banking and among small and medium-sized businesses. Back in 2020, we were ranked fifth in mid-corps in the Prospera Customer Satisfaction Survey. Now we are #1.

We also hold the top spot among small corporates. And underscoring our strong progress, in Sweden, we were recently named Bank of the Year. It's a clear sign that we are doing many things right.

Of course, growth has not been limited to Sweden. We have also grown our position in the other countries. In Norway, we now have more than 1 million customers following 2 bolt-on acquisitions, the most recent of which was completed a year ago. We are growing and taking market shares, especially in deposits. And we have a strong development in savings, outpacing the market for the past 2 years.

Other parts of our business are also seeing good growth, including life and pensions, private banking and corporate banking, where we continue to use our size and scale to position Nordea as the best partner. We have become the leading provider of Nordic bond financing and a recognized global leader in sustainable lending.

To support operational efficiency, we have made several structural improvements, which have reshaped the business to deliver sustainable higher profitability. This has been driven by the significant investments we have made in technology and data and digital services and a much stronger focus on and disciplined approach to capital consumption. Income and costs are now better balanced and each business area has lifted its return on allocated equity significantly.

When we look at financial performance, we have delivered on our financial targets ahead of time, reaching a return on equity level of greater than 50% and more importantly, staying above 15%. Of course, we have not operated in isolation. The world has changed a lot since '22 when we set our targets.

Our last Capital Markets Day took place just a few days before Russia's full-scale invasion of Ukraine. Inflation jumped and interest rates increased after more than a decade at 0. But what that happened -- when that happened, we did not just sit back, we raised our ambition. Our initial return on equity target was greater than 13%. And as the environment shifted, we lifted it to greater than 15%. Six years ago, Nordea was an underperformer among the world's 100 biggest listed banks by return on equity. We are now in the top 20 with good momentum.

Something else we have done clear is to deliver positive jaws. We always want to grow income faster than costs. Of course, this year has been a bit of an outlier given the rate environment. But the way things have developed is also by design.

We made a clear choice to keep investing strategically, making investments that are already strengthening the group and will continue to do so. While investments are high, they have leveled off over the past couple of quarters. And we have delivered on our guided cost-to-income ratio.

Nordea's financial performance has been good, and it has supported consistent and strong capital generation, which in turn has enabled solid shareholder distributions and market-leading shareholder returns, which has been significantly higher than our Nordic peer average.

Are we pleased with the progress? We are. It's a strong base to build on, and we are moving in the right direction. But now we are focused on what's ahead in this third phase of Nordea's development and growth.

The coming years will be about taking Nordea to the next level. When you are looking at Nordea in 2030, there should be no doubt that we are the best-performing financial services group in the Nordic region. The pace of change in the financial sector is accelerating. But that isn't something that concerns us.

On the contrary, our ambition is to continue to lead, and we are better equipped than ever to take the leading role because we act from a position of strength. Multiple forces are shaping the financial industry and some are long familiar to us. We have a world that is volatile and evolving. We have increase in digitalization, and we have challengers that want to take on incumbents. And some forces, we expect to be more dominant going forward. AI is obviously one of them, and it will drive many banking processes.

All of these developments have been taken into account when forming our strategy and our conclusion is that they play in our advantage. A couple of examples. One is that scale will become even more important. It will drive efficiency, resilience and customer value. It would also give Nordea the edge when we attract talent to Nordea.

Second, like much of the world, the Nordic population are aging and the need for long-term savings and better pension solution will continue to grow. We are well equipped to meet this demand as we are the largest asset manager in our region and one of the largest in Europe.

Lastly, trust. We believe trust will matter more than ever for both private and corporate customers when choosing a financial partner. It's more complex today. There are more uncertainty, more noise and threats can come from anywhere. That makes trust more valuable and harder to earn and keep. We have invested billions of euros over the past 5 to 6 years to build a safer and more resilient company. For us, it's really at the heart of what we do. And we think we are ahead of many of our peers in this respect.

Our ambition in this new era is high, and this is reflected in our financial targets. We are looking across to 2030, which is clearly long term. But it's consistent with our approach to value creation and delivering sustainable progress over time.

Our first target is to deliver a return on equity of greater than 15% each year throughout to 2030 and to be significantly higher in 2030 itself.

Our second target is to deliver a cost-to-income ratio of 40% to 42% in 2030. Getting to that cost-to-income ratio level will take hard work and will be a gradual progress. But on these targets -- of these targets -- I would say, both of these targets are ambitious, but concrete, and we are fully committed to achieving them.

We also have an ambition to deliver earnings per share of around EUR 2 by 2030, driven by a strong improvement in underlying performance. That's where we are going. And to get there, we have built a strategic plan around 3 key priorities.

The first is growth. We have decided to focus on and invest in 6 attractive growth areas. These 6 areas are a mix of geographic markets where we see lots of room to grow and segments which have a strong growth outlook, in particular, segments where savings play a big role.

The second priority is to lead with a compelling customer offering, with stronger value propositions in key segments, all brought together in an outstanding digital experience. Today, customers can easily manage their finances digitally while always having our advisers and support close at hand. That combination of freedom and support is one of our real strengths.

In the next phase, we want the digital experience itself to feel even more supportive and personal with tailored and adaptive experiences that fit the customers' financial situation. We will accelerate our work on personalization to deliver more timely insight, relevant product suggestions and attractive offers to ensure that customers, both households and corporates, feel well supported and able to make smart, informed decisions. My colleagues running the business areas will talk more about this pillar in the presentations.

The third priority is about unlocking the full potential of our unique Nordic scale. We already have scale benefits in several areas. But after simplifying our operating model, and investing heavily, we are now ready to take the next big step. That work is centered around 4 big product areas, mortgages, corporate lending, payment and savings.

Across all 3 priorities, technology, data and AI will play a very important role. They will help us to create more personalized customer offerings, respond faster to credit requests and run the most cost-efficient operations. We will also maintain our strong commitment to sustainability. It's important, and we support our customers in their transitions. We have made good progress in this area and sustainability is now fully embedded in our strategy, processes and operations. All in all, we are convinced that our plan will lead to even stronger customer experiences, significantly increased cost efficiency and create lasting value for our shareholders. You can also be assured that this plan will be executed with the same rigor and focus we have applied over the past 2 strategy periods.

We do what we say. That commitment is reflected in our new vision. We aim to be the best performing financial services group in the Nordics, period. The 6 growth areas play an essential part in the strategic plan. In all of them, we will drive focused and profitable growth. Each has been carefully chosen, and they offer solid underlying market growth, and because, in several of them, we do not yet hold the leading position we aspire to. So we have a job to do. But we know we can do this. We have proven it over the past few years.

Our progress in Sweden is a clear example. Sweden remains a key focus area, and we see we can continue to grow by making the most of our enhanced saving and payment offerings, our best-in-class digital platforms and our strong local presence in the major cities and towns. Norway is our second growth priority. Our 2 acquisitions there in recent years have given us a solid platform to accelerate growth. Our goal is to broaden and deepen customer relationships, ensuring that clients choose to meet all the financial needs with us. But to be clear, let me assure you that we will not be satisfied until profitability in Norway matches that of our 3 other home markets. From that perspective, we see 2030 as a milestone on that path, not the finish line. So Sweden and Norway, both markets with lots of room to grow.

A strong common theme in the strategy is to build stronger relationships with our customers. We'll do this by offering a broader and more attractive range of products, improving accessibility, strengthening our brand and showing customers the benefits of bringing more of the financial needs to us. This is a model we will continue to develop for both households and corporates.

Here, it's summarized as cross sales. Strong anchor products will be essential to making it work, and we will, therefore, continue to invest in our savings and investments offering as well as in our cash management services. Life and Pension, in particular, is an area where we have the potential to deepen relationships with our customers. Momentum has been really strong in this part of the business, supported by bolt-on acquisitions, but we are already the leader. We now have a unique opportunity to improve our position within Life and Pensions, predominantly by cross-selling pension products to our large base of small- and medium-sized corporate customers as well as to private customers.

The underlying market outlook is also positive, driven by the aging population and growing uncertainty about what the public pension systems will be able to deliver. The last 2 areas with attractive growth potential for Nordea is private banking and small businesses. Private banking is the growth area where we see the greatest potential. The market is expanding quickly, and we are well placed to reach the leading position across the Nordic region that we aim for. We will invest to strengthen our digital services to complement what we have today, which is a very adviser-dominated approach, and we aim to grow our share in all countries. To help us, we have an in-house globally competitive asset management team.

And then on small businesses. Nordea has done very well, serving midsized corporates and retail customers. Now we want to replicate that success with the small business segment, which is a huge step in the Nordics and is very profitable, especially when you have large scale. Our strong industry expertise and digital solutions will help us here. Our business area heads will provide more details about all 6 growth areas in the sessions.

Our Nordic scale is a key source of competitive advantage for Nordea. Scale was the driving force behind our creation 25 years ago. Over time, we have built it deliberately. We have already delivered clear scale benefits, for example, in central functions and in our Large Corporate and Asset Management business. But more gains lie ahead. Now we will take the next decisive steps to ensure that we unlock those benefits across all of Nordea. This is about increasing our competitiveness. We will deliver services to our customers faster, better and at lower cost. We will significantly improve our cost position and make Nordea an even more attractive partner for all stakeholders. This is unique for Nordea and something we own. The turnaround of the past 6 years means the time is now right. The operating model has been simplified. The accountability culture is in place, and we have made significant investments to build a market-leading digital franchise.

Technology now plays a much bigger role and our foundation is much stronger. So we are in a very good position to succeed, and we know how to go about it. The focus of the work will be on our 4 key product areas and on making the processes in these areas very lean, automated and efficient. The business areas are in the driver seat and setting the target picture and redesigning the processes. Meanwhile, our technology team will be an active partner supporting in the delivery.

Technology and especially AI will play an important role in this transformation, helping us to turn local process into Nordic processes. This will make them faster and more transparent with AI-enabled automation and human support brought into play at key moments, which, for example, means in practice that customers get faster decisions on lending and simpler and better savings and payment experiences. And it means us being able to provide those things in a much more efficient way. We will drive Nordic scale benefits wherever feasible and wherever it makes sense. And that will give us a clear edge in the market.

We also see potential for major scale benefits within our technology itself by reducing platforms and applications, by modernizing legacy systems and by improving engineering productivity. These efforts will also make our technology more resilient and secure. We are clear about the approach because we have learned a great deal from the work to upgrade our core banking platform, which we have now completed in Denmark and Finland. While this delivers clear benefits, it has also taught us that there are no silver bullets. Building scale is about doing many smaller things right. That's the approach we will take with multiple smaller scale initiatives.

By 2030, more than 60% of workloads will be running on our modern systems, making them faster, more reliable and secure and easier to run. In total, by delivering our Nordic scale benefits, we target a cost takeout of EUR 600 million. Kirsten will later outline how we are going to do it, while Ian will provide more details about the financial outcome of these efficiency improvements.

We have delivered 2 strong strategy periods, and we will make this one our third. We clearly aim to be the best-performing financial services group in the Nordics with faster than market income growth, a leading customer experience and clearly demonstrated scale benefits to drive efficiency and competitive advantage, all leading to superior earnings per share growth and sustained high profitability. I'm confident that we have what it takes. Strong businesses, great digital services and technology, unique Nordic scale. We also have a focused team that is both excited and determined to deliver. And I can't stress enough what that means. We have built a performance culture, and we have come a long way. The difference from a few years ago is night-and-day. Nordea today is a different company and our employees say so. Still, we are not done yet. We can still raise our game and take Nordea to the next level. We look forward to showing you that we will deliver.

Thank you. And now I would like to welcome on stage Head of Personal Banking, Sara Mella.

Thank you, Frank. Good afternoon. I'm Sara Mella, Head of Personal Banking. And it is my pleasure to share our progress and the strategic direction as we look towards 2030. I've been in this role for 6 years now, this is actually my third Capital Markets Day, and I have to say, when I look ahead the next 5 years, our journey in Personal Banking will be more transformational than the past 5 years. So let me now share how we have strengthened our unique pan-Nordic franchise and then present our strategic vision for continued growth, efficiencies and innovation in the years ahead.

Personal Banking serves 6.5 million active household customers across the Nordics. We are among the top 3 in all of our markets. And our business is well diversified. Each of our 3 largest countries contributes around 25% to 30% of the income. Our product mix spans across mortgages, deposits, savings and payments, also equally on income. Now this scale gives us clear advantages. We combine local expertise with shared platforms and technology to deliver consistent, high-quality service, while driving efficiency and innovation across all markets.

Over the current strategy period, we have delivered on our plan, and we have built a strong foundation for the next strategy period and for the future. We have added over 0.5 million new relationship customers, also supported by the very successful acquisition in Norway. Income grew by 8% annually and interest rates, they drive less than half of that. Majority comes from higher volumes, gained market shares and disciplined pricing. We improved our cost-to-income ratio by 4 percentage points and accelerated digital adoption. 1.1 million more customers are now digitally active than 2021. In short, strong growth, improved efficiency and top-rated digital bank position us well for the next strategy period.

Now looking ahead, our strategy for the next period is clear and is built on 3 pillars: first, strong focus on growth; second, upgrade and extend our offerings, securing to be market leading; and then third, use our Nordic scale to deliver operational excellence. We will, over the next strategy period, become a fundamentally different bank, significantly more tech and AI powered, data-driven and truly digital and much more efficient. We expect to deliver around 5% average income growth over the next period and a positive jaw development of 3.5%. This will be driven by a broader, more profitable business mix and a continued success in mortgages and savings. We are investing in digital sales, AI and enhanced savings offerings to deliver superior digital experience, while simplifying our core processes. Our focus is clear: investing for growth, drive efficiency and capture market momentum.

Let me now share and highlight the 3 key areas where I expect us to deliver growth above the market. First, Sweden. Sweden is our largest country with a strong growth potential. We already lead in mortgages and pensions, combining best-in-class digital processes with human advisory when needed. Our proven model will now be scaled to attract more savers and strengthen our premium offering. We expect to grow income 1.5x faster than the market and increase savings net flow by 50%.

Second, Norway. Norway is on a journey to a better profitability. And I have no doubts that Norway will reach the same level as the other countries in profitability. Our shift to a more capital-light income mix is working with significant upside in both legacy and the acquired customers. We have already deepened relationships in the acquired portfolio and will leverage advanced digital sales to win new customers. We expect income growth in Norway also to be 1.5x above the market. And we also expect to increase our savings inflow by significant 350%.

Then third, deepening customer relationships across all countries. AI-driven personalization is already boosting customer engagement. Around half of our customers are saving with us, presenting a major opportunity for top-ups and drive top-ups. As an example, if our existing savings customers increase their allocation to investment just with 1 percentage point, that will drive new inflow of EUR 1 billion. The remaining half of customers not yet saving with us offers a fantastic opportunity, which we will capture. With our data, tech and digital sales, we can now reach and impact our full customer base in the Nordics. Now this is my and my team's passion, and this is the way for future growth and sales and income growth. So our goal to grow ancillary income 15% above lending growth.

Now to support this growth, our service model will evolve to be even more personalized and data-driven. We are delivering AI-powered mobile-first banking that integrates to our customers' daily lives and moments that matter. Proactive insights and smart recommendations will help customers to make better financial decisions with confidence. More than 80% of our sales will be digital by the end of this strategy period. We will continue to enhance our market-leading mobile solutions and develop best-in-class savings experience with a robust platform, competitive products and intuitive digital interface for our customers.

Now it's not only about digitizing the customer-facing experience, we are embarking on a journey and transformational journey to change our operating model. Our advisers will be empowered with digital tools, real-time insights, while automated processes reduce administration, freeing up time for more customer meetings and better and more targeted advice. At the same time, we are building a common scalable digital Nordic service model, powered by AI, harmonized processes and improved efficiency across all markets. For example, harmonizing mortgage processes across the Nordics by leveraging shared technology will deliver over 30% lower processing time and doubling the adviser efficiency.

Our ambitions are underpinned by clear financial targets. By 2030, we aim to achieve return on allocated equity clearly greater than 19%, while achieving a cost-to-income ratio below 43%. Delivering on these targets is transforming our performance. They reflect the confidence of the strength of our platform, the capabilities of our team, and the opportunities that lie ahead.

Thank you for your attention. And now I'd like to hand over to Martin, the next presenter.

Thank you, Sara, and hello, everyone. My name is Martin Persson, and I can tell you, I am super proud in representing our Asset and Wealth Management business in Nordea. That's a role I took on in the beginning of this year after more than 8 years heading our Large Corporate & Institutions business area. The starting point of our 2030 strategy is very unique. We run the largest savings franchise in the Nordics, where we are combining the largest Private Banking and Asset Management business and the second largest Life and Pension company.

The main purpose of our 2 growth areas, Private Banking and Life and Pension is simply to ambitiously drive above-market growth. When it comes to our market-leading Asset Management business, we are seeing a gradual improvement over the last many years of negative flow developments in our institutional and wholesale distribution segment. Here, we will now be super focused in driving our 3 strongholds in European fixed income, our beta plus product offering, that is our response to passives, and our sustainability investment strategies throughout our strategy period. For me, it's also very important balancing or navigating this attractive structural growth opportunities in the savings and investment area with the ongoing margin challenges that we see across many of our customer segments.

The essence of our growth is then simply Private Banking and Life and Pension, left-hand side of this page. Superior value propositions in each and every one of our customer segments, combined with detailed plans how to mitigate the ongoing margin challenges, combined with a much higher ambition in our digital customer experience. That's the essence of our offering, the midpart here. And Nordic scale, that's the enabler for us to finance the enhanced growth and the improved offering. I genuinely feel we have a winning vision and clear and robust strategic priorities to drive this. This will, of course, then result in formidable positive jaws throughout our strategy period, where our Nordic scale enable us to limit cost growth to inflationary levels.

Let us now look into our first growth area, Private Banking, where we aim to accelerate an already strong momentum and where we are already outgrowing the market in both Norway and Sweden. We will grow our customer base by 30% and income by 9% CAGR. To achieve this above-market growth, we will focus on 5 main areas. Number one, we will double our digital investments to significantly improve the customer digital experience, and this will also include a more ambitious offering for the self-directed customer segment. Two, we will hire 100 new private banking advisers from our already strong base of 500 today across the Nordics.

We will significantly raise the bar on external customer acquisitions, where we will target 60% of new customers coming from the outside. This will require a stronger hunter mentality culture among our advisory teams. Four, create clear value propositions for each of our customer segments, for affluent, for high net worth and for the ultra segment. We will prioritize the must-win affluent segment first. And five, products. We have a strong starting point with a market-leading asset management in-house offering with 82% of funds currently outperforming benchmarks over a 3-year period. And with a broad offering and faster time to market than any other Nordic bank can offer in our region. Now we will focus extra on the discretionary offering, alternatives and margin lending to drive growth and to mitigate margin challenges. We have low penetration in all these 3 mentioned products.

Further, Norway and Sweden are the 2 fastest-growing Private Banking markets in the Nordics. This is where we are already growing faster than the market, and we are underpenetrated in both these markets. That is why we will allocate more investments and more resources to Norway and Sweden to fuel this above-market growth. By 2030, we will generate EUR 1.5 billion of capital-light income in private banking.

Our second growth area, Life and Pension. That is a fast-growing hidden gem. With 8% annual income growth, we will become the largest Life and Pension company in the Nordics by 2030. There are structural tailwinds in the Nordic Life and Pension industry. We will see 20% growth in the plus 65-year olds in the next 15 years alone, which means that structurally higher savings are needed. Both the Private and Corporate businesses, therefore, have strong growth drivers and the Nordea customer base is underpenetrated in both. The good news is that our business model is already proven. We have tripled flows since 2022. And with our reentry into Denmark, we expect to grow further.

We are leading the way with digital innovation in a rather analog industry. We are now outgrowing the market in 3 of 4 Nordic countries, driven by stronger collaboration between our business areas as well as our digital leadership. We now plan to roll out the local digital successes, both within corporates and the private segment, to all our Nordic countries to reap the benefits of our obvious Nordic scale.

Let me give you another example. Our ability to digitalize insurance products into the mortgage process in Sara's retail area should make it possible for us to scale this to our large existing retail base. Only 17% of our customers currently have these products. We should be able to take that close to the best-in-class benchmark of 40%. We are targeting 5% positive jaws throughout the strategy period. Life and Pension is a fast-growing hidden gem where we are confident that we can deliver above-market growth with scale. By 2030, we will generate EUR 1 billion of capital-light income in Life and Pensions.

To finance the investments in the growth that I presented, the main enabler for productivity will be the scale benefits from technology, data and AI. With this, we target 30% adviser efficiency in our affluent segment, combined with 50% reduction in legacy applications. This will be done through significant reduction of local variations, instilling common Nordic operating models as well as deploying digital tools to make advisers more efficient. Kirsten will soon also present how we will harness group-wide data to develop more personalized sales and service, how we can further automate customer journeys and how our customer needs will be met in an even better way when supported by digital tools and data-driven insights.

So with the most competent and the most passionate team back home, I am confident to deliver a market-leading return on our allocated equity by 2030 with a cost-to-income ratio below 36%. That is down from roughly 45% today.

Thank you. And I will now hand over to Nina in Business Banking.

Thank you, Martin. My name is Nina Arkilahti, Head of Business Banking. And I'm proud to say that we are the trusted partner for nearly 0.5 million SMEs across the Nordics, where we are the largest financial services provider to SMEs. This market position has been built on our universal relationship banking model, broad product offering and Nordic footprint. We serve customers from creation through scaling and into international expansion.

We hold top 2 position in Finland, Denmark and Norway, and we have a challenger position in Sweden, the largest market in the Nordics. We are focused on strengthening our position to 2030 and beyond. We have delivered on our 2025 targets with improved profitability across all markets, while delivering robust growth, especially in Sweden and Norway. We have invested a lot in our digital capabilities to provide an effortless banking experience. In 2022, about 40% of our customers' daily banking needs were covered by self-service functionalities. Today, we stand at close to 75%, and the customers like what they get. Our mobile app enjoys a top rating. Customer satisfaction has increased. In Sweden, we have the highest satisfaction of the peer group.

Sustainability has been integrated into our business, and we have significantly grown our sustainable finance portfolio. New data-driven tools and streamlined processes have improved our overall structural efficiency. We now deliver 49% more income per FTE than in 2022. With a strong position among mid-corporates, a leading digital offering and a track record of solid growth, we are well positioned to enter the next strategy period. We are ready to take Business Banking to the next level.

We see clear opportunities to continue taking market share in Sweden and Norway and deepen penetration in attractive segments within our mid-corporate segment franchise. Our best-in-class digital channels and payment strengths provide an anchor for deeper customer relationships. We will expand our focus to the small business segment where digital is significantly changing how small businesses do banking, and our unique scale enables a leading offering at high levels of productivity.

The strategic priorities for our 2030 strategy are growing faster than market with a leading customer offering and leveraging our Nordic scale for increased efficiency. At Nordea, everything starts with the customer, and we will make the necessary investments to deliver on our plans. This, together with our clear geographic and segment growth priorities, will enable us to grow income by approximately 1 to 2 percentage points above the market. The opportunities provided by technology, data and AI and the full potential of our Nordic scale will deliver improved efficiency, positive jaws and a cost-to-income ratio below 39%. When accounting for normalizing cost of risk, this will result in Business Banking sustaining a high profitability of greater than 15% return on allocated equity.

In the following pages, I will take you through our plan for each of the 3 priorities, starting with growth. Our growth agenda is focused on 4 areas. First of all, we want to win in Sweden. Sweden is the largest market in the Nordics and our strong track record in the current strategy period makes us confident that we will continue capturing market share. We see good opportunities for growth in underpenetrated segments or where we have a structural advantage, such as cross-Nordic SMEs.

Secondly, we want to grow in Norway. In the current strategy period, we have outgrown peers in deposits and mid-corp lending. We have an efficient operating model, but we can do more to deepen the customer relationships. And to succeed with this, we will invest in our frontline capacity and expand customer acquisition capabilities. In both Sweden and Norway, we aim to grow 1 to 2 percentage points faster than the market every year.

Thirdly, we will focus on building deeper customer relationships. It all starts with payments as a key anchor product. With our strong cash management offering, we can be the house bank. This, in turn, provides further ancillary income opportunities. We expect our ancillary income to grow faster than lending volumes at more than 4% per year. Our fourth growth opportunity is the biggest change compared to the current strategy period, growing in the small business segment. Earlier, we did not have the digital capabilities in place to focus on this segment. Now we do. There are 2 reasons why this segment is an attractive growth area. We are below our natural market share and small companies have a high deposit to lending ratio and many ancillary business opportunities generating attractive returns. We will be welcoming 50,000 net new customers to Nordea through our focus on new customer acquisition and an uplift in our offering.

As already mentioned, cash management is the anchor product for deep relationships and house bank position. For example, for mid-corp customers where we have the cash management, we generate about 8x more income, including income from, for example, markets, savings and trade products. Therefore, we will invest to maintain our leading position, always with the ambition to be the house bank. We know exactly which features need development next, and we have the plans in place to do so. Secondly, we know that small businesses spend a significant amount of time on financial administration. We want to give that time back to the entrepreneurs to run their businesses. This we do by building a digital financial hub that goes beyond banking, integrating banking and financial management in one place, our Nordea business platform. Lastly, our experience shows that building sector-specific offerings and expertise strengthens our competitiveness. We will expand the coverage of sector expert teams to important and high-growth sectors across the Nordics.

The third pillar of our strategy is about leveraging Nordic scale. First of all, we will improve productivity in the front line. With AI-powered frontline tools that support advisers with customer benchmarks and insights, we will drive smarter engagement and a more efficient way of working. Our Nordic scale is also an advantage in the lending process, which is one of the most expensive processes in a bank. We have started digitalizing this process with a digital workflow that enables straight-through processing. More than 50% of credit cases above EUR 1 million are already managed on this workflow. It will make borrowing money simpler, more transparent and faster. Finally, with our Nordic scale, there is an opportunity to drive efficiency in payments. We will concentrate volumes onto a Nordic platform, reducing unit costs while enabling more self-service, better scalability and more agility.

To conclude, we want to be the preferred financial services partner for SMEs in the Nordics. Our 2030 target is a sustained high profitability of greater than 15% return on allocated equity and a cost/income ratio below 39%.

Thank you. I will now hand over to my colleague, Petteri from LC&I.

Thank you, Nina, for that strong Business Banking plan. My name is Petteri Ankila. I'm proud to represent the most profitable Large Corporate & Institutions business in our Nordic region. Entering the new strategy period, we will focus on profitable growth while leveraging the high quality of our franchise. We want to become a leading LC&I business in all 4 home markets. We're in an ambitious yet realistic growth path while continuing to keep the costs low and maintaining our high level of profitability. I will now walk you through how we will achieve this.

Our starting point is strong. We are a reliable and trusted partner with deep and personal customer relationships across the Nordics. We have leading market positions in all 4 countries with particular strongholds in Denmark, Finland and with our private equity franchise. We have a resilient and well-diversified business model across geographies, customer segments and income lines. Roughly 75% of our income is coming from stable, recurring lending, deposits and transaction banking services. We are a leading debt and capital markets franchise in the Nordics with broad equity and debt financing and structuring capabilities. This is evidenced to us by being continuously selected by our customers to support them in their large strategic transactions. We are well positioned for growth with a unique combination of Nordic scale and local presence.

Since our Capital Markets Day 4 years ago, we have repositioned ourselves, transforming into streamlined and return-focused business supported by strict cost and capital management. We have delivered on our strategic priorities and financial targets, achieving an industry-leading approximately 17% return on allocated equity and a low cost-to-income ratio of around 40%. Success has been achieved by driving income growth by being very close to our customers, but also we have broad mix of structural cost reductions and enhanced capital efficiency measures such as originate to distribute and risk-sharing transactions. We have delivered what we promised, and this supports our transition into the next strategy period.

So our vision is to become the preferred financial partner for large corporates and institutions in the Nordics. We have clear priorities how to achieve this. Those are: one, grow across priority segments and outgrow in selected markets; two, lead with strong value propositions to increase customer satisfaction; and three, operate with scale advantages and enhance our advisory effectiveness through data and AI. As we deliver results within these strategic priorities, we are to grow approximately 2 percentage points above the market. We will invest in selected strategic areas. In addition, we will leverage our Nordic strength and operational power resulting in efficiency improvements. All in all, we will commit to deliver a cost-to-income ratio below 37% and return on allocated equity of more than 15%.

I will now further elaborate on our plan, starting with the growth. Our focus for the next strategy period will be delivering profitable growth with a special focus on Sweden, Norway, increasing gross sales and growing the infrastructure segment of our leading private equity franchise. Firstly, we will win in Sweden by growing revenues more than 2 percentage points faster than the market. We will deliver this through a strong focus on real estate, corporate infrastructure and event-driven transactions. We will deepen our existing customer base while growing in selected segments supported by increased proactivity by our client-facing people. Furthermore, we will grow revenues in Norway more than 2 percentage points faster than the market also. To achieve this, we will leverage our well-established platform in Norway and sector expertise, which we have in-house. We see an opportunity to increase our focus on the growing shipping and real estate segments while also increasing our penetration in the fast-growing transition finance and seafood segments.

Secondly, we will deepen our customer relationships through product leadership by investing in anchor offerings and commercial excellence tools. We will strengthen our full service offering, including a leading corporate payment solution. We will improve our sales efficiency and leverage our risk management capabilities in markets and our leading debt and capital markets franchise. This will result in total ancillary income growth of over 4% per annum. Thirdly, we will build a leading infrastructure financing portfolio within the private equity segment. Based on our current leading position in Nordic sponsored LBOs, we aim to complement this position with the build-out of infrastructure-related financings. We aim to take a more Nordea-like portion of this sector with strong financing demand from our customers. To summarize, by accelerating our take-up of these identified opportunities, we will grow revenues faster than the market and strengthen our position as a leading LC&I business in the Nordics.

To succeed with our ambitious growth plan, we will enhance our customer value propositions and relationship model and improve customer satisfaction. First and foremost, strong customer offerings and relationships are the key to growth. With the customer at the heart of everything we do, we set off with a strong commitment and plans in place to improve customer satisfaction. We will develop a leading relationship model with the goal to reach or retain top 2 positions for customer satisfaction in all 4 countries. Our proposition is built around being a safe and trusted financial partner with deep expertise and strong personal relationships. Comprehensive banking solutions through a broad and leading product offering is a must. In particular, cash management is a critical anchor product and relationship driver where we will upgrade functionality, user interfaces and connectivity to reach top 2 position for this product also.

Lastly, we aim to grow our sector focus. Our skilled people with broad Nordic market understanding and industry-specific knowledge will be equipped to deliver the right strategic advice and solutions customized solutions for our customers. This will be boosted by accelerating of data and analytics insights and support. These 3 levers are key drivers for growth and customer value.

Our Nordic scale is a true competitive advantage compared to our Nordic main LC&I peers. We will further unlock our scale potential with a focus on enhancing our advisory effectiveness and transfer customer engagement through data and AI. We will also be future-proofing our core product infrastructure to secure modern, resilient platforms and services. This will benefit our customers in all major product areas, in particular, in corporate lending, but also in payments and foreign exchange as additional examples.

If we zoom in into the corporate lending, which is our main income contributor with over 50% of our income pool, current credit processes are still too manual and way, way too long lead times for our customers. Therefore, as one of our Nordic scale initiatives, we are focused on improving the process to develop a digital automated and data-driven lending journey. We will digitalize approximately 80% of the end-to-end corporate lending value chain, which includes also corporate customer in Business Banking with Nina. With improved efficiency and quicker time to decision, we will reduce the marginal cost while improving customer experience at the same time.

So our LC&I 2030 strategic agenda is clear. We will grow above the market with special focus on Sweden, Norway, increasing cross sales and the infrastructure segment of our leading private equity franchise. We will do this while maintaining the high quality of our franchise, enabled by leading offering and Nordic scale. We have the best, passionate and competent people, a real winning team mentality and drive for everyday improvements to serve our customers even better tomorrow than today. This is how we will realize the potential of our business. Our foundation is strong, and we have what it takes to become the preferred financial partner for large corporates and institutions in the Nordics.

Thank you. That concludes our 4 business area presentations. If we have time, we will now pause for a 15-minute break. Thank you.

[Break]

Ladies and gentlemen, we kindly ask you to retake your seats.

Welcome back from the short break. I hope you're getting ready for the next presentations. My name is Kirsten Renner, and I'm the Head of Group Technology and CIO. It is my pleasure to share with you how we will leverage technology, data and AI to deliver on our strategy.

Financial services are undergoing a major transformation driven by technology. We see customer expectations continuously increasing. Modern infrastructure like cloud and soon quantum computing creating new opportunities. And AI is at an inflection point where Gen AI and Agentic AI will disrupt our lives. I believe Nordea is very well positioned to capture this opportunity with technology, data and AI being at the heart of our 2030 strategy.

Let me share with you how we plan to deliver what we call Nordic scale. We have a very strong starting point, but you might remember that until 2019, we had a vision that our new core banking platform would replace our entire technology estate. However, we've learned along the way that a one-solution-fits-all program is not the best way to go, or as Frank said, there's no silver bullet. We have learned that technology modernization does not start from implementing a new technology tool. It needs to come from solving a customer problem. And when we work to deliver for the customer, we modernize the technology as we go.

We also learned that transformations are not executed as a one big bang program, but need to be modular, multiple smaller changes that deliver real benefits and can happen in parallel. This is why our Nordic scale will start at the customer, not the technology, and it will be delivered in parallel streams.

In the past years, we have applied that learning already, and we have focused intensely on our customers. We have prioritized the technology that mattered most to them, digital front end. We have leveraged our Nordic scale by developing one Nordic solution and deploying it across all 4 countries. This has helped us to achieve a market-leading position in digital banking across the Nordics with top ranking in mobile app and digital front-end experience.

Today, we are proud that we provide 100% self-service in daily banking, and we have over 5 million digitally active customers. In the coming strategic period, we will again make a step up, extending this good work to also address the technology behind our products and processes. We will leverage technology, data and AI to outperform our competition in both customer experience, resilience and cost efficiency. In short, the same way we delivered on our digital ambitions, we are now building a modern, scalable technology backbone that delivers faster value, higher resilience and sustained competitive advantage for Nordea across our channels and markets.

You have heard Frank and my business colleagues speak about the growth ambitions and our Nordic scale plans before the break. I will now elaborate on how we can achieve this with positive jaws. In short, we're streamlining our customer journeys with a Nordic-first approach to enhance customer experience and increase efficiency. Nordic-first means that whatever we design and build for our customers, regardless of which country the wish started, will be done with our Nordic customer and business in mind. This way, we will be faster in providing new features to our customers across our region. And it's not about building a new one-size-fits-all solution. It's about maximizing reuse of local expertise and group-wide technologies.

To deliver seamless customer experience, we do not only harmonize products and processes, embed AI and modernize the underlying technology and data estate, so we really deliver Nordic skill front to back. This way, we are convinced that we can sustain our market-leading customer experiences, deliver even better products and processes at significant efficiencies. Let me make this promise very concrete. Through Nordic scale, we will deliver EUR 600 million of gross annual savings by 2030.

In the next pages, let me elaborate on the components that add up to these savings. Talking loan products. The transformation is all about fast, transparent and scalable processes through automation and digitalization. If I put it very simple, our customers just want to know whether we grant them their loan application. And if so, how fast can they access it. So we automate our processes, enrich them with AI data collection for faster origination, and we use AI productivity for smoother fulfillment. By 2030, we will have 90% of the mortgage loan promises automated and 60% of the SME loans straight through process.

Looking at savings and investments, our focus is on delivering a market-leading digital experience. As you've heard from Sara and Martin, we built one digital platform for our customers, enabling fully self-service savings and using AI for proactive and personalized interactions. The digital savings and investment platform will be built on our consolidated and resilient markets infrastructure, the same platform that our dealing rooms use to access the Nordic and international markets. This will provide a fast and smooth experience for our retail customers, self-directed investors and Private Banking segments. By 2030, we aim to support our advisers with digital tools, data-driven insights and simplify processes, having between 30% and 50% higher advisory efficiency across our businesses.

Now we deliver fast, simple, resilient and trusted payment solutions. Before the break, Nina and Petteri have spoken about our payments ambitions already. Today, we have our global payment engine. This is a resilient and modern payments platform that enables us to provide payment services, including instant payments and account-to-account transactions. And we are incrementally migrating our legacy payment flows out of our legacy applications onto this engine, resulting in 45% less applications in the payment space by 2030. When it comes to cards, we streamlined our products and increased the self-service availability by 40%, making it easier for our customers to manage their cards themselves. With our modern and Nordic payments infrastructure, we will be ready for new developments like digital currencies.

AI. It's not new to Nordea. We're building on a strong foundation, and we're accelerating adoption across our organization. Our chatbot is widely used by customers and employees, and many of our people are using AI assistance and productivity tools daily. We've also applied AI in our financial crime prevention when we automated parts of the know your customer and transaction monitoring processes. We're accelerating now our AI journey by working on 3 time horizons for AI value creation. We continue to scale our everyday productivity like coding assistance and tools to provide customer-facing recommendations. But we also transform core business processes like lending with AI-driven automation for personalized conversational banking experience. And in the longer term, we foresee a world where customers' AI agents are talking to our AI agents about their financial services needs.

We expect Agentic AI to reinvent customer services and internal operations to next-generation autonomous banking experiences. And we will be there to provide safe and trusted AI solutions. It's going to be very exciting times, if I may say so. So technology and data is central to our competitive advantage, driving superior customer experience, resilience and productivity.

We apply our Nordic scale strategy front to back to fully reap the benefits. We begin with the customers' products and processes and then continue to simplify 4 key layers: applications, data, infrastructure and people. First, we concentrate the functionality onto fewer applications. Second, we simplify the data architecture to faster time to value. Third, we modernize our infrastructure, transition to a hybrid cloud environment where we can blend the best features across public cloud and our own data centers. And finally, we introduced best-in-class engineering tools and practices to make our engineering talent more efficient.

Nordic scale for technology means that we enhance and modernize our applications, data, infrastructure and the way we work. As a result, we will have a simpler, more modern technology estate with about 60% of our workloads on modernized technologies by 2030. This is quite an achievement considering we deliver this without closing the shop or diverting our focus from our customers. On the contrary, we're accelerating modernization of elements with long life cycles. I am convinced this positions our landscape competitively within the European financial services sector as our modernization will deliver faster time to market for new customer features, strengthened resilience of the platform and greater cost efficiency.

I know I've shared a lot of details on our plans and how we will deliver on our promise. So let me wrap up with a summary. In this strategic period, we will harmonize group-wide data to deliver more personalized sales and services. We will streamline and automate journeys in all our channels with Nordic first. We will embed AI to drive continued business value while stepping up modernization of our technology and data estate. This will strengthen our system resiliency and security, and it will boost efficiency through stronger engineering practices and teams. Our targets towards 2030 are to achieve a gross annual cost saving of EUR 600 million and to have 60% of our workloads on modernized technology. In one sentence, we will deliver Nordic scale, accelerated by technology, data and AI.

I would now like to welcome our CFO, Ian Smith, on stage. Thank you.

Hello, everyone. I'm delighted to be here today to walk you through our financial plan and flesh out the path to our 2030 targets. We're building on a foundation of real strength, and I'm excited to share how our strategy will deliver for Nordea, our customers and our shareholders. As Frank highlighted in his presentation, over the past 6 years, Nordea has delivered a significant turnaround in profitability from underperformer to market-leading return on equity. In doing so, we've outperformed our peers in the measures that matter. And our EPS growth has comfortably exceeded that of the European Banks Index.

Rates have helped lift performance in recent years, but rates have helped everybody. This is not a story about higher rates or silver bullets. It's about relentless focus on growth, operating performance and structural improvements across many different areas. And importantly, Nordea offers something that few of our peers can match, leading returns with low volatility.

Key to this is diversification across countries and business mix, across P&L revenue lines and in our well-constructed credit portfolio that avoids concentrations. We're in a strong position today, having delivered on all of our targets in our current strategy period. Now Frank has covered in detail what makes up that strength and performance improvement across the board, not simply in financial metrics. We've delivered on growth, winning market share, especially in Sweden and Norway. We've improved our operating efficiency despite inflationary pressure while investing heavily in growing our business and making Nordea a more resilient and secure bank. Alongside investing, we focused on day-to-day productivity and efficiency bit by bit throughout the period, the Nordea Lifestyle.

In the first 9 months of this year, we were the best in market on ROE. And in our recent Q3 results call, one analyst asked me a good question about our cost-to-income ratio compared to peers. And despite heavy investment in the last couple of years, we're significantly better than our European peers, of course. And the latest results show that we are firmly in the pack amongst our Nordic peers. Now obviously, in the pack is not good enough for this team. And today, we'll show you how we improve our operating efficiency over the coming years.

We've delivered on our targets while maintaining a low cost of risk and capital returns to shareholders have exceeded expectations. At our last CMD, we promised EUR 15 billion to EUR 17 billion of capital returns to shareholders by the end of 2025. Including the current buyback program, that figure will be almost EUR 17.5 billion. We're well placed for the road ahead.

The economic assumptions that underpin our plan for the next 5 years highlight the strength of the economies in our 4 home markets, higher than the European average. Importantly, we expect to see relative interest rate stability, a contrast to the ups and downs of the last 3 years. We plan prudently. It gives us a strong base from which to deliver further value creation, growing income and delivering superior structural efficiency gains against the backdrop of a stable economic platform.

Frank has introduced our 2030 targets and the strategic priorities that will help us deliver it, and my colleagues have filled in the details. Our plan is clear: deliver superior EPS growth at sustainable market-leading profitability. We will grow faster than the market and drive structural efficiency through Nordic scale. So our firm 2030 targets, ROE above 15%, that's a minimum 15%, throughout the strategy period. And when you consider that our plan is based on strong growth in capital-light deposit and fee income, improved efficiency and our customary capital discipline, we expect it to be significantly higher in 2030. Our cost-to-income ratio in 2030 will be between 40% and 42%, excluding regulatory fees, delivered by positive jaws over the strategy period. And all of this amounts to an ambition to deliver around EUR 2 EPS in 2030.

Now what's the difference between a target and an ambition? At Nordea, we treat a target as a firm commitment to deliver in a broad range of market conditions. But one thing we cannot control is market growth and macro. So our ambition is based on market growth assumptions that may turn out differently and therefore, give a different outcome, in this case, for EPS. We've talked about the key building blocks of the strategy. This slide summarizes them well. Strong income growth and structural efficiency gains are at the heart of our plan.

Income growth comes from 2 different blocks. Holding market share and growing at pace with the economies in our 4 home markets delivers income CAGR of 3%. And then there are key areas where we think we have the keys to unlock higher-than-market growth. We'll deliver structural efficiency improvements by leveraging the full potential of our Nordic scale. This is a pivotal element in our plan as it is a core differentiator to our peers. And lastly, I want to highlight capital. Capital excellence will continue to be an important tool to deliver ROE and EPS. We'll continue to operate our business for capital efficiency and in accordance with our capital policy. You can expect our strong capital returns to continue.

Now as I mentioned, we view our income drivers through 2 lenses: what can be delivered by growing in line with the economy, market momentum, if you like, and where we can grow faster than the market. Taken together, we estimate total income growth of 1.5x the market growth rate. My business area colleagues covered Nordea's growth potential in lots of detail, so I'm not going to repeat that here. But let me just say, there are no heroic assumptions here. We will grow income by leveraging Nordea's strong market position across the Nordics and by delivering on clear growth plans in focus areas where we have both a right to win and a growing track record, such as Sweden. Importantly, this growth comes with improvements in efficiency, and I'll turn to the cost aspects next.

Growth with strong cost efficiency is critical to the continued improvement of our operating performance. Now entering this new strategy period, the group's cost base is around EUR 5.4 billion. Around 60% of that is people and a further 20% is technology, together 80% of our costs, where inflation is somewhat higher than CPI. Average wage inflation in 2025 across our locations was around 4%. And while the outlook is for that to moderate slightly, it's still above headline. And IT cost inflation isn't going away anytime soon.

So we assume regular cost inflation and cost increases from higher volumes of around 4%, of which we will offset a portion with our regular productivity gains and other efficiencies. Our regulatory fees, of course, hard to predict. And absent any other information, we assume a modest increase driven by higher volumes. And we'll also continue to invest in making Nordea, a more resilient bank.

Cost growth from business momentum, therefore, is expected to be around 2.5%, with modest positive jaws. What makes the real difference to our operating performance is what we do on top of that. The income delivered through our 6 growth areas presented by my colleagues today comes with a low marginal cost income ratio, supported by investments in technology, limiting the impact of incremental run costs for the growth areas. And the Nordic scale will take further cost out for some additional investment.

The Nordic scale initiatives set out by Kirsten will deliver right across the group, will give us at least EUR 600 million of annual gross cost reductions by 2030, more than 10% of the cost base. Investment to deliver those process and technology efficiencies, along with increased focus on AI will reach a run rate of around EUR 250 million by 2030. This is not an increase in our overall investment need. We're already investing heavily, and you've seen our step up in technology and risk management investment in the last couple of years. This is a rotation of investment spend where Nordic scale becomes the #1 priority for Nordea. This is hard, focused work across a wide range of detailed initiatives and it requires discipline to deliver. But we're very confident in our plan and the savings that will accrue.

Together with effective management of momentum cost inflation, our low-cost incremental growth and the benefits of Nordic scale, we will limit group cost increases over the period to 2030 to 2% CAGR or better. Just to be clear, this level of cost growth is planned to support substantial growth in income. And if the income environment turns out to be different, we will manage costs accordingly.

Now process efficiencies and greater use of technology, including AI, will mean fewer people in Nordea. And as demonstrated already this year, you'll see net reduction in FTE over the strategy period. This all requires some restructuring costs. And the amount is not yet settled, but it's not expected to be material. And certainly, lower than the last restructuring provision we took 6 years ago. And this is likely to be booked in full in 2026.

So with 2030 cost growth limited to 2% CAGR or better, what's the outlook for Nordea's cost-to-income ratio? A reminder first, we're going to change how we report our cost-to-income ratio from 2026 onwards. We'll exclude regulatory fees. We think it's sensible to set aside an item we can't control and focus on the things where we will make a positive impact, and the revised approach also makes us consistent with most of our Nordic peers. Our cost-to-income ratio exiting 2025 will therefore be around 45%. And we expect to bring this down to 40% to 42% by 2030. While, of course, we don't know what other banks are aiming for, we believe this will be very strong compared to our Nordic and European peers. The improvement in our cost income ratio comes from an above-market income growth, so more than 3%, together with cost discipline that delivers positive jaws.

Now the income growth and the structural cost savings net of investment will build over the period to 2030. And we're going to establish strong momentum in our growth initiatives right off the back. Martin calls me every week to ask me how many new private bankers he can hire. And we continue to invest to deliver on Nordic scale. But our progress will not be linear, meaningful change doesn't always go in straight lines. But we aim to improve our operating performance, and therefore, our cost-to-income ratio every year from 2026 to 2030. And we're confident we'll meet our target of 40% to 42%. Now our commitment is to give you plenty of color as we go on how our key growth and efficiency initiatives are progressing, so you can assess that we're on track to deliver and we'll provide our usual annual guidance on performance metrics.

So moving from cost-to-income ratio to loan losses. We gave revised guidance on annual loan loss charges on our 2022 Capital Markets Day where we said that 10 basis points on average was what you could expect. Since then, and despite the challenges for our customers posed by inflation and higher interest rates, the Nordea portfolio has been strong. Our underwriting and credit management approach has served us really well over the years, and we aren't making any changes to them. And we don't expect to see a shift in the portfolio mix either. So we repeat our guidance of around 10 basis points for the coming strategy period. Although the quality of the credit portfolio suggests it ought to be a little lower than that in most years.

As you know, we've been making small releases of our management judgment buffer over the last few quarters. This has been driven by strong portfolio performance that meant the reasons for holding the buffer have diminished over time. As things stand, and we should always be mindful of potential shocks given the turbulence over the past couple of years. In 2026, we expect the buffer to be fully utilized in strengthening our model provisions or released.

Turning now to capital. Capital excellence has been an important lever over the last 4 years to drive profitability. It will continue to be an important tool in our new strategy to create shareholder value and support higher profitability. And I can say, we've got a strong reputation in this space. So let's start by highlighting some important capital assumptions that underpin our plans.

We assume a working CET1 ratio of 15.5%, similar to today's level. Capital requirements have stabilized, and we don't expect requirements to increase markedly from this point. Our capital policy is also unchanged. 150 basis points of management buffer above our CET1 requirements, appropriate also for the new strategy period. So we move on to the dynamic pieces in the plan. We'll continue to generate capital strongly around 80 to 90 basis points per quarter before dividend as previously guided. And we'll deploy this capital to fund our growth ambitions and distributions to our shareholders.

Over the period, 2026 to 2030 all else equal, we expect to distribute more than EUR 20 billion to shareholders via dividends and buybacks. And of course, this excludes the impact of any Nordic bolt-on acquisitions that may occur. But you know our approach, we won't sit on excess capital. We expect REA to grow by approximately EUR 40 billion, primarily driven by our ambitious growth plans, but also from the introduction of the output floor under Basel IV.

Now before the outlook floor becomes finding, as previously guided, we expect real relief of EUR 4 billion to EUR 6 billion from our retail IRB model upgrades. Our nonretail models have been submitted for approval, and we currently expect those models to be implemented in 2027. For now, we assume no real reductions from the nonretail models in our capital plans. We consider that REA inflation from the output floor is very manageable with clearly defined mitigating actions. We assume a EUR 10 million REA increase or 5% inflation, net of efficiency actions such as securitizations.

And finally, on dividends. Firstly, our annual dividend payout policy is unchanged at 60% to 70%. But I'm pleased to announce that from next year, subject to shareholder approval, we'll introduce an interim payment of the annual dividend, thus moving to 2 dividend payments per year. We plan to make advanced distributions of the annual dividend to the tune of 50% of first half profits. And this is how it's going to work in practice. Our new dividend approach should be in place next year following the Annual General Meeting in March 2026. After shareholders give us a mandate, we'll declare an advanced distribution at the 2026 Q2 results based on first half profits, and this will be paid after the summer. Later, at the AGM in March 2027, we'll propose the full dividend for the year 2026. If approved, shortly after the AGM, we'll pay out the full year dividend less the advanced distribution made 6 months before. And I trust this initiative will be welcomed by our shareholders.

Back in 2022, we presented a view like this of our 18 business units, primarily 4 BAs across 4 countries. And we talked about our performance management approach in that matrix. That approach will continue. We expect each business unit to deliver growth and improve profitability, and we allocate capital to drive those outcomes. The BA and business unit targets are always clear and well understood. It's a critical underpin of our performance management approach and how we drive maximum benefit from our scale and diversification.

Nordea will be the best-performing financial services group in the Nordics in 2030. We target a sustained market-leading ROE, always above 15% and expect our ROE to be significantly above 15% in 2030. With above-market income growth and cost efficiencies driven by Nordic scale, our cost-to-income ratio in 2030, excluding regulatory fees, will be between 40% and 42%. And we will grow EPS strongly throughout the period with an ambition of around EUR 2 per share by 2030.

Thank you for joining us today, and we really look forward to answering your questions.

All right. So we are ready to start taking questions. So just a quick instruction in the room. So if you can raise your hand, you'll get a microphone brought over and then state your name and the firm from -- where you're from before the question and maybe limit to 2 questions max. While we get the microphone to the first one, I'll shoot off one from the webcast, which is from Nicolas McBeath. He asked about the flexibility around the guided 2% cost growth. So if revenue growth turns out below your assumptions, will you take down cost growth to get to the 2030 cost income target? And how dependent on the revenue environment is the cost income target?

Ian, please.

So we -- thank you. I mean we highlighted that, of course, the world can turn out differently. I think what is important to understand here is we have clear plans for cost efficiency and cost reduction. Some of the cost increases that we would experience would be related to growth. And of course, if that turns out to be lower, then we have the opportunity to adjust both cost and investment. So I think the key message to take is very focused on delivering an improvement in the cost-to-income ratio. And that commitment is there irrespective -- certainly to make that improvement irrespective of the income environment. But the reason we have a range is because we recognize that uncertainty.

And I see Andreas has the microphone. So go ahead.

It's Andreas Hakansson from SEB. Some of us are getting a bit old and 2030 is far away. So I'm trying to understand, if we look -- you talked about the EUR 600 million savings by 2030, but you need to take investments to get there. So should I understand that there will be investments upfront, which means that upfront, you're going to have higher than 2% cost inflation, and it's going to be lower towards the end of the plan? And can we try to get some sort of feeling that where we would be like in 2027, 2028, when I'm still going to be modeling this bank?

Yes. Ian, will you try to help.

Yes. So thanks, Andreas, and I'm sure you're younger than me, so. But as I said in my presentation, yes, we do have this balance of investing to improve customer outcomes, but also to deliver on structural efficiencies. So our progress towards our 40% to 42% cost-to-income ratio as I said, will not be linear. But then also understand our commitment. We said that we would expect to improve our operating performance and our cost-to-income ratio every single year through this period. So expected to build and deliver more strongly towards the end of the period for the reasons you outlined, but we will improve every year.

Shrey Srivastava from Citi. Another one for Ian, if I may. Within the bridge from your cost income this year to the cost income in 2030, there's obviously a sizable NII component. And when I look at your rate assumptions, I can see your forecasting basically in line with the forward curve rates to sort of increase going through to 2030. If we were to disaggregate the NII uplift from structural business improvements and volume growth and the impact of rates, how much would this affect your cost-to-income target?

So there is absolutely something -- a strong benefit from having positive rates. And we do expect positive rates throughout the period. And I think that's very different from when we stood here almost 4 years ago. And those rates contribute both in terms of lending margins, but also deposit margins. But the strength of this plan is it delivers on every line. And I'd point, I guess, to the ambition we have in our PBB and Asset & Wealth Management business for strong growth in savings. And those elements of our plan are income growth plan, but are not entirely NII dependent. So savings, life and pensions, working with small businesses or cross sales, all of those things that deliver above-market growth that aren't NII dependent. So I think our plan is strong and stands on many legs.

Tarik El Mejjad from Bank of America. Just a couple of questions, please. First, on costs. I mean why the pan-Nordic scale AI does not allow you to grow cost less than inflation. What's the burden there? So 2% is the kind of implied cost growth you have and the same as inflation you have in your assumptions? And same question also on AI. You mentioned that numerous times in your presentation. So when you had these 3 time frames, when you have the long-term buckets, how long term are we talking? And the agentic kind of AI, which is clearly an evolution in the banking system has been already started in some Eurozone banks, so I mean, clearly, you want to be in the forefront of AI, how fast that's going to be implemented?

Ian, if you take the cost part, then Kirsten will take the AI part, please.

Yes. So look, we -- CPI projections are 2%. As I said in my presentation, 80% of our cost base inflation is 4% or more. So what we're committing to here is actually below inflation cost growth over the period. Wage inflation alone is around 4%. So I think if you tease apart those different elements, our inflation -- real inflation is above headline, and we're doing better than that. So I think this is actually a pretty strong cost performance.

So maybe on AI, these 3 horizons are within the strategic period. Agentic AI has already started. There's something we need to consider when we talk about the definition of Agentic AI. There is AI agent small things that take pieces of your workflow or that aid advisers when they talk and support customers. That is shorter term, I would say. But the longer term, an agent truly autonomous talking on behalf of the bank to customers has obviously also a risk profile that we need to be very certain of before we just put it out there. So definitely interesting technology developments, and we follow it closely, but there's both customer use cases that we're investigating, customer appetite, risks, risk understanding, risk appetite, and that will drive the timing of our deliveries.

This is Martin Ekstedt from Handelsbanken here. Can I just first check in on the M&A topic with you. There was very little mentioning of M&A today. So I wanted to check, is it baked into the plan that you presented today that you will continue to do roughly 1 M&A deal consuming, say, was it 30 basis points of core Tier 1 per annum roughly over this period. So that was my first question. And then secondly, maybe one for Ian. Could I just quickly check if the advanced dividend distribution, I mean if the dividend payout ratio target is 60% to 70%, why is the advanced dividend distribution set at 50% and not at 60%?

Thank you, Martin. So let's start with the M&A part. In our updated strategy, we have our bolt-on acquisitions as a strategic pillar, but of course, the right target must be for sale. The plan and the figures that we show here are all based on organic growth. That means that we will deliver with the business we have. If something comes for sale, well, of course, assess what that will deliver of value to our shareholders and what it will consume when it comes to capital. So meaning they are not included.

And on our ambition for advanced distribution proportion, I guess, Martin, at that level compared to other banks across Europe that distribute, we are more generous. And I think that reflects the confidence in the stability and consistency of our earnings. And we balance that generosity, I guess, with understanding that there's more development to go through the year. So I think it's a good start point for us and of course, more generous than our European counterparts.

Okay. I think Johan first and then Magnus next.

Johan Ekblom here from UBS. So 2 questions, I guess. First to Frank. I think at Q3 earnings call, you promised us some information in AI. So thank you very much for that. But you also said that you talk about things that maybe didn't work. There were some things that were very promising and some things where costs were prohibitively high. So maybe some more color on where have you explored AI, where current cost structures don't allow you to proceed. So interesting to see what those kind of cases would be.

And then a nitty gritty, maybe for Ian here, just on the cost side, I guess, 2 questions. You said that the restructuring charge next year is likely to be smaller than the one in 2019, which I believe was around EUR 200 million. Is that included in the improving cost income next year, so that's including the restructuring charge? And then also with these investments you're making, is there any change to your capitalization policy? Are there any large investments that are expected to be capitalized at the front end of this period, just so we can understand the developments?

All right. Thank you for the questions, Johan. So let me start with the AI and then Kirsten, you could check in. There's no doubt that AI will transform many banking processes over the coming years. That we are very certain about, honestly. But there's no doubt either that you should go blind into investing in AI because it's a hyped topic, and you must show the world that you do as well as the others, you will lose. So you will have to figure out where do you get enough return for the money because what you will figure out is, it is quite costly in several areas to get right and to deliver value.

I think where we are now is in a good place, as we have not been a fast mover, we have probably been a fast follower, making our learnings, understanding where the benefit comes, understanding what the risks are, understanding where we can scale. And that's what we are going to do now. And the cases that we have is actually quite promising. But yes, a bit more color, please?

Yes. So maybe to add the color. I think if you look at the plain vanilla productivity tools that everybody is rolling out very widely. They're nice, they're convenient, but do they really deliver full productivity. We like them. We appreciate them. We work with that, but there's actually much more potential in using AI and AI beyond machine learning when we automate our processes. So what data can you effectively use? And how can you generate GenAI, how can you generate something that advisers or ultimately customers can use? I think the processes that we've most experienced with in the financial crime prevention space, that is where it truly is helping us in the example of know your customer and towards transaction monitoring. So it has to be -- if I can call it that, bigger than the plain vanilla productivity tools that you would use at home or maybe also in your collaboration tooling.

So definitely, that is where we want to bet on more and invest in more. And if you then look at what are the examples that we also spoke about today, in the product flows, where we have to collect data and recommend customers that is where GenAI more than robots can add value. Mortgages, consumer lending, corporate lending, payments flow, savings and investments, where investments, I think, is a next level of interest in when it comes to conversational AI.

And then the last part of your question was that...

So Johan, you have some technical points. First, on capitalization. No change to capitalization policy. But importantly, actually, what I think we'll see over the strategy period is probably slightly lower capitalization rates because the things we're investing in hybrid cloud transition, early-stage AI lend themselves less to capitalization. And there's nothing in the works in the short term that is a large spend that goes immediately onto the balance sheet. So I wouldn't be looking for anything unusual there. And then in terms of improving our cost/income ratio every year and importantly, next year. Our commitment there is excluding any restructuring costs.

Then Magnus up here.

Magnus Andersson at ABG Sundal Collier. First of all, the message has been quite clear about winning Sweden and growing in Norway. So I was just wondering if you could say something about how you look at Denmark and Finland and specifically, potentially inorganic growth opportunities in Denmark considering what's happening there, we've been waiting for consolidation for a long time.

And secondly, perhaps on -- just on costs, now you communicate around 2% cost growth, roughly 2 percentage points of jaws. In the last plan, you had 1% to 2% cost growth, 2% jaws, should we read that as that you have come longer in your efficiency-enhancing journey and now focus more on growth although it's perhaps not a huge difference, but at least slightly more than you did in the last plan for that reason?

Thank you for the question, Magnus. I'll start with the M&A part, and then Ian will take the other part of the question. So let's be very clear. This is the strategic plan. So why we highlight Sweden and Norway is that we want to change our size structurally in these 2 countries. We have lower scale there than in the 2 other countries, but it's not about not growing in the other countries. So when you think about the 6 drivers or levers we have, the growth areas, 4 of them cuts across the entire Nordics, private banking, cross-sales, life and pension and the small businesses, that goes for all countries. Then we have 2 countries where we will invest even more to structurally improve our size and our position.

So let me say this, we have the same recipe in the other countries as we have had until now, plus the 4 growth pockets that we have now in our areas we have, and we have growth plans in place in both the countries that you mentioned, Finland and Denmark already now. So no big change in that regard, just even more attention to structurally lift the 2 others to more -- just to get more the size market share-wise, as we have in Finland and Denmark.

May I just follow up. Could you say something about the profitability differences between your 4 markets?

The best I can say is that you can look at the Ian's charter, there you'll see it roughly where the business areas are. We have 18 business portfolios and all are actually in very good shape. Some are in very, very good shape. Some are fine and some are on the way. Most are really looking good. Finland and Denmark are a profitable market we are very happy about and they are in a strong position. We want to grow a little bit more in Denmark in a couple of the areas, but the starting point is very, very strong.

Finland is a 30% market share country for us. It's highly profitable. It's a more slow growing country right now. We believe that they will improve, but we still have pockets where we can outgrow the market, and that we will ensure will happen. And one of the areas is private banking another one is life pension, cross-selling and small businesses.

When it comes to bolt-on acquisitions, so one of you said that we had -- that was you, Martin, as I said, we have done one in average each year. That's right. We like bolt-ons, they come with quite low risk. They fit well into the platform we have, the franchise we have. And it's -- we have learned quite a lot on how to implement them or integrate them. So we welcome very much bolt-ons in the Nordics that can strengthen Nordea either on distribution, on product or services like technology or other. And I think I'll stop there then. So very positive, yes.

And Magnus, your follow-up question on those jaws, but also the relative contribution of cost and income. If I take you back to Frank's presentation where we talked about the first 2 strategy periods that we've executed on together. The first was about sorting out the basics. The second was establishing that market-leading profitability through a bunch of different levers. This next one is -- there's a lot more in it, and that's partly why 2030 is so much in focus. We think we've got so many different opportunities, whether it be on the income or the structural efficiency side. Maintaining those positive jaws, at least 2%, I think, over the period is very much in focus. But there is a bit more growth in here. And I think we've been clear about where we think we can grow and why we think we have a right to win. So this is definitely about saying, I think, Frank, profitability is solved. This is now about delivering at that market-leading profitability, but now we need to deliver growth. And I think that's going to be a really strong story for Nordea.

Let's go with Jacob and Sofie.

So first, I just wanted to ask on the IT stack and what you're doing there. So when it comes to the cloud investments and, I guess, inference for the AI, is that going to be something you run? Or is it going to be outsourced? And in that context, do you expect to start disclosing a bit more of those costs in your financial reporting? And then secondly, I guess, on the same topic, a lot of these process improvements that you talk about, do they have staff implications? And if so, what kind of magnitude are we talking about?

Let me start on the tech stack. And let's start at the point, let's recognize that in our sector, the technology has quite a high level of complexity, so do we. We have a blend of data centers, so on-prem technology as well as public cloud. We are growing towards a hybrid environment, which means that we can move workload around between our own data centers and the different cloud providers, which allows you to avoid things like vendor locking. There's -- the investment levels that we have in the plans and the strategic plans include the investments spent on AI. Some of that we do with our own staff and some of that we do with partners. Obviously, we look at which partner on a regular basis and how we work with that where we choose the strategic efforts to do ourselves. But obviously, a cloud hosting is something we outsource.

I'll take the one on costs?

Yes, please do.

So to the extent that we talked today about some big changes in the structure of our cost base, and I also made the commitment that we'll give you plenty of color as we move through the strategy period on delivering the benefits of Nordic scale and also where we're investing. So you can expect us to provide color on how we spend our money because it will look differently. Frank, there was also a question about process efficiencies and people.

So in regards to people implications, we will be fewer people in Nordea during the next 5 years. That's very clear. Technology nowadays plays a significant role within Financial Services, and the role of technology will just increase quite significantly in the coming years as well. So when we let or when we replace people with technology, some will do other stuff. We will rescale or reeducate. We will train people, and we will be better in the meeting with our customers, but the number of employees will go down.

Sofie?

Sofie from Goldman Sachs. So thank you for the presentation. I think it was very clear and maybe just going back to slides that you are going to gain market share, especially in Sweden and Norway. Can you maybe just talk a little bit about from whom are you going to gain market share? And how do you see the competitive advantage we read in the press that U.S. banks have much less regulation. It's easier for them to penetrate in Europe. Southern European banks have a lot of excess capital. They are also looking for growth. You have the fintech sector who is quite keen to grow. So how do you think about like competition in the Nordics over the next 5 years? And also from which entities do you expect to get the market share.

And then just a follow-up question. In terms of the rate sensitivity, you still guide, I guess, for EUR 350 million to EUR 450 million from a 50 basis point cut. So if rates only grow 2% on average in 2030, I guess, that would mean EUR 700 million to EUR 900 million of less revenues compared to your plan. Would that change, the cost-income ratio target because I guess, EUR 700 million to EUR 900 million is around 2% of your cost-to-income target?

And then also a follow-up question on the output floors, when we do the back of the envelope calculation, we get to kind of significantly bigger impacts than 150 basis points. Could you just detail a little bit more where the offsets come from? How much SRTs you're planning to do, what capital optimization you can do? Can you sell assets and how you can mitigate that impact?

Thank you for the questions. We will try to boil it down to 2 as we asked for in the beginning. So the first one will be about mortgages and -- but you also added that question about challenges in general and then rest of Europe, and it became very big question. I would say we are not concerned about the challenges that comes from fintechs or newcomers to the Nordics. This is our backyard. We are very good at what we are doing, and we are developing very fast and learning a lot. We welcome the competition, and we intend to come out of the next period, 5 years period as the winner. On mortgages, specifically on Norway and Sweden. Anything to add?

Yes. Well, our plan is to take market share across the board and especially our incumbent peers. And we've seen it. If we look at the path that we've had in Sweden, we've been very consistently, I think the last 5 to 6 years -- 7 you say, not missing even a quarter of not winning the market. And just the latest -- the last Q3, our front book market share in Sweden was 20%, where the back book is 14%. So it's been very systematic strong progress. And there's -- we will continue. The key elements there is that we have a very strong, I would say, platform to provide a very good digital experience for our customers. And we call it a home buying platform where customers can see very clearly where are they in the mortgage process and they can submit their documents, very smooth and easy.

Then we've been taken care of, and we will take care of our availability and the speed. We hear a lot of our broker -- real estate broker partners that we are very responsive. We're very speedy and that we will continue to do. And then there's one element, which we see both in Sweden and in Norway, and that is our hunger for growth. And that's in the culture. That's very difficult to copy by anyone. And that's very strong, and we are in a very, I would say, positive spiral in both of the countries of really being eager to grow and win the customers. So that's the way.

Thank you, Sara. Ian, please.

Sure. So Sofie, thanks. On rate sensitivity, I'll go back a little bit to my answer to Shrey's question, which is, first of all, this plan stands on a number of legs, not just NII. But if we see rates move differently and go lower than expected, it's not always easy to offset that. And one of the reasons we have a range in our cost-to-income ratio target is to cater for those sorts of differences. So we remain very confident in delivering on our target. And if we have a more favorable rate environment, then you can expect us to be towards the better end of that target.

And on output flows, you need to sort of think about timing of impact here. I'll tease you a little bit. We've had some questions about why go out to 2030 and isn't that a long time. The real -- the biggest impact of the removing of transitional rules happens after 2030. So up to then, we've got gross impact on REA. We estimated about EUR 15 billion. We will mitigate EUR 5 billion of that, we're estimating EUR 10 billion and therefore, 5% reinflation in the plan. The big piece that relates to unrated corporates and the loss of transition rules happens after 2030, but that's also well in hand in terms of thinking through how that gets dealt with.

I think we have Namita.

Namita Samtani from Barclays. My first question, with the cost initiatives in Nordic scale, is Temenos still involved in that? And what's your relationship with now? Or are you -- have you finished that?

And my second question is on large corporates. I noticed on the slide there's an ambition to grow in Norway and shipping was mentioned. And I just wondered why that was the case given the 100% risk weighting there. And surely, that's not a very profitable part of the market for Nordea?

Could I just start with -- before you answer on Temenos and I'll ask others on shipping. You can rest assured that where we spend our shareholders' money will be in areas that are profitable and will add value to Nordea. So we are not here to grow. We could like this grow tomorrow. And we could, by the way, also reduce or improve our cost-to-income ratio very fast. But it's very difficult for most to do it with a market-leading profitability. That's a recipe of Nordea. And that's why we will use this recipe going into the next round as well. So rest assured. Temenos and then Petteri, please.

Yes. So I didn't call out the vendor name, but when I was speaking about the learnings with our core banking program, I think it was about that originally, we believe that this software package would solve all problems in our technology estate. And I think we now have it positioned within the estate. We still work with them on our account within the technologies. And as Frank has mentioned, Denmark and Finland is in there, and we're now progressing to the other countries. So it is part of it, but it's not the silver bullet that just automates everything we have in our state. So we will have different components for products, for processes for digital, but definitely still part of our estate, and I think we have an okay relationship as we go.

Yes. Maybe on shipping quickly. So we see obviously the foreign trade continuing and the shipping growing with that one quite well in the coming years, and we want to be part of that. And they need to also renew their ships with less CO2 heavy ships and engine and whatnot. So we see a lot of interest in that area. We also believe that the risk flows are too high, and we will diminish some of that.

Yes. And just to support on that. So let me take the technical bits here. When we implement our nonretail models, the floor on shipping falls away. Now we can't say what other good ideas the ECB might come up with to counteract that. But when we implement our nonretail models, the shipping floors go. And then secondly, what I would say is that, we often have conversations with investors and analysts around use of securitization and those kinds of things. And we're pretty disciplined about how we use it. But one of the areas where you can find an obvious dislocation between what the market thinks your credit risk is and what your regulator thinks it is, is in shipping. And so as we are dealing with temporary headwinds through a floor or whatever securitization and other tools are also a legitimate way to ensure that you get a better capital outcome on that particular portfolio. So I think it's a combination of -- Petteri says strong demand in that space, presenting a great opportunity for us, and we have line of sight to lower capital requirements on shipping.

And we have a good position in that industry with our clients as well. So it's quite natural.

Then Bettina?

Bettina from BNP. I had a question on margins, actually. We talked a lot about growth today, and it seems like you're very, very confident. And I think someone said hunger for growth. When I think, for example, about lending margins in Sweden on the mortgage side, they are at low levels. What are sort of your assumptions, what happens to those? Is there a normalization implemented in the plan? Or I assume you're not trying to win the growth via pricing? If you just could comment on that?

And then similarly, I think this is a question for Martin. In the Asset Management business, we had a bit of margin compression, and part of it is also due to a mix shift to lower-margin products? And what is your outlook on that part? Do you expect that to continue to stabilize from here onwards?

Could I just start briefly with an overarching answer to that question and then say a little bit about the margins and then over to was it Ian -- or Martin, yes. You're right that the margins across the Nordics right now are a bit compressed. The main reason for that is that the growth has been limited. Is this something we have not seen before? No.

And when you have been running businesses for many, many years in the Nordics, you would have seen this many, many times. We are used to thin margins. I don't think the margins will be significantly different. They will probably come a bit up on the lending side as long as the growth starts to increase, at least that has been the history or our historic development, but why we are quite good running businesses in the Nordics in general. We, of course, best. But in general, is that the Nordics are built on efficiency and execution capability. So we are used to thin margins. And that's why the cost efficiency for Nordic company in the culture of the Nordics means a lot. It starts with being efficient and then the prices we cannot control. So we're very comfortable, we're confident that we will manage this no matter how the margins will develop in the coming years. Martin, over to you?

If I can comment especially in Sweden, we definitely haven't been winning the market by pricing. We are amongst the highest priced. It's very open data. So to win, it's much more about the experience we provide to customers and what I explained earlier. So that is also going forward. So it's winning through pricing. Pricing is important, of course, in a commodities market, you need to be with the right price, but that's not the way. And therefore, as Frank said, being very competitive in a commoditized market, you need to have a kind of a set of way to do it. And therefore, the experience is very, very key.

Sure. Martin, please.

Yes. I think it's a bit of an understatement, maybe even, but we have had, of course, significant margin deterioration, specifically in our institutional and wholesale distribution segments. I think the last 3 years have also had outflows. So that combination has been quite difficult for us.

On a high level, how we model the new strategy period is basically we -- the institutional, both Nordic and international, we have a slight decline of margins, but there is no drama. In the wholesale distribution segments, we are modeling margin deterioration to continue at a much lower pace than we have seen now specifically '25, '24 and the beginning of '23. And to put that in context of private banking, for example, we are with a very ambitious value propositions and the alternatives and discretionary and margin lending. We aim to defend the private bank margin as we have today. So those 3 segments. And then in Sara's, the Asset Management delivering to retail, we also have a slight, but no drama decline on margins. But that is all included in the plan for 2030.

Very helpful. If I can just ask on the lending margins, so the plan does not assume a significant increase again in the margins on that front. Do you assume stable lending margins going forward? Or a recovery?

Well, our expectation is that when the market and the rate environment normalizes a bit that, as said, typically, there's been at that type of a situation, a bit of improving margins because -- and especially in the Swedish market, it's been quite -- it's been lower margins now than we've expected. So it has taken some time. But that's not something we bet on. So that will not -- the margins then will be in a commoditized market what they are.

Maybe if I can just add one small. It's not necessarily on the savings on the front book. It is much more with what kind of mix you have of the asset management products.

Let me take one from the webcast. So there's a question around the strategy to grow in small business segments. So how can Nordea attract small business customers as the financial partner?

Nina, please.

I didn't hear it well?

How can we attract...

How do we attract? Okay. We have carefully looked at the ones that are successful in winning small businesses across the world and of course, especially in Europe. And we see clearly that there are 2 crucial things that are signs of successful actors. One is very quick onboarding and the second one is quick access to products. And that is exactly what our plans entail. We will make sure to have digital onboarding and very quick access to the products that our small company customers want to have to support their businesses.

And then the product offering is somewhat wider than just traditional banking products. And that is also included in our plan.

Not that many hands up. And maybe Tarik you want to go?

Just I was disciplined with 2, so I can ask another one. So just on the lending growth, especially in Sweden, more about trajectory than actually your end kind of point. So where do you see the household lending picking up? Is it from next year? What kind of trajectory you see there? And why do you think the fiscal stimulus next year can actually accelerate that recovery in lending growth in household?

Yes. Sara?

We overall -- if we talk about on average across the Nordics, we expect some 3.5% lending growth on this period. And then clearly, Sweden been the one market where the growth is the highest, where we expect that to be a bit shy of 5%. So -- then as we know, it's not, of course, exact or linear how it goes, but we expect that growth in housing and the mortgage market will pick up more as we've seen the past 2 years, I think.

I think in general, what you do see now is that the -- what we have been saying all the time is that we believe it will pick up is starting to happen now. And it has taken longer time. And I think that's not because of this financial foundation. Households are very cash rich. They pay their bills. They dream about the house, they dream about investments. They dream about retiring one day and then have a good start to the third part of their life is just that the uncertainty and thereby the consumer confidence has been so low due to the uncertainty in the world.

I think we have learned in the Nordics to live with this is the case, and then there have been some improvements that basically have let people start to believe more in the future. And that goes across the Nordics. Finland being the slowest. And I would say, Denmark and Norway being the fastest, but Sweden is starting to show the right signs in our view now.

And I think we'll take -- there's 2 questions in the webcast. So let's take those maybe. So first one on loan losses. So you're maintaining the 10 basis point loan loss ratio assumption despite the last 5 years being significantly below in a challenging macroeconomic environment. So what's the reason for this? Are you planning to slightly increase risk appetite to defend margins and ROE?

So thank you. No plans to significantly increase risk appetite here. I think what we're saying is that we expect loan losses to be very low. And the 10 basis points is made up of an assumption of a blended rate between our household and corporate customers. But importantly, I said -- but given the strength of the portfolio and I guess, consistent with the experience of the last few years, but in most years, we would expect it to be below 10 basis points. So I think the message you should take from what we're guiding here is same strong credit performance from Nordea as we've seen over the last few years.

Okay. And then there's one more. Maybe this is the last question, I think, that we'll take. And there's a question around the divisional cost income ratios. So adding those up, looking at the weighted average, it seems to indicate below 40. But can you clarify that?

Sorry -- the aggregate of the divisional ones comes in lower than the group.

Yes. Exactly.

So look, our business areas have ambitious plans and have a strong understanding of what their growth and the benefits of Nordic scale will deliver for their operating performance. There's always an element there of understanding the mix and match and reality will be different. And so setting a group cost-to-income ratio with that in mind, I think, gets you to what is still an extremely ambitious 40% to 42% by 2030. So I think what you should take away from that is business areas that are very focused on delivering strong improvements in operating performance and a group that will look very different and much stronger than even where we are today in 2030.

Well, I think that's it for the questions and answers. So let's hand over to Frank for some closing words.

Thanks so much, and all of you, I want to thank you for joining us today and for the many great questions. We have outlined our plan for a successful third phase of Nordea's development and growth. Our third act so to speak. We believe that we have a great plan, and of course, plans and priorities are worth very little without the determination to deliver. I can assure you everyone here and back home is committed to taking Nordea to the next level.

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

With that, Frank, please go ahead.

Good morning. Today, we have published our results for the third quarter of 2025. Again, it was a very solid quarter for Nordea. The past few months have reminded us that the world economy is delicately balanced. Political shifts and rising global tensions mean the operating environment can change quickly. Still, after the turbulent first few months of the year, the third quarter felt more calm and settled. Some of the earlier uncertainty around tariffs receded when the new EU-U.S. trade agreement was struck. The Nordic economies also continued to benefit from low inflation and interest rates, conditions that helped lift confidence.

During the quarter, Nordic corporates signaled a renewed appetite to invest. That translated into increased demand for lending. Household activity also showed clear signs of picking up, though lending demand was still at muted levels. While customers' main focus was on growth their savings, we also saw continued activity in investments. In this environment, Nordea delivered higher business volumes and very solid results. Our performance again demonstrated the strength and quality of our pan-Nordic business.

Looking at some of the highlights for Q3. Our return on equity was strong at 15.8%, in line with our financial target. We have now delivered a return on equity of above 15% in 10 out of the past 11 quarters. Earnings per share were EUR 0.36. Mortgage lending increased by 6% and retail deposits were up 8%, supported by our business in Norway and Sweden. Corporate lending grew by 6% year-on-year and deposits were up 1%. Assets under management were up 11% to EUR 456 billion.

Total income was resilient, decreasing by 3%. As expected, net interest income was lower following further policy rate reductions, decreasing by 6% year-on-year and by 1% quarter-on-quarter. Net fee and commission income was up 5%, rebounding after the market volatility seen in the previous quarters. Net insurance result grew by 10%. Net fair value result was in line with our expectations and fairly typical for the quarter, though was down 14% when compared with the unusually high level a year ago. Costs were stable year-on-year and quarter-on-quarter, supported by stabilized investment levels and careful management of headcount. Full year operating expenses are expected to be around EUR 5.4 billion and well within our guided range.

The cost-to-income ratio with amortized resolution fees was 46.1%. Operating profit was EUR 1.6 billion, 2% lower than a year ago and stable quarter-on-quarter. Our credit and asset quality remains exceptionally strong. Net loan losses and similar net result amounted to a net reversal of EUR 19 million. This quarter, we released a further EUR 50 million from our management judgment buffer. The release was driven by strong credit quality, reduced uncertainty and lower credit risk due to lower rates and inflation.

Our strong capital generation continued. And at the end of September, our CET1 ratio was 15.9%. That put us 2.3 percentage points above the current regulatory requirement. Today, we announced that we will shortly launch a new EUR 250 million share buyback program in line with our commitment to regularly trim excess capital and return it to our shareholders, all part of maintaining an efficient capital structure. Our 2025 outlook is unchanged. We are well on track to meet our guidance for the full year, that is a return on equity of above 15%.

With that summary, let's now take a closer look at the results, starting with the income lines. Net interest income remained resilient in the lower interest rate environment. Our NII was supported by both higher lending and deposit volumes and the contribution from our deposit hedge. The deposit hedge contributed positively to our income in the quarter, increasing NII by EUR 127 million year-on-year. Our net interest margin for the quarter was 1.59%. This compares with 1.64% last quarter and 1.77% a year ago. The difference was due mainly to a lower deposit and equity margins as expected, given the policy rate reductions.

Mortgage lending grew by 6%, driven by strong growth in Sweden and our Norwegian acquisition. Excluding the acquisition, mortgage lending was up 1%. Corporate lending was strong and picked up further, increasing by 6%. Retail deposits were up 8%, while corporate deposits were up 1%. Net fee and commission income increased by 5% year-on-year, supported by growth in all our main lines. The higher savings fee income was driven by higher assets under management with positive net flows in all channels.

In our Nordic channels, we had strong net flows of EUR 4.4 billion, driven by continued strong performance in Private Banking and our Life & Pension business. Net flows from international channels were EUR 0.6 billion with net positive flows of EUR 0.4 billion in wholesale distribution. Brokerage and advisory fee income improved this quarter driven by higher debt capital markets activity. Card, payment and lending fee income grew on the back of higher customer activity.

Net fair value result was solid in the quarter, although lower compared with the unusually high figure a year ago. We benefited from good levels of customer activity in a seasonal soft quarter, especially in foreign exchange and interest rate hedging products. And our market making result was strong. Costs in the third quarter were stable year-on-year. That development reflects our strategic investments spent in technology and other key areas leveling off as planned. It also comes from our usual cost discipline. We continue to actively manage our costs according to the operating environment and headcount is lower.

Looking at the full year 2025, our expectation is that operating expenses will be around EUR 5.4 billion, which is slightly better than previously anticipated. The third quarter cost-to-income ratio was 46.1%, unchanged from the second quarter. Our credit quality continues to be exceptionally strong. And it has meant that net loan losses and similar net result for Q3 were again favorable, amounting to a reversal of EUR 19 million. Loan loss provisions and write-offs have been low, well below the long-term average. That stems from customers' stable financial positions as well as our diversification and prudent credit policies. Given the lower provisioning requirements and continued strength of our credit portfolio, the buffer now stands at EUR 291 million compared with EUR 341 million in Q2 and EUR 435 million a year ago.

Our capital position is strong, supported by continued robust capital generation. At the end of the quarter, our CET1 ratio was 15.9%, 2.3 percentage points above the current regulatory requirement. We continue to use share buybacks to secure an efficient capital structure and focus on shareholders' returns. Our next EUR 250 million buyback program will be our fourth this year. We will launch it on or around the 20th of October.

Let us then turn to our business areas. In Personal Banking, we delivered solid business volumes. Customer activity increased during the quarter, especially in savings and investments. This was visible in the strong growth in deposits, up 8% year-on-year. Many customers still feel somewhat uncertain about global developments. However, there are signs that confidence is improving. This was visible in higher activity in the housing markets, although the pace is still slow.

We saw a further increase in demand for loan promises. And mortgage lending increased by 6% year-on-year. Here, growth was driven by Sweden and Norway. Excluding our Norwegian acquisition, mortgage lending was up 1%. Households also continued to put money into investment funds. Net flows in our Nordic retail funds were EUR 0.7 billion during the quarter.

Demand for our digital services remained high. App users and log-ins grew by 6% and 8%, respectively. We also received more external recognition in this area, winning Best Nordic Digital Bank in both the Euromoney and Global Finance Awards. The work we have been done or have done in digital has really moved us forward and means we have some of the best digital services in Europe today. Total income decreased by 3%, driven by the lower policy rates. The decrease was partly offset by the higher income from payments, cards and savings. Return on allocated equity with amortized resolution fees was 16%. The cost-to-income ratio was 52%.

In Business Banking, we performed well and delivered volume growth, supported by higher customer activity. Demand for lending grew in all markets, led by Sweden and Norway. That showed increased confidence among our small and medium-sized business customers who continue to settle into the new operating environment. Lending volumes overall increased by 5%. Deposits were up 9% year-on-year, also with growth across all Nordic countries. Our investments into developing our customer experience and digital capabilities are clearly resonating with our SME customers. We performed well in the annual EPSI industry survey, improving our customer satisfaction results relatively to peer across all markets. In Sweden, we achieved the highest rating among peer institutions.

We also received external recognition for our digital offering for SMEs, winning the titles of Best Corporate Digital Bank and Best Mobile Banking App in the Global Finance Awards. Total income for Q3 was down 5% year-on-year, driven by the lower rates and net interest income. The decrease was partly offset by the higher net fee and commission income, where we had higher income from lending fees and debt capital markets. Return on allocated equity with amortized resolution fees was 16%. The cost-to-income ratio was 46%.

In Large Corporates & Institutions, we continue to use our expertise, Nordic scale and strong balance sheet to support our customers with their investment and growth plans. Even as broader market uncertainty persists, Nordic large caps continue to be cautiously optimistic in their outlook. We saw a pickup in event-driven transactions and related financing and robust demand for additional liquidity. That showed in strong demand for lending with our volumes up 6% year-on-year, up from 4% growth in Q2.

Deposit decreased by 7% year-on-year. This was mainly driven by a few larger customers in Denmark and Norway. Debt capital markets activity remained high with broader-based transaction volumes among both corporate and institutional customers. During the quarter, we arranged more than 120 transactions. That makes it more than 500 for the year-to-date and reinforces our leading position in the DCM space.

One of the highlights of the quarter was a green bond for the Kingdom of Denmark valued at DKK 7 billion. Market conditions remain volatile for equity capital markets and mergers and acquisitions. However, several M&A transactions were announced and ECM activity showed signs of recovery. Total income was resilient, decreasing by 2% due to the rate reductions. Net fee and commission income was up 4% due to event-driven business. Return on allocated equity was 16%, and the cost-to-income ratio was 41%.

In Asset & Wealth Management, we drove solid business momentum in our Private Banking and investment performance was strong. We continued to perform very well in Private Banking with EUR 1.5 billion of net flows. The third quarter is typically quieter on account of the holiday period. However, customer activity was at a record high. We were very proactive towards our private banking customers through our advisers and across various special events during the quarter. In Sweden, we drove high investment activity, including helping our customers take part in several IPOs across the Nordics. The steadier markets and more positive sentiment also helped after the volatility of spring and early summer.

In our international channels, net flows were positive as well, amounting to EUR 0.6 billion. Wholesale distribution, which continued to stabilize, contributed EUR 0.4 billion of that with the remainder from international institutions. Net flows in Life & Pension were EUR 1.2 billion, which was a record high. Gross written premiums amounted to EUR 2.9 billion compared with EUR 2.6 billion a year ago. Assets under management increased by 11% year-on-year to EUR 456 billion, driven by the positive flows and strong market performance.

We were pleased to see strong interest in our new Empower Europe Fund that invest in the drivers of Europe's transformation, energy resilience, reshoring and defense and cybersecurity. Total income was down 1% in the quarter, driven by lower net interest and net fair value income. Net fee and commission income was up 1%, driven by the higher assets under management. Return on allocated equity was 33%. The cost-to-income ratio was 44%.

In summary, this was another good quarter for Nordea. We are well on track to deliver on our target of a full year return on equity of above 15%. Our performance so far this year clearly highlights our strength, our strong customer focus and offering, our highly profitable and well-diversified pan-Nordic business model and our scale and efficiency. Nordea also has the advantage of operating in the Nordic markets. All of which are globally competitive, innovative, resilient, low risk and highly digital. All that makes the Nordics and Nordea well equipped to navigate the current global shifts.

Finally, we have our Capital Markets Day in London coming up on 5th of November. There, we look forward to presenting our plans and financial targets for our next strategy period. We will share the concrete steps we are taking to build on our successful foundation with continued focus on our 4 home markets. These will enable us to drive above-market business growth with improved cost efficiency through our Nordic scale. They will also position Nordea to continue delivering market-leading return on equity and achieve superior earnings per share growth. Thank you.

Operator, we are now ready to take the questions. [Operator Instructions]

[Operator Instructions] The next question comes from Andreas Hakansson from SEB.

So let's skip the P&L questions for now. And could we just start with -- you talked about the recovering activity levels towards the end of the quarter. Could you tell us a little bit about where do you see those activities picking up? What segments and what countries? If you can talk about your outlook a little bit into Q4 and maybe even for 2026? That's my first question.

Andreas, sorry, I was waiting for your second one there as well. But it's Ian here. It was certainly a good pickup towards the end of the quarter. July and August are traditionally quieter given seasonality, but seem more quieter than usual. The key things that we saw coming through again in September, so at the end of Q3 were strong demand on corporate lending, so fairly evenly split across Business Banking and Large Corporates. Some recovery in our corporate activity levels, which is helping to drive fees and then good market performance that helped with AuM.

We also saw good flows coming through, particularly on the Nordic channels, so Life & Pensions and Private Banking. So fairly broad-based, both on the corporate lending side and on activity levels that drove fees. Now the weaker spot is mortgage markets, as we all know. And although Sweden is reasonably active, and we performed extremely well in Sweden, other markets are still pretty slow. And I guess Norway has some good activity levels. So more muted on housing, but -- so I'd say corporate-led. We'd like to see that momentum sustained into Q4. But as we've seen through this year, things are generally quite finely balanced. But I think we go into Q4 with a sense of -- a genuine sense of momentum, and we hope that will continue to build slowly into 2026.

And then I mean, I booked my flight ticket to London, so I'm not want you to front-run your whole Capital Markets Day. But if we look at the number of FTEs, they're falling quite nicely now in the last 2 quarters. Would you say that, that's you starting to execute on the cost plan that might or might not be presented in the next couple of weeks? Or is that just underlying delivery, so to say?

Andreas, this is Frank speaking. I will say that we will come back to this question in 2.5 weeks. But what you see in this year, is that we have adjusted the cost base of ours to the environment somewhat. And so it's no -- it's not a big change. But of course, you should expect us to continuously become even more efficient. So let's come back to that topic.

The next question comes from Markus Sandgren from Kepler Cheuvreux.

So just following up on Andreas' question. How about the sentiment in Finland? It seems to be struggling a bit. That's my first question.

Let me take that one. So yes, Finland is a more stable country. And I think that is built on cultural reasons, but also historical reasons for natural reasons. So a more stable, more cautious, but very profitable and a very solid country to run a bank in. Right now, there is a bit gloomy view, but it is being addressed. The government is doing, in my view, the right things to get the economy back on track, lowering the cost, lowering the taxes to increase growth. And although it goes slowly, I do sense that the trend is upwards now when it comes to sentiment and also the confidence in the future.

But there is a slight tendency to talk down the country, and that's a cultural thing, but people are aware of it. So let's see. When it comes to the substance, actually, it's people pay the bill. They have a lot of liquidity. It's just sit in the lack of -- a little bit lack of confidence. So let's see how it will develop. I'm not that skeptical and neither that negative. We -- Finland has what it takes.

Okay. Good. And then secondly, on asset quality, it seems like you're really delivering well there. And you're still reiterating that you want to release this management buffer gradually. What kind of risks are you -- I mean, is it just because you don't want to give it away in 1 quarter? Or is there anything that is related to risk? Because it seems like your underlying asset quality is much better, and we're through the rate hike cycle and most of these effects should be visible now. So what's the reason to keep it more than to just be gradual in releasing it?

So Markus, it's Ian here. Yes, you're right that the portfolio is performing extremely well and all of the leading indicators as well as the actual level of loan losses being low, the leading indicators are pretty strong. I guess we're a bank that moves with caution. It is harder to find reasons to hold on to additional buffers given the strength of the portfolio. And we've always been fairly clear that we'll either use it if we need it or release it.

So -- and we have further said in the past that we wouldn't expect it to still be with us certainly by the end of '26. So we'll continue to stay close to what's happening in the portfolio. And if we continue to see the strengthening that we've seen throughout this year, it will be hard to hold on to that management buffer.

Very good. Okay. And then there is no reason to change the outlook of 10 bps losses through the cycle, at least not for the coming 2.5 weeks?

No. And -- but it's a question that comes up quite often. So we will talk about that a bit more on the 5th of November, but no changes.

The next question comes from Martin Ekstedt from Handelsbanken.

So first one, I listened to Ian speaking at a conference between quarters regarding the Danish business, the preoccupation currently. We talked about the Finnish business before, right? But you stopped reporting on a country basis more than a decade ago, but trying to piece this together from your fact book. I saw some weakness in fee income, perhaps in the divisions, but no immediate red flags. So I just wanted to check if you could share some more detail on what this preoccupation has been about, what you've been focused on, what the underlying cause was perhaps and if this turned positive in the right direction in Q3? That's the first one.

Martin, yes, you're right. I did say that we were very focused on improving performance in our Danish business. It's a very competitive environment there, both on the household and business banking side with occasional aggressive pricing moves from some of our competitors in that market. We are -- let me take household first and then business.

On the household side, we suffered also from, I guess, some operational glitches and other things that means we haven't been as quick as we are used to in terms of turning around customer decisions and other things. We've taken strong action to address that. And I think the early signs are that we're now very much back in the saddle in terms of providing quick decisions to customers, supporting their home purchases and other things that are important to them.

And then on the Business Banking side, it's just been a very, very competitive market with some quite aggressive pricing. And you have to be pragmatic about that. We will pursue good business even if we have to give away a little bit on pricing, but it has been that occasionally, we will walk away from some things. I think we've got a good balance now in terms of winning the business we want to. So I'm pretty confident. I don't know Frank will want to say something on this, but I'm pretty confident we've got the right formula, and we'll start to see Denmark improve.

Martin, it's Frank. I can only echo. It's a fine quality. It's a good business. We want to see more growth, and I think we control that ourselves and we'll ensure that we do what its take -- what needs to -- what it takes to ensure that, that will happen. So all in all, no red flags, but more growth to come.

Okay. Understood. And then just perhaps a quick one on the deposit hedge. You said earlier in the presentation that the deposit hedge contributed positively to NII in the quarter. But I just wanted to check, do you rather mean it had a positive quarter-on-quarter effect? Because if I read the presentation in the back correctly about the impact to NII, it's still negative by EUR 28 million in the quarter, right? And in that case, when would you expect this to turn positive, looking at the trajectory, perhaps Q1 '26? Is that a correct read?

Yes. So you've picked up correctly the moving parts in Q3. The deposit hedge is still contributing to dampening the impact of rate cuts and we'll continue to do so as we see rates move down. If we think about Q4, all of the different moving parts mean that Q4 NII will be lower than Q3. There's often a lot of interest as to when the trough in net interest income might occur. And given the unexpected Riksbank cut in recently, it's now sort of -- is it Q4 this year? Is it Q1 next year? But certainly, Q4 NII a little bit lower.

The rate reductions are expected to be in the absence of rate cuts, probably about 12 basis points of impact in Q4. So that's half of what it was in Q3. And the deposit hedge contribution is relatively linear on that basis. So if we've got half the rate cuts, it's probably half the deposit hedge contribution in Q4. So I hope that helps.

The next question comes from Shrey Srivastava from Citi.

I'll keep it shorter term given the CMD is happening in sort of 2.5 weeks. First one, treasury net interest income, it's actually quite a significant delta on the quarter-to-quarter result. Is this -- what exactly does this consist of? Is it to do with timing differences in Sweden or Norway, something else? And I know you don't specifically cite this as a one-off. So could you elaborate on why or why not you expect this to persist going forward? That's my first.

So treasury is pretty active in managing funding costs quarter-on-quarter, as you'd expect, that can be slightly opportunistic sometimes. The level you saw in Q3 is, I'd say, probably normal. It's been higher in previous quarters where we've had some specific timing effects. So I think this is -- what you're seeing here is active management from treasury of the funding base and the levels you saw in Q3, not a bad guide to what we have going forward.

Great. And my second one, on the sort of collateral management initiatives that helped RWAs in this quarter. You mentioned in the second quarter that improvements in sort of collateral quality could offset 1/3 of the sort of fully loaded Basel IV impact. I just want to inquire about time line, if that's all right. This would point to about EUR 10 billion odd of RWA benefits. Is there any time line in which we can expect these?

Yes. So it's a good question, Shrey. So I guess the start point for this is what we discussed in Q2, which is that as we move -- as we transition to the full sort of output floor impact, we get closer to standardized risk weights on our IRB portfolios. And as you remember correctly, if the pro forma impact of that was reported at around EUR 30 billion, we said EUR 10 billion related to appropriate recognition of collateral on standardized mortgage portfolios. So that's about 1/3 of the pro forma unmitigated [ RWA ] inflation due to output floor and other Basel IV effects. That's something that we said on the -- on that EUR 10 billion of mortgage impact that we would work on, the ability to sort of capture the data and use it properly over the next couple of years.

What you've seen in Q3 is the impact of picking up those portfolios that are already standardized and taking advantage of that collateral data. So all our other portfolios that in due course will be impacted by the output floor, they're all IRB and there isn't anything to be gained at this stage. So we focused on those portfolios that are already standardized and that drove 10 basis points of CET1 improvement.

In terms of the rest of the stuff, we'll phase that in as the output floor starts to take effect. I don't have a clear time line yet. We'll work on that and share it with you. But the main thing is that where we had an advantage or where we had a benefit that could be delivered today, we focused on that, which is the portfolios, which happen to be 2 key mortgage portfolios in Norway that are on a standardized basis, and we've delivered around EUR 1 billion of [ RWA ] relief from that.

The next question comes from Sofie Peterzens from Goldman Sachs.

So my first question would be on M&A. We have seen quite a lot of M&A rumors across Europe, but not so much in the Nordics. But if you could maybe just more broadly talk about M&A, how you think about it, how you see the banking landscape in Europe change and also in the Nordics potentially change over the next 5 to 10 years. And kind of how you think Nordea should be positioned with a 5-year view, if you take into consideration like more M&A, more competition, what you're doing to kind of offset this?

And then my second question would be around the dividend. I recognize you have the CMD in a couple of weeks' time. But could you maybe just talk about how you expect or how we should think about the potential interim dividend going forward? And what the considerations would be for splitting the dividend into an interim and final dividend?

This is Frank speaking. I think both are excellent questions for the CMD. So I'll push them 2.5 weeks forward. It's strategic questions and tactical questions, both of them. So I think let's keep them out of this call and then ensure that we have time enough to discuss it when we meet in London in 2.5 weeks.

Okay. Then maybe if I may ask something different. So in terms of the FTEs, we saw, as already was commented, a decline in the FTEs. Could you just maybe discuss like which business units, which countries saw the biggest declines in FTEs? Yes, and how we should think about?

I think you should not put too much into it. So what we have said all the time is that we, of course, focus a lot on OpEx and thereby headcount. And as the year started very much different to what we had planned due to the trade tariffs and the volatility and the uncertainty and the geopolitical tension, then we knew that this year would be challenged on income.

And our response to that, of course, is, first, to push hard on the income side and the activity level. But secondly, to ensure that the costs are trimmed as good as they can on more operational -- with a more operational focus, not a structural focus. And that is what you see. So there's no funny stuff. There's no magic. It's just that the business areas are looking into ensuring that their business is as efficient as they can in the current operational environment.

When it comes to the -- what I think that you're asking for as well is that how we look in the future, that is one of the topics that we'll come back to in the Capital Markets Day, at the Capital Markets Day in 2.5 weeks and talk about how we see the headcount development and also the cost base in the years to come.

The next question comes from Namita Samtani from Barclays.

My first question, just the hedge contribution on net interest income in 2026. I noticed it's gone up versus what was previously disclosed in the second quarter by EUR 35 million. I was just wondering why that's the case? And can you help me think about the hedge impact beyond 2026, i.e., in '27 and '28, even if it's just qualitatively?

And my second question, I just wondered why Nordea is not part of the 9 European banks who are going to launch a euro-denominated stablecoin? And I just wondered what your plans are for stablecoin going forward.

Namita, thanks for your questions. Yes, we've tweaked slightly our hedge volumes and as you can see on Slide 17. And we're always just alive to opportunities to manage our NII sensitivity. And that means we've kind of lowered the overall estimate of sensitivity slightly. That has the impact of -- certainly in the current environment of rates coming down, helping a little bit with the start of 2026. And we've also seen, as I said before, an unexpected Riksbank cut.

So -- and as -- in a sort of expected environment of stable rates thereafter, we would then expect to see kind of stability in terms of hedge impact on NII. So we always said that '25 and a little bit into '26, you'd see some help from the hedge and stability thereafter. That remains how we think about it.

And then your second question, just on the initiatives that other banks have banded together to look at stablecoin. It's certainly an interesting initiative. We talk to those other banks fairly regularly about how they're thinking about it. And they've made it clear that they're open to other banks joining that initiative in due course. We have a lot of different options that we're looking at and working on, on the payment side. And if that were to be relevant for us, we'd look at it pretty closely.

So look, I think it's overall a pretty positive initiative. I think there are plenty of options that might turn out to be better than a digital currency for the euro and solve the issues that the ECB is trying to solve with its digital currency. So we'll keep a close eye on that.

The next question comes from Gulnara Saitkulova from Morgan Stanley.

So the first question is on Asset Management profitability. So you previously mentioned that the customer preference in Asset Management has been recently concentrated mainly in the lower risk and lower margin products. What are the key levers for Nordea to improve the margins in the Asset Management business over time? And given the rate trajectory appears to be bottoming out, do you see the potential to convert part of the customer deposits or excess liquidity into investment products and Asset Management over time?

And the second question is more general. Given that we see that operating momentum is steadily improving and activity levels are picking up, what do you see the key risks and challenges for Nordea's business going forward? Could you share some color on your current dialogue with the regulators? What are the key areas of their focus and the main issues that regulators are mostly concerned at the moment?

Okay. Thanks, Gulnara. So on your first one on asset management profitability, yes, there's certainly been, in terms of appetite during this year, more focus from our customers, whether they be household customers or institutional right across the spectrum for lower risk. So we see that, for example, in our Life & Pension business, where flows are really, really strong and quite a lot of that money is going into bond funds, reflecting that lower risk appetite with, therefore, a bit of a mix shift that has diluted the margin.

We've seen similar mix shifts, I guess, in our international and wholesale business, the business we do outside the Nordics. We saw really, really strong flows, good money coming into the institutional side at the end of last year and beginning of this year. And that new money is welcome, but it's coming into a part of our business that's a little bit lower margin. So there are mix shifts there that are customer-driven.

Our own response is to ensure that we've got brilliant products. And so we have introduced some new funds and products through the course of this year. One we talk about in Q3 has just been the success of our Empower Europe Fund that's got off to a really good start, popular with a range of investors and at good margins and pricing. So I think there are plenty of strings to our bow. And then we are always focused on efficiency. And that's also key to continuing to sustain the profitability in our Asset Management business.

And your point on do we have opportunities to convert excess liquidity? The first thing to say is customers decide that. We provide good advice, but customers will decide. I think it's reasonable that as customers are thinking about what to do with their deposits, particularly when rates are lower, they'll look at our attractive range of investment products. But customers will decide that. But I'm pretty confident we'll pick up if customers are moving money into more fund-based products, we'll pick up a really good share of that.

Gosh, your second question, what are the risks and what are regulators talking about? Very broad. I think regulators are, I think, quite focused on operational risks at the moment. They're very alive to geopolitical threats and challenges. What they want banks to do is to be very thoughtful about that, to be investing as we have done in technology and risk management in order to keep the banking system safe and sound, and there are still some difficult situations out there in terms of more aggressive nation states, et cetera, et cetera. So I think those sort of operational issues are very much to the fore with regulators.

I think they feel relatively comfortable about the sort of strength of the banking system, whether that be from a capital liquidity perspective, we aren't seeing particular focus or stress on that. And I guess the EBA stress tests, the system came through with a good pass mark. So I'd say their focus is on operational issues.

If I turn it back into the things that we're focused on, we're very thoughtful about growth and the things that we can do to help deliver growth in our business, whether that be about filling in gaps in our offering, enhancing our offerings, those sorts of things. So that's a key focus area for us. But look, that's a question that we could talk for hours about.

The next question comes from Bettina Thurner from BNP Paribas Exane.

I have 2 quick questions. The first one, touching on Namita's question on the structural hedge earlier. Looking at the steeper yield curve that we have now seen over the last 12 months, how do you think about -- or what are your limitations of either increasing the hedge or increasing the duration of the hedge perhaps to get a bit of a yield pickup from this steeper yield curve? If you could just talk what would be possible, what you maybe are thinking about right now.

And then the second one was just on the reciprocation of the Norwegian residential real estate risk weight floor increase. You said there is no impact on your RWAs. So I was just wondering whether that is the result of having gone through the retail IRB exercise of the ECB last year and having those add-ons. And as a consequence, whether that would reduce sort of the EUR 4 billion to EUR 6 billion mitigation power that you're expecting to realize?

I mean -- Bettina, thanks for the question. Realistically, we are not focused on increasing the scope of our hedge. The opportunities to hedge more deposits are relatively limited in terms of our own positioning in the markets we operate in. For example, there is not a lot of market depth in being able to use derivatives to hedge short-term Swedish or Norwegian kroner deposits. It's just a feature of where we are. But actually, I think we're in a good place. The hedge works. We've seen it work this rate reduction cycle. We tweak it a little bit primarily with regards to managing our NII sensitivity, but it's not something that we can or propose to use opportunistically for both reasons of how we think about hedging, but also practically speaking, there aren't too many opportunities.

And then on the Norwegian residential risk weight piece, yes, some of it is related to add-ons. We don't see this reciprocation as limiting our ability to deliver those RWA reductions. And that's primarily because we also operate with other floors and things that means that this increase in risk weights has no impact on us. So -- but don't be concerned. We still have a firm line of sight on to the delivery of EUR 4 billion to EUR 6 billion of RWA reductions through removal of add-ons. We're making progress on that, and we expect to deliver.

The next question comes from Nicolas McBeath from DNB Carnegie.

I first have a question on AI. If you could please update us on any progress you have on implementing AI? Any tangible productivity gains so far that you could share? What's the status here?

Let me take that one. Yes, we have -- Nicolas, it's Frank. So we have good progress, I would say. We have learned a lot. We keep learning and do my mistakes as well, right, where we overestimate or underestimate the effect. So I would say that we feel increasingly comfortable with the implementation we have done.

And then the question, of course, how much and how fast can we scale. We will talk about that at the Capital Markets Day. So I would like to come back to that. But there's no doubt about that. There are areas where you would experience it's more costly than we would have assumed and thereby, you can question the business case. But there are clearly areas where you can scale and where it makes super good sense. And I think we are very much well aware of these areas, and it will be a topic separately on the -- at the CMD. So let's come back to that, please.

All right. And then I was thinking about your previous cost-to-income target for 2025, which seems to have been removed as far as I can see in this quarter. But based on your new cost guidance, it implies that if you can keep Q4 revenues in line or slightly above the Q3 level, you would be around 46% cost-to-income. Do you think that is too optimistic? Or why do you remove the target? And then just related, does the removing of the target suggest anything that you don't think it's useful -- as useful anymore to think about targets in relation to income for cost and that we should think more that the cost targets from here would be on absolute terms rather than in relation to revenues, such as cost income?

Nicolas, let's leave this question about costs in the future for the 5th of November. But also, I guess, let me be clear that there's no removal of our target for this year. Maybe we didn't emphasize it as strongly in Q3, partly because we expect to deliver. So if I think about where we are, we've been now, I think, relatively clear on cost, a really good cost performance this year. We said we would be around EUR 5.4 billion for the full year. And that's probably where I think some of market expectations need to adjust a little bit in terms of thinking about full year '25.

Broadly speaking, I think income expectations for the full year more or less in the right place. There's some uncertainty. We saw a good September that would -- we would like to see that momentum sustained through Q4, but let's see. Costs, we know about, we're very confident on. And so we think that 46% cost-income ratio, our range was 44% to 46%. We think 46% cost-to-income ratio for 2025 is within reach.

And we have time for one more question, then unfortunately, we need to stop. So apologies for not getting through the full queue this time. But last question.

The next question comes from Magnus Andersson from ABG Sundal Collier.

I was just wondering about how you look at your cost-to-income ratio from a relative perspective, i.e., versus your peers on a like-for-like basis if you adjust for different treatment of taxes and fees.

Yes. It's a good question because I think sometimes perceptions don't always reflect reality. And certainly, the way we look at it is -- other than a couple of our peers, I think the 2 obvious ones, we're pretty much in the pack with certainly 2 of the big Swedish peers, Danske. And I think also the critical thing is you see the focus that we have on costs and where we expect to end our year.

So I think -- and Frank may want to come in with some additional color on this. We see ourselves as pretty much in the pack and with some opportunities to tackle that. We've talked before about capturing the benefits of our Nordic scale, and we think there is untapped potential there. So -- and we said that, that is going to be one of the key themes at our Capital Markets Day. So I think we have a good base to work from.

All right. Ian, anything else that you want to highlight before we close the meeting?

I think there's been a few questions around how we expect to finish the year, whether that be about our cost-to-income ratio, whether momentum will be maintained. So I guess just to reiterate, I think generally speaking, the market has a good sense of full year income expectations for Nordea. Net interest income will be lower in Q4 for the reasons we've outlined.

On the fee and commission side, look, we saw good September, but that needs to be sustained. And just to remind people that we did have some nonrecurring gains around about EUR 10 million in our fee income base in Q3. So that needs to be knocked out in Q4. And we feel very good about costs. So I'm absolutely confident we will deliver on our return on equity target, which is our primary target for the year. And we also feel pretty good about our cost-to-income ratio target. So -- but that's income dependent, and there can be some puts and takes in that.

So no, Frank, I think we've covered the key issues, and I'll hand over to you.

All right. Thank you. And to all, thank you so much for the call and the good questions. And I'll just say welcome to our Capital Markets Day on November 5. Thank you so much. Have a nice day.

Good morning, and welcome to Nordea's Second Quarter 2025 Results Presentation. I'm Ilkka Ottoila, Head of Investor Relations. Here in Helsinki, I'm joined by our President and CEO, Frank Vang-Jensen; and our Group CFO, Ian Smith. As usual, we'll start with the presentation by Frank, followed by a Q&A session.

[Operator Instructions] With that, let's get going. Over to you, Frank.

Good morning. Today, we have published our results for the second quarter of 2025. It was a quarter marked by high uncertainty and the most volatile market conditions for some time. Concerns over higher U.S. trade tariffs and increase in geopolitical tensions resulted in significant financial market turmoil. Despite the external pressures, overall sentiment among Nordic households and businesses remained calm with customer activity increasing in most areas as the quarter progressed.

Global trade volatility clearly presents risks. However, we believe the Nordic economies are better positioned than many to manage through periods of turmoil. That advantage is rooted in our region's strong economies and fiscal positions and our globally innovative and competitive businesses.

Looking ahead, we expect that lower inflation and interest rates will further support increasing activity levels as confidence returns. In this extraordinary environment, Nordea delivered another strong performance. We grew lending and deposit volumes and increased assets under management. We delivered strong profitability with a return on equity of 16.2%.

The result underlines our structural improved profitability and our position as a strong, resilient market-leading financial services group. It also keeps us firmly on track to meet our full year guidance.

Looking at some of the highlights for Q2. Our return on equity was strong at 16.2% with earnings per share at EUR 0.35. Mortgage lending increased by 6% and retail deposits were up 8%, supported by Norway and Sweden. Corporate lending and deposits also grew significantly, both increasing by 5% year-on-year as we help corporates strengthen their liquidity and financial flexibility.

Assets under management grew by 9% to EUR 437 billion. Total income was resilient in the turbulent markets. As expected, net interest income was lower in the declining interest rate environment, decreasing by 6% year-on-year and by 2% quarter-on-quarter. Net fee and commission income was stable year-on-year after being significantly impacted by the financial market turmoil. Net insurance results and net fair value result were also both resilient and broadly stable year-on-year.

Operating profit was EUR 1.6 billion compared with EUR 1.7 billion a year ago and was stable quarter-on-quarter. Costs increased by 3%, excluding foreign exchange effects, in line with our plan with more than half of that increase driven by our strategic investments, including the Norwegian acquisition. The cost-to-income ratio with amortized resolution fees was 46.1%.

Our credit and asset quality remained exceptionally strong, with net loan losses again well below long-term expectations. Net loan losses and similar net result amounted to a net reversal of EUR 21 million. This quarter, we released a further EUR 60 million from our management judgement buffer given the lower provisioning requirements and continued strength of our credit portfolio.

Our strong capital generation continued. At the end of June, our CET1 ratio was 15.6%, which is 1.9 percentage points above the current regulatory requirement. Our 2025 outlook is unchanged, and we are firmly on track to meet our guidance for the full year of a return on equity above 15%. With that summary, let's now take a closer look at the results, starting with the income lines.

Our net interest income developed as we expected, in line with the lower policy rate environment holding up well with a decrease of 6% from a year ago. This quarter, NII was supported by a higher lending and deposit volumes as well as the contribution from our deposit hedge.

The deposit hedge contributed EUR 127 million to our income compared with Q2 last year. Compared with Q1 this year, the contribution was EUR 19 million, in line with our guidance. Our net interest margin for the quarter was 1.63% compared with 1.83% a year ago, with reductions from rate cuts as expected impacting deposits and equity margins. Mortgage lending grew by 6%, driven by strong growth in Sweden as well as the positive contribution from the recent Norwegian acquisition.

We increased corporate lending by 5%. Retail deposits were up 8%, while corporate deposits were up 5%. Net fee and commission income was stable year-on-year, with growth slowing as a result of the significant financial market turmoil early in the quarter. Brokerage and advisory fee income was lower in the quarter, reflecting lower corporate finance and debt capital markets activity.

Card and payments activity was higher with increased customer transaction volumes during the quarter. Savings fee income was stable year-on-year. While end of period AUM was up, the average AUM was lower due to the market volatility caused by the tariffs. Also the mix of business with strong performance in lower-margin institutional clients dampened growth.

In our Nordic channels, we had net flows of EUR 4.5 billion with continued strong performance in private banking and our life and pension business. Inflows from international institutions were lower following two strong quarters with inflows from larger mandates and our wholesale distribution flows continued to stabilize.

Net fair value result was up 3% year-on-year, driven by higher customer activity. In a volatile environment, customer demand for our risk management products remained high, especially in foreign exchange and interest rate products. As we guided, we usually peak in Q1 where we saw a real strong result. Q2 was lower and in line with our expectations, with solid customer activity while market making and treasury was impacted by the tariff-related volatility.

Costs developed in line with our plan, and were up 4% year-on-year or 3% excluding foreign exchange effects, with more than half of that growth driven by our strategic investments, including the acquisition in Norway. We continued our significant investments in key areas of the business, including technology, our digital capabilities, data and AI and cybersecurity, which will support our income growth, profitability and overall resilience.

We do not plan to increase investment levels this year and will continue with our usual cost discipline. We, therefore, expect year-on-year cost growth to slow significantly in the second half of the year. Full year costs are expected to be no more than 2% to 2.5% higher than last year, assuming end Q4 2024 FX rates.

Our cost-to-income ratio was 46.1% for the second quarter. Nordic households and businesses continue to have stable financial position. That shows in our exceptionally strong credit quality and low credit losses, which remain well below our long-term expectations.

For Q2, net loan losses and similar net result amounted to a reversal of EUR 21 million. This quarter, due to lower provisioning requirements, we released a further EUR 60 million from our management judgment buffer. The buffer now stands at EUR 341 million compared with EUR 397 million in Q1.

We maintained a strong capital position reinforced by continued robust capital generation. The CET1 ratio stood at 15.6% at the end of the quarter, 1.9 percentage points above our capital requirement. We have been consistent in our ability to generate capital from profits supporting lending growth and absorbing or offsetting the impact from our Norwegian acquisition, regulatory changes, such as Basel IV and our share buyback programs. Our latest buyback program launched on the 16th of June. We expect this EUR 250 million program to complete by the end of September 2025 at the latest.

Let us then take a look at our business areas. In Personal Banking, we performed well, delivering solid growth in lending and deposit volumes. Mortgage lending was up 6% year-on-year, driven by both Norway and Sweden. With an exceptionally good performance in June, we further strengthened our possession in Sweden, where we also took more share of the mortgage market.

The Nordic housing market are continuing their gradual recovery after 3 slow years, though activity overall is still muted. In Q2, demand for loan promises grew once again which shows there is appetite among our customers for investing in their homes. As confidence returns, we expect the market to pick up further.

Retail deposits for the quarter grew by 8% year-on-year in local currencies. Customer use of our digital channels in Q2 remained high. Mobile users and log-ins grew by 7% and 6%, respectively, year-on-year. Total income decreased by 2%, driven by lower policy rates. The decrease was partly offset by the higher volumes and higher payment card and savings fee income.

In the volatile quarter, personal customers continued to have a high level of investment activity, leading to positive net flows of EUR 0.7 billion in our Nordic retail funds. Return on allocated equity with amortized resolution fees was 18%. The cost-to-income ratio was 51%.

In Business Banking, we also performed well, driving strong growth in deposit and lending volumes. Our lending volume growth of 4% was mainly driven by Sweden and Norway with indication of higher activity levels among small and medium-sized enterprises. Deposits were up 10% year-on-year in local currencies, with all of our Nordic markets contributing to that growth.

Equity markets activity was subdued however because of the macroeconomic uncertainty During the quarter, we continued to improve customer experience in support of our ambition to become the leading digital bank for small- and medium-sized enterprises. We made improvements to Nordea Business, our dedicated digital services for our businesses, including by adding a new tool, making it easier for customers to select the right product for their needs.

In June, we also began piloting our new business Insight Service. Once fully available, the service will help Nordic small business customers manage their liquidity and cash flows. Social income for Q2 was down 6% year-on-year, driven by lower net interest income. Net fee and commission income was stable, while net fair value income was down 1%. Return on allocated equity with amortized resolution fees was 16%, while the cost-to-income ratio was 46%.

In Large Corporates & Institutions, we grew lending volumes by 4% year-on-year or 6% when adjusting for foreign exchange effects, supported by a pickup in June. Despite the uncertainty, Nordic businesses are cautiously optimistic, supported by their strong competitive positions in global markets.

During the quarter, we were active in helping our customers raise financing. Debt capital markets activity was high and well diversified among both corporate and institutional customers supported by our leading positions for our Nordic corporate bonds and Nordic bonds overall year to date.

The overall market sentiment for our equity capital markets and mergers and acquisitions remain challenging with volatility and uncertainty postponing transactions. At the same time, we led the way in the IPO market, taking part in multiple Nordic IPOs.

Total income was down 8%, driven by lower rates. Net fee and commission income was down 2%, driven by continued slow markets in event-driven business. Return on allocated equity was 15%. The cost-to-income ratio was 42%.

In Asset & Wealth Management, business momentum remained strong with solid investment performance and continued growth in our Private Banking business. The development of our Private Banking business is a key focus in our savings strategy. In Q2, customer activity continued to be strong, and we attracted net flows of EUR 2 billion in Private Banking, driven by Finland and Sweden. These contributed to solid overall performance in our Nordic channels.

Net flows in our international channels were lower after two exceptionally strong quarters, amounting to outflows of EUR 0.4 billion in Q2. Flows in the higher-margin wholesale distribution channel continued to stabilize and amounted to EUR 0.2 billion for the quarter. For the year-to-date, we have had net inflows in our international channels of EUR 3.8 billion, which, together with a good performance in our Nordic channels, meant we had total first half net inflows of EUR 8.1 billion.

Assets under management increased by 9% year-on-year to EUR 437 billion, while asset management fees were impacted by the volatility early in the quarter and customers' preference for lower risk and lower margin products. The strong year to date performance in international institutions added to the margin pressure as this part of the international channels is lower margin compared to wholesale distribution.

Our life insurance and pension business continued to perform well with Q2 net flows of EUR 1.2 billion. Gross written premiums amounted to EUR 3 billion compared with EUR 2.9 billion a year ago. In Denmark, we were named Commercial Pension Company of the Year by EY and FinansWatch.

Total income development reflected the lower policy rate environment and lower net fee and commission income and was down 6% in the quarter. Return on allocated equity was 33%. The cost-to-income ratio was 43%.

In summary, this was another solid quarter for Nordea, and we remain on track to deliver a return on equity of above 15%, consistent with the target we set 3 years ago. Our performance so far this year clearly highlights the strength of our well-diversified business model and structurally improved profitability. It also reflects the advantages of operating in the strong and stable Nordic markets, home to globally competitive businesses and a bold entrepreneurial spirit. Few countries are better equipped than our home markets to navigate the current global shifts.

We look forward to presenting our strategy for 2026 and beyond at our Capital Markets Day in London on 5th November. We will share the concrete steps we are taking to build on our successful foundation with continued focus on our four home markets. This will enable us to outgrow the market, continue delivering market-leading return on equity and achieve superior earnings per share growth. Thank you.

Operator, we're now ready to take questions. [Operator Instructions].

[Operator Instructions] The next question comes from Magnus Andersson from ABGSC.

Yes. I have a question. I mean you keep your guidance of more than 15% ROE for the year. And you also keep your cost guidance, and I think that for most of us, it looks like a close call, especially if, I mean, rates continue down in NII where we could end up lower in the second half than in the first half. So I was just wondering if you could get us a feeling for the outlook for the various P&L items for the remainder of the year, as obviously, you have a plan in place.

And secondly, just on a more detailed note, I note that you keep your deposit hedge guidance unchanged for '25 and '26 despite the fact that your rate scenario probably has changed. When will we get an updated scenario? Or is it not as sensitive as we perhaps think it is?

Magnus, it's Ian here. Thank you for your questions. So I think we finished the first half strongly. We're doing well in markets that are a bit quieter than normal given some of the market volatility, activity levels, particularly on the equity and corporate finance side are lower than normal. And we've seen some volatility. But we finished the quarter and the half year with the business firing on all cylinders. So I think that's a strong start into the second half.

A general sense though is that given usual seasonality in Q3 and the market quietness we've seen, we're not expecting to see a pickup in activity in Q3. Customers are generally a bit more cautious, a little more risk off given what they've experienced in the first half of the year. But I think we've seen momentum building, particularly into Q4. And so if we don't see further shocks or disturbances, I would expect us just to finish the year quite strongly.

What does that mean in terms of the key line items? On net interest income and the rate environment. I mean, first of all, if we have a look back in Q2, we did get a small benefit from a lower deposit guarantee scheme fee. I think we'll see a similar average policy rate change impact as we saw in Q2. There was about EUR 100 million or so of margin impact there.

And we have seen some pressure on lending margins driven by competition, particularly in the corporate space. There is pretty strong, some might even say aggressive competition out there, but we win. We win on the accounts that are important to us. So -- and I think thinner volumes on the household side in the mortgage market mean that the opportunity to expand margins is still, I think, a little bit further in the future.

So I think that picture says we will see lower NII and -- but still resilient, particularly in comparison to our peers. On the fee side, again, despite lower activity levels, I think we posted a good outcome in Q2. We did see there on the savings side, which is particularly important to us, the benefit of semiannual custody fees around EUR 10 million that came in Q2, that happens every half year, but it's not a Q3 item. I mean the seasonality in Q3, I think, will slow things down a little bit.

Net fair value, another key line item. We generally stronger first half than second half, particularly in Q1. We always think about that one as being worth about EUR 1 billion a year with the key contribution being fairly stable on the customer side, but then you get the more volatile trading and treasury elements, which is around about, it can be anything from 0 to EUR 50 million in the quarter, certainly don't expect more than that.

But I think, second half, just a little bit smaller than the first half. That's the sort of broad shape. And so expectations for the whole year for net fair value, probably around EUR 1 billion, something like that, give or take. I think what I'm trying to leave you with here is we expect things to strengthen towards the end of the year on the sort of growth and income side, but perhaps still a slightly quieter quarter in Q3.

On the cost side, everything proceeding according to plan. We reiterate our guidance of 2% to 2.5%. We'll always look very closely at costs. And then the other elements that contribute to ROE, really, really good loan loss performance. Credit is exceptionally strong and we're well provided in that space.

And we have a buyback program ongoing. We will stick to our promise of distributing excess capital that we can't deploy in the business. I think all of those moving parts contribute to our confidence that we'll deliver on our above 15%. So a long answer, Magnus, but I hope it captures the key moving parts, and I can certainly go back to any one of those if you need it.

And then on the deposit hedge, we think it's too soon to revise guidance. And so we might come back to that in Q3 depending on how the rate environment evolves and rate expectations. We probably saw slightly higher average rates than expected in Q2 which means that the deposit hedge contribution was slightly smaller. Clearly, when rates move downwards, we'll see the hedge kick in. So no need to revise guidance at the moment.

And just in case I wasn't clear on costs, as I say, reiterating guidance of 2% to 2.5% full year. The Q3 run rate is probably a little bit higher than Q2, say, EUR 20 million, EUR 25 million. But the overall full year, I think consensus is in the right place.

Okay. Just two quick follow-ups that impacts ROE obviously. First of all, you reduced your management judgment buffer by EUR 60 million, and you sound very bullish on the underlying asset quality. So I think it's probably not unreasonable to expect further reductions of that buffer in H2? And secondly, just on capital, how close to your 1.5% management buffer target can you be realistically?

So yes, Magnus, we've consistently said that we would expect to either use or release the management judgment buffer. I'm pleased to say we haven't seen any opportunities to use it. So what you've seen so far is releases because of the strength of credit quality. And you're right, we are very confident about the strength of the credit portfolio.

So I reiterate our normal position, which is we use or release. And we see underlying credit conditions as pretty strong. And then on the capital side, we can -- I think it's always difficult to be precisely on the line. But we do carry a substantial excess both to our overall capital requirement, but also to the 150 management buffer. So I think we've got a fair bit of flexibility there on buybacks, and we'll judge according to market conditions.

At the moment, one of the things, I think, was a positive feature of the Q2 capital development was we saw some absorption from lending growth. That's a good thing and it's good that we generate the capital to support that as well as our buybacks. So I think we've got a bit of play in that ratio even if we don't go all the way down to our management buffer line. So we feel good about continuing to deliver on our commitments on returning excess capital to shareholders when conditions allow.

The next question comes from Andreas Hakansson from SEB.

Coming back a little bit to the NII, and I'm looking at your Page 18 in the presentation pack where you show the sensitivity to rising or falling interest rates. And I would assume that, that is at the current interest rate level.

And if we assume that rates are going to fall further in basically all four countries in the region, do you see that the sensitivity increases as you go further down? I would think in Denmark, you are not paying very much on your deposits at the moment, and we're not actually sure in Finland, but how big would the sensitivity be if we cut another 25, 50 basis points?

And then also on NII, could you tell us -- in Norway, retail NII started to go down already before interest rates were cut really and could you tell us what's driving that? And also in Business Banking Denmark that seems to be quite tough in the quarter?

Yes, I think the first thing to understand is our sensitivity prescribes a range. And it's exactly for the reason that the rate path is never certain. And I think there are sort of equally balanced expectations for cuts or no cuts going forward. Outside Norway, I think there's a pretty strong expectation that there will be a cut there. So broadly speaking, I don't think we see much reason to change our sensitivity at the moment, but we might be towards the upper end of the range that we talk about there.

And then your specific questions on Norway, the NII compression there is around some of internal items rather than rate cut related. So they've absorbed a slightly higher treasury cost in our business in Norway this year. So nothing related to market out there.

And in Business Banking Denmark, it's a very, very competitive environment. And so I think there's a bit of margin pressure that we see there, but nothing more than that.

Perfect. And then very quickly, so after you get the change with the Norwegian adjustments in Finland, is the new capital target really 15.5%? Is that what we should see it in the end of the year?

So first of all, we're -- we've seen the decision, we don't agree with the decision, and we're thinking about how we might respond to that. We see clear overlaps between the many macro buffers that we are required to carry and this additional requirement. If it sticks, it, of course, will increase our overall requirement.

But then when we think about the capital trajectory, we sort of factored the possibility of that into our thinking. It doesn't change the overall long-term picture in terms of our capacity to continue generating and distributing capital.

The next question comes from Gulnara Saitkulova from Morgan Stanley.

My questions are on outlook on capital. So you have mentioned a higher -- potentially higher capital requirements from Norwegian systemic risk buffer coming in Q4. How should we think about the remaining capital tailwinds and headwinds for the coming years? How do you expect the organic risk-weighted assets to evolve given that you expect a pick up in activity starting in Q4?

And more broadly, when it comes to the longer-dated headwinds and the impact from the output floors, it looks like the potential risk-weighted assets increase could amount to 20%. What levers can Nordea pull in order to mitigate this headwind? And do you think there will be any changes in the regulatory capital requirements or regulatory framework that could potentially help to partly offset the impact? And how should these headwinds -- would there be any impact on your capital distribution considering these headwinds?

Gulnara, thanks for the questions. So I think in terms of the near-term moving parts on capital, we're certainly not aware of anything waiting out there in the wings in terms of new regulatory requirements, anything of that nature. As we've all seen, the FRTB elements of Basel IV have been pushed out a little further.

And bring back to your attention that we're working very hard on remediating some of the issues that we know we can fix in relation to our retail models. So we flagged EUR 4 billion to EUR 6 billion of real benefits coming through in the next couple of years from that. So certainly, in terms of outlook on capital requirements in the near term, no particular issues there.

And capital is in a really good place. We're in a very strong position. So I think the outlook is relatively stable. Of course, things can change, but for now, relatively stable.

On the sort of recent interest in impact of the Basel IV output floor. I think from where we sit, so technically, if you move from IRB risk weights to Basel IV output floor risk weights, that does drive on a pro forma basis on Q1 2025 REA, as you say, around EUR 30 billion of REA increases. We don't think of that as a headwind.

Two things to think about. First is around 1/3 of that falls away next year because we have the schedule an enhancement -- a technology enhancement that will allow us to pick up the full value of collateral, which currently because we don't use standardized models we haven't prioritized. We'll make that technology change, pick up the value of collateral, feed it into the standardized models. And that theoretical REA inflation is reduced by 1/3 already.

The remainder of that relates to the risk weight increases of unrated corporates. And I -- first of all, we have many of our corporate customers out there that have ratings that we currently don't use or pick up. So we'll ensure that we capture all of the data that is needed to start to deal with that requirement.

And then we have time. Over the next few years, I expect that the market will come up with a solution to deal with unrated corporates and will be part of driving that solution. So we don't -- where we sit today, thinking about the impact of these rules by 2033, we don't think of it as a headwind. And as I've outlined, I think there are a number of things that will happen to reduce that.

And could I just add -- it's Frank here. In regards to the Norwegian SyRB and the reciprocation, it's absolutely no problem to us. It's just annoying. It's 20 basis points, around that number, so it doesn't really matter, but it's wrong as we -- in our belief, there are clearly double counting, which should not be the case.

And that's why we're also that clear says that this we disagree about and, of course, are considering how to tackle it. So it's more a -- I'd say, a basically a structural question for us or a political question, we need to get this right and -- but ultimately, actually no problem.

And do you think this double counting may be eliminated at some point in the future by the regulator? Or do you think it will be unlikely?

I think that the European system is increasing whereof that the micro and the macro capital requirement system is not working as effective as it should in Europe. And they are -- it's about trust in the system, and there should definitely be a better coordination, and there should be no overlaps, which is not the case at the moment. And I think this is a good example where it's not managed in the way it should. And that we, of course, intend to address, which we have and will continue to do.

The next question comes from Tarik El Mejjad from BofA.

Two quick ones. I will come back on the hedge, Slide 18. And by the way, very helpful. So on the bottom left chart, where you show the quarterly impact from deposit hedge, the incremental or the lower headwind, I would say, from the hedge so far is still very low. I think that we are now well advanced in the rate cut cycle.

And my question is why actually it has taken so long for the hedge to turn positive. And if you can remind us what was the guidance for '25 for the hedge contribution as a delta, I guess, year-on-year?

And then the second question, you have your CMD in early November. And I would like to know in which mindset you are and what kind of big thematics or areas you would cover obviously at a high level, just to understand what mindset you are going into the Investor Day?

Yes. If I go with the hedge question and then I think Frank will handle your question on CMD. I suppose I'm going to be helpful and unhelpful. We've never guided on a sort of precise NII number for obvious reasons because we see fluctuations in the market.

But what I can say is that the hedge contribution is pretty much proceeding as planned. We give a general guidance as to what we expect from the hedge on our slide there. And we've said before, it's probably a net EUR 20 million quarter-on-quarter in terms of incremental support. I'm not sure what I can add to that. It's performing as planned, and I think we've been pretty clear in our guidance. So Frank?

I mean, I think for this is more the mechanism of actually you already had the rate cuts. I mean, yes, it goes in line with your budget expectations. But in the mechanics. Why? I mean, we are happy to finish the rate cycle to start to see it turning positive. I mean -- and I think I remember last year, you were obviously talking about breakeven in the hedge actually earlier than that, if I remember well.

I don't think we ever did. We've been very clear and very consistent on our guidance, Tarik. I think the pace of it is determined by the repricing over time. So the shape of the hedged item. I'm a bit perplexed at the question because we're performing pretty much in line with how we guided. So I guess, look, let's take it offline if there's something I'm not seeing here, but we're on track.

In regards to your question on theme for the coming period, I think we have been sort of like talking about it to some extent up until now in previous calls. So I don't think there will be anything wrong to give a little bit out here on sort of like the themes.

But it is about building on a very, very strong foundation we have. It is being even stronger in the Nordics. It is about growing our income above markets and evidence where we will do that. It is about making the unique Nordic scale of ours to play a very crucial role and we do know how to do that, and we'll show you how to do it and what it will do to make it really play a big advantage to us.

And then, of course, eventually, it is about keeping a market-leading return and a superior -- delivering a superior EPS growth. And we know what to do. We know how to do it and look just forward to being able to present it at the Capital Markets Day.

The next question comes from Martin Ekstedt from Handelsbanken.

So could we have an update on the Norwegian business after the integration of the acquisition from Danske. So looking at your fact book and I see fee and commission income in the Personal Banking segment up 26% year-on-year and 10% quarter-on-quarter, which is quite good. Is this cross-selling driven revenue synergies kicking in? Or am I just over-interpreting Q2 figures there?

Martin, it's Frank speaking. No, I think you are on the details, right? I would leave it to Ian to just quality check whether I say something that is not justified. But the sentiment is very positive. So the plan was to take over the portfolio to address up the customers with all our services and products instead of just -- not just only but to some part only do mortgages. And that is happening while we speak and it's actually developing quite well.

We have, at the same time, in it, did a sort of like a bit the same exercise on the old Nordea mortgage book in Norway, where it's basically about growing the relationship with our clients and that part is going very well as well.

When we look at the, you can say, the business case of the acquisition, we are fully aligned with plan, probably also slightly better. We expect a little bit churn. The customers that only have been choosing the previous owner for price would probably some extent sort of like look for alternatives if you go for a price only. But at the end of the day, it is a total relationship and the total income, and that's actually looking very, very nicely, so better than planned.

And we -- if you look at our ancillary and cross-sell, you can say, metrics in Norway compared to, for example, Sweden, we are much less developed in Norway. So here, we clearly have an area in which we believe we can continue to outperform for quite some long time. Did that answer your question?

Martin, just a couple of follow-up data points there because I think it's important. I mean, the sense you get from our people on the ground in Norway is that the new customers are really engaged. And as Frank says, the cross-sales performance is going extremely well.

On the year-on-year, up 26%, that's somewhat masked because the new customers were not there a year ago. But quarter-on-quarter, we're up 10%. And that is two full quarters with these customers and the fee and commission income up 10%, and I think that shows we're doing a good job.

And then secondly, my second question, if I may change track to Denmark, I just wanted to quickly check given it's been about a year since this has resurfaced. Is there an update on this Danish AML court case that failed to settle about a year ago now. Are you still retaining, I believe it was EUR 98 million or something like that provisioning for this?

Yes. So first of all, Martin, no change to the provisioning levels, and there's no requirement to change. We continue to both believe in the strength of our case ourselves. And we have three independent legal opinions that support that position.

The court case started in May, and it's going to be a long process. But certainly from the initial discovery and things like that, nothing to change our view on both, first of all, our responsibility in the case, and secondly, as I said, no change in provision requirements.

Understood. And just to clarify, when you say long process, are we talking years or quarters or months?

I think the initial phase is scheduled to take almost a year. So this will continue for a while.

The next question comes from Namita Samtani from Barclays.

My first question, just in your 2024 annual report, it says Nordea has 6,628 nonemployees, which include consultants. I just wondered what so many consultants were doing at Nordea and what the plans were for these consultants in the future. I appreciate maybe that number has changed since the end of '24.

And secondly, what part of your franchise do you see most momentum in right now? And where do you see like the most opportunity?

Yes, on the external employees, as we term them, there's a mixture there. Certainly don't get the impression that there's 6,000 people from the big consultancies, we don't work that way. The vast majority of that relates to outsourced technology function.

So we have partners elsewhere in Europe and the world that undertake technology development and other things for us. So they are classed as these external consultants, if you like, and that's the vast majority of that figure. So always a focus on cost and managing that down, but it's certainly not consultants as we tend to think of them.

And the other thing in regards to momentum, let's -- we can split it in business areas first, and then we can look at countries. Our Asset & Wealth Management business is having a very good momentum. The key there is private wealth, so Private Banking. And we are in a very good position, I would say. We are speeding up even faster in more than we have done before and are across the countries showing very good progress.

When it comes to the inflow within our asset management, it looks good. Of course, it has been risk off. It has been quite -- there has been quite much turmoil. But when looking at the inflow, it's really strong. I think the inflow for the first half was EUR 8.1 billion. So fine in the first difficult year.

Our life and pension business, doing very, very well, very solid, very consistent, and we gain market shares. Looking at Business Banking, I would say it's -- that's a business -- small and midsized corporates are quite sort of like muted now in their investment activities, but we're doing very well in Sweden, for example.

We did very well in Q2 in Norway. Finland is gaining market share, but in a very slow market. Denmark is probably losing a little bit market share. But all in all, good growth, 4% up year-on-year in the quarter.

LC&I and retail. So first, retail. Retail is doing well and in line with our plans. The mortgage markets are muted, but it's building. And we clearly see consistent increases of the -- in the activity level each quarter. Strongest in Sweden, we took after the first 5 months, as we have not June numbers for the market yet. We were 20-plus percent on the front book market share. On our back book, market share is around 14%. So clearly, much better than our peers. And Norway and Finland are doing well, a little bit slower in Denmark.

Large corporates, I would say, picked up well on the lending side, which was nice to see. We were very active and did well in the debt capital while the equity side was very slow. So IPOs, ECM, M&A activity in the Nordics in the quarter was at a very low level, and that was very visible in our figures.

So all in all, I would say, momentum is building. And I'm very pleased to see that actually lending on the corporate side is starting to come in now, which is nice to see. Country-wise, we are very strong in Sweden and winning market shares, are winning for the, what, five, sixth consecutive year within mortgages and SMEs and Private Banking now is really taking off. It's a good position.

Norway, a good position here in Q2. We are building and it looks good. Finland, I would say we come from a sort of maintain to a winning culture now, and that's visible, but the market is very slow, but we are actually above our back book in a number of areas. And Denmark, I would say, doing very well in wealth and doing well -- very well in large corporates. A bit slower on the retail and the SME business, which is items that we work with, and we will bounce back and -- I think late in the year or early next year.

So all in all, I think we are in a good position and firing all cylinders, and activity is just very low. And as Ian said in the beginning, Q3, you shouldn't expect any big pickup. It's vacation, it's slowly building up. There is a risk of focus from customers, but we do see signs that makes us believe that in Q4, it will pass through, and then we will start to see an increased momentum. And we are on our own side in a very good shape. Sorry for the long answer.

The next question comes from Shrey Srivastava from Citi.

One shorter term and one a bit more longer term for me. The first one is just on the large corporate deposits, particularly in Denmark and Sweden, is this a function of pricing changes, just normal seasonality or something else you see? Just a little bit more color on that would be appreciated.

And the second one, you've talked at length previously about utilizing the benefits of sort of pan-Nordic scale. Could you -- I mean, if not the size of the benefit, could you give a bit more detail on where you see the biggest cost saves in such initiatives and where you are in that journey?

Yes, on the LC&I deposits, there's an element of seasonality there. We've just come through dividend season. So there's always a bit of depletion of corporate bank accounts from that. And then we've seen one or two situations where customers have completed acquisitions, and that meant that the money raise that was with us has now been deployed in completing those acquisitions. So those are the two main reasons.

On the Nordic scale benefit, I would say, so first of all, I would say that I would like, but I would prefer waiting to the Capital Markets Day where we can elaborate on the theme. I would say that probably now we have eliminated the complexity and the flip side by being big in four countries.

And that I think that is visible when you -- if you calculate the cost income in their way, and don't do what some other banks do, for example, in Sweden, where they remove the bank fees or the regulatory fees and put them under basically the profit line and then exclude them from cost income.

Then I would say that, of course, there are different business mix and so, but we have neutralized the complexity. And now it's about to materialize. So basically, showing the benefit by being big and having the scale.

And it's very obvious that the banking or financial service is a scale business. It has been difficult for us to get out the complexity. We have done that now. We have made the plans. We do know what to do. And we have a number of streams that we are working on, exactly seven streams that we are working on right now, which will now bring a significant increased efficiency.

And that is among other things what we will talk about on the Capital Markets Day. But there is a -- needless to say, there's absolutely no reasons for, all else equal, that we will not be the most or at least in top of the efficiency game within the Nordics going forward.

And operator, I think we have time for one last question, please.

The next question comes from Nicolas McBeath from DNB Carnegie.

Okay. So I just had a follow-up on the helpful elaboration you made, Ian, on the various P&L drivers for second half. So 15% ROE, I guess, seems reasonable, in particular, given that you might get some aid from further release of the management buffer in the second half.

But I'm struggling more with the 44% to 46% cost-to-income outlook given that you were at 46% in the first half and normally second half has higher costs and revenue is still unlikely to grow materially given the rate trends. So just wondering how confident are you that the cost-to-income will come in below 46%? And what can you say to help us build confidence in that outlook, please?

So we're always confident that we hit our targets. And clearly, things can happen. But certainly, our crystal ball for the second half now says that we'll make it. I think that, first of all, we're within 46% for the first half of the year, so 45.4%.

And one thing I think that we need to continue to clarify is we guided at the start of the year that we would expect our costs to accrue a little more evenly, the phasing will be a little bit different. So you won't see the same pickup towards the end of the year that you've seen in previous years.

And part that is a function of, at the end of last year, the second half of 2024, we increased our investment spending substantially. We're maintaining levels this year. So you're not going to see that same pickup much more evenly accrued costs over the year, and we are within the 46% half year-to-date.

All right. I think we have reached the end of the meeting. So thank you so much for great questions. And as usual, if you have anything that you want to discuss, please reach out to us. Thank you very much, and have a nice summer. Thank you.