SEB Aktie

Good day, and thank you for standing by. Welcome to the SEB Financial Results Q1 2026 Webcast and Conference Call.

[Operator Instructions]

Please advise that this call is being recorded. I would now like to hand the conference over to your speaker today, Johan Torgeby, President and CEO. Please go ahead.

Good morning, everyone, and welcome to SEB's first quarter results presentation. First, I'd like to just comment on a pretty unusual quarter. We've clearly seen some turbulent times with some macroeconomic sharp turns during the first quarter of this year. After a very constructive start in January, February, we had the trigger of the military conflict in the Middle East where we saw interest rate expectation significantly increased following higher energy prices and the risk of higher inflation, fairly sharp drops in some of the equity markets and also a widening of credit spreads.

What's good to see is that April has really contrasted to this development and things have clearly stabilized. The highlights of the first quarter is really around the sentiment that ended positively and came out weaker during March after stabilizing in April. We saw some areas really benefiting from the market volatility that increased, and we saw higher demand for commodity hedging supported by high activity in the secondary equities market. This quarter, we can also clearly see the cost consolidation at work, and this really creates the freedom of degrees that we would like to use for the future to invest in prioritized areas. We will also continue the share buyback program of SEK 1.25 billion for the coming quarter. Turning to the page with our credit exposure and lending. We noticed modest growth within the corporate segment. We also saw a little bit more growth within Property Management, whilst household lending was flattish. We can clearly see measured as year-on-year that we continue to have good growth coming from the Baltics and Wealth and Asset Management, and some growth within Corporate and Investment Banking.

On the next page, we look at the business pulp, and we can clearly state that we had a shift in sentiment during March, which really meant less activity in the areas such as listing on the stock exchange, M&A and large investment decisions on behalf of our clients. We also saw an improved sentiment around fixed income, currencies and commodities as market volatility increased which is typical that activity thereafter follows. We also had 4 customer satisfaction surveys completed, and it was very constructive to see a good position for SEB within cash management fixed income in Sweden, financial sponsors in Sweden and their capital markets in Sweden. We saw some customer inflow in the corporate portfolio of business and retail banking. The AirPlus integration is on track, and we've also seen somewhat of an uptick in house prices in Sweden, which is clearly supportive of an activity level that might come back later during the year. In Wealth and Asset Management, we had some inflow here measured as the Swedish mutual fund inflow in Sweden of SEK 9 billion in net with a market growing SEK 4 billion in total. Also here, we got some recognition for our work within PWM and FO as well as asset management.

Baltics continues to outperform, particularly measured as year-on-year with growth in mortgages and SMEs, both at 10% and large corporate in the Baltics of 4%. We also continue to see constructive signs of growing long-term savings and investments in the Baltic states. Turning to the next slide. As customary, we once a year, like to do the CIB numbers by clients in different geographies. First, one can conclude that the growth of total client income was muted with almost a sideline movement in 2025. But as we've experienced over the last decade, the new clients that we've entered into the bank over the last decade plus, are the ones that outgrow the older vintage of clients that we do have. Looking at the dependence on Sweden, we continue to see a stabilization, where we went from 66% of income coming from Sweden to now around SEK 50 million. Focus going forward will be to increase growth. This is a customer-oriented approach where we would like now to see the total increasing in the years to come.

Lastly, as we are designing the strategy of the bank with a clear focus on positive operating jaws. We can see that we have now with clearly a different cost trajectory path, somewhat of a stabilization of the operating jaws. With that, I'd like to hand over to Christoffer Malmer.

Thank you, Johan. So turning to the next slide and the summary financials. The net interest income in the quarter declined by 6% year-on-year. And on an FX-adjusted basis, that decline was 4%. This should be put in the context of an increase in lending to the public of just over 3%. So the decline in net interest income is primarily reflecting lower deposit margins as a result of lower interest rates. The sequential decline in net interest income, so development versus Q4 was mainly driven by a couple of technical factors, including a lower day count higher costs for the deposit insurance guarantee and FX headwinds. Partly mitigating these effects was a positive contribution from treasury. So there has been some traffic between net interest income and net financial income in treasury in this quarter.

Turning to fee and commission income. The momentum that was building during last year has been somewhat disrupted this quarter by the increased market volatility and the broader market uncertainty that Johan referred to in his introduction. So while the pipeline of pending transactions remains healthy and corporate customers have demonstrated both resilience and strength during this period, transactions and new issuance have in many cases, been placed somewhat on hold. Therefore, the outlook for market-related fee and commission income for the rest of the year will naturally remain subject to the broader market backdrop. Looking at net financial income from the divisions, it actually increased from the fourth quarter, notably within CIB, driven by FICC. So fixed income, currencies and commodities and commodities, in particular, performed strongly. FICC risk management generally performed well throughout the market volatility in March. Here also, the contribution from treasury has an impact in the quarter. And in this line item, it was negative. But as I mentioned, offset by a corresponding positive effect in net interest income.

For both fees and commissions and net financial income, I think it's worth bearing in mind that the year-on-year comparisons are very demanding. The first quarter of 2025 was a record quarter for both those 2 line items. Turning to operating expenses. We continue to consolidate the cost base, which we started during last year. And for 2026, as we communicated together with our full year results back in January, our intention is to consolidate and reduce the underlying run rate to make room for prioritized investments. Now this has primarily been implemented through a pause in external hiring. And this allows the organization to consolidate past investments and also work with the natural churn of FTEs. This is also proving a helpful tool to realize efficiency gains related both to the increased initiatives around automation and the implementation of our AI tools. The development of operating expenses in the quarter has also benefited from lower costs from outstanding share price-linked incentive schemes. So these effects had a meaningful positive impact on the cost base compared to the same quarter last year.

In total, expenses in the first quarter declined by 7% year-on-year. The number of FTEs is down by around 250 compared to Q1 of last year and is down by around 4% from the peak. Now taking into account FX movements in the quarter, we provided an updated annual cost target of SEK 33 billion, plus/minus SEK 250 million. So this is down from the original SEK 33.4 billion. As you can see, we are tracking well below even that updated cost target for the full year. And this is the result of our underlying cost base consolidating a bit faster then we are increasing some of the investments in our prioritized investment area. So this is according to plan. Now turning to the net ECL of SEK 546 million or 7 basis points. This is a drop from Q1 of last year and a small increase from Q4. Underlying asset quality remains robust and the provisions in the quarter reflect a similar pattern that we saw during the course of last year with a few exposures in a few sectors requiring additional provisioning. We have also in the quarter released some of our portfolio overlays and some of that has been attributed to individual exposures. Levies and taxes are in line with our communicated guidance. So the net profit comes out at SEK 9.4 billion and EPS at [ SEK 383 ] million.

The return on equity for the quarter at 13.1%. And as we have mentioned before, we do have an impact from our overfunded defined benefit pension scheme, and that continues to have a nontrivial impact on our ROE. So for comparison, we also provide an ROE adjusted for that surplus. And for the quarter, that amounted to 14.5%. Turning to the next slide, we'll look at the net interest income. As the interest rate cycle now starting to stabilize, we pointed last year to a typical lag of some 3 to 6 months the last rate cut until the full effect of lower rates would have made its way through the balance sheet. We see no reason to change that assessment. Looking at the Baltics, the latest ECB rate cut occurred in June of last year. And in the fourth quarter, we recorded a sequential increase in net interest income in local currency as reported. This trend has now continued in the first quarter of this year. So net interest income in the Baltics, again, is up in local currency if we adjust for the day count, and that increase is about 2%. And that is driven by higher lending and deposit volumes with margins holding relatively stable.

In Sweden, the latest rate cut came in October last year. So the turning point in net interest income is likely to occur now in the first half of this year. but will, of course, continue to depend on the interest rate development. The more technical factors impacting the net interest in the quarter that I mentioned previously around day count and FX adds up to around SEK 250 million to SEK 300 million compared to the previous quarter. But on the other hand, a number of smaller effects going the other direction across most divisions. It's a combination of higher business volumes in some areas. There's a lower funding cost at AirPlus in this quarter. And as I also referred to some positive developments in NII, offset by headwinds in NFI in treasury. These together added up to a positive contribution of around SEK 200 million. So net-net, there is a SEK 100 million, quite a modest development of net interest income declining in the quarter. Moving on to fee and commission income. As mentioned in the introduction, this is the area where the change in market sentiment has had the most visible effect compared to the momentum we saw building towards the back end of last year.

Comparing the results in the quarter to the same quarter of last year, so adjusting for seasonality, the decline we see is most notable in what we refer to as net payment and card fees, which is down 8%. Now this is primarily reflecting developments related to Air Plus. Partly, AirPlus exited 29 noncore markets during the course of last year. So the scope of the change has changed, and that is very much, of course, in accordance with the plan of the implementation and restructuring of that platform. And also, we've seen a result of postponed corporate travel in the latter part of the quarter, of course, due to the conflict in the Middle East. The year-on-year decline in what we call Securities Commission is partly related to lower fees on new issues of securities or IPOs and other type of activities, as well as some lower secondary commissions. Fee income related to assets under management and assets under custody increased somewhat, and that's broadly in line with the move in asset values. If we compare to Q4, there is also the lower issuance of securities that accounts for most of the decline in fees from securities. And there is a drop in performance fees, which are typically higher in Q4.

Finally, on this slide, we see a decline in life insurance commissions from the previous quarter, and that is reflecting a lower day count and lower asset values and the year-on-year effect is primarily driven by lower margins within notably unit linked. Turning to net financial income on the next slide. This line item has been affected by the restatement that we have announced prior to this quarter. Historically, we have pointed to a long-term average for net financial income, spanning over 16 quarters which in Q4 was around SEK 2.5 billion. And this we have pointed to as our best indication of the level around which this P&L item should move. Now taking into account the restatements, which is increasing our net interest income and reducing NFI that equivalent level looking at the past 12 quarters, over which we restated the numbers, is around SEK 2.1 billion. On the next slide, we look at the development of the capital position. We closed 2025 with a management buffer of 300 basis points and then taking into account the developments in the quarter, we're adding 40 basis points from accrued earnings, which is largely balanced by the combination of the upcoming buybacks that we deduct upfront, volume growth and FX effects. Then we do continue to see the impact as we phase in the IRB impact in the Baltics and a positive contribution primarily from asset quality. That takes us to a buffer at the end of the quarter of 290 basis points. On a pro forma basis, so taking into account the final part of the IRB phase- the Baltics, the buffer stands at SEK 250 million. basis points.

Turning to the next slide. We continue to make progress in the area of AI, which is one of our prioritized investment areas. In this quarter, we have progressed well with our efforts to secure access to sovereign and also cost-efficient compute at large scale, a key component in growing and scaling AI solutions. So we have, together with 3 other companies from the Wallenberg [ Sferical AI ] Saab, Ericsson and AstraZeneca, formed a company called Sferical AI. Now this company is building powerful AI hardware here in Sweden, together with NVIDIA. And during this past quarter, we took delivery of around 1,100 GPUs. And based on NVIDIA's latest Blackwell Ultra architecture. This architecture offers significantly better performance per watt than any previous product from NVIDIA. And just to give a sense of the capacity of this installation because, of course, talking about GPUs, it's hard to quantify, we can say that the capacity of this installation enables around 150,000 to 200,000 users to simultaneously have a real-time AI conversation with everyone effectively acquiring the AI at once without any drop in performance. So it's a significant capacity that will allow us to roll out AI solutions and also use this capacity for sensitive data as it is our own installation, and continue to develop use cases in and around AI. We expect to start accessing these capacities to be up and running later during the course of this year.

Finally, at the final slide, we conclude with our financial targets. There are no changes here. We continue to aim for a 50% payout ratio, a capital buffer between 100 to 300 basis points. and a return on equity of 15%. So with that, I hand over to the operator for questions.

[Operator Instructions]

Our first question comes from the line of Magnus Andersson from ABG SC.

Two questions, please. First of all, good to see that corporate lending was up slightly quarter-on-quarter. I was just wondering what initiatives you're pursuing to improve your market share in corporate lending, particularly in Sweden, which you seem to be losing ground versus competitors. If you please can tell us something about that?

Secondly, just on net commission income, expectations have come down quite significantly since the pre-closing call. And yet, you are even a bit below the down guided numbers. So I was just wondering is -- I mean, from here, is it purely market driven what happens? Or are there any specific actions you are taking? Or are there any technical factors related to AirPlus or something else we should be aware of?

Magnus, Johan here. So from last quarter, we discussed the corporate lending with a little bit focus on Sweden. We've taken quite a lot of internal steps to do something that is not particularly difficult but still hard to execute on and that back to business, back to focus on making the most effort we can to be relevant in the marketplace. And it's early days, but it's, of course, encouraging to see the point you made that there seems to be a little bit of uptick. We also, for Sweden last quarter looked very closely on the statistical Central Bureau the official stacks for Sweden. We can also see the same shift there, where I think we captured about 30% which is significantly above our back book market share of new corporate lending in Sweden, but still not outgrowing the best in the market.

So constant focus now on just continuing this improvement, and we're not going to hold back we're going to try to do. I wouldn't say that we don't have a sense that we've lost a lot of business that we would like to do. So there are always different areas within the subsectors of a lending book, which we have differences of opinion in how hard we pursue it. So that's at least a little bit of cushion for us that we've done the business as the price and up the underwriting standards, we believe is appropriate.

Good morning, Magnus. So on the commissions, I think you're right to observe that the sequential decline is primarily attributable to the market-related fees and commissions, its issuance of securities and the advisory that accounts for that. So going forward, of course, those market-related revenues that has the opportunity to recover provided the market backdrop is constructive. From the cards business, there is the seasonality. So Q4 tends to be higher, corporate travel quarter, Q1, a bit slower and then Q2, a little bit higher. We've seen minor effects on the revenue in fees and commissions attributable to the corporate travel impact from the conflict in the Middle East, which we will recoup and travel resumes, but that's a very small number.

Johan, may I just follow up on corporate lending. Do you have any comments about pricing discipline in the market? As you briefly touched upon yourself, there's particularly one actor growing extremely fast relative to all others. I mean do you think that has impacted the pricing in any way?

I wouldn't say in a meaningful way that I can point to objectively. So I would be a bit cautious. But you can do some very simple analysis and see how lending grows has developed versus the NII development over the last 18 months, and you get a picture that there's definitely some signs of very tough competition. And it's not only one, there are a few more which we definitely feel that there is a more forward-leaning ambition in the marketplace. So it is heating up.

Our next question comes from the line of Namita Samtani from Barclays.

I just got 2 small ones first. On the net interest income, Christoffer, you mentioned the lower funding costs to AirPlus and some positive developments in net interest income offset by headwinds in NFI and treasury. Are these components sustainable and net interest income, i.e., should I not be expecting these elements to reverse? And then my other small one is on the cost group functions. Other expenses improved by SEK 500 million quarter-on-quarter. And even in the other expenses and the group cost base, it improved by SEK 150 million quarter-on-quarter. So what exactly is this?

And then my final question, I appreciate the comments in the report that given the current outlook are stable to potentially higher interest rates, the ambition is to grow revenues and maintain a positive delta between income and cost growth, but when do you think you can actually get to a 15% ROE? Because consensus doesn't have you there in 2028. So I'm just trying to understand what stops you from getting there over the next few years?

Thank you, Namita for the question. If we start with the net interest income, as I mentioned, we had those headwinds from the account FX and deposit insurance currency of about SEK 300 million, offset by around SEK 200 million of the effects that you were referring to. I would roughly split those in half and say that half of that is more attributable to business as usual and half of that SEK 200 million is more treasury traffic between NFI and NII. Can I ask you to repeat the cost question, please?

Yes, sure. Look, I'm just looking at the cost and group functions and on the other expenses, just quarter-on-quarter, it improved by SEK 500 million. So I'm just trying to understand what that is. And even when I look at the costs on a group basis and what you call other expenses, there's an other within that, which also improved by SEK 150 million. So I'm just trying to understand what other is.

Yes. So the biggest delta in those costs between Q4 and Q1, it's partly attributable to the AirPlus restructuring charges and related redundancy fees. The second element that you also have, which is primarily in the salaries line as well where you see the bigger delta is attributable to what I refer to as impact from the movement in the share price impacting our LTI schemes. So those 2, I would say, are the biggest deltas between Q4 to Q1. But in the other line, you should find those implementation charges.

Let me -- that's in addition to a reduction of FTEs.

And just my final question?

Your final question on...

There's nothing holding as bad as such. So we do control the cost base with pretty much surgical precision is our ambition. But what we are lacking is really the income side. So that we do not control. I wish we did, but we would like to have a much more active investment bank. That's the biggest drop if you look at percentage terms. Even though it's not that meaningful in quantum, it's about SEK 2 billion of income from that per year in terms of the copper finance and primaries. Those are the 2 ones that are down now 30%, both Q-on-Q and year-on-year. And those are, of course, extremely high return on equity contribution areas as they are capital-light and doesn't really any capital.

And the third one is, of course, that we do have a drag when we look at the 15% to your point, from the pension fund, which is capital -- I mean, it's a luxury problem to the extent that our surplus is growing as markets are appreciating, but it is capital that we really can't use for the business. And I would say those things are the ones that I think about in order to come quicker to the aspiration we have of 15 versus the consensus that you refer to.

Our next question for today comes from the line of Martin Ekstedt from Handelsbanken.

Could I focus a bit on retail banking, please? So your new Head of Business and Retail, he's had some time to sink his teeth into that division now, I imagine. That should have included, I guess, the business review and some benchmarking perhaps against his former employer where he oversaw some impressive market share gains. So are you able to share with us some of his views and recommendations? Perhaps any initiatives that we should be aware of to strengthen retail banking in particular? And just as a backdrop to this, please your former CFO, wrote an article in the Swedish Business Daily between quarters, saying mortgage growth basically will be unprofitable once it comes under current capital regulations and margins. Would you agree with this? I guess you may have read this article. What is the scope of widening mortgage margins in the current Swedish market?

On the retail banking side are now predominantly then for Sweden, it's nothing -- it's not rocket science. It's really an assessment that [indiscernible] has done around simplicity and speed. So very much back to basics, back to banking and make sure that you have those things that are a prerequisite to be quick and have the right product at the right price. So this is very much what we are redesigning right now. It's not that we haven't done it in the past. It's just something that is quite easy to think about and quite hard to execute on. But is everything from updating the technology side, making sure that you answer fewer questions. You get your mortgage promise in a very convenient matter at your own terms, et cetera.

On mortgage growth, I would just say that margins move up and down. And there's definitely a relatively speaking, low margin business right now. So if we grow on this margin, there is a less impact financially than we had maybe 5 or 6 years ago. But in my opinion, the mortgage margins are cyclical. They go up and they go down. Right now, they are very depressed. But they could -- they will recover at some point in time in the future because they do. And I think that deposit taking and lending, they are communicating with each other. And the other thing on the totality, why this is, I would actually attribute it to a competitive market and a very well functioning bank market, in particular, Sweden, where there are no systemic permanent over profitability products. They tend to be completed away over time and there's not a permanent situation either where you have low profit as a whole that you make banking dysfunctional.

So if you look at -- compared to many of the European countries over the last decade, you can see that there's higher swings between very high profitability to no profitability, whilst the market is quite well functioning here with some insecurity on pricing and return on equity that it kind of evens out over time. And this could be centered in our language around the 15% aspiration of return on equity. This goes into the analysis that we do. of what we think is an appropriate medium to long-term aspiration to have. Some years, we will get higher, some will go lower. But we will always try to work against that in the balance between customer satisfaction, very well-priced products and profitability for the group.

Our next question comes from the line of Nicolas McBeath from DNB Carnegie.

So I was wondering why you're keeping the cost guidance underlying unchanged given what we see here in Q1, which seems to reflect a much lower running cost base with fewer FTEs and the change trajectory, of course, as you mentioned, Johan. Do you have any large investment projects that require large hiring freeze hiring increase in the near term? Or do you see potential for reduced cost guidance later during the year?

No, I think the way we look at this is we talked about reducing the underlying cost growth and consolidating the cost base to make room for prioritized investments. And therefore, we do see some investments that are still scaling up. and we'll do so during the remainder of the year. So when we conclude the first quarter, there is the impact of our underlying cost base coming down before some of those investments are phasing up.

Secondly, the impact that I referred to earlier around the share price movement remains, of course, an exposure that could go either way. And then we have an element of seasonality that Q1 tends to be a little bit of a lower cost base. We have the range still in the cost target of plus/minus 250 but where we are after the first quarter, we think it's too early to have a discussion around any changes in.

Could I just follow up? Is the hiring freeze still in place? And would you expect the FTE number to continue to decline also in the next couple of quarters?

So we have a -- we continue to hire externally only that we're working with a natural churn. So we are hiring less than our naturally leaving. And with the size of our organization, we have a natural churn around 800 to 900 FTEs every year. And what we've been doing over the last couple of quarters is continue to hire externally but a considerably lower pace than the natural churn. And for the time being, we like this model. We'll continue with this. because it also helps the organization to consolidate efficiency gains. We're introducing automation and AI, that's a helpful tool to work with. So for the time being, this will continue to be the model.

And then my second question was on profitability trends in the Baltics. So we can see that your returns on allocated equity went down quite a bit in the quarter by think slightly more percentage points due to higher equity allocation, I guess, to the model update. Are you happy with this profitability in the Baltics? Or do you see a need or potential to widen margins, given the increased capital consumption, I guess, in particular, given that your largest competitor now in the Baltics also seem to be facing higher risk weights in the Baltics?

You're right. The effect is a technical one from the increase in the risk weights there. We continue to work with those models. And our ambition is, of course, to resubmit and get approved IRB models going forward. And when we look at the impact on pricing, this is a competitive market that is very much priced of market conditions. So I think for the time being, we're ensuring that we're continuing to win and take the business that we want to take in the divisions and the operating teams. So we're not expecting any change from the allocation of capital.

Okay. And am I correct? It's still SEK 20 billion that you -- or it's now SEK 20 billion that you expect remaining increase from the model updates in the Baltics? You don't see any further increases on that. Is that correct?

That's correct. We see no further increases.

Our next question Comes from the line of Sofie Peterzens from Goldman Sachs.

Sofie from Goldman Sachs. So just a follow-up on the previous question. With the IRB models in the Baltics, when do you expect this to reverse -- like what's the time frame, if you could give us a little bit of details here. And then also, I was wondering how should we think about the levies going forward? Is it fair to assume that the current level is the good run rate for the remaining year? And then finally, my final question would be on cyber security. We have seen a lot of headlines around Messano bad people join the a banking system. So how do you think about this? And how do you ensure SEB's Cybersecurity 's top notch?

Thank you, Sofie. So starting with the IRB models in the Baltics -- this will take some time. So we are looking at the years for those to be submitted, and we expect to be approved eventually. But as I referred to on Nicola's question, the full capital effect from the Baltic IRB models is expected to be implemented by the end of the second quarter. And then we'll like to, of course, to work as quickly as we can to remediate that, but we are looking at years. The second question around the levies. The expectation for the full year is around SEK 3.3 billion. So that's sort of our best case right now where we stand, adding the various risk taxes, levies, et cetera, together.

And on your third question, when it comes to [indiscernible] , this -- you're right that this is a development that, of course, has triggered a lot of conversations in many industries, banking, no difference. And we are very active working with our suppliers. Many of our technological partners are part of the Project Glass wing which do have access to the [indiscernible] model. So our way to work with our own exposures will be very much working with those partners. And second thing, which we are certainly focusing in on progressing more broadly is the ability to just reduce the cadence of releasing patches. So when there are vulnerabilities identified, the ability to quickly move forward, identify them and release matching. That will continue to work with in parallel. But this is a development that we're following very closely, and we are in close conversations both with authorities and our technology partners.

Our next question for today comes from the line of Shrey Srivastava from Citi.

The first one is actually on provisions. I know you've reduced your management judgment buffer. -- somewhat despite it seems seeing some customer-specific events this quarter. So if you could just elaborate on what exactly is well and why you don't expect to occur at first? The second question is on the potential for rate hikes in Sweden. During the last hiking cycle, we saw a little bit of coverage on Swedish banks now being able to partially model the contract parity of overnight deposits. If we do get any great hikes in Sweden, is your behavior going to be materially different in terms of hedging this hiking cycle versus the previous one?

Okay. Thank you. On the provisions, well, you're absolutely correct in the question. So we take release a little bit, and we still have about SEK 0.5 billion or so. It's fairly concentrated to a couple of names within projects and infrastructure. So for us, this is, of course, never fun, but it's very normal, and the level is in line with what can be expected as we have more corporate and investment banking compared to retail. It's not to be viewed as a broader sign of asset deterioration or quality deterioration, but rather a fairly specific number of a couple of events project and Infra Finance.

On hedging, no change really. So obviously, we have had an unhedged version of SEB. So if you buy the bank, you do get some interest rate sensitivities, and we have not changed our view on that.

Our next question comes from the line of Riccardo Rovere from Mediobanca.

Just a couple, if I may. If I'm not mistaken, just getting back, I think, to what Namita asked right at the beginning of the call, Christoffer, can you explain a little bit what you mean when you say [indiscernible] between NII and FI, this quarter. Just to understand if there is anything that should be taken as not recurring in this quarter or the other way around? The second question I have is on the buffer, including the full impact of the Baltic IRB models, the buffer now is 50%. Is this the number 250 basis points is this the number that you have in mind as an adequate buffer once the IRB models in the Baltics have been, let's say, [indiscernible] has been completely absorbed or do you think you could go lower to 200 given that you have 100 to 300 basis point range?

And the last question I have is, if I remember correctly, one of the few calls, I think it was Q4, maybe Q3 I don't exactly remember, you mentioned the possibility or looking into SRTs, I was just wondering whether this is still something you're looking at, if you've done something in the meantime or it's something that you have no intention to do anything on this side?

Thank you, Ricardo. So coming back to the net interest income, and hopefully, I can clarify. So as I mentioned, there is about SEK 100 million in this quarter that within treasury is in NII moving from NFI to NII. So what's behind that? Well, this is effectively attributable to the funding of our Market Making business. And when you saw the kind of shift in rate expectations and rate moves during the quarter that just passed, there could be an effect in some of the swaps that you get the booking in NII versus NFI or the other way around as rates move. So what we want to flag is that the movement of around SEK 100 million could be reversed. And if so, it would show up in NFI instead. Does that make sense?

Yes, it does make sense. But it's not, let's say, a one-off by its nature is just rate movements this quarter, rates go up and down every single day. I mean there is nothing particularly one-off in this. It's just what happened in this quarter.

Yes. Well, you could argue that what happened in this quarter was quite unusual. And therefore, we just want to flag it that it moved from NFI to NII. But of course, in total revenues, it's still there.

So Ricardo, if I understand the question correct, the 250 pro forma, I have no disagreement with. That's roughly where we're thinking as well. When it comes to the acceptance of going down to 200 , I'll just say there are 2 reasons personally. This is, of course, for the Board and not for me, it's capital allocation discussions would be acceptable. So you shouldn't rule it out, is that why do you have a -- why do you go into the buffer. In this case, it's actually because we put in extra buffers in the Baltic. So that's a very good reason why you don't need to have extra buffer on buffer in terms of your management buffer.

The other one would be business. So I would not rule out that you can absolutely hit 200 for 2 reasons, namely, we do have extra buffer now. So we are a more safe and secure bank with more loss absorption everything else being equal because of the B. That's the positive. The other one negatives, of course, and it's capital that we can't really deploy smelly. And we are still hopeful that the April indicators of strong equity markets, falling interest rates, volume credit spreads that we come back to where we were earlier this quarter. the past in having a more constructive view. Obviously, everything else being equal, the world looks more insecure right now after the war in Iran and it did prior to it. Otherwise, it's going to be the 100 to 300. And as always, if nothing [indiscernible] happens. The decision will take in December amount?

Yes. So on the SRTs, Ricardo, we continue with that work. We have not undertaken any transaction during the past quarter, but we continue to work prepare us and increase our readiness if we should deem that a relevant tool going forward. So work continues.

Just a quick follow-up, John. When you stated if I understand correctly on the buffer, I'm talking about buffer. Basically, you have 100 basis point add-on because the Swedish FSA is reviewing the whole model of the whole group then the ECB decided for SEK 50 billion additional risk-weighted assets on your Baltic exposure because of the [indiscernible] and then basically you are saying if you capital, let's say, the 300 basis point buffer you would have above them on above on a buffer basically 3 layers. The 100 basis points plus the SEK 50 billion plus the SEK 300 million is do I get it right, you're reasoning?

Yes, you are. And remember, when we introduced the Baltic IRB add-ons, we did say we will use the buffer for it. So I think you're right.

Our next question comes from the line of Emre Prinzell from Nordea.

Emre Prinzell from Nordea here. Just a quick question from my side. How should we look at the Baltic NII going forward? I noticed you print 10% year-on-year loan growth on mortgages and SME loans there. the 6-month Euribor is up some 30 basis points since the beginning of the war. And most, if not all, lending in the Baltics is explicit reference to the [indiscernible] right? So what does this mean for Q2 and Q3 sequential NII in the Baltics would you say? That's my first question.

Yes. I think I think you're right, these are exactly the variables that I would look into. So the development of Euribor, our volume progression and a margin development, of course. Now from a deposit base perspective, of course, the -- we now have around SEK 150 million to SEK 200 million or so of 0 cost deposits in -- across the Baltics, which would then be affected, of course, from rates 100 to 150 million, I should say.

And also looking at the corporate lending in Sweden, we already discussed it a bit, but provided what is happening now with the geopolitical uncertainty. Do you -- how should we look at the market growth would the corporate appetite for lending in Sweden going forward. It's been on a trend upwards, but will there be a dent in corporate appetite? Or will they continue to have demand for credit in Sweden?

I think it's a little bit too short term for it to have a meaningful shift. What happens is, of course, that larger investments they put on hold. So there is a marginal negative to lending demand. And in the end, as we've been talking about now for 1.5 years, we do need the consumer to come to the table for corporates to start increasing capacity to satisfy the demand of the end consumer. So in my book, I'm still a little bit cautious. It's improving. There is a little bit of lag. Now it looks good again after a weak March. So I don't draw too much conclusions from that.

But I do think that the GDP estimates are being revised down, which is not helpful because we were looking for a consumption consumer-driven pickup. That's kind of been the area that's likely not stability, not investment ability, but whether that you need an end customer demand for all companies in the end to expand business. But it looks pretty constructive. And then you have, of course, a small signs also on the retail side with mortgages, not at least in house prices that at least looks neutral to marginally supporting.

We will now take our final question. And our final question comes from the line of Jacob Kruse from Berstein.

I guess just 2 small questions from me. First on the expenses, if I look at your other expenses, the IT cost came down quite significantly this quarter. So I think about SEK 1.3 billion in Q1 last year to just under SEK 1 billion this quarter. So I guess my question there is, is that a shift? Or is that what you're talking about in terms of this ramping up investment idea? And then the other question I just wanted to ask was in the mortgage business, when you talk about the pressure on margins currently, do you have -- are there any effect here of the rate moves that have a temporary effect on Q1 that will reverse in Q2 in terms of the pricing of the back book?

So on the IT cost, I would say the decline in Q1 is more of a seasonal nature. So this is 0.1 of the areas where we expect investments to show up. On your second question, if I understand correctly, no, there's no such impact in the first quarter visible in the numbers from those mortgage price adjustments.

Thank you. There are no further questions at this stage. I will now hand the call back to Johan Torgeby for closing remarks.

Thank you for today, and we wish you all a happy first of May, and see you soon. Thank you.

Thank you. This concludes today's conference call. Thank you for participating. You may now all disconnect.

Good morning. My name is Wilhelm Luning, and the Board of Directors for Skandinaviska Enskilda Banken AB, have given me the task of opening this AGM and chairing the proceedings until a Chair has been elected. I declare the AGM for 2026 open.

Brings us to Item 2. The first question to resolve, that's the election of the Chair. And the Nomination Committee proposal is to elect me to chair today's AGM. Are there any further proposals? No, it does not seem to be the case. Can you elect me to chair this AGM today? Let me begin then by thanking you for having entrusted me with this task. Next to me on the stage, on my right from the auditorium, we have the Chairman of the Board, Marcus Wallenberg. And next to him, we have the CEO and President, Johan Torgeby. On my other side here, on the left of the auditorium, we have the Group General Counsel as well as the Secretary of the Board, we have [indiscernible], who has been given the task of being the Secretary at the AGM, taking the minutes here today.

And in addition, it is duly that the Board of Directors of SEB are present as well as the lead audit partner. I also note that the Board of Directors has previously decided that shareholders be given the opportunity to participate at the AGM, not just through presence but also through postal voting. So let me see. The Board has also made the decision to enable shareholders who have decided not to participate, not able to participate in person at the AGM to give them access those interested, the possibility of following the proceedings via the digital live broadcast streaming on the corporate website.

And the broadcast will only show the podium and the big screens behind us here. So no shareholders will be visible in the broadcast. Those who speak here will be heard in the broadcast though. In addition to those who may follow the proceedings via the broadcast, I will ask the AGM to also make its view known with regard to the presence of invited guests. Can we decide accordingly that they may be present here today? Yes. Thank you. Brings us to Item 3.

Item 3 is the preparation and approval of the voting list. A list of all those shareholders who've notified the company and the rotation of taking part in the meeting has been distributed as part of the documents distributed here. You may partake either by being present in the room or by postal vote. In the list, every shareholders' shareholding and number of votes have been included. And those shareholders who have arrived here today were registered upon arrival. That list, which is proposed to constitute the voting list composed of all those who've registered to take part with the deletion of those who did not register upon arrival here today. Can -- is the meeting prepared to resolve to adopt this procedure and this voting list? Thank you. And I need to get some information. Thank you.

At today's meeting, we have a number of votes. Large numbers indeed, 1,132,103,229 votes and number of shares represented, 1,933,530,716 shares corresponding to approximately 58.5% of the entire share capital. 1,554 shareholders are represented mainly via proxies. I would also like to inform everyone that there are a number of institutional shareholders who have submitted prior voting instructions for today's meeting, and I have received those instructions as well as the postal votes, which have been submitted. And I have a list, which we keep up here on the podium.

And I have a few practical points of order. First of all, for all those of you who are present here today, I want you to be aware of where your closest emergency exit is located. There are a number of doors. If you find it difficult to move stairs, you can choose the middle doors over there. And if we need to evacuate, the assembly point is outside on Heroret Square outside Filmstaden cinemas. There is a doctor on site. And should you need medical attention, we ask you to make yourself known to one of the officials. Audio and video recordings other than those made by the bank themselves are not permitted. I also ask you to verify that your phones have been muted. I intend to open up for questions and statements following the CEO's address under Item 8 on the agenda.

Any questions concerning a particular item on the agenda may, of course, also be raised as the item is dealt with. For safety reasons, shareholders will be asked to ask -- to make statements and ask questions from where they are seated, and I will provide further instructions when we get to that point. The addresses by the Chairman of the Board, the President and CEO, the bank's auditor and the Chair of the Nominations Committee will be made from the podium up here. There is simultaneous interpretation of this AGM from Swedish to English and you can listen to interpretation using the headphones distributed at the entrance -- if you wish to listen to interpret and you don't receive headphones, contact one of the officials to welcome English speaking participants to this year's Annual General Meeting with the shareholders in Skandinaviska Enskilda Banken AB as a service to shareholders, simultaneous interpretation from Swedish to English is provided. If you want to use this service and did not get a headset at the entrance, please call one of the staff members, and they will assist you. I will now turn back into Swedish. The minutes and the presentations will be available afterwards on the company's website.

That brings us to Item 4 on the agenda. The approval of the agenda. This is part of the documents distributed, and I note that the numbering is in line with the convening notice. Does the meeting adopt the agenda? Thank you. Item 5. We are to elect 2 persons to verify the accuracy of the minutes. There's a proposal to elect Alexander Bertlsal- Fernande representing Folksam and Carina Sin representing Alfachaing. May I please ask those 2 individuals to stand up for a moment, so we see that you are present. Thank you. Are there any other nominees? No. Does the meeting elect Alexander Bertlson Fernander and Karina to verify the accuracy of the minutes, together with myself. Thank you.

Item 6, the matter of whether the meeting has been duly convened. I have reviewed the procedures, and I find that the notice was issued in accordance with the Articles of Association provisions when it comes to issuing convening notice. Does the meeting consider that it has been duly convened? Thank you very much. The annual report for 2025 for the bank. A comment.

The bank's annual report has been available since the 3rd of March 2026 at the bank head office as well as the statements by the auditor, the various proposals from the Board of Directors and Nomination Committee and all other documents, which need to be provided in accordance with the Swedish Companies Act and Swedish Code of Corporate Governance. All documents have been kept available as per the relevant provisions. And I therefore ask the meeting if it is prepared to resolve that all the documents have been duly presented.

Thank you. Now I'm going to give the floor to the Chair of the Board of Directors, Marcus Wallenberg, for his address.

Thank you very much, Chair. So dear shareholders, I'd like to give you a warm welcome to the Concert Hall and SEB's AGM for the year 2026. It is a pleasure to once again be here together with you. The AGM -- it is a very important occasion when we can summarize the year that has just passed as well as to speak about what the future holds and the future that we can shape. As we all know, we are living in a world that is characterized by major changes, geopolitical tensions, a changed security landscape, climate change, technological advances that all have a fundamental impact on households, companies and societies.

War and conflict is something that affects the world around us with immense human suffering as a consequence. The conflict in the Middle East is a reminder of how quickly the global situation can change as well as the importance of stable institutions. At the same time, uncertainty regarding the world order and the transatlantic relationship has grown. Last year was marked by trade conflicts and the global uncertainty has continued into 2026. All forms of protectionism entail changed trade patterns as well as an increase in costs for cross-border trade.

Companies have had to adjust their supply chains as well as their investments. A whilst the uncertainty has an impact on a willingness to invest in the future. We do know that openness and trade and close cooperation have historically been essential for our prosperity as well as our stability. That is why we must continue to safeguard global cooperation as well as the global institutions. Against that backdrop, Europe is facing important choices. In order to safeguard our prosperity and long-term strength growth, Europe needs to strengthen its competitiveness. This is about more than remaining independent with a set of clear values, strong relations with the world -- strong relations with the world around us and a long-term strategy for our role in the global economy.

It requires an industrial policy that strengthens our innovativeness and takes our societies forward as well as regulations that both safeguard stability and create room for growth. At the same time, Europe is facing a need to invest a need rarely seen before. This applies to both defense and security as well as infrastructure and new technology. These are investments that will shape our priorities, our competitiveness and our growth for a long time to come in Europe. For this, we need access to long-term capital on a large scale.

Functioning capital markets play a decisive role here, something I also highlighted at last year's AGM. The European Commission's strategy for savings and investment union is an important step towards better channeling savings towards productive investments for the long term. Banks such as SEB also have a responsibility and an important role to play in meeting these major investment needs. As a bank, one of our fundamental tasks is to provide capital from those that save to investors in business and projects that drive development forward.

In that light, it is important that the European Commission continues working with reinforcing the competitiveness of European banks. For the last 170 years, SEB has helped pave the way for major social shifts. It has supported companies through these major changes that we've been through. That is something that we continue to do in accordance with our purpose to shape a positive future by providing advice that is responsible and capital today and for future generations. I would now like to highlight a couple of shifts and changes in our times that also have an impact on how we develop the bank. Now a central part of this work has to do with sustainability.

Climate change is one of the biggest challenges of our times. And the transition is a vital matter for the future for us and for future generations. At SEB, we maintain our support and support our high ambitions and targets. And we have a continued focus on increasing our sustainability activities such as green financing and the we also want to gradually decrease our credit exposure vis-a-vis fossil fuels in our energy portfolio. This is long-term work that we, at the bank, take very seriously indeed. At the same time, the preconditions in the world around us are changing rapidly. geopolitics, new regulations, political priorities and technological development, for example, within the area of renewable energy and green industry, these all have an impact on development within the area of sustainability. And here, we, as a bank, we need to be able to navigate through this increased complexity.

Our greatest positive effect is something that we can achieve together with our customers through by providing advice and financing that make this very important transition possible. And that is even when the road is both complex and time-consuming. Another key factor that I wish to highlight is the rapid development of technology, in particular, within AI, artificial intelligence. This is one of the major shifts of our era and will have a fundamental impact on the financial sector. SEB has high ambitions in this area, and our work spans several dimensions. And we will continue to invest in AI, automation and data with a focus on enhancing the rate of implementation throughout our entire organization.

So we wish to create scalable solutions, make internal processes more efficient and meet regulatory demands. Technology must naturally be used in a responsible way with a clear added value for our customers through better services and better customer offerings. It is also key that our customers seize the opportunities that AI provides as this can also further strengthen their competitiveness. Innovation and entrepreneurship have been a part of SEB's identity since the bank was founded. Today, we play an important role as a stable and international bank with a strong balance sheet and a diversified business model. This means that we are able to provide support to our customers in a situation of shifting markets and even when the world is changing rapidly.

As a long-term partner, we wish to assist our customers as they navigate this complex world through the provision of sound advice and capital, of course. And SEB's strategy for 2030 as well as a longer perspective is about assuring our operations for the future, our customer relations, our growth of revenue and our technological platforms. In the last few years, we have taken important steps by making major investments in our customer relations, and our digital and technological capability, AI as well as strengthening the bank's resilience. In order to be able to meet our customers' high expectations, we need to continue to adapt. We need to continue reinforcing our work.

And at times, we need to also increase the pace. Customer service is crucial, both personal service as well as during digital meetings. We need to continue to make constant improvements in this area. We also need to develop our euro capabilities as well within all our financial services such as payments in order to meet the needs of our customers in an increasingly international market. With a strong financial position and with a clear focus on ensuring the future of the bank, we will stand well equipped to support our customers and to deliver long-term value to you, our shareholders. SEB's results for 2025 were stable and that despite continued subdued global growth and the increasing uncertainty that has characterized the world around us. The bank largely has a strong capital position and solid liquidity, which enables us to support our customers and the wider economy through thick and thin.

Banks that are stable and profitable in the long term, they are vital for both growth and financial stability in the economy. Dear shareholders, resilience. Resilience is a recurring theme for the Board's work. The risk landscape is today broader and more complex compared to previously. And apart from the financial risks, we as a bank, also need to address risks in areas such as cyber threats, climate and geopolitical uncertainty. Therefore, we are continuing to strengthen our capabilities in these areas. In recent years, laws and regulations in the financial sector have also increased in scope, and they have become even more stringent.

SEB has robust processes in place to ensure regulatory compliance and maintains an ongoing dialogue with our supervisory authorities. In the last year, the work of the Board has been shaped by the present world situation. We have held a number of Board meetings in line with our rules of procedure. And we have focused on, for example, our business plan on risk management, capital, sustainability, customer satisfaction, employee involvement, data, AI and digitalization. It's a long list. And against the background of the growing importance of IT, technology, AI and resilience, the Board has also decided to establish a new committee, the Technology Committee.

And that committee, the Technology Committee will support the Board on matters related to the bank's technology strategy, and it will help meet rising customer expectations modern and secure services as well as more efficient ways of working. The Board and the work of the Board is in line with established rules of procedure, regulating its role as well as the way it works. These rules also provide instructions to all our committees who prepare certain questions for discussion and decisions then made by the larger Board. In 2025, we have held 10 Board meetings.

In addition, we have held a further 30 meetings in our committees. Issues concerning capital and dividends are central areas of responsibility for the Board and the proposal concerning dividends that we are managing -- discussing today does reflect the good results of the bank as well as its strong financial position. The Board has proposed an ordinary payment of dividends of SEK 8.50 per share and an extraordinary payment of SEK 2.50 per share, in total, SEK 11. A strong capital base, good access to financing, high creditworthiness and cost efficiency, these all allow SEB to create value for shareholders even in different market conditions. SEB's capital buffer at the end of 2025 stood at 3 percentage units higher than the regulatory requirement.

And in 2025, SEB purchased own shares for a total of SEK 10 billion. Buyback, this is a complement to payment of dividends to return capital to the shareholders. It is a flexible way of -- for the bank to adapt its capital structure to customer needs as well as to developments in the financial markets and what is happening in the world at large. As previously announced, SEB has received an approval from the Swedish Financial Supervisory Authority to buy back shares to the tune of SEK 1.25 billion. This buyback program was commenced on the 30th of January and was completed as of yesterday.

Dear shareholders, for over 25 years, SEB has offered members of the Group Executive Committee, senior executives and key employees as a part of the total remuneration structure made it possible for the participation in our long-term equity-based programs. And for many years, this has also included all employees at the bank. Now the aim of this type of remuneration is to attract and retain the competence required to assure the business of the bank for the future.

The ownership of SEB shares means that employees, they share the shareholders' goals and also promotes long-term commitments to the bank. The Board has, based on surveys as well as discussions with the major shareholders, decided to submit a proposal for long-term equity-based programs with the same structure as last year's. I would also like to thank or to extend the Board's gratitude, and we would like to thank all you shareholders who have taken the time to come here today. Thank you for having confidence in our long-term work, aiming to create value for our customers and for the economy at large.

We'd also like to thank the customers of the bank. SEB is with you through thick and thin. We wish to support your ambitions and your ideas. Together, we wish to drive progress forward. And a warm thank you to all the employees of the bank and management who with their knowledge and commitments drive every day to develop the bank and to create long-term value.

Dear shareholders, today and here at the AGM, we'll be making a number of important decisions. We'll adopt the income statement for 2025 as well as the balance sheet. We will be making decisions concerning the payment of dividends, elect directors of the Board and the auditor and resolve on remuneration. Therefore, on behalf of the Board and the management of the bank, I would once again like to welcome you to the SEB AGM for 2026. Thank you very much.

That brings us to Item 7, which is the presentation of the annual report, the sustainability report, the auditor's report, et cetera. You will recall, however, that all those documents have been adopted as having been duly presented to the meeting. And I would like to give the floor to chartered public accountant Hamish Mabon from Ernst & Young, therefore.

Chair, esteemed shareholders. My name, as you will have heard and can see on the screen is Hemish Meborn. And I have, since 2019, been entrusted by Ernst & Young with the task of being lead auditor for the audit of SEB. I have a number of slides that I'm going to show, and I'm going to try and use them as the basis for explaining the work of the audit during the course of 1 year. I am the lead auditor. I'm chartered public accountant as of more than 30 years, I also have -- hold a special license in order to audit financial companies. Since I have just completed my seventh year as lead auditor after this AGM according to the current provisions, I am no longer permitted to take part in the audit. This will be dealt with a separate item on the agenda, EY as an audit firm and may be reelected, however, not myself.

The main recipient of our audit work, our planning and the work that we do during the course of the year is the Bank Audit and Compliance Committee, usually abbreviated ACC, Audit and Compliance Committee. I take part in all of the meetings throughout the year. Mostly, we have a standing agenda item, whether it's an annual accounts meeting or anything else. We have excellent cooperation, and I also meet twice a year, the entire Board of Directors, and I present a summary of what has already been reported. This cooperation works very well, and I meet with ACC and the Board of Directors without the presence of the AC on occasions regularly.

Myself or one of my key colleagues at least once a year, I confirm to the committee that neither myself nor any of my key employees are the object of any sanctions or investigation by the Swedish inspector of auditors or other government agencies. And if you turn to Page 342 in the annual report that I hope that you received upon arriving here today, you can read the auditor's report. We've submitted an unqualified auditor report. And on Page 344, we submit an unqualified auditor sustainability insurance report on the sustainability work of the bank.

These are 2 quite tools in the sense that I hope to be able to give you a little bit more information of what came before the auditor's report as it were during the course of the year. And before I comment on the details of the auditor's report, it's important to understand the purpose of the audit. Every quarterly report sent to you and the market, we review the sustainability and annual report, the internal controls, and we report mainly to ACC, but also on occasions to the entire Board of Directors.

The review follows, to a large extent, the structure and organization of SEP. And therefore, a large part of the work is performed in Sweden, but there are also a number of other countries in the Baltics with growing banks, and there's also Germany, Luxembourg, et cetera. We have a fairly sizable team. I submit instructions to the auditors in those foreign entities. They report back to me on a number of occasions during the year. And the cooperation is working very well. We have in excess of 200 people globally assisting me in the audit of the bank.

There's a lot of text here, but I'm going to try and guide you through reading from the left over to the right. A well-implemented audit begins with very careful planning. We look at materiality. We cannot delve into every issue. We look at areas which are connected with significant risk. And that is a risk assessment, which is permanently developing, and we need to make changes as the bank develops. There are many control functions within the bank, internal audit, compliance and risk. We coordinate, but we also perform our task individually, even though we do have number of contacts. And the main recipient is ACC, the Audit and Compliance Committee, as I mentioned before.

Moving to the middle column. As of a number of years in the audit report and in the audit work, there is a special focus on so-called key audit matters that are of particular significance. They have remained the same. We have 3 specific key audit matter areas, which we focus on in particular. The first one being provisions for expected credit loss, i.e., the risk that the bank has lent money, which they have not fully been able to recuperate. This is a complex issue. We have millions of credit commitments, anything from mortgages, many of us can relate to that to highly complex loans to companies at very different stages of a corporate cycle, a start-up, a well-established company, large corporates, et cetera, et cetera.

And we need to review the procedures for the initial lending, the follow-up when there is a potential credit loss and to identify a suitable provision so that you have not registered it at the incorrect levels. It's complex with a lot of data, it's difficult to assess the future, but the bank has good controls, and we spend a great deal of time ensuring that the conclusions are such that we are comfortable with the values indicated.

The second area is the valuation of financial instruments. A bank has many investments, of course. It can be positions not just assets. It could be an investment in a start-up or in a well-established company. To value financial instruments, we have a set of rules and recommendations. So there are instruments, but we've completed the audit review, and we have drawn our conclusions in that area as well. And finally, in a bank with such extensive activities abroad, there is a complex tax situation. So we put a great deal of emphasis on the assessment of tax positions.

Looking at the rightmost column, in addition to the key audit matters, there are certain items we always need to review the sustainability report, for example, where the bank for the second time in a row last year as well, on a voluntary basis, they applied the CSRD directive. The bank felt that this would serve as a good exercise so that they could use that experience coming into this year where this is a requirement. And we submitted an unqualified report on Page 344, as I mentioned previously.

The remuneration to senior executives mentioned by the Chairman of the Board is an important item. And in the material distributed here today, there is a statement confirming that the bank has complied with the guidelines adopted by you at previous AGMs. And so there are unqualified statements in that respect as well. A little bit later, I will sum up our view on the discharge from liability of the CEO and the Board and the proposed dividend.

And I can assure you that it certainly looks promising. However, this -- I just want to mention that we perform the audit work throughout the year. There are 4 quarterly reports submitted by the bank. We review all of them during Q1. We review the report for the first quarter, and we submit the plan for the audit for the year to ACC. We have a dialogue continuously. We then review both Q2 and Q3. And in the autumn, the work is increasing in pace because the internal control functions of the company will report and we do something similar.

This happens during the autumn. We look in particular at IT audit, which is a key issue, as you will understand, with a bank with such a global and complex type of operations. And then we get to Q4, where we, of course, review the Q4 report on the annual accounts, the sustainability report, we submit our statements and opinions to you. And then we present the auditor's report here at the Annual General Meeting of Shareholders. This is linked -- comes with a certain cost. Of course, an information is provided in the annual report on the costs incurred. You can see in detail that the total cost for EY amounts to SEK 62 million, SEK 48 million of which consists of the audit work performed. Having said that, some of the SEK 14 million, which are added to that amount also review -- concern various assessments and reviews when the bank is lending money, verifying the prospectus documents, various types of certificates required that we assess.

So the bank is very clear in its stance that the task of the auditor is to audit. Any additional assignments above and beyond the audit task are permitted if confirmed, and this is a setup which works very well. Now that brings me to the conclusions. First of all, I'm going to remind you once again that we've submitted an unqualified sustainability assurance report.

We have also in the special certificates and statements that you've received confirmed that the guidelines you've adopted for remuneration to senior executives have been complied with. We recommend to the Annual General Meeting to adopt the income statement and balance sheet for the parent company and the group. We recommend that the General Meeting of Shareholders appropriate the profit in accordance with the proposal from the Board of Directors and that the Board of Directors and the Managing Directors be discharged from liability for the financial year. Thank you for your attention.

Thank you very much. And any questions to the auditors can be put in during the Q&A session. That brings us to Item 8. And I'm going to give the floor to Johan Torgeby, President and CEO, for his address, and then we will have the question-and-answer session for questions and statements.

Esteemed shareholders, a warm welcome from me as well to this Annual General Meeting of Shareholders. Before I begin summing up the year -- the past year and some thoughts of the turbulent world around us, I would like to begin, as I often do, by showing you SEB in 8 key figures. 4 million private customers in the retail segment, approximately divided between Sweden and the Baltics, half and half.

We have 400,000 small- and medium-sized businesses, 3,100 large corporate customers and financial institutions and SEK 3,700 billion in our balance sheet, money which is working on behalf of our customers.

We also have SEK 2,900 billion in capital, which we manage on behalf of our customers and assets in custody equivalent to SEK 20,000 billion in various securities held by the bank, 19,000 employees, and it's been a long time since we were as many as 300,000 shareholders. That's a very rewarding fact to note. I would like to extend a particularly warm welcome to the 32,000 new shareholders who've joined this group over the past 5 years. The pressure to transition is a financial fear on how a company is to be operated and managed with a focus on the world around us, knowing that there are different events on the outside that you cannot control, but that you need to adapt to, to remain relevant in the longer term.

There are 6 such pressures the bank is very much impacted by that I'd like to say a few words about. First, I'll mention artificial intelligence and its development. What is this really using slightly clearer language, plain language. In the 1990s, Internet developed. It's a way of revolutionizing the way in which information is moved from point A to point B. And here, 30, 40 years down the road, our societies, individuals and companies have more or less entirely transitioned as a result of the Internet.

Think about how we consume entertainment, watch movies, how the studios were impacted in Hollywood. How about postal services? We now have e-mail. I can get a valuation forecast very easily or get information from any single part of the globe and with a marginal cost, which is very close to, if not already down at 0 and with just a touch of a button. This requires the bank to change significantly because artificial intelligence is not the submission, the sending of interim to do something with the information already available, i.e., to interpret this information, prioritize it, make decisions on the basis of it and take actions.

The AI agents, artificial intelligence is taken to such a level that it can itself take action on the basis of the information it has compiled. It's completely new. It's only at the very early stages, but it's growing very, very rapidly indeed. The bank has 3 different strategies to deal with all this. One is that we need to make improvements to ourselves. We can use decision-making, which usually required analysis, experience, wisdom and in particular, time by a human being. It's something we can now do in an automated manner. It's a very rapid process, and it helps the bank to operate more efficiently. We see a faster process, but it also is a more correct process.

And then customers. We want to develop improvements amongst our customers in how they consume SEB's financial services. And thirdly, there's now a new industry growing with start-ups, newly started companies, entrepreneurs, expanding as a sector very rapidly. And we want to support them as entrepreneurs on their journey to promote their companies and their business. And then security and politics to simplify matters, this changed very radically as the war broke out in Ukraine, focusing on resilience, infrastructure, the defense industry, food security, energy security, bank services, pharmaceutical products, medicines, everything is now in different light. And the reason why this is particularly relevant to the bank because the amounts mentioned and discussed in Europe of thousands of billions of euro to enhance autonomy, security and capabilities to be able to resist external shocks is something which needs to be funded, of course.

In consultation between the public and the private sector. The bank wishes to and will play a major part in this procedure. Now sustainability 2.0, 2 or 3 points that I'd like to mention, which have changed during the course of 2025. Since the U.S. election in January, February, sometime last year or so, something has happened in the business community when it comes to the optics. We hear less talk of it. Some types of appeals we saw previously in the banking industry where we have been involved have either been reduced or disappeared entirely. This is a troubling circumstance that there is a change of situation where this is discussed less.

And when we talk of force of transitioning, it's not what you want to do yourself in your operations. It's also something that you're impacted by when politicians discuss it, the general public, media, that impacts the pressure to transition. And unfortunately, we've seen a reduction here. And secondly, competition. We've had a competitive landscape. What should we focus on the war in Iran accentuated that conflict between different objectives. What should you prioritize over what else?

But SEB hasn't made any changes. Our focus is unchanged, and I will get back to this when I talk about our performance in 2025, our sustainability strategy, a reduced fossil content, et cetera. The fourth point, this is a new word to many to me as well. tokenization. Tokenization, once again, just as artificial intelligence is a new technological ability, a capability that we have had for the past decade or so, but now things are happening. And to put it simply, it's about having an entirely digital version of money and/or a security. I often think about the infrastructure in the area of roads. We have roads in the banking system today, highly well-established infrastructure paths in the entire global system based on bank accounts. The bank accounts were then linked to Swish or Mastercard or Visa so that you can have a credit or debit card. They are linked to newly started fintechs -- and everything ends up in the old infrastructure, the banking systems road network based on banking -- bank accounts with plus gyros and other bank gyro services, et cetera.

But tokenization are linked to blockchain technology solutions. There is now an embryo to an entirely different infrastructure. We've just invented the trains, you could say. We can go from A to said, we can send money or transfer people in a very different way to what we used to do from the 1940s and '50s. That's when the current infrastructure was being set up. Now this is very exciting news. It's a potential improvement, making things faster, cheaper, safer. And that's very interesting because we're a bank who's well established in the existing infrastructure, and we also need to consider new options very carefully when it comes to payments and securities.

And I will get back to this in a few moments when I tell you more about what we've been doing in 2025. Now compliance is a very important point, of course. But let me emphasize that over the past 5 years, new introduction of regulatory packages have reduced in numbers, but supervision on the other hand, has increased. The compliance. This has been stepped up considerably. We also see a transfer continuously where interpretations are amended to the existing sets of regulations already in place. And the supervision, when government authorities verify that SEB is complying with the rules and regulations.

This is like a living organism that is changing. And I mentioned this because our credit risk models is one of our major challenges. It's been mentioned before, and we need to ensure that all those regulations are complied with and implemented in full in the banks. And finally, of course, in the short term, a bank isn't impacted then by anything other than the macroeconomics in the short term, interest rates, currencies, share prices and raw material prices.

And as I mentioned this as one of the major pressures because the uncertainties are extraordinarily high currently with geopolitical risks and security issues, which can reprice many of the assets compared to what we have learned to expect. Now a few highlights from 2025. First of all, we have an app that we've launched for children or young people, Neo, it's addressing the group of people under the age of 18. They are not yet of age to do their banking by themselves, but this is to a young child or youth with parental control available and the parents can still be involved. We've also launched a consortium with 6 friends, a large consortium.

And it's important in AI in the future where you have access to considerable computational power, very, very forceful computers that are necessary in order to perform the different types of development steps required in the area of AI. This is a company created as a consortium, spherical AI in NVIDIA. And so NVIDIA is one of the leading companies within this area. Today, we also have SEB Asset Management that we have launched in Norway. So both -- we've made improvements with regard to offerings and et cetera, in Norway that we haven't had previously.

And then as regards to the requirements in the private sector to assist when it comes to resilience and security, autonomy and working with the European level, we launched a European defense fund so that customers -- SEB customers as well as others could invest in this. so for the expanding defense capabilities in Europe by this asset management or by a fund -- defense fund. And then we've worked together with 11 different banks from Spain to Sweden, where we together have established a consortium called Civalis.

And the ambition is to have a tokenized version of euro, the currency euro for the first 6 months of 2027 on the new infrastructure on the trains, railways, not roads. And then we also continue working with AirPlus as well. And those of you who had a gold card, corporate card, which used to be called Eurocard, have already seen this or will soon be seeing that this is going to be replaced by a green card called AirPlus, which is the new brand that we are using for this as corporate cards.

In addition to that, we haven't celebrated this, but we have announced the fact that we are opening an office in Amsterdam. It's a very small -- I mean, this is sort of -- this is for our corporate business that we're opening up. This is for the Netherlands, Austria and Switzerland. So we have a small office in Switzerland, but we're opening an office here after having sort of seen things, how things panned out in Amsterdam for a couple of years, and now we have opened this officially.

And then after a decade plus as it were, we've also upgraded our creditworthiness by one of the most respectable institutes, S&P, Standard and Poor. And so we were upgraded to AA- 1 of 12 banks in the world which have this level, the second highest credit level that you can have -- worthiness level that you can have, but the highest is AAA, that's sort of reserved to nations and not to private companies, but that's very pleasing indeed. And then unfortunately, our market value is not SEK 400 billion, but for SEB, but we -- just before the new year, we just crossed the value of SEK 400 billion.

And I'll tell you a little bit more about what's happened in the last 12 weeks in a moment. But most importantly here is that we've changed the color from the old SEB to the new SEB, which was, in fact, the old SEB. So this is going back to the original color. And you can talk about colors and brands and it's a whole science, and this is not my area. But anyway, this is our new world or that was the old world, in fact. SEB was founded in 1856. And the green color goes back to the 1500s, in fact. In 1434, Jan van Eik then had his Al and Giovanni and the daughter of Markus and her dress, as you can see, there has a certain nuance of green.

So this color was used by Al deelcambio. This is the new -- that was the new modern bank system, and they had this dark green material on their tables. And we made that dark green color ours. And then in 2002, we changed this to the lighter color. But now we're back to the old color. And that -- it feels like coming home, in fact. So back to the real world then. stable and long-term growth as well as profits. This is something that in this market environment, and this is something that we have to remind ourselves about because it's very -- we would like to look at the week, the sort of the month, the quarter, the year, no, but we have to actually look at the long term.

We need to have a good perspective, and we need to try to combat short-term trends, negative trends. So therefore, I'd like to show you a graph here and show you the stable increase with regard to profits in the last 25 years, so 200 up to 2025. So this is Board, the senior management, this is always our perspective. And so we think about what's going on in the present, but also looking forward.

And as you can see, it's very positive growth here, just except in 2009 was a very strong year in fact. So the bank did very well in 2009. And then the last 3 years after COVID, we've seen it similarly and after Ukraine has been unusually strong and very. But anyway, you can see that over time, it's very stable despite all the crisis that have occurred in these 25 years, we can see the average line, and that's the the dotted line, and then you have the dark green line there, which is the actual situation.

And so we have accelerated speeding up from 6% to 7% to 9% increase annually and where these extra -- these super as it were increases are excluded from those figures. But it's also worth reflecting in the last 5 years, so from 2020 until today, what has happened and how the banking system, not least SEB are faring. Now we've had a year where -- I mean, there was a year where the whole world economy closed with an increase in unemployment as a consequence. That was when COVID hit us.

And then after that, there was the war in Ukraine, which entailed a 10% inflation in Sweden, 20% in the Baltic states and 40% in the growth economies. And due to that, there was an erosion of purchasing power and increase in poverty and thereafter, increased interest rates from central banks, 4%, 5%, 6% increase in interest rates in a very short period of time, which then led to a recession for the -- across the globe and Sweden is still in a recession, even if we are leaving that behind us.

But in that context, we can see that the bank really stands stable despite the world situation. And that is our assignment that bank must be with everybody through thick and thin. And I'd like to highlight that sometimes you have to be humble. It wasn't the bank that created this increase here. These were things outside our control. It was the fact that the interest rate increased very, very substantially due to the inflation that needed to be dampened. This means that because we are a bank that loans money, I mean there's interest on our money.

And of course, if interest goes up, then that also has an impact on our profits, which then things become normal again. And when interest rates then go down, then, of course, then our profits decrease as well. And we can see this normalization that we've seen for the last 2 years. And it's good to bear that in mind when we look at the figures for 2025, which tell you here that we can see income from revenue fell by 6% from -- this is part of this normalization from '24 to '25. This is automatic.

And then costs, just as we said, they were just what they would be that we are reinvesting in the bank. So that's up 5%. And the net result was, therefore, at a minus EUR 6 per share, then the net result that we -- shares that we all own, there was a slight or rather less -- slightly less lower reduction, minus 4%, and that's because there are a few of us sharing the profit since we've had a modest buyback program of our own shares.

And so return on equity, 14%, very good cost efficiency, 0.42% and low credit losses net at 0.05%. Now this should be then placed in relation to others. I mean one thing is looking at the absolute development of the bank, but we also need to look at this in relation to other banks. And I have 4 measures. I'm not going to go through these in detail. If -- the first thing that we measure is capital efficiency. So return on capital on equity. And we have these Nordic banks, and that's the yellow. And then we have the average from the European banks in gray. And you can see here that SEB in green is doing very well.

But however, we have to look at Europe and how it's improved because one thing is where you are. The second thing is how things have changed over the last 10 years. And if we look at Europe like gray, they were very, very low, poor levels. And in the last 10 years, you can see that they have recovered enormously. So what's happened in the last few years is that the European banks, which have very -- were in difficulties since the financial crisis have recovered substantially. We can see that there.

And then if we look at cost efficiency, and costs divided by revenue, you want to have as low as possible. And even here, we are doing very well compared to others. And then also, we also have sufficient capital if anything bad happens as it were. So that's the loss absorption of loss so that you are able to cope with losses that weren't predicted as it were. So if you have a high capital and here, we are also Nordic banks, we are far above Europe here.

And then finally, we have credit quality where we stand firm and there's a slight increase there. We still at a very, very low level. So a very strong position for SEB when we imagine 2026 is rather uncertain. And we're all shareholders. So we also need to look at the share price naturally. And here, we have the total here. This is the total return over time. So this is dividends and also is impacted also by buyback program. So we can see here increase here, almost SEK 300 million for the last 10 and then last 10 years, just over SEK 200 million. And in the last year, up 38%, which is one of the best years, including the dividends that we've had for a long time. And this needs also to be compared with others.

And as you can see, over time, you compare with European banks up 240%, and we were EUR 650 plus. But if we look at the last year, then European banks have a substantial increase, much better, 78% in the last year compared to the Nordic banks here, which have increased by about 40%. And primarily, this has to do with the gray line, which has they are increasing -- there's a larger increase because they were lagging behind in the last decade. So we see still there's a substantial recovery for the European -- Continental European banks.

Now if we then -- we've started 2026, may as well look at that because a lot has happened. Of course, we have the Iran war, which has caused problems. And yesterday, so we're down 8% with regard to the share price. That's up until that's this year. So it's a very shaky start to 2026. So what about our customers then? So we see that our customers -- we have surveys, et cetera. These are very important for us, what they say, what our customers. This is Prospera -- outside the bank, this is a third party measuring what corporate companies and major financial institutions and others say about SEB, our staff and products. So the first one figure here is Sweden.

And so this is Sweden and the Nordics. And corporate and financial institutions looks very good and sustainability advice that we provide. So that's how we reach out to our customers and get them to adapt in accordance with a more sustainable environment. There, you can also see a very good result. Then we also do this on -- for the private side and small businesses as well. And this is done externally by SKI, Swedish Quality Index. It's not just customer satisfaction. It's me more the general public's view with regard to different banks. And we've been position # 3.

This is not something that we're satisfied with, and we've had that position for a long time, but we really want to increase the position there. And we also measure the -- our customers' satisfaction. That is the NPS. That's the Net Promoter Score. That's how we do that. So if you're a customer that you can give a grade between 0 and 10, what will your experience, would you recommend the bank? So either 0 and or 10 if you get 10, then you get a plus. If you're between 0 and 6 that you wouldn't recommend the bank or that you're neutral, then there's a minus.

So between 7 and 8, you're not counted, then you're neutral. And so if you have above 60 is world-class. So this is a very strong result with regard to the provision of advisory services in Sweden as well as on the business side as well. But this is just people who meet the bank, whereas the SKI is all people, whether they are customers of the bank or not. In addition to that, we also have our core activities run by people who are committed, involved and want to be at SEB. So we measure also satisfaction of our employees.

And for 2025, it was 82. That's the highest. So that's -- the average is 79% in this -- in the financial sector. And so it's not just compared to the SEB group as a whole, but also your team. So that's 19,000 employees that participated there and they're 87% and the average is 84% -- then we also measure those that don't work in the bank because we also want them to come into the bank. So firstly, we look at talent, young talent. So we go to universities, for example. And so IT students, students of economics, for example, at key universities in Sweden and measure whether we are an attractive employer or not.

And there, we fare very well compared to other banks. And then we also have our trainee program, which is highly ranked not just amongst banks, but also in Sweden as the most attractive trainee program in Sweden as a whole. And here, we can see we have over 10,000 applicants to the 17 places that we have. So I'm very pleased that I am not 21 now because then it would have been very difficult for me.

We also measure those who are already in the labor market. They've worked more than 5 years. And out of those who are not employed by SEB, many answer that SEB is considered a very attractive employer. Now the business plan. We want everyone to gather around the campfire. You should have one simple PowerPoint slide for everyone. What is business really all about moving forward?

And that's this slide. It's about growth and technology, business growth. We want to ensure that we continue on the journey we've embarked upon, making the most of the potential in wealth and capital management, including pensions, private savings and deposits and of course, entrepreneurs who have done well in a family office environment, setting up a company in addition to your private capital position and you deal with them in parallel in relation to your bank. We want to grow in corporates and financial institutions. covering all companies from the small to the very large ones.

And we very much wish to future-proof our entire retail segment. It is a lot easier indeed to determine how the new technology we're witnessing developing right now will impact the retail sector, private customers. So you want to be future-proof so that you can continue to grow that line of business. Now in the area of technology, to put it simply, we have thousands of people employed working with technology. We have lots and lots of technology installed, hardware, the machines and devices and software installed. And we need to upgrade this infrastructure that we currently have, working with what's already there.

However, we need another strategy to do the onboarding of new technology that we don't have yet, that we're being introduced with here and now and in the future in the best possible manner. So all in all, this is a way of summing up the strategic priorities for the business for the next 3-year plan. Sustainability as a strategy, we have 2 components here. One is that we want to reduce the content of the component of fossil operations in our portfolio, in our lending. We started 5, 6 years ago, and we're using a reference scenario, which is IEA, International Energy Agencies and another which consists of the Central Bank's ENGFS.

And we chose the toughest, most demanding path offered in those to ensure that we are truly in line with the Paris Agreement. That's the black line, how the fossil content in the world globally should reduce in order for us to be on safe ground to reach the objectives. I'm sure you all know that we're nowhere near achieving this. But we're using that as a reference point because we can only control our operations.

And if we want to see a drop, which is at least if as great, but hopefully greater. That's the gray shaded area. It's -- we've been able to move more rapidly than expected. We had an aim of getting to 60% by 2030. We're virtually there already as of 2025. We're not changing or amending anything. We're not resting on our laurels in any way. We continue with our ambition to reduce the fossil component in our operations in relation to customers. Now the second part is to increase the financial services, which are sustainability related. We set very high targets in 2020 and '21, increasing to -- by 6 to 8x. We're currently at 3.1, which is just below the scheduled target development.

And the main reason for this is that the demand for loans hasn't been very significant as -- not quite as expected at least. So it's not that the sustainability-related business is doing poorly. It's not quite at the level we expected in 2020. But the entire growth has been lower due to the recession. It's still growing or actually, it's dropping a little bit less than we see in other types of lending as it were. We're not amending any of the targets and objectives. We continue with a clear cap that we have set. Now to conclude, just to mention that there is no amendments to our financial targets either.

Approximately 50% is the ambition for the annual dividend of earnings per share, 1 to 3 percentage points of buffer in relation to minimum requirements set by the authorities for our capital and a competitive return on equity to the tune of 15% as a long-term ambition. This was already mentioned by the Chairman of the Board, but will require a resolution at a subsequent item for the dividend for 2025, ordinary dividend proposed of SEK 8.50 and an additional SEK 2.5 since we need to adjust the capital structure as a special dividend so that we are in line with the targets on the upper part of this slide. I would like to express our gratitude to all our shareholders for your continued trust and confidence in us. Thank you.

Right. We have arrived at the item, as I said, there's a Q&A session. And what we'll be doing is that anyone who wishes to speak, raise their hand and then an AGM official will come to you with a microphone, and I will then also tell you when you can speak and you speak from where you are sitting, in fact. And anyone who speaks, I'd like you to introduce yourself and say who you represent. And if you have more questions, then ask all your questions in one go and then I will distribute the answers between the people who go to answer. And I know that Folksam have, in fact, already notified in advance. Alexandra, where are you? You have already said that you wish to ask a question. So a microphone to you. That's microphone #1. So off you go.

That's our technician's called Rob and he knows everything about how to handle the technical equipment. So the instruction is that there is a red button underneath that you need to press in order to switch the microphone on. Now here we go. Wonderful. Thank you.

Thank you very much. So as you heard, Alexander Falander is my name. I represent Folksam and KPA Pensions today at the AGM. We always ask a question. We'd like to do the same this year. And this year around, we'd like to focus on climate and the environment once again. We have read the annual report and you gave a good outline of how you work to influence and support customers' transitions in terms of their credit portfolio for corporate and real estate credits. During the course of 2025, you began to develop processes to assess the credibility of the transition plans provided by customers. This is to be rolled out and implemented this year. Could you give an explanation on how in real terms, this assessment is made and which measures you're prepared to take if a customer's plan is considered noncredible? Go ahead. Thank you.

The specific question, first of all. Over the past while, for a long time now, ever since we introduced the current sustainability plan, we included the point of transition plans. And to be perfectly crass about it, nobody is perfect. There are no companies, no customers who do not consume any oil or gas at all and only have 100% renewables. And so that is of course for discussion. Are we talking about significant emissions, significant damage or nonsignificant, focusing on what is determined to be significant, the car, the automotive industry, for example. There are very few car companies who will have electrical vehicles at 100% that are in accordance with the Paris Agreement, dramatically reducing the tail pipe emissions.

So the emissions at the tail pipe needs to drop. You don't have to be at 0 for all of them, but that is the ambition, nevertheless. All of those automotive companies that have a mix of various hybrid vehicles, petrol and diesel cars and EVs need to have a transition plan in line with -- sufficiently in line with our strategy and as we can determine also well in line with the strategy as regards to Paris Agreement generally. We've been doing this consistently for years now. But what we're going to do this year is we're going to have a much more professional assessment of the likelihood of -- as to whether that transition plan will work.

So the credibility in the plans provided by the company, this requires expert knowledge. It's not -- you need to know the subject matter. to make this assessment. We know of credit -- we know how to assess the credit ratings, but we still need to make an assessment so that we don't lend anyone too much nor too little. Those are the customers that we -- that's what we do for credit assessments. Now you can have this as a parallel for the assessment of the transition plan. So there will be a credibility assessment, in fact, if we've accepted the plan previously in particular, but because then it needs to be rolled out and implemented.

Now if we don't agree, there are 3 things we can do. The most extreme is that you conclude the business with this customer effective immediately. Secondly, the other option would be to gradually phase out if things fail to improve or continue to deteriorate or thirdly, that you initiate a process to impact the customer in the positive direction. And -- this is always something that we look at when there's no consensus with the customer in question.

Thank you very much. We have more questions at microphone # 2. Go ahead.

My name is [indiscernible]. I was born in Stockholm. I usually ask questions under other -- that have been in for a number of years. A very good contact with [indiscernible], but I hear that he is moving on, so I need to have new relations. I've been a customer for almost 20 years, my business and private customer in retail segment. And I have to say that I agree with what was said. It's so important that SEB invests more in the environment. When you look at oil and gas and all this. I'm a speech therapist and preschool teacher, et cetera, et cetera. And I know that it's very, very important with the environment. I'm very grateful that you're focusing more on this.

And just as the previous speaker who put a question about the environment, you wonder after all, Johan, that Russia, we shouldn't have business with them considering Ukraine and et cetera. We need to all chip in and help out. Teamwork is what matters most of all. And we, as adults, we need to take the responsibility -- shoulder the responsibility on behalf of future generations for the environment. And let me tell you, last year at the AGM, which could have been really great, turned into something terrible. It was a shocking experience. And I have a tip as with experience from my professional career. I try to look at opportunities in life and for life and equal value for all. You knew that there were protesters outside. They were wise. They purchased shares. You can bring 2 guests.

But I was sitting somewhere around here. And it started with one person who came and chaos ensued. It was quite frightening. You had your guards. We have a doctor. Can I ask you as the Chairman of the meeting to put your question. What you could have done, you could have invited [indiscernible] and the Nature Conservation Society under any other business. You could have given them 2 minutes. They could have had a chance to present their points on the environment and Russia and shares, et cetera, et cetera. But then I have one more question as well, which is the third follow-up question as it were. The [ Tiggleave ] life assurance, I've had it for almost 20 years as a private individual and for my company, and it's deteriorated a lot. You have specialist doctors, et cetera, et cetera, and you would like to go to the same doctor because you could have different issues. They could be your [ bowels ] or personal aspects are not relevant, but you've added 3 years and then you need to transition to someone else. And the age factor I've addressed before, you offer a service up to 80, [ Scandi and Landfaing ] offered the full lifespan range.

I've addressed this 3 years in a row. I don't know what you intend to do about this. Well, Johan, it's up to you to determine whether this is a customer-specific question. Well, I'm happy to answer questions. But if it's a legal matter, let me just mention that there is no any other business item on an AGM. We only have the adopted agenda. Now Johan, I'm going to give you the floor.

As for Nature Conservation Society, they are perfectly free if they so wish to give a statement of 2 to 3 minutes. I think they read out their statements and Jakob made a summary of it. The floor is open, but I'll ask Sven, where is he? I'm looking for Sven. There he is. He will speak to you after the end of the AGM to discuss your personal experience.

Thank you very much. We're going to proceed, and we have a request at microphone #8.

My name is [indiscernible]. And I have my question now. Everything isn't -- all the glimmers is not gold. But how has the bank run worked as regards to insider crime and money laundering in 2025, which is discovered in 2025?

Well, as regards to money laundering, the core issue there is that we have criminal elements and crime is often about money and getting rich. And when criminals get money, they need to hide the money or rather the source of the money. And that's where the bank enters into the equation. So the key is to the trick the bank or the tax agency, et cetera, as regards to where the money comes from.

Now in the last 10 years, we have worked very hard to try to stop money laundering and to, at an early stage, find customers that use the bank to hide the actual source of the money. It could also be tax fraud. For example, you don't want to show anybody that you have money, so they pay less taxes. So organized crime that is also that you want -- you can't use the profit unless you manage to trick the system in some shape or form. And we have invested a great deal in this area and fingers crossed. Things are getting better. It's still impossible to resolve in its entirety because crime will always be there. And as long as there's crime, there is a risk that a bank will be tricked when it comes to hiding the actual source of money. We've also employed hundreds, if not thousands of people who today work full time with this issue at the bank. And the regulations with regard to this have also become much, much more stringent and will become even more stringent going forward. So it's become much, much more difficult to launder money, which, of course, has a negative impact on our ordinary customers. There are a lot of questions to the bank, for example, when it comes to all these -- or the bank as our customers also question and different documents. With regards to insider trading, -- now this is very critical if you're on the stock exchange in this market, and there are 2 risks with insider trading here. One risk is that you have a company or private individual that they trade on information that they may not use to trade. So there's a leak or that they gain this information -- gain the information that is not known to the general public, and they use that for their own personal gain when they trade. shares, et cetera. And there, we have a task to try to identify these things and to find them. So that's the stock exchange, et cetera, that have the main responsibility through their supervisory efforts to monitor trade in all securities to see anomalies or irregularities. And in addition to there's also -- this is also a criminal offense so that there will be a sentence. And then the bank also holds a lot of sensitive information, and we may not leak that information, and we work with this type of information the whole time, and this is what we do really. And so therefore, it's very important that we have procedures in place and the right employees who don't use that information for their own personal gain.

Thank you. Microphone #5. -- rather microphone #1. S Linton from the Swedish Shareholders' Association.

Number one. Thank you very much. S Linton from the Swedish Shareholders' Association, if you didn't catch the chair stating my name. Board Chair and CEO mentioned resilience. It's crucial in a world like the one we're living in right now. And one of the areas mentioned was cyber threats or cybersecurity, something which is quite closely related is fraud using new technology and AI, which can grow in magnitude, but also in terms of how advanced it is in its setup. Banks are quite skillful in warning their customers using bank ID provisions on how it's used, et cetera. I'd like to hear a little bit more about how you work to try and keep up with this very rapid development to protect your customers. Thank you very much.

Two years ago, we identified a radical increase in the number of frauds in Sweden. We saw relatively speaking, compared to other European countries, which could be considered as having digitized that we were in a worse situation we determined. And the analysis back then was that the underlying criminality, which has grown more rapidly in Sweden because it's many received, together with a highly digitalized society meant a transfer from robbing ATMs or security transports to digital versions of crime. You might remember a program by the Otra Granssking documentary following along with a couple of individuals in Marbeea, who were entirely focused on tricking elderly Swedish pensioners out of their money. We have done a great deal since then to try and ensure that bank services are more stable in relation to this particular risk. There are 17 points where we've made changes. You can have your transactions validated if you so wish. If you have a concern and you worry about scam, you can reduce the pace at which a transaction is made. You can also delay payments because you might feel under pressure, someone sounds highly credible on the phone. It's almost never the bank. I would put it to you that it never is the bank. It's someone else who's instructing the individual to instruct the bank to perform a payment. And it's very difficult for us to not grant approval of a transaction requested by a customer in the bank, even in a situation where we feel that there's an element of uncertainty. So there's going to be a lot of focus on safety, security against fraud, and we have a clear turnaround. We're not at all in the same problematic situation as we were. But there are romantic -- the area of romantic fraud that's particularly troublesome. And the largest volume is financing or funding fraud. It's one thing taking 200 or 10,000 or 40,000 like when you try to trick older people, but investment fraud is much greater now there. You can suggest hundreds of thousands of kon or millions of kroner, expanding the volume and the amounts considerably. So just a friendly reminder to conclude to everyone in Sweden and all our customers do not make payments because somebody is telling you that you should make a payment.

Right. No further raised hand. Oh, no, there's one. There's a raise hand microphone. So we're sending microphone #2. Is it working? Yes. So a rather odd question. But who are you first, please?

Well, I am. That's what I'm doing, [indiscernible] a shareholder. Now I have tried to call the bank. It's impossible to get through the telephone exchange, and therefore, I'd like to bring up this issue today. Now this campaign advert looks like this. We see both parts of the Skandinaviska broad sheet. And I don't quite understand the background. There's a dark skinned man with the SEB jumper on. He looks like he's a poor pensioner who doesn't shave and it's cold at home. So he needs this very thick sweater makes me all sweaty just looking at this. And I don't know whether it's a man or a woman, is always wrong. I mean what was the idea behind these campaigns, the adverse? I mean, is it worth your while because I mean, these pages of advert -- I mean, they cost so much.

I don't think this is really an AGM matter, but I don't know the CEO. Well, I think that our tastes differ, quite frankly. I'll take that on board. And I do appreciate all types of feedback when it comes to advertising campaigns. So we will bring that with us and have that as input on. Okay.

Microphone # 4 next, please.

Bent Anderson. I heard resilience mentioned. Some of the resilience is required, of course. And the defense and the armed forces I'm thinking of there's both the traditional armed forces and cybersecurity, of course, -- it's been mentioned, and I understand completely that the criminals are ahead of the rest of us is a problem for our customers, especially when you consider that it's so difficult many times when you have to deal with your banks, you feel that you're suspected of something everyone is under suspicion, and it gets very strange indeed. But here's my question. It regards various areas of investment. Oil was mentioned. We rely on oil very much so, in fact. It's not just for driving our cars. It's for all sorts of other purposes, plowing with our tractors and producing the fertilizers that we need, heating, industrial processes, steel industry.

Can I please ask for your questions? You're presenting arguments now.

Here's my question. What's your approach to defense sector investments in a broader perspective? It didn't used to be politically correct to be involved in that sector.

And that's sort of still around a little bit. It's unfortunate as I see it. Thank you very much. So the question is the approach of the bank to investments in the defense industry.

Well, on the one hand, we have a possibility to assist our millions of customers to channel the capital they hold to put it to work to strengthen resilience, defense capability and security. We've changed some of our internal policies in 2025 to make it easier for this to be performed. And we've also launched one product on the share side. The bank, in addition, works with our role and the customers we have within those sectors because we are, of course, a corporate bank for these businesses. We assist private individuals who wish to invest in these companies, and we have a number of those companies as our own customers in the bank. And then in terms of cybersecurity, it has a special part in the bank's business. It's being prioritized. We've made many great investments, and there are 2 components really. We usually have a pyramid about fraud and organized crime when they try to get access to money, but there are also states who would like the banks to tag along geopolitical geopolitical approach. This is like a stick you can use to take action. We upgrade our protection. We don't have and touch wood. We have no major operational losses. Nobody has got in and have access and stolen things they shouldn't have access to. You can feel safe and secure, but we take it extremely seriously, nevertheless, to ensure that the bank is fully protected.

Thank you very much. Microphone #4.

I have a problem with that area, and that is the handling of cash, and this has been pointed out before to be resilient, you need to have a cash system in place as well. And I think that the banks have dismantled that system to a large extent. And I think that we need to take a step back. So there is a system, at least some sort of system in place. And the expansion of volume in a difficult situation, that's one thing. But I mean, we need to keep the system alive as it were. You used to have a cash office here on again before. But there's a problem if you close that down completely because then you don't have a plan, you don't have continuity for how to do. I mean the need has been stated at the level of the government and the Riksbank as well. And when we see what's happening in Ukraine as well, we see that, that is an issue.

So that's more of a statement rather than a question, I would say, as the Chair. Any further hands raised? No? No, I apologize. There's a strong line, so I can't see it. So microphone #1.

My name is Kristina Holm, and I'm fed up with waiting for short moments all the time when I do my bank transactions because that -- those moments can go into long passages.

I'm not sure I understood what the question was or your statement.

Waiting a moment, waiting on hold. When I'm trying to make transactions, I get told -- I get messages to say that there's no contact, try again later.

I'm not sure the CEO will be able -- I'm sure the CEO will transfer that information to those responsible to convey it. And let's see if I see any further requests for the floor. That does not appear to be the case. And so we will conclude the Q&A session.

And then we have come as far as Item 9 on our agenda, which is the adoption of the profit and loss account and balance sheet as well as the consolidated accounts. You've heard previously that the auditor is in favor of adoption. Does the meeting resolve to adopt these documents for the parent company and the group for the financial year 2025. Meeting in favor? Thank you.

That brings us to Item 10, which is the disposition of the bank's profit. As you heard previously from the Chair, the Board has proposed an ordinary dividend of SEK 8.50 per share and a special dividend of SEK 2.50 per share, totaling SEK 11 per share and that remaining funds be carried forward. And we've heard that the auditors are in favor of this proposal. The Board furthermore proposes that the record date be set at the 26th of March. And should the meeting resolve in accordance with this proposal, the dividend is expected to be sent out from Euroclear in around the 31st of March 2026. that the meeting resolve in accordance with the Board's proposal on disposition of profit and record date.

Thank you. Item 11, which concerns the matter of discharge from a liability for the Directors of the Board and the CEO. And I note that the members of the Board and the CEO are naturally not permitted to vote under this item. We've also heard the recommendation from the auditors to grant discharge. And I ask if the meeting is in favor of granting discharge for the Board of Directors and the CEO's administration of the company and the bank during the financial year 2025. Thank you. Can we add to the minutes that with the exception of those who've submitted prior voting instructions to vote against or submitted postal votes to vote against with those exceptions, all others voted in favor of this proposal.

[Voting]

Thank you. Moving on to Item 12 in a few moments. So first, I'd like to give the floor to Petra Hedengran, Chair of the Nominations Committee, to present the committee's proposal under Items 12 through to 15. You have the floor.

Thank you very much, Chair and shareholders. And my name is Petra Hedengran, and I'm Chairman of the Nomination Committee for SEB. I also represent Investor AB here at today's AGM. Now the Nomination Committee consisted of not just myself, but also Peder Hasslev from Alecta, Thomas Floden from the AMF, Niklas Ekvall from the Fjarde AP-fonden as well as the Chair of the Board of Directors, Marcus Wallenberg. In addition, the Director and Vice Chair, Jacob Aarup-Andersen, has been co-opted to the Nomination Committee. I will now report on the Nomination Committee's proposals under items 12, 13 and 14 and 15 on the agenda since documents with our proposals and the reasons behind them have been published on the SEB website and also handed out here today. I will, therefore, only make a brief presentation.

So we propose that the number of directors shall be 11. In addition, the Nomination Committee has discussed with regard to the auditor. And as previous years, we propose one auditor is elected. Now as regards to remuneration to those directors not employed by the -- by SEB were elected by the AGM, we then propose SEK 4,325,000 to the Chairman of the Board, SEK 1,420,000 to the Vice Chair and then SEK 1,110,000 to each of the other directors. In addition to that, we also propose remuneration for committee work in accordance with the following. So firstly, we have the Risk and Capital Committee, SEK 870,000 to the Chair and SEK 535,000 to the other members each.

The Audit and Compliance Committee, SEK 570,000 to the Chair and SEK 360,000 to each of the other members of the committee. The Remuneration and Human Resource Committee, SEK 475,000 to the Chair and SEK 235,000 to each of the other members of the committee. And then the Technology Committee, SEK 500,000 to the Chair and SEK 250,000 each to the other members. We have also discussed the structure and the level of the remuneration for the directors.

The point of departure for us has been that the remuneration must be sort of competitive and correspond to a reasonable remuneration for the scope, the complexity, the responsibility that goes with the assignment. And in our assessment, we have reviewed comparisons with other financial institutions, both in Sweden as well as outside Sweden. Now since the bank -- a lot of our operations are pursued outside Sweden and because we also want to attract competence and experience from other countries, this has been an important part of this, trying to assess the competitiveness of the level of remuneration.

As you heard, the Board has decided to set up a new committee committee for IT technology and AI, which we call the Technology Committee. Now the reason for this is to be able to manage the increased importance of these areas and to work more efficiently by automating routine tasks, making data-driven decisions, deliver also ensure that we have better security in a digital environment. AI is expected to enhance risk management and customer interaction and also support innovation and operational stability.

The Technology Committee will assist the Board to manage these issues, and it will thus also reduce the burden of some of the work of the other committees to an extent at least. Now with regard to the comparison that I mentioned with regard to remuneration and to ensure that we can still -- we can continue to attract the right type of directors with the right profile We, therefore, have proposed a structural increase of remuneration of just under 10%.

And bearing in mind the sum of the Technology Committee and the work that it will entail and the fact that it will also, to an extent, reduce the burden of other committees, the proposal is for the other committees to not raise the remuneration for this year. As regards auditors' remuneration, just as previous years, it shall be paid according to approved invoice, bringing us to the proposal with regard to the election -- election of directors as well as the Chairman of the Board. So we have been informed that all the present directors with the exception of Winievok stand for reelection.

And the Nomination Committee believes and it's our impression that the work on the Board is running smoothly. SEB has operations in practically every financial submarket and thus collected competence and experience competent experience of both banking and securities, asset management and insurance. These are all -- those different types of competence are all a necessity. It is also important within the Board to have sound collective knowledge from business and different markets, both within the geographical markets that we see as our domestic markets as well as other geographical markets that SEB deems to be of strategic interest.

In addition, the Nomination Committee also believes that it is important that the Board has collected knowledge regarding, for example, risk management, regulations, governance and control and experience of strategic operational development, establishment of goals and the follow-up of goals as well. In addition, an insight into an understanding for the transition to a more sustainable society and SEB's role in this very important transition as well as an insight into an understanding for the digitalization of society and how SEB operations shall be developed in a digital environment. We have also discussed the size of the Board, its composition as regards to experience and competence with regard to different sectors and also driven to ensure an equal gender distribution and to take other diversity perspectives into account.

So the Nomination Committee proposes the reelection of directors, Jacob Aarup-Andersen, Signhild Arnegard Hansen, Jan Erik Back, Anne-Catherine Berner, John Flint, Svein Tore Holsether, Eva Lindholm, Lars Ottersgard, Johan Torjby and Johan Torgeby and Martina Wallenberg. We also proposed the new election as a well of Marcus Wallenberg for the period up until the end of the AGM 2027.

Now Marcus Wallenberg is a Swedish citizen born in 1989. She is currently employed at the bank and has held several positions at the bank over the last 11 years, including as manager in the area of strategy and digitalization. Martina Wallenberg will leave her employment at SEB if she is elected as director by the AGM. Martina Wallenberg holds a business degree from the University of Colorado Boulder. Nomination Committees believes that Martina Wallenberg is a suitable candidate to the SEB Board, and she will be part of the Board committee that we've all spoken about that is going to be set up to monitor the increased automation and digitalization in society.

Martina Wallenberg and her background, her education and her work experience make her a particularly valuable addition to the Board in that area. And Martina Wallenberg, she represents the next generation of the Wallenberg family and her involvement in the Board will further reinforce the long-term owner involvement that the family has demonstrated over generations. Martina, could you please stand up, please? Thank you very much. Thank you.

As Chair of the Board, we propose Marcus Wallenberg. More information regarding the proposed directors can be found in the material distributed here today. I'd also like to mention that our proposal fulfills the requirements regarding independence in the Swedish Code of Corporate Governance. May I also inform the AGM that the Nomination Committee has decided to issue the following recommendation for the directors elected by the AGM regarding their shares and their shareholding in SEB, which means that directors who not previously have this level of ownership are expected to, over a 5-year period, increase their own ownership of SEB shares to a market value that is expected to correspond to at least 1 year's remuneration before tax, and that's excluding remuneration for committee work.

Item 15 next, which is the electing the auditor. So as regards to the auditor, the Nomination Committee proposes in accordance with the recommendation from the Audit Committee, we propose, as I said, the reelection of the authorized auditing firm Ernst & Young AB for the period up until the end of the AGM next year. So if the AGM resolves in accordance with the proposal, the authorized public accountant, Daniel Eriksson will be the lead auditor partner. So all these proposals have been included in the notice. They've been available on the SEB website and distributed here today. And on the website, since the notice was issued, there's also been the read -- we can also find a report on the reasons behind the Nomination Committee's proposal. And everything is available in the material that was distributed here this morning.

And to end, I'd just like to thank all the other members of the Nomination Committee for good cooperation. Thank you very much. Thank you.

Thank you very much. And before you step down, let me just ask if there are any questions on the proposals from the Nomination Committee. That does not appear to be the case. So we will proceed and deal with the various proposals from the Nominations Committee. The first one being the determination of the number of members of the Board to be elected. The proposal is 11 for the period at the end of today's AGM to the next year's AGM. Is the meeting in favor of the Board of Directors' proposal under this item? Thank you very much. And you've also heard as regards to the number of auditors to be elected. We propose to elect 1 auditor, auditing firm. Any other proposals? No. Can the meeting resolve in accordance? Thank you, adopted. Now the determination of remuneration for the directors appointed by the AGM and for the auditors. You've heard the proposal. You should be able to see it behind me on the screen. Are there any other proposals? No. Thank you. Does the meeting resolve on the Board fees in accordance with the Nomination Committee's proposal? Thank you. And now the proposal for the fees for the auditor. The proposal is for this to be paid in according to approved invoices meeting in favor. Thank you. That's adopted. Which brings us to Item #14, which is the election of directors as well as -- and are there any other proposal nominees other than what was proposed by the Nomination Committee?

No, it doesn't seem to be the case. So we have to elect 11 directors. There are 11 nominees, and it's the Chair of the AGM should tell the AGM about the assignments that they have in other companies. And let me hereby just referred to the material distributed here today as well as the information that has been available on the bank's website since the 9th of February. And even there are 11 nominees, so we will do this individually despite the fact that there are only 11 seats. And so I'll ask you the AGM if you elect each and every one. And then I will use my gavvel between each. So does the AGM elect Jacob Aarup-Andersen? Does you elect Signhild Arnegard Hansen? Do you elect Jan Erik Back, Anne-Catherine Berner. We must be very clear. It's going to be fair in the level. Thank you. That was better.

John Flint, yes. Tore Holsether, yes. Eva Lindholm. Do you elect Lars Ottersgard? Do you elect Johan Torgeby and Marcus Wallenberg and do you elect Martina Wallenberg? I find that the proposed directors or people have been elected by the AGM in accordance with the Nomination Committee. Next then, we have to elect the Chairman of the Board. And as you heard, the Nomination Committee proposes Marcus Wallenberg to be elected as the Chair. No other nominees. So can we elect Marcus Wallenberg to be the Chair of the Board? Yes. Thank you.

And for your information, let me just mention that we have employee representatives on the Board and Leona Schulman and Paula Berg have been elected and in addition, Sonia Landin and Thomas have elected as deputies, and they should be on the screen behind me. It brings me to Item 15.

Item 15, the election of auditors, proposal from the Nomination Committee to reelect Ernst & Young, chartered auditing company until the end of the 2027 Annual General Meeting. Any other proposals? No, does the meeting elect Ernst & Young to be the auditor according to this proposal? Thank you. And as you heard previously, Ernst & Young have informed the company that the new chartered public accountant lead auditor will be Daniel Erickson, who will take up this position. He's chartered public accountant since 2006, and he has the required license from the Institute for the Accountancy Profession in Sweden FAR to audit financial companies. Perhaps we can ask him to stand up for a moment. And a warm hand indeed.

Now the Board of Directors' remuneration report has been available and published just like all other documents, any questions on this report? That does not appear to be the case. Does the meeting approve the Board of Directors' remuneration report for 2025?

That is carried, which brings us to Items 17 onwards and Item 17 has to do with 3 different sub proposal with regard to our long-term equity progress for 2026. So we have A, which is SEB -- all Employee program 2026 for all employees in most countries where SEB operates, SEB share deferral program for 2026 and SEB restricted share program for 2026. Any questions with regard to these proposals at all? No, it doesn't seem to be the case. So I suggest, therefore, because here, it's only simple majority is required, but let us deal with these together. So can the AGM then vote in accordance with the Board's proposal suggestion as regards 17A to C, yes, which brings us to Item 18.

This is the Board's proposal on the acquisition and sale of SEB's own shares. a, the acquisition of SEB's own shares in its securities business. The B item, an authorization for the Board to resolve on the acquisition and the transfer of the bank's own shares for capital purposes on the one hand and in addition, also for long-term equity program transfer and then c, transfer of own shares to participants in the 2026 long-term equity program. First, I ask if there are any questions on these proposals. That does not appear to be the case. Now here are 3 subitems with different majority requirements. 18A and B has a requirement of 2/3 majority of votes and shares represented at the meeting for this to be adopted and 9/10 under 18C of both votes cast and shares represented. And for the purposes of simplification, I propose that we resolve on all 3 subitems with the -- while applying the highest majority requirement. Does the meeting resolve in accordance with the Board's proposal 18A, B and C meeting in favor? Thank you. Can we include in the minutes to confirm, in fact, that we've achieved the necessary majority requirement that with the exception of those who may have submitted a no vote in advance, all others have voted in favor of this proposal. Can we adopt this? Thank you.

Which brings us to Item #19, which is an authorization to the Board of Directors to issue convertibles. Any questions with regard to this? No. Once again, here, we have a 2/3 majority required. And so can we adopt the proposal? And can we also note here that with the exception of shareholders who have notified no in advance or through their post that they would vote no. But do you say all participating shareholders here have voted in favor of Item 19 because Item 20.

Item 20, a proposal from the Board of Directors on the reduction of the share capital redemption of shares and the bonus issue. It's technically quite complicated. Are there any questions on this proposal? These 2 also have a heightened majority requirement, and they are mutually conditioned upon each other. Can the meeting adopt the proposals under 20A and B? Thank you. And can we, with the exception of those who have submitted a no vote prior to the meeting, all others have voted in favor. Thank you. The requisite majority has been achieved. Item #21, which is the appointment of auditors. So the AGM has appointed a number of auditors for a number of foundations with linked administrations as it called. This is in the notice and the material which has been distributed about who these people are. Are there any questions with regard to those proposals at all? No, it doesn't seem to be the case. So can we vote in accordance with the proposal at hand. Thank you carried.

Item 22. We have a proposal from the Swedish Society for Nature Conservation, a shareholder, to entrust the bank that by no later than 2026 revise its strategy to ensure a responsible capital allocation and reducing environmental, climate-related and financial risks by no longer providing any lending issuance guarantees and other funding or types of services to fossil fuel companies who are involved in new oil and gas projects with a long lead time north of the Arctic and in the Arctic Circle. I understand that the Nature Conservation Society would like to take the floor. Anna Lindberg is present, I believe. Can we have a microphone? Microphone # 2 in this case. No. #1, it appears. -- thank you very much.

Yes, Anna Lindberg from the Nature Conservation Society. I represent a group of organizations, the finance guide, which we heard mentioned earlier today, working to ensure that banks shoulder more of the responsibility for our climate. And SEB, as we can see, have taken steps forward in their climate efforts. We welcome this. But we are here today because we've tabled a proposal to try and cover a serious gap in the environmental work of the bank, the fact that the bank still chooses to lend money to expanding oil companies operating in the Arctic region, the Arctic being one of the most rapidly changing areas due to climate change. And the UN Climate Panel shows that there is simply no equivalent in research.

No new oil or gas fields must be opened if we should achieve the target for the environmental. In spite of this, the SEB have given support for expanding operations to oil and gas companies operating ever further north in the Arctic region. In excess of EUR 6 billion in loans and other funding have been granted by SEB to such companies over the past year. The bank has justified this. We've heard today by saying that oil and gas will be needed during a transition phase as part of a controlled transition. We agree with that assessment. However, companies expanding are not transitioning. They are moving in the wrong direction. A transition phase has to do with the reduction of the fossil dependency, not increasing the production of fossil fuels. Fossil expansion has led to emissions across decades, making it more difficult to have a just transition. In today's turbulent world, it's clearer than ever before that we need to get out of our fossil dependency, not just for the sake of the climate, but also to reduce our risk of ending up in geopolitical stability and price shocks.

You say that the Arctic expansion is necessary to resolve the energy crisis in the EU and to replace our dependency of Russian oil and gas. However, it takes on average 13 years to get underway with new oil and gas production in the Arctic region. So when these products reach the market, the EU must already have reduced its emissions by 90% and the use of fossil fuels should be down by around 80%. The Arctic policy for the EU also states that the EU should work to not open up for new fossil extraction in the Arctic region and phase out any imports from that region. So neither in the short term nor in the long term, are there any grounds to support such a continued expansion? Rather, there are major financial risk for the companies, for their owners and their funding partners since the projects in the Arctic region are expensive, technically highly complicated and with considerable risk of accidents.

Many other players have taken action, Handelsbanken and Swedbank and Danske Bank over the past few years have put a halt to expanding oil and gas companies in that region. It's led to very positive reactions amongst our customers and is a competitive edge in a market where climate and the environment are important issues to customers. So there are strong climate, financial and strategic reasons to vote in favor of our proposal, and we encourage the owners of SEB to support this proposal and take one further step towards making the bank a clearer part of the solution to the climate crisis. Thank you. I'm going to give the floor to you, Anto. Go ahead. Well, I addressed this matter with Jakob. So suffice it to say that it is a complicating circumstance that there are only a few companies in this context. We're not defending the extraction of oil and gas in the Arctic region, but there are companies we do not wish to move away from. We cannot leave them to their fate right now.

And when we are part of the bank group, we can have an influence. We've stepped out of a very large number of oil and gas companies in the last few years and nothing positive has happened. We -- to be perfectly honest, we feel that we're one of the players on the inside trying to work to promote this very target that was mentioned. We -- as a Norwegian major bank, the Norwegian state, of course, has -- holds the reins and controls the matters in that context. But we have -- you have made a good point. It's a very difficult issue with a small number of companies, but let me just be clear. Part of this issue is the fact that we are -- that it is not correct to describe the situation whereas we are in favor of this extraction and would like to continue promote such activities, but we remain in contact and have operations dealing with some of those companies.

Thank you very much. Daniel Kistonrom from Alecta. Can we have a microphone, please?

Microphone #1. Thank you, Chair. My name is Daniel Kistonrom, and I represent Alecta, which is a major shareholder. Now this proposal is important actually because it -- we are very appreciative of the people set forward the motion because the AGM should be a situation, an occasion where we can have an exchange of views and take the bank forward, which we do. And this includes a proposal with regard to new extraction of oil in the Arctic. And it's important for the climate as well as for the interested parties of the bank. Now we share the society submitting the motion and their views, but we've reviewed the work carried out by the bank over the last 10 years, and we've decided not to support this motion. Why? Well, because we share that this transition is necessary. And we also share with -- share the view of the motion that this is specifically especially important in areas like the Arctic.

And how the bank pursues its business and depends on the economy that we live in and the society that we live in. The banks need an insight that the banks need an insight and that they shape their strategies, looking at risks and possibilities and opportunities with regard to sustainability are important in their long-term responsible business. Alecta has a debate, a discussion with the bank with regard to the climate, and we've been able to follow the developments of the bank where the bank has set very ambitious goals, increased transparency, made very difficult corporate decisions with regard to customer relations and also taken out certain customers from their portfolio. So -- and a lot of profits have been made and markets have followed suit with what the bank has done. We think that there's a huge challenge ahead, not just due to the uncertain world that we live in today, but also because of technologically and as regards to resources, it's going to become increasingly complex. technology shifts, infrastructure, we need for those need to be in place.

As major shareholders with 63 million shares to a value of SEK 12 billion for a number of years, we've been members of the Nomination Committee proposing directors to the Board. It is that Board which has supported and said that the climate is an important part of the bank's work, and this is something that we're going to continue reviewing and monitoring. And we believe that the current Board will continue to drive the bank in the right direction. Thank you. Thank you very much for that, which means we needed to make a decision with regard to the Nature Conservation Society's motion. Now Anna Lieber has also given me a statement with regard to the the minutes that things need to be noted in the minutes, the decision. And we can already see go through the postal votes that there is a majority voting against this proposal. But I suggest that those participants that are here today above and beyond the Nature Conservation Society, which we're voting in favor of its motion and proposal, if you -- those who voted in favor of it that you come up to the podium afterwards, and we will note who you are, your name and the number of shares and votes that you represent.

Can we work accordingly? Thank you. So decision then. So the AGM, do you support the Nature Conservation Society's proposal under Item 22? That was a rather weak no, but together with the postal votes, it is a no. And so we have not adopted the proposal, which brings us to Item 23. And before we conclude this, I'd like to hand the floor to Markus Wallenberg, please. Thank you, Chair. Before we conclude this AGM, I would like to extend my thanks to a couple of people who have played a very important role for SEB in the last few years.

Wini Fok who has after more than 10 years on the Board, has chosen to decline reelection. Winnie, you have served with distinction since 2013 and since 2015 in -- you've been a central part of the Audit and the Compliance Committee. Over these years, Winnie has contributed both with very high professionalism and strong dedication to the bank, always well prepared, knowledgeable and fully engaged. In addition, Winnie has also contributed very important insights into our operations in Asia, which has been of great importance for us as a bank with this international presence and which is a very important part of our international presence. She has also been greatly appreciated for her Board work, for her wars, her integrity and for our ability to build trust and long-term relationships. Winnie? -- a warm thank to you for your many years of service and for your great contribution to the bank. Can I give you a little flower maybe? Yes. We need doesn't like when you speak well over her, anyway.

I'd like to now continue by thanking our 2 outgoing employee representatives. That's Marika Ottander and Anna Kojlimenstrom. Marika is here today. Unfortunately, Anna Kojlimenstrom is not able to attend today's AGM. And I'd like to extend my thanks to both of you for your contributions to our Board work. And we'll be following Anna Kojlimenstrom as the President or the Chair of the Financial Trade Unit at SEB. It's very important to have the employee representatives on the Board. It gives us new perspectives. It's very valuable to us in our work. And I'd also like to welcome then our new members, Thomas Floden as well to our Board work.

I'd now like to turn to Hamish, who is now leaving the bank as our lead auditor after 7 years. And this isn't because Hamish has done anything wrong, but because the regulations are as they are, which means that he needs to be rotated as it were. Now during his tenure with us, he has combined his deep knowledge with a broad perspective. And both these aspects are very important for the bank. And for our audit, his analysis, his assessments have always been well balanced, well founded due to his deep understanding of our operations. We're grateful for that.

And Hamish has also had a unique ability to imagine many different possible scenarios and outcomes. That's also very important when you work with the bank. and characterized by quality and the sense of security in our work and your work as well. He has always shown great integrity. He holds very clear values and Hamish his compass and judgment have been a very valuable support for us. And when it comes to very difficult matters sometimes, always available, always very clear. But what also helps is your good humor and you laugh quite easily, which is nice, and that is very helpful. So a warm thank you to you for your crucial work over the last few years. And we do look forward to continue our cooperation with you, Daniel Eriksson, who has just been elected to be the new lead auditor partner for SEB from Ernst & Young. And with those, I don't know, do I have more flowers? I'd like to ask the Secretary to note in the minutes -- to note the gratitude that the bank would like to extend to the 3 leaving directors and also the lead auditor. I hereby declare the AGM for SEB closed. Thank you.

Good day, and thank you for standing by. Welcome to the SEB Financial Results Q4 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker to Johan Torgeby, CEO. Please go ahead.

Good morning, everyone, and welcome to SEB's financial results presentation for the full year of 2025 and Q4. I'll take this opportunity before we go into the material just to mention a few highlights of 2025 that we are particularly proud about.

First, it is the very strong position in customer satisfaction surveys, not at least within financial institutions and corporate and investment banking. Even though we're not at the very top of private banking, we still made a meaningful improvement.

Secondly, the employee engagement hit a new all-time high compared to our peers. We are now solidly placed in the top decile of happy employees within the financial industry. Also very constructive is to see our market position within CIB when it comes to league tables that we record a top level, particularly now as we've seen an activity pickup within this area.

A meaningful symbolic event is that we've also established and opened our Amsterdam office. And lastly, after more than 10 years in the making, we achieved an upgrade by S&P to a weak AA rating, and we now join a very small group of banks in the world that has this formidable position when it comes to credit quality.

Now flicking to Page 2 and the highlights for Q4. First, we saw a pickup in fees and commission across all divisions, offsetting the continuation of net interest income headwinds. As I mentioned, we got an upgrade by S&P. We are meeting our annual cost target and AirPlus is in line with plan. We have set the new cost target for 2026 to SEK 33.4 billion plus/minus SEK 250 million, particularly to take some -- have some room for variable compensation and other unforeseen events.

The Board has proposed an ordinary dividend for 2025 of SEK 8.50 per share, plus a special dividend of SEK 2.50 per share. In addition to this, the Board has proposed a SEK 1.25 billion share buyback program for the first quarter of 2026.

Flicking to Page 3, we have now received the full suite of the major customer satisfaction surveys. And we can conclude that we have maintained our position on large corporates as #1. In the Institutional Banking segment, we were #1 in Sweden, Finland, Norway, #3 in Denmark and #2 just like last year in total, and we achieved a first position in syndicated loans.

Private banking improved from position 6 to 4, and we also got an award for the best Swedish equity fund of the year.

On the next page, we'll go through the loan and exposure development, and we continue to see a predominantly sideline movement during the fourth quarter with some signs of improvement. Corporate lending on an FX-adjusted basis increased 3% year-on-year, and the total lending for the group increased by 2% compared to last year.

Flicking to Page 5, just a very short update that we can now conclude '25 that we have adjusted or excluding all restructuring costs, a positive contribution from AirPlus, and therefore, this is EPS accretive. We are also now very well placed to grow our fee income from European payments industry given our exposure that we get with AirPlus. We're also on track to be EPS accretive, including implementation cost in 2026.

Flicking to Page 6, our business plan update for 2026. We divide it in 3 simple areas: Wealth and Asset Management, Corporates and financial institutions and retail banking. And here is a selection of particular focus areas for the next year. In WAM, we want to improve our digital capabilities, and we have formed investment and Trading Solutions unit to faster develop these capabilities. We want to have more international distribution capabilities and improve our position within the pension market.

For Corporates and Financial Institutions, we will continue to maintain our position, which is very strong in the Nordics and continue to selectively carefully grow outside the Nordics. We will have targeted efforts around the private capital markets. And as I previously mentioned, we expect AirPlus to contribute a bit more meaningfully during the year for the corporate payment area.

In Retail Banking, it's focused on digital transformation, use data to increase sales and also go back to basics and have a simplified way of working.

Flicking to Page 7. We just double-click on technology where we divide it into 2 areas. One is to work with what we have. We call that modernization of the tech stack. We have several core infrastructure transforming projects this year. And together with efficiency initiatives, we also need to increase speed of development and technological capabilities build-out.

We also want to embrace new technologies and particularly, they're going to be around AI tools, both for the people that works in the bank, but also to try to get AI capabilities in front of our customers. And 2 particular projects we will focus on in the years to come. One is Sferical AI, which is the NVIDIA consortium. The other one is Qivalis, which is the stablecoin consortium with other European banks.

Next page is just to say that whatever we design now in this business plan and for the future, we aim to come back to a medium- to long-term positive jaws. The last 2 years after the extreme uplift of profits coming from the sharp rate increases, we now see that we will have a different future. And whatever we do in the planning period right now, it is to at least have cost control in order to achieve positive jaws, but we do not dictate income, albeit we see some tentative signs of improvement in the year to come.

With that, I'd like to hand over to Christoffer.

Thank you, Johan. I'd now like to turn to the financials on the next slide. Before we look closer at the results for the fourth quarter, I'd like to comment briefly on the full year performance 2025.

I think the year is a good example of how our diversified revenue mix provides stability over a business cycle. Lower rates continue to weigh on net interest income and net fee and commission income increased both organically and as a result of the consolidation of AirPlus.

The impact from the stronger krona on our operating income has been meaningful during the year, and the stronger krona has had an impact on our operating income of about SEK 1 billion, affecting negatively both net interest income and fees and commissions. As a result of the stronger krona, the 2025 cost target has also been adjusted downwards by around SEK 500 million during the course of the year, and the final FX adjusted cost target came to SEK 32.5 billion plus/minus SEK 300 million.

The reported operating expenses for the full year of SEK 32.6 billion is hence, in line with our FX adjusted cost target, and this includes the impact from the accelerated implementation program of AirPlus, which we mentioned as a potential action already in the previous quarter. This acceleration has added around SEK 100 million compared to our initial implementation cost guidance and took the total charges to around SEK 800 million for the full year. We'll come back to the annual cost target for '26 in a moment.

The return on equity for the full year, adjusting for those items affecting comparability came to 14% with a cost-income ratio of 42%.

Turning to the next slide and the results for the fourth quarter. The operating income of SEK 18.9 billion increased somewhat from the previous quarter despite lower interest rates continuing to weigh on our net interest income as fees and commissions increased by 8% or around SEK 500 million quarter-on-quarter. Compared to the same quarter of last year, the increase in fees and commission was 5% and 8% in constant FX.

Net financial income in the quarter of SEK 2 billion is somewhat below our historical quarterly average.

Operating expenses for the fourth quarter came in at SEK 8.5 billion, taking the full year cost base to SEK 32.6 billion inside our FX adjusted cost target, as I just mentioned.

We can see that our efforts to continue consolidating the cost base, as stated earlier in the year, are having effects. The total number of FTEs declined during 2025 for the first time since 2018, and we will maintain the external hiring pause to continue challenge our need for external replacement hiring across the bank with continued exceptions for business-critical roles. So as such, our strategy to make room for investments in prioritized areas through consolidating prior investments remains intact. This means that even though we expect to see higher FTEs in a number of focus areas in 2026, the total FTEs in the group should remain stable.

Net expected credit losses of just under SEK 400 million corresponds to 5 basis points, and overall asset quality remains stable. And the development in the quarter follows the pattern from earlier in the year with a handful of counterparties requiring provisions in specific portfolios.

Imposed levies at SEK 812 million, just under our full year guidance of around SEK 3.5 billion for the year. And for 2026, we expect levies to decline slightly to around SEK 3.4 billion.

So under items affecting comparability that I mentioned previously, we report a negative SEK 400 million attributable to the outcome of our annual impairment test of intangible assets. More specifically, this write-down relates to an acquisition within the Norwegian consumer card business back in 2002. And it is continued pressure on returns that has triggered a revaluation of the assets. The goodwill is written off in full, and we do not see any other intangible assets at the risk of impairment at this point. This particular asset was highlighted in our annual disclosure last year as an asset at the risk of impairment.

The tax rate for the fourth quarter at 17.2%. This is, as you noticed, below our normal tax rate of around 21%, and it reflects a positive tax effect that occurred in connection with the full year closing. And going forward, we expect that the tax rate should revert to around 21%.

ROE for the quarter in isolation at 13.6%, excluding those items affecting comparability, i.e., the goodwill write-down.

On the next slide, we take a closer look at the development of our net interest income for the quarter. Average STIBOR rates declined by around 20 basis points over the period, which impacted our rate-sensitive deposits, particularly in Corporate & Investment Banking and in Business & Retail Banking. And as Johan mentioned, FX-adjusted lending volumes in these 2 divisions were moving largely sideways in the quarter, the results of the lower STIBOR impacted those divisions by between SEK 150 million to SEK 200 million, respectively. This delta also reflects the impact from FX headwinds.

Within CIB, the net interest income in our markets business performed well and benefited from favorable market conditions, partly mitigating the negative effects from the lower rates and FX.

In the Baltics, average euro rates remained largely unchanged during the quarter and net interest income in local currency increased slightly from Q3. So this represents the first quarter-on-quarter increase in net interest income in the Baltic division since 2023. Now due to the stronger krona versus the euro, the NII for the quarter in krona was largely flat.

The NII in the Baltics was supported by continued strong volume growth, offsetting some of the lagging headwinds on deposit margins that has been triggered by rate cuts earlier in the year. And the volume growth in division is broad-based across all 3 countries and spans both retail, mortgages and corporates. Mortgage sales, in particular, continued to be strong, up 43% from the same quarter of last year in local FX.

The contribution from our treasury operations, including some of the benefits that we enjoyed from short-term funding during Q3 remained largely unchanged and supported NII in Q4 as well.

Looking forward, we continue to expect the impact from lower rates on our NII to bottom out some 3 to 6 months after the last rate cut, which then based on current rate expectations, should occur sometime in the first half of this year.

Also bear in mind that the first quarter has some technical headwinds, for example, a 2-day lower day count. And we also expect a slight increase in our cost of the deposit insurance guarantee for seasonality. And of course, the FX effects we'll continue to monitor.

Turning to the next slide and fee and commission income. The fourth quarter saw an increase of just over SEK 500 million compared to Q3, and this increase is broad-based with all operating divisions reporting a positive development. Within CIB, the increase was notably driven by corporate finance, equities and debt capital markets. Within BRB, the Business & Retail Banking, card fees, in particular, represented the strongest increase quarter-on-quarter, partly seasonality, but also a pickup both in the SEB Kort's traditional markets as well as in the markets of AirPlus, which, of course, has an emphasis on Continental Europe and Germany.

In Wealth and Asset Management, there was higher asset values and also performance fees, which drove the increase quarter-on-quarter. Net new money for the quarter came in at SEK 6 billion with a largely even distribution from Wealth Management, Retail and the Baltic divisions.

Fee and commission income in the Baltics continued to develop positively and remains on a positive trajectory supported by a number of different savings initiatives.

Turning to the next slide. We'll look at the net financial income. The income came at SEK 2 billion for the quarter, which is, as I mentioned, below our 16-quarter average, but still inside the sort of standard deviation that we have seen movements around in the past.

During the final quarter, we saw good performance from both FX and commodities and fixed income was more in line with its seasonal pattern of a stronger first half and a lower second half. We also had some lower market volatility impacting income in NFI.

On the next slide, before we go on to the cost target for '26, just coming back to some of the AI developments and priorities that Johan mentioned briefly in the business plan presentation. In the last quarter, we introduced the SEB AI triangle that we use more as a framework as to how we engage with AI in a couple of different dimensions. We're talking about building AI into our offering; secondly, to build it into our business and running our operations more effectively; and thirdly, importantly, also supporting the AI community and growing together with AI-related companies in our part of the world.

During '25, we did scale up some of our early use cases from pilots to production tools. And at the same time, we continue to roll out general purpose AI tools, so Github for Developers and the Microsoft 365 Copilot for nondevelopers to help our employees integrate AI into their everyday workflows.

As we now head into '26, we'll put emphasis on a few areas where then building on the experience that we had from last year, we'll look to implement at larger scale and get AI-powered automation as a result.

It's early days, but it is looking encouraging. And the areas in particular are the process-heavy parts of our value chain and on the other hand, customer-facing capabilities and ideally looking to apply AI where we get a combination of productivity gains and enhanced customer experience. Some examples include some of the customer service processes, onboarding, KYC and also parts of the mortgage process.

And then finally, we'll continue to support the AI community through offering both scale-up products and services like venture debt in CIB, everyday banking and also supporting both founders and entrepreneurs in the WAM division.

On the next slide, we'll look through the cost targets for 2026. And when we arrive at the number for the year, we take a couple of factors into consideration. First, we expect inflation to add around SEK 1 billion to the cost base. We expect part of this increase to be offset by efficiency gains of around SEK 700 million. This is a combination of the effects from our continued external hiring pause, efficiency gains that we've achieved through increased degree of automation as well as improved ways of working through closer integration between operating divisions, technology and business support.

Now turning to investments. We make here a distinction between the ongoing investments in the business. They include the continuous work on our technology road maps, the regular system upgrades, selected hiring, incremental product development, et cetera, and this is expected to amount to about SEK 400 million. So if you add these factors together, the increase from inflation, the efficiency gains and those investments will come to an underlying cost increase of around 2%. And this is then also excluding the positive effects we're going to get from lower implementation charges at AirPlus.

Now in addition to those ongoing operations, we plan to take a couple of dedicated investments in AI, regulatory and technological resilience and also building out our digital asset capabilities. So this is expected to around SEK 500 million for the year. And some of these investments we've already communicated. And a couple of them include, first of all, our initiative to secure access to sovereign compute, as Johan also mentioned, this Sferical initiative that we're expecting to ramp up during the year.

Secondly, we're also investing in AI-specific tools for specific initiatives that I mentioned previously, where we're looking to scale up our activities.

Thirdly, also ramping up our IRB road map initiative and here to obtain regulatory approval from relevant authorities as swiftly as possible, addressing the capital add-ons that we currently carry.

Fourthly, we're also looking to invest in our operational contingency considering the geopolitical uncertainty and the backdrop we're operating in. And finally, also the build-out of the digital asset capabilities and notably our initiative that Johan also alluded to, to launch a euro-denominated stablecoin in a European banking consortium.

So these are the prioritized investments, which we have wanted to make room for through our ongoing cost consolidation and the restrictive external hiring. And this, we expect will allow us to enhance operational efficiency over time. So in total, it takes the full year cost target to SEK 33.4 million plus/minus SEK 250 million for the reasons Johan mentioned. And we expect some of these additional investments to have a peak year in 2026. So the cost trajectory for the coming 3-year period should taper out.

On the next slide, we turn to the development of our capital position. We closed the third quarter at the end of September with a CET1 buffer above the regulatory minimum of 360 basis points on a reported level. We also showed that we are at 290 basis points on a pro forma level, taking into account the announced but not yet fully phased in impact from our Baltic IRB models.

During the quarter, we then added around 20 basis points from our retained earnings and FX contributed positively by roughly the same amount. While going the other way, the continued phase-in in the Baltics had a negative impact of around 20 as well and other REA movements had a total impact of negative 15 basis points. Now that includes the operational risk REA that we flagged in Q3, which actually in the end came in at 7 basis points, so lower than our initial estimate.

So to finish the year back at our target capital range of 100 to 300, we deduct the approved buyback program of SEK 1.25 billion, which corresponds to 13 basis points and then the dividend -- the special dividend of SEK 2.50, which is another 50 basis points. So that takes us to the 300 basis points above the minimum and implying a buffer of 250 basis points on a pro forma level adjusting for the remaining phase-in in the Baltics.

On the next slide, we are looking at our financial targets. And this is a familiar picture and the targets remain unchanged. So from left to right, the payout ratio with an ordinary dividend of SEK 8.50, the ratio comes out at around 54%, so in line with our target of around 50%.

Secondly, the 100 to 300 basis point management buffer. We remain committed to operate within this range and as we've said, to take action if the buffer exceeds 300 basis points. And therefore, just like this year, we use a combination of continued buybacks and a special dividend to ensure that we arrive at the management buffer in line with our targets.

From an ROE perspective, our ROE came to 14% underlying, which is below our 15% ROE target, and we are committed to enhancing our returns going forward, including some of the actions that Johan presented as part of the upcoming business plan.

In the context of our ROE development, it is worth noting that the surplus capital in our defined benefit pension plan has continued to expand. And at the end of the year, that surplus was substantial, and there is some SEK 24 billion deducted from our CET1 capital, but included in shareholders' funds. So we have for 2025 increased the upstreaming of capital from the pension fund to the bank to around SEK 2 billion, and this compares to between SEK 1 billion and SEK 1.5 billion over the last couple of years.

This additional contribution will become visible in our capital base gradually during 2026 and will be adding around 10 basis points. Nonetheless, the impact on our ROE from the pension fund surplus, which is, as I mentioned, part of our shareholders' equity is around 1.2 percentage points on our stated ROE. So bearing in mind, this impact was effectively negligible up until 2021 when the surplus was considerably smaller. So therefore, for comparability of the development of our underlying profitability, we quantify this effect.

So with that, we're concluding our prepared remarks, and we are happy to take your questions, and I'll hand over to the operator.

[Operator Instructions] We will now take the first question from the line of Namita Samtani from Barclays.

The first one, what percentage of the workforce do you think AI will take the place of? And secondly, just on the risk-weighted assets, when you're writing new business on the lending side, particularly on the corporate side, what type of risk densities are these at? Are they lower than the average risk weighting of the corporate lending book?

Thanks for your questions. On the percentage of the workforce impacted by AI, I think we come back to our previous comments on this topic. I think it's a bit early to conclude. As we mentioned, we have, during last year, rolled out a number of AI initiatives, both for developers and nondevelopers with very encouraging developments.

We have, as part of our hiring force, external hiring force, also made sure that in the conversations we're having about replacing in the event of an exit that we have the conversation around the possibility to introduce more efficiency gains or productivity enhancements through the use of technology, including AI. But to put a number on this at this point, we do think it's a bit early, but the outlook remains encouraging for broader productivity gains. And then, of course, Namita, we also have to take the question whether we want to see more productivity from our existing resources or if there are areas where we do think that we could do the same amount of work with less.

On your second question, it will very much depend on the type of business that we are adding. So the risk weight on our corporate business will then depend on the type of counterpart, the risk class, et cetera, that dictates the risk weighting. On our mortgages, as you know, that's another very transparent risk weight, which, of course, is based on our risk weight floors. And across the book, it's the risk weight of the business that we're growing into that decides. As we've highlighted in this particular quarter, it has been a relatively stable development, particularly within CIB. So you'll see that there is no meaningful impact from any REA density deviating from the average of the book.

We will now take the next question from the line of Magnus Andersson from ABGSC.

Yes. I just had a question on volumes as corporate lending remains rather sluggish quarter-on-quarter. And it looks -- I know you don't want to talk about the statistics, but if they -- if the numbers tell us anything, it looks like you've been losing market share in Sweden for a while as well. So just if you can tell us anything about what you see here, if there are any signs of a potential pickup in bread and butter corporate lending during '26 or how you expect to grow back into your previous market shares.

Secondly, on volumes, just in the only area that actually seems to be growing, which is the Baltics where you're growing by 10%, 11% in Latvia, Lithuania year-on-year, local currencies, 8% in Estonia, how you see the sustainability of the releveraging process that seems to be ongoing.

Thank you, Magnus. So if I start with the first question on the CIB, I think you're right to say that it is hard looking at the numbers from [ SCB ], I guess, is what you're referring to. And we are trying to find better data to follow this more numerically to be able to conclude exactly on your question, what is our actual market share and how is it developing?

Now since we have seen in the SCB data, the same trend that you have seen, we're also, of course, in discussions with CIB, whether there are any such developments. And I think a couple of things to highlight. We have a sense that we're doing the business that we like to do. So we don't get the feeling that there's a lot of business going around that we would have liked to do that we're not in. So I think that's from our perspective of our activity level.

And I think the second thing could be worth highlighting is that we have had towards the back end of the year, very high activity levels. It has now, as you see in the numbers, translated into a pickup in fees and commissions in the advisory and the markets-related business, but not yet in the balance sheet-related business. So I think our best conclusion is that we are in the areas where we want to be. We are active in the dialogues where we want to be. And as the volumes start to pick up, this should materialize in increases in our balance as well. But we're monitoring this closely and would love to get better detailed numbers on exact the market share rather than relying on the SCB data.

Your second question on the Baltics, you're right, that's the standout performer in terms of volume growth. And it has been a stable pickup and, of course, partly reflecting the strong macroeconomic backdrop. And I think our sense right now is that there continues to be a constructive outlook for Baltic growth with a broader momentum and the sentiment in the -- all of the 3 countries. And in areas that you're referring to in terms of leveraging and homeownership, there are indications there from a structural perspective that suggests that there's room to grow.

We will now take the next question from the line of Nicolas McBeath from DNB Carnegie.

First a question on the capital distributions here in the quarter. So why the decision to make the extra dividend combined with the slowdown in buybacks? If I annualize now the buyback pace that you're running with your latest buyback program, it's around SEK 5 billion annualized, which is SEK 5 billion less than last year. But if you wouldn't have done the extra dividend, I guess it couldn't have continued at a similar pace. So yes, why that decision to shift more to dividends from buybacks in terms of your capital distributions?

Thank you, Nicolas. Yes. So the main point here is to solve for our 300 basis point management buffer. And with the ordinary, we're at a payout of 54%. So we're sort of in the upper end of our around 50% guidance. And then the blend of the other 2. If you look historically, we have had buybacks between SEK 5 billion, SEK 7 billion and SEK 10 billion annual pace. And we're conscious to maintain ongoing buyback track record. And as you know, we're also one of the banks in Europe that have had the longest suite of consecutive buybacks. So we want to maintain that.

At the same time, we want to ensure that we maintain maximum capital flexibility. And in that context, we propose to the Board a mix of a special dividend, buybacks and ordinary. And we've also taken impact, of course, and conscious from the conversation we had around this last year that there are preferences in some camps for buybacks over dividends and in some comps, there are preferences the other way around. So we're trying to put together a balanced mix of capital distribution. And in this quarter, we wanted to -- for this year, we want to maintain buybacks, but also put a blend and a mix to get us to the 300 basis points.

All right. Then I had a question on your NFI line, which has been now below SEK 2 billion for a couple of quarters, which is closer to the levels we saw prior to the 2022 rate hikes. And any reason to update your kind of guidance of normal NFI. And is the NFI level impacted by interest rate levels or the slope of the yield curve? If so, how?

Yes. So on the NFI, you're right that we have been fluctuating between the -- around that SEK 2.5 billion. And this is, as you know, by definition, a difficult line to predict. And looking at some of the structural elements that you referred to, the tightening of credit spreads, the way that rates have moved, of course, there has been, for some time, a favorable development that has supported the level of NFI. But also bearing in mind that the fourth quarter, particularly in fixed income, is the seasonally weakest quarter of the year. And if you look at fixed income in isolation, it's not that different from where it was in Q4 of last year and in Q4 the year before. So I think we need to see a little bit how the seasonality plays out as we go into next year to see if there's a reason for us to revisit the level and the range that we are within at the moment.

We will now take the next question from the line of Sofie Peterzens from Goldman Sachs.

This is Sofie from Goldman Sachs. So my first question would be around the Baltic risk models. You note that the impact will be around 50 basis points, but there were some headlines a few weeks ago that the ECB had identified some deficiencies in the Baltics. Are these fully captured by the current models? Or do you need to do any additional work on that?

And then my second question would be on the share buyback. So just a follow-up. So is it fair to assume that the share buyback will be SEK 125 billion quarterly run rate throughout 2026? And why didn't you kind of ask for the full year share buyback with Q4 similar to what you did last year?

Thank you, Sofie. So for the Baltic development, we maintain our guidance, there are expectations of the impact on capital for phasing in of the IRB impact in the Baltics. So no change to that. And we also provide those pro forma numbers in the slide.

On your second question, I'll come back a little bit to what I said to Nicolas. This is a -- for us, together with the board, of course, to come up with a mix of getting us down to 300 basis points. And in coming up with that mix, we take into account, of course, the dividend component, the special and the size of the buyback. And of course, last year, we were at a point where we're a much more elevated buffer level. I think we were at 460 basis points prior to distribution. And there, you remember, we took a sizable one-off deduction to a full year buyback program. And this year, we are around 360 basis points prior to distribution and then solving for the 300 together with the Board, this is the mix that we suggest and that we came up with. So I think that's the color that we can give you on that.

But basically, it's fair to assume that you will continue with a quarterly share buyback.

Well, as always, we take a quarter at a time and it's subject to both Board and regulatory approval as we go along. But yes, you're right, it implies a 5-year run rate for the full year -- SEK 5 billion, sorry.

We will now take the next question from the line of Martin Ekstedt from Handelsbanken, please go ahead.

So first, I just wanted to ask one on dividends. So you do a reversal back to annual dividends from previous announcement of semiannual dividends. I'm sorry if I missed part of this answer before I was a bit late on to the call. But you do this as a result of what you call in the report feedback from market participants. Could you just share a little bit more of that feedback with us and what in the end made you reverse this decision?

Yes. So that's right. What we opened the conversation at this point last year was to look into the possibility of semiannual dividends. And the market participants, of course, it's a lot to do with listening to our shareholders and having discussions around the process within which this could be done. And one option is, of course, to have a dividend approved at the AGM and then distributed in 2 installments. But the feedback from our shareholders was that this is effectively just waiting a little bit longer for the dividend to be handed out. So the feedback on that model would also deviate a little bit from what we see in the rest of Europe, where distributions are made from current year's rolling earnings.

This, however, in our jurisdiction requires an extra general meeting of shareholders. So it immediately creates a slightly bigger process and a procedure around this in order to get this into place in a shareholder-friendly way, which would then be to do the forward-leaning semiannual dividends. And this, of course, has been a conversation with primarily investors. And I think this -- the model that we would then have to introduce in Sweden would be less appreciated.

Now we're not entirely ruling this out to if there is a way that we could put this in place in a shareholder-friendly way, then something we could revisit. But for now, the proposal is that we continue with 1 annual distribution.

Okay. And then for my second question, just quickly taking a step back and focusing on your return on equity, which was 12.9% in the quarter, i.e., well below a 16% long-term target and below some of your Swedish peers as well. So I mean, we talked a bit about the costs on this call, right? But recognizing that a lot of the macro factors impacting your revenues are outside of your control. What do you think would need to happen in Sweden macroeconomically for you to close that gap to target 15% and to peers? And when do you see the timing of this, i.e., kind of a wish list macroeconomically from you guys?

I can elaborate a bit on that. Thank you. First, I'll just let us establish the baseline. So first, we have a significant surplus in our pension fund. Historically, we haven't really been talking about it because it has not been meaningful. But right now, it's actually very significant. So if you say that the SEK 24 billion of surplus, which is not available to do business, but it's included in the return on equity calculation. We don't adjust for it. It equates to 110 basis points pickup.

On top of that, it is, of course, the capital that we have on -- or capital add-ons that we have, which is also outside the normal course of business as we are approving the IRB models over time. And that's another almost 200 basis points equivalent or so of a drag. So that's the baseline. So the thing that is comparable with others are, of course, without these 2, which is not a comparable number when you want to see what's the underlying profitability. So that equates to quite a lot in totality.

Now what is required for top line because you're so right, you don't dictate income, I would love to, but we dictate cost and there we have a more modest trajectory going forward, as you can see from today's announcement, and we started already last year. And of course, we also now have a little bit of pause on increasing the number of FTEs in order to address efficiency and make sure shaking the tree that we have maximum optimal capital allocation also in the operational side of things that we have the right cost base.

But what we do need in my book is consumption. So the -- all things look pretty promising, but it's on leading indicators. It's not really happening to the full extent. And if I look at the relative weakness for investments to really come along for that to be debt financed or equity financed, which is, of course, where we come into the picture. It is for both households and corporates to take that last step. And for me, it is consumption, and consumption is weak.

I just consumed our own macroeconomics Nordic outlook the other day. And it's a pretty constructive view, and I don't think they are far off consensus. There's a strong group of consensus around a 3% growth of GDP in Sweden next year, which would have been a fairly significant acceleration. If it happens or not, we will know next year, but it's definitely the one that I'm on the watchout for income to come up, both for transactional banking, payments banking and balance sheet banking. All 3 areas will benefit from that.

We will now take the next question from the line of Markus Sandgren from Kepler Cheuvreux.

So I just had 2 questions coming back to what some others have asked about. But if we're starting with the buybacks. So last year, you did SEK 10 billion for the next year, and now you're doing SEK 125 billion and then you can annualize that, of course, I guess. But Nevertheless, it seems like you really want to defend the 300 bps. So your target to be within 100 to 300, is that kind of obsolete is more like 300 plus/minus something. Is that what we should expect going forward? So that's the first one.

Yes. I think at this point in time, considering the broader geopolitical uncertainty, the outlook that we have to Johan's previous answer, hoping, of course, that balance sheet growth should come back again. We've had tremendous tailwinds from the FX. And of course, that could go the other way. So I think at this point in time, we feel it's appropriate to be at the upper end.

Just to mention also, we are on a pro forma basis, taking into account the remaining phase-in of the IRB effect in the Baltics down to 250. So to some extent, you could argue that, that's sort of moving and dipping into the buffer. But all things taken into account, I think it's cautious. And as you know, we are a cautious and a conservative bank to operate at the upper end of the range.

Okay. And then coming back to costs, as Namita was alluding to what AI can do and so on and so forth. But I mean, you were saying that you expect cost to taper off after '26. So I mean, in terms of numbers, one of your competitors has said they expect cost to grow by 2% annually until 2030. Is there something similar you're expecting? Or what should we read into this tapering off?

Yes. So as you know, we provide annual cost targets and not the longer-term cost guidance. But what we're trying to elaborate a little bit around in the slide there is to show what that underlying cost growth is at the moment and also to highlight that some of these incremental investments we're undertaking in 2026 should peak in 2026 and then fade thereafter.

And I think that the -- when it comes to the productivity gains and the efficiency gains that we're starting to see, if you look at our underlying cost growth, adjusting for the consolidation of AirPlus and the implementation charges, you'll see that it's gradually come down during the course of the year. And underlying in the fourth quarter, it is actually in that range or even a little bit below. So of course, to the extent that we can continue to enhance productivity going forward, working with the churn and the efficiency gains that we have lined up, there is, of course, a possibility to continuously improve on that cost growth. But the main message with the tapering is really to say that the current growth trajectory that we're on should taper from here going forward.

We will now take the next question from the line of Riccardo Rovere from Mediobanca.

A couple, if I may. The first one is on -- sorry to get back to loan growth, but accounting rules are the same for everyone in the loan book, corporate and retail, so forget governments, repos, collateral margin, all that stuff. The book is flat quarter-on-quarter and it's flat, kind of flat year-on-year. So the NII, considering you give the margins in your fact book and the margins are stable quarter-on-quarter and actually up versus Q2. It looks to be more a problem of absence of growth in general terms, also in retail, while the rest of the rest of Scandinavia is somehow responsive to the easing in monetary policy. So I was wondering why you don't seem to be responsive to that. And what you're planning, if you are planning anything to start resuming growth in 2026. This is the first question.

The second question I had is if there is any room maybe on SRTs or something like that to keep RWA under control and eventually and so to keep the capital return as it is. And on this topic, SEK 10 billion buyback on SEK 986 billion risk-weighted assets would throw 100 basis points of capital into the fireplace to cancel at SEK 203 per share to cancel less than 2.5% of your share count. So reducing the buyback to me is the most sensible thing you could have done. So that's to be clear because the share price can move by 2.5% any minute of an hour. So canceling -- I would have canceled it personally, but reducing it and giving cash to shareholders is the best thing you can do in my view. But again, on risk-weighted assets, is there anything you can do to keep it under control on the SRTs and stuff like that?

Riccardo, Johan here. I can start with growth. So one is a constant disappointment on growth, as you are pointing out correctly in your question that the transmission mechanism, rates are going down from the central bank, banks are lowering rates and you see economic activity go up has been very disappointing. There are some signs in the retail market that things are picking up, but it's been remarkably slow to act. This is actually quite normal and very frustrating as you probably have 4- to 5-year cycles when you look at loan growth. You can just take a graph on SCB's corporate lending exposure, and you see that it moves slowly and it has not picked up.

My potential explanation because I don't know why, is the capacity utilization in the industrial side on the corporate side has been fairly low. And therefore, any demand that they have met in this slightly more stabilized environment, they've been able to cover with cash at hand or existing loans and therefore, not used more capital to increase capacity. That's back to my original point on consumption. So we are looking at that, and it's one potential explanation, and it looks promising if things pan out as economists say that there will be a catch-up effect for that going forward.

I also say that the leading indicators, which is typically having a 12-month lag to actual lending is the industrial sentiment indices, and they all point more than modestly. They are upwards, but not particularly impressive yet.

On the retail side, there is signs of things waking up. There's clearly -- we do one, which is the house price expectations, which is a leading indicator, and that has clearly recovered. However, then you have the specifics for SEB to our earlier question around market share. So we do see that we are not performing to the best of our ability in the mortgage market, which is also partly explaining where we have some work to do there in the coming year or 2.

On your question, Riccardo, about the SRTs, yes, I mean, as you know, we have not been active in that space historically, but it is a space that we are looking into. It is, as you also know, something that is top of the regulatory agenda in Europe, and there seems to be a lot of initiatives providing more favorable conditions for such transactions to take place. So it is something that we are looking into. Also, the pricing environment has changed there. So from an attractiveness financially speaking, it has also become increasingly attractive. So it is something that we are evaluating.

And then just on your final comment, thank you for the comment on the dividend. We'll pass that also to the Board.

Christoffer, if I may follow up very, very briefly. Have you identified in SEK billions, the maximum amount of portfolio that eventually could be part of SRT's program because that instrument -- I mean there are banks that are very active on that, and they are keeping risk-weighted assets kind of flattish or eventually down. So I was wondering what is the theoretical maximum capacity that you could have there?

Riccardo, there is -- it's too early to share any numbers on sizes of portfolios. But one thing that we need to take into account is the regulatory environment in Sweden, which has some impact on the amount of capital release that could be achieved from an SRT. So that is one aspect into this, which then, of course, will dictate the attractiveness of the type of transaction and volume, et cetera. But no volumes to share at this point, Riccardo.

We have a hard -- thank you, Riccardo. We have a hard deadline, so we'll try to be a little bit quick. So please go ahead.

We will now take the last question from the line of Shrey Srivastava from Citi.

My first one centers around the SEK 500 million uplift from sort of AI regulatory and resilience. If you were to break this down between sort of regulatory and resilience and actual sort of AI initiatives or put another way, investments and revenue synergies versus cost synergies, where would you -- sort of would you where would you land on this, if we could just have some more color?

Thank you. We don't break that down any further. But given that we're mentioning these 3, they all 3 have a meaningful contribution to the total number. But we don't provide an additional breakdown to that number.

And just a second brief one. If I was look to look at your comment on the sort of uptick in investment banking activity, could we just have a little bit of color on that, specifically around if you're seeing an increase in demand from corporates operating in broader Europe around any REA initiatives.

Yes, I can take that. So generally speaking, it's a quite unusual world where the financial markets depending business lines are doing very well. It's really say that share prices are good, rates are low. It's been quite a lot of activity, very resilient financial market given the risks that we see. However, the real economy has not really performed, which is more linked to the actual funding, actual loans, house buying, factory openings. So it's a quite divided world. This seems to be -- continue. I have no reason to believe that this recent more uptick in investment banking in capital markets supported by resilient financial markets will continue until we have another, call it, situation in the market. And now we're hoping that the other part of the real economy, where you actually need new funds will come and help us.

On Europe, I would say no, there are -- this is again the position where leading indicators are pointing to a better future. But I couldn't say that we have really seen it materialize yet to the point where you see -- because half of the book, of course, in corporate lending is outside Sweden. And it's quite muted still.

Thank you. I would now like to turn the conference back to Johan Torgeby for closing remarks.

Yes. Thank you. And usually, we ask you to close early. Thank you for helping us with that because I know there's a lot of other calls we have today from your side. Thank you for participating. I wish you a good day.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the SEB Financial Results Q3 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Johan Torgeby. CEO. Please go ahead.

Good morning, and I'd like to extend a warm welcome to all of you today for SEB's Q3 financial results. Going to our first page with highlights. We today post a solid financial result in a quarter which is seasonally slower but we've also experienced less volatile and stable financial markets. Noteworthy is that investment banking activity has held up and showed resilience and we saw an increase in capital markets activity to the later half of the quarter.

Customer satisfaction and employee engagement continue to show relative strength and it has been decided to continue the SEK 2.5 billion share buyback program per quarter by the Board as we announced today.

Flipping to the next page, we have some recent events. And the first one is the infrastructure of payments which is now being disrupted to some degree by new technology coming from blockchain. We have, together with 8 other European banks launched a consortium with an initiative to see if we can launch a euro-denominated stablecoin on the chain and targeting the first half of 2027. Also, AirPlus has now been used as the new brand for our previous Eurocard. And this is an example of the marketing campaign, particularly towards the Scandinavian countries where Eurocard has been a long prevailing brand within the Corporate Card segment.

It has now been rebranded under the headline green is the new gold. And if you haven't already, you will soon get an AirPlus instead of your Eurocard in the color scheme represented here on the slide.

Turning to Page 4. We have, over the last couple of quarters, updated you on our progress within AI. We have shown you the internal projects that we're running, about 130, which is funneling in, in different categories of areas we think we can improve. But also gone through the recent investment that we've done together with a consortium to get compute capabilities available to us. Today, I'd like to introduce the third corner of this triangle, which is actually SEB not only working with offering better products, integrating it in the products, not only running the bank using AI, but actually enabling banking in the AI community, which is the core business we do. We speak a lot about different business units in the bank, but this is probably one of the lesser known ones.

In 2022, we created a business unit called SEB Growth, where we now have an offering tailored for fast-growing companies with high innovative content and companies that plan to raise capital and/or lift or sell themselves in the future. This is an attempt to combine corporate banking with investment banking, with private banking, force entrepreneurs and these fairly young companies as they begin their journey. We've also included a few of the logos which we have recently supported such as Lovable, Sana, Modal and Legora. All these are well-known fast-growing companies in the AI space in Scandinavia.

The next page, we can then look at the development of our credit and lending portfolio. As all of you are aware, we've had a little bit of a sideline movement in recent years. However, both last quarter and this quarter, we have some growth, albeit modest. Lending year-on-year for the corporate book is up 4% FX adjusted and the total lending portfolio is up 3% FX adjusted with households and Swedish mortgages just shy with half of that growth in the third quarter year.

Looking on the next page on the jaws slide. We can see that the costs -- the trajectory of costs is tailing off. And we are roughly back to trend that we had prior to the elevated profits generated by the interest increase with a CAGR here represented from the time 2016 to 2021.

And with that, I'd like to end this part and hand over to the CFO, Christoffer Malmer.

Thank you, Johan. I would now like to turn to financials on the next slide. Operating income for the third quarter declined from the previous quarter, reflecting typical seasonal patterns, notably within net fee and commission income, where the second quarter performance was particularly strong. Net financial income was impacted by market valuations of our strategic holdings during the quarter, which had a positive contribution in the second quarter. This valuation effect accounts to around SEK 500 million of the delta in net financial income between the quarters.

Net interest income increased slightly despite continuously downward trending interest rates explained in part by the higher day count in the quarter, some positive effects from FX, slightly lower deposit insurance guarantee fee and a lower short-term funding cost. Operating expenses declined slightly from the previous quarter, also following the usual seasonality. As the Swedish krona has continued to strengthen in the quarter, we are providing an updated FX adjusted cost target for the full year of SEK 32.6 billion compared to the original cost target of SEK 33 billion.

We maintain our range of plus/minus SEK 300 million around the cost target level which is primarily related to the ongoing integration of AirPlus. Here, we see some potential scope for possibly accelerating that implementation program a little bit further. As mentioned at the start of this year and reiterated also here in the second quarter, we're now in a phase of consolidating recent years of investment, which is resulting in a lower cost growth. We also maintain our external hiring pause for nonbusiness-critical positions to facilitate this consolidation and to make room for continued investments in selected areas, notably within technology and AI.

The full year cost target does imply that there are some effects to expect in the final quarter of the year. Net expected credit losses of around SEK 200 million or 3 basis points reflecting underlying stable asset quality as also reflected in the continuous decline of Stage 3 assets. We added around SEK 100 million to the portfolio overlays in the quarter, and we also had some sizable reversals. Imposed levies came down in the quarter as expected, reflecting the development of our Baltics levies and our full year guidance for imposed levies now also including Riksbank's introduction of the interest-free deposit now amounts to SEK 3.6 billion.

So that's up from the SEK 3.5 billion communicated in the second quarter. Tax rate of 21%, in line with guidance. Net profit for the quarter of SEK 7.7 billion and a return on equity at 14%, and we ended the quarter with a CET1 ratio of 18.2%.

On the next slide, we turn to the development of the net interest income. On a divisional basis, the NII in Corporate and Investment Banking declined by around SEK 200 million, primarily reflecting a lower net interest income within Investor Services, which was elevated during the second quarter, and that was a dividend season as we mentioned at the time. NII also within our markets business was a little bit lower as customer activity came down for the season.

From a volume perspective, lending within CIB declined in the quarter as some of the event-driven financing volumes generated earlier in the year rolled off. And that, together with FX effects, explained the majority of the move in the loan book compared to the second quarter. Now year-on-year, lending to corporates within CIB increased by 3% on an FX-adjusted basis.

Within Business & Retail Banking, NII declined by around SEK 100 million compared to the previous quarter, and that's primarily reflecting the impact from lower interest rates on deposit margins. Lending volumes were largely unchanged in the quarter and following 2 strong quarters of market share gains in the Swedish mortgage market, Q3 volumes grew a little bit less than the market. Now year-to-date, our net sales of mortgages represent a market share of around 13% which is in line with our share of the stock.

Competition in the market remains firm and mortgage margins moved largely sideways in the quarter, remaining at historically low levels. Within our Baltic banks, net interest income was largely unchanged as the impact from lower interest rates was partly offset by higher lending and deposit volumes across both private and corporate customers. Loan growth in the Baltics remained robust with mortgage growth of around 9% and corporate loan growth at around 8% compared to last year. Within treasury, NII was positively impacted by the yield curve as well as favorable funding conditions within short-term funding.

Looking forward, we continue to expect our net interest income to bottom out some 3 to 6 months after the latest or the last rate cut. Bear in mind that, that is based on how our balance sheet looks today. So volume growth and any proactive repricing could impact those dynamics.

If we turn to the next slide, and we look at the fee and commission income in the quarter. Total fees and commissions declined by around SEK 400 million compared to the previous quarter. And if we look on a divisional basis, we effectively see 3 developments behind this. Firstly, within Corporate and Investment Banking, fees are seasonally softer in Q3 across most capital markets-related businesses, including issuance of securities and advisory, which was also particularly strong in the second quarter.

This is also true for lending fees and combined, these effects accounted for around SEK 400 million in CIB. Nonetheless, CIB generated the highest net commission income on record for a third quarter. The second factor related to card and payment fees within Business & Retail Banking and again, seasonal patterns impacting activity levels primarily within corporate cards and AirPlus and this affects around SEK 100 million compared to the previous quarter. And thirdly, going in the other direction, we saw about SEK 100 million increase in fees and commissions in wealth and asset management as a result of higher assets under management and continued business momentum. Net new money across the group amounted to SEK 8 billion in the quarter.

And on fees and commissions, when we close the second quarter, we refer to a more constructive fee environment. And while Q3 will see or should see some usual seasonal patterns, which we've seen, we said that if the market backdrop doesn't change dramatically, Q4 should see a continuation of this more constructive trend. And this comment, we think remains valid, which is encouraging going into the last quarter of the year.

If we turn to the next slide, we set out the development of net financial income this quarter, NFI from the divisions was largely unchanged from the previous quarter at SEK 1.9 billion. The decline in the headline, NFI versus the previous quarter is, as I mentioned, largely explained by valuation effects related to our strategic holdings and that's primarily in Euroclear, which also paid a dividend during the second quarter. affecting that comparability. These effects were partly offset by XVA going the other way, and we continue to look at the long-term average of around SEK 2.5 billion per quarter.

Turning to the next slide. We'll look at the development of the CET1 ratio in the quarter. We closed the second quarter with a management buffer at 290 basis points. And during the quarter from left to right, as usual, we received an updated SREP, update from our supervisor. And as you will have seen in our separate disclosure on that topic. This resulted in a lower Pillar 2 requirement related to lower capital impact from IRRBB, interest rate risk in the banking book. Then we had 41 basis points, reflecting the net profit in the quarter after deducting our dividend accrual while lower risk REA contributes about 14 basis points reflecting positive risk migration in the book during the quarter.

Under REA other, you will find a combination of other developments on the balance sheet. So the FX effect, the overall REA size market risk REA and also a positive impact from us applying the SME factor to some of our CRE exposures. These factors in total added 22 basis points and largely evenly distributed between them.

Finally, the decline of 18 basis points reflects the phasing in of the REA increase in the Baltic banks that we announced in the second quarter, and that is related to the ongoing work with our Baltic IRB models. This takes the CET1 buffer to 360 basis points at the end of September. And we also highlight that the remaining impact from the Baltic REA increase is around 70 basis points, so in line with the communication at the time of the second quarter. And we expect to phase this in over the coming 3 quarters. So that means that our buffers in effect on a pro forma basis stands at 290 basis points with the Baltic REA fully phased in. Other effects to bear in mind as we go into the end of the year is the impact from operational risk REA in the fourth quarter when we do review that level.

On the next slide, we summarize our capital and liquidity position at the end of the third quarter. Our capital as well as our liquidity measures have all strengthened during the quarter, reflected in rising LCR from 130% to 136% and a higher NSFR from 112% to 116% and the CET ratio, as we just discussed on the previous slide.

Finally, I would like to conclude with our financial targets, which remain unchanged, including a 50% payout ratio, a management capital buffer target of 100 to 300 basis points above the regulatory minimum and a return on equity competitive with peers with a long-term aspiration of 15%. Return on equity year-to-date stands at 14.1%.

So with that, I hand the word back to you, Johan.

Thank you, Christoffer. That ends our prepared remarks, and I'll hand over to you, operator, for the Q&A. Thank you.

[Operator Instructions] We will now take the first question from the line of Namita Samtani from Barclays.

My first question, what should we think of funding costs related to net interest income going forward because surely, if rate is still coming down or they have come down, which is yet to be factored into our net interest income, this will continue to be a tailwind. And secondly, I just wondered, do you lend to private credit and what percentage of that is part of your book?

Thanks for your question, Christoffer here. I'll take your first question on the net interest income. And you're right to say that we've had a positive effect from funding costs in the quarter, and you saw that also in the breakdown of the NII in treasury. And we estimate that effect to be positive for the quarter of around SEK 100 million or so. Now going forward, we'll continue to reiterate the message on 3- to 6-month lag from the last rate cut for the dynamics to work their way through the balance sheet before the net interest income would trough.

So we should expect the net interest income to come down again in the fourth quarter. And then in the first quarter, and then we'll see again what happens to rates, of course, as we go into 2026. Those are broadly the effects that I would bear in mind. Johan, you want to comment on the private credit?

Yes, sure. Thank you, Namita. We have no meaningful noticeable exposure direct to any private credit. We do have a very, very small group of private equity firms that also have a private debt arm, but no direct exposure. So it is so small that it's not really noticeable.

We will now take the next question from the line of Magnus Andersson from ABGSC.

Two questions, please. First of all, on corporate lending. Last quarter, you said you had an elevated level of activity-based lending. And it comes down a bit now quarter-on-quarter FX adjusted. Could you please tell us how you see the outlook for activity-based lending as transaction activity is undoubtedly picking up now? And also what you think about the more lending for general purposes when you think that will pick up? That's the first question.

Secondly, on capital and risk-weighted assets. The level was significantly lower than at least I thought in this quarter, and I see that your -- I mean, risk weight comes down in corporate IRB, for example. Is this -- with the exception of the op risk coming in into Q4, is there anything else here that could be volatile? Or is this a reasonable run rate to use?

Because I think you even included SEK 10 billion of the Article 3 announcement as well here. And related to capital, do you know already now if you will continue with the share buyback approval for the full year in the Q4 '25 report? Or if you would consider doing it as you did previously with half in -- half year approvals?

Thanks, Magnus. I'll start with the corporate lending. So first, I just note that you did accurately depict what we said and what happened last quarter. Those temporary elevated levels for transaction-based exposures, they have not fallen off. So this quarter with its 4% year-on-year does not have those, let's call it, temporary bridges on as there was very little transactions done into the summer. So this is a much more steady as we go.

When it looks going forward, so the pipeline looks unusually strong. That doesn't mean that they naturally materialize for events and the event-driven lending that might come with it. But we did see a pickup in investment banking and also capital markets transactions towards the later half of the third quarter, which is an encouraging sign. And we, of course, always keep a close look as a leading indicator of what the Americans do.

And you could see some similar signs or even more pronounced there. But I also want to say that the lending fees this quarter, even though it's a very, very quiet one is still 24% up year-to-date, the lending fees, which is, of course, what you typically -- the majority of what you earn on leases is not NII when it comes to transaction is up 9%, the first 3 quarters this year compared to last. So there is some underlying event-driven momentum, but it's -- I still want to be cautious because a lot of things need to happen, and we don't want any of the risks that have been identified to materialize in Q3 that would create volatility.

So if I'm a little bit constructive and hopeful, I think general corporate purposes, that's a longer transition. So we are not seeing this broad-based, let's invest in increased capacity, then you need to borrow to invest further because the first investments, they're always done with the operational capital or cash at hand to meet the demand. So in my mind, I often come back in this discussion around the lack of demand in the economy. Retail sales and consumption in GDP. And that's kind of the last leg that we are looking for really to change the picture. And of course, looking at the economists they are looking pretty constructive for '26 and '27 on this topic, but let's wait and see. Malmer?

Thank you. So Magnus, on the REA. If we look into the fourth quarter, you're right that we expect the op risk effect. We estimate that to around 15 basis point negative impact. The other moving parts that are subject to movements during any quarter is the FX effect, of course, you see that is positive in the quarter. That remains, of course, unknown. It's a REA size, which in this quarter is again positive contribution. And coming to your previous question, of course, I hope that we will see that be moving in the other direction. And the third one is REA asset quality, which, again, in this quarter due to upgrades of risk classes of a number of counterparts also contributed positively.

So these are the moving parts and then you go to op risk REA. So when it comes to the buffer, the 360 basis points, and we look at the pro forma effectively the 290, assuming the remaining phasing of the Baltic REA, last year, at this point, we were around 470 basis points. So of course, the situation was very different. But still, there are, to your question, a number of moving parts in the REA that will play out in the fourth quarter. I will come back at that time with comments on future buybacks.

We will now take the next question from the line of Markus Sandgren from Kepler Cheuvreux.

I was thinking about -- there is some growth in the Baltic lending business. So I was thinking your ambitions going forward? Do you expect to grow in line with the market given your size? Or is there any reason to believe that you can capture more market shares there?

Okay. yes, we are growing clearly higher, and it's not only this quarter, it's been going on for a while. So we are actually accelerating a bit. So we're now looking to 8%, 9% growth in this quarter year-on-year compared to -- if I remember correctly, it was about 6% last quarter. We are maintaining our market share as -- the long-term picture is that it's quite concentrated as you probably know to 2 large institutions, Swedish banks in the Baltics. And there has been, of course, increased demand for higher competition from everyone in the marketplace.

But right now, we have an ambition to maintain this position. I wouldn't commit as it is a very high market share we start with. So this is a little bit defend and protect, but we are not going to give it up easily. So be careful in increasing market share, but definitely it's a fast-growing market. I'd also like to point out that it is a higher inflationary market. So in real terms, it is not as impressive as these headline numbers are, and you need to also take that into account because the loan book unless you relever the economy will grow with nominal inflation plus whatever you do.

We will now take the next question from the line of Martin Ekstedt from Handelsbanken.

I wanted to focus a bit on your retail business. Looking at statistics, Sweden data on mortgage lending during first half of '25, you saw quite strong market share of net new lending. I think you took like 16% on new lending against the back book market share of 13%. But as we enter the second half of the year, this trend kind of evaporated, and you took just 1% in July and 3% in August despite similar volumes in the market overall. Is there a story behind this that you could share with us perhaps?

And then secondly, on that same topic, with Sven Eggefalk now joining you as a new head of the business line, should we keep hopes up for higher volumes share -- volumes of market shares to return?

Christoffer here, I can comment on this. I think, as I mentioned in the remarks, if we look at our market share year-to-date in net sales and mortgages, that stands around 13%, and that is in line with our historical stock level. So there is, as you point to some movement between the quarters. I think when I look at the focus that we have for winning the mortgage market share business, we think all 3 components, it's the speed, it's the availability and it's the pricing. And it's about us continuously evaluating and making sure that we are competitive along all those 3. And as you will see that we haven't moved pricing much in the last quarter, but we're continuously working around speed and availability.

But I would also mention that there is a volume effect into this as well, volumes are still relatively small, which can impact movements in between individual quarters. But year-to-date, broadly in line with the stock market share.

Understood. And then a second question, if I may, and just picking up on Namita's earlier question on private credit. I wanted to just pose this question to you a bit more broadly. I mean, the main focus around the private credit discussion has been centered on the U.S., right? And you said you don't do this yourselves currently to any large extent. But I mean, generally, you stand perhaps as the leading Swedish lender to nonbank financial institutions.

So I just wanted to check with you for a Swedish take on this. How widespread is this concept in Sweden? And what are your views on the viability of the model in Sweden and also a bit on the risks perhaps. I mean if you don't do this, who should be doing it or shouldn't we be doing it at all in Sweden, and why not.

Okay. Yes, this is a little bit of reasoning. Don't take this as a fact. So first of all, this has been a development very much driven by the U.S. I hear numbers like USD 2,000 billion. It's actually surpassing bank lending if you extrapolate the current trends. It is a very, very significant deep source of debt capital for the American economy. Europe is much, much smaller as a whole. And even the things that are growing fast in Europe is typically more American firms, replicating what they've done in the U.S. rather than European firms. Then you go to the Nordics, it's even more pronounced. So private debt is not a large funding source for the Nordic where we operate.

And this is, of course, very much if you look at the classic private debt, private equity firms of Scandinavia, which is our home market, that it looks very, very different in terms of the balance between equities, infrastructure, alternatives versus private debt lending. So my take on this is that, first, the leverage buyout market is very well functioning in Nordics. This means that there's much less of a free lunch to be had sourcing the money that you then refund and redeploy into a leverage buyout type of financing because this is almost like a game between the 2 different products.

They are slightly different, but they achieve the same thing for a private equity firm. One is you borrow from a private debt with typically 7% to 9% yield expectations or you borrow from a bank, which in the Nordics, we are very efficient, and we've been able to price the LBOs quite differently. But if you look at the overall market of LBOs, how they're financed, it's clearly in favor of private debt funds. But from the banking system, as far as I know, Nordic is very little -- has very little exposure in the Nordic banks to this. It's other capital providers that have put the money in.

We will now take the next question from the line of Shrey Srivastava from Citi.

My first one is your comments around the pickup towards the end of the quarter in capital markets activity. Of course, this quarter was affected somewhat by sort of lower episodic transactions debt than you'd expect. So I just want to talk about what the pipeline for the fourth quarter, what you've already seen in the fourth quarter and going forward, please?

And my second question is going back to your comments on the scope for accelerating the implementation of AirPlus. You've previously, if I'm not mistaken, commented qualitatively about when you expect it to be accretive, excluding and including restructuring costs. Is there anything further you can now provide on that, given you've obviously had an extra quarter seeing the business and integrating it.

Sure. I'll start with the pickup. So the circumstances around capital markets and primary deals, M&A and IPOs is quite -- it's very, I would argue, benign. It's a good market. Markets are strong. They're not over -- they might be an all-time high on the stock market, all-time tight on credit -- recent tights in credit markets, lower interest rates and a little bit of European spurring optimism for what is going to come. It's not particularly strong here and now, but it's definitely more optimism around where Europe could go, not at least in Scandinavia and the Baltics, if you look at GDP protect -- projection, consumption, et cetera.

And also, I would argue that Germany has had the biggest delta from 1 year ago, where they were very much not in favor. And now it's a little bit of, let's say, interest at least on what could Germany do with all these announcements around fiscal, stimulus, defense, security and resilience. The uptick is exactly what we would have expected. We've actually been a little bit disappointed, I would say, if you compare 1.5 years ago when we saw that the interest rate has peaked, then we had a very quiet couple of years behind us after the record years of the early 2020s.

And now it looks quite constructive. And you saw that -- before summer, we did an unusually amount large deals in the Nordics, then, of course, summer dies. And I would say that the pipeline and the amount of discussions for the fall and next year, still indicates that there is a higher level of potential than there was before.

Now don't take that too much, but I'll just look at issuance of securities and secondary market and derivatives, which is, of course, it's cut in, in the financial result today, we're up 29% year-to-date compared to last year on issuance and securities and services, M&A and equities. And we have 14% in secondary markets year-to-date. So there is something clearly better already happening compared to last year. And we are just saying that we feel quite constructive. We're not saying that this seems -- there are no indications right now that this would implode tomorrow, rather being quite supported of this could probably continue.

On your second question around AirPlus, a reminder of where we are there. So as we highlighted in the second quarter, the first critical milestones around IT migration, the discontinuation of noncore markets and the rightsizing of the organization has been completed, and this process is on track. The next phase now is to increase pace of implementation between AirPlus and the rest of the SEB Group business. So what we are now reviewing is if there is reasons to try and accelerate that phase. As you will remember, we gave a range around the cost target for 2025 of plus/minus SEK 300 million as we said, largely attributable to the pace of implementation of AirPlus. So it was in that context, I made those comments.

Thank you. We will now take the next question from the line of Johan Ekblom from UBS.

Just to come back on some of the comments you made earlier around AI. I guess trying to figure out what AI could mean for your business longer term. There's 2 aspects to it, I guess, that I'm interested in. One is, how do you think about the cost of AI? So we hear a lot of stories about the cost of AI being heavily discounted today and that we should expect cost to increase materially as you get on to kind of normal rate cards for what you're paying. And I guess when do you expect to see concrete benefits in terms of efficiency or revenue opportunities that will be kind of obviously visible in the financials. So that would be the first question.

And then secondly, just a bit of a detailed one on asset quality. I mean we had a big green project that went belly up in Sweden earlier this year, and there's another one that's in the press now. Your corporate loan book tends to be very much focused on investment grade. How do you view this potentially higher credit risk project? And how do you manage risk around those? I realize you probably can't comment on individual exposures. But just from a more kind of top-down view.

If I start with the last and I'll hand the -- I think you asked mostly for the financial impact, I'll ask Christoffer to reason around on AI. The traditional loan book is investment grade. The really minimum rule of thumb is that you have to have 3 years of good cash flow, that has proven resilient business model, et cetera. So that's what we do. But there are, of course, also a very, very small part of the balance sheet that also gets dedicated to starting up of firms. These -- the ones you mentioned, the larger green ones, they have been unusually very unique that they are of that magnitude, but we have had very, very modest, if I say it that way, exposure that you won't really have seen even though there have been a little bit of actually blowouts in the whole green and clean tech sector as we speak, and it's continuing.

The other thing is to see that the capital stack of all these projects, if they are large, are very different from the past. They are namely predominantly government guaranteed, and there are risk and offsets. So the nominal values often, if not always, exaggerate heavily what the banks actually are exposed to. But -- so there are 2 mitigating factors to any worry. And that is that the amount is very small, and it's often guaranteed somewhere between 60% to 85% by a government.

If I reason a little bit around the AI and the financial impact, and you're right that we are at an early stage and trying to assess and quantify the ultimate impact is still difficult. But I'll make a few comments. I think in terms of the benefits that we can already see is there are certainly some areas where we do see tangible efficiency gains and productivity enhancements One is in software development, where we see the use of Copilot increasing developer productivity and output and deploys.

Another area is in Wealth and Asset Management, where we can see an increase in the number of outbound customer calls as a result of AI support in documentation. So we see those productivity gains. Now how does that translate into P&L? Well, one of the comments that we made around the hiring pause that we're having consistently asked the question when we do replacement hires, if there is a technology or an AI solution that could be levered for that same activity.

So we will see this gradually coming through. In terms of the cost of the actual AI. One of the reasons we decided to team up with a couple of other companies in the Wallenberg sphere to invest in the compute power from NVIDIA here in Sweden is partly to get access to sovereign access to compute, but also to ensure the cost. And to your point, we're buying compute power from the large compute providers around the world is, of course, an exposure that anyone would have if you want to grow and expand in AI.

And that is also for us a level of comfort to have that cost under our own control. So those are some comments. But as you point out, it is still early days. But we are following it very closely. And the early signs that we're seeing is constructive productivity enhancements.

We will now take the next question from the line of Sofie Peterzens from Goldman Sachs.

This is Sofie from Goldman Sachs. So my first question would be on the fee line. The softness that we saw in fees this quarter, was that reflecting margin pressure? Or was it just less volumes than expected. So if you could kind of just discuss a little bit margin pressure compared to the volumes on the fee side?

And then my second question would be around kind of capital. What we're seeing is that the fiscal outlook or fiscal spending next year is quite good for Sweden, macro-outlook is improving. Should loan growth pick up for SEB. How do you think about kind of prioritizing growth over shareholder returns. And what kind of takes priority if you look at like growth versus dividends versus share buybacks versus any potential M&A?

Thank you, Sofie. So if I'll start with the fees, the sequential development there is really in 3 areas where we see this. First, within CIB and as Johan alluded to, a little bit, even though activity level is benign in the third quarter, it was very strong in the second quarter. So you see the drop in fees and commissions sequentially of about SEK 400 million being partly attributable to activity levels and fees in CIB.

The second component you see is card fees in BRB, particularly on the corporate side. And as you know, we are in our BRB card business more exposed to corporate activity than private activity. And that being slower during the summer month is a second explanation. And the positive effect and partly offsetting this is an increase in fees and commissions on AUM-related fees in wealth and asset management. So there's no margin development impacting sequentially in the quarter, but more how the fees have fallen between Q2 and Q3.

Yes. Sofie, and nice to hear that you're back in a different role. So welcome. I would say that the reason for the more optimistic outlook, as you also pointed to, is partly driven by the monetary stimulus that we have already seen, let that bite in the economy monetary policy, typically works with 12- to 18-month lag. But also, as you pointed out, the fiscal stimulus that is expected to come. So those 2, I think, are quite important pillars for economists when they do look at it.

Will this increase loan demand? Well, that's the purpose of it, both the monetary policy want the economy to pick up in pace and particularly focused on consumption. Fiscal policy tends to be quite effective on consumption. But the pattern right now is because uncertainties, high risks are very mitigated in my book, but uncertainty is still around. It means that households have been quite keen to save rather than consume. So all this is kind of part of that package to become a little bit more constructive for the future, and it should be supportive of growth. But that prediction I'm not making. I'm just reasoning around it. So it's definitely a part of it.

When it comes to priority between growth and shareholder return. I assume you mean shareholder repatriation and not just total shareholder return because I think growth in SEB, having more clients doing more with them is very much aligned with total shareholder return, that's the same thing. But of course, it's not -- you might want to save more capital for the business rather than repatriating it. And there, it's pretty easy. We always try to develop the bank first. I would love to use the capital that we generate to do more business to generate even more, so that's typically not a big conflict. Otherwise, as we've had for many years now, we generate more than we can redeploy and then we'll pay it out to shareholders.

Okay. That's very clear. And maybe just on the fee side, one follow-up. So in terms of DNB Carnegie, you haven't seen any business opportunities kind of getting any -- being able to take any market share from them?

I would say no, but I also want to acknowledge that it's a formidable competitor, and they're very good, and this is not an easy market to win in. And it's getting -- it's tough out there.

We will now take the next question from the line of Tarik El Mejjad from Bank of America.

I just wanted to come back on Johan Ekblom's question as well on AI from a different angle. The scalability of use of AI and the benefits also, I think, is based on how your core systems can actually be plugged to these AI tools. How do you consider today your IT system ready for this, I would say, evolution in terms of using for AI, especially in your triangle on the parts on integration into the products. And also, I mean, there is a perception that the cost to achieve is actually much lower using AI versus the traditional kind of cost savings measures in the past. Do you -- would you confirm that perception?

And just very quickly on the capital part, I mean, Sofie, I think addressed that partly, but the -- I think you commented in the past that to go below the 300 basis point buffer or the high end of the range, that will be used for growth rather than special distribution or buyback. Given the headwinds on CET1 coming -- on RWAs coming in the next quarters from the add-ons on Baltics, should we assume that our priorities for volume growth and the buyback would probably be secondary here?

So if I start with the question on AI, you're right that there is a broader upgrade of core systems in general required to some extent, this reflects our ongoing work with our technology road map that has been in place for some time. But there are also opportunities in multiple areas where AI can be applied without necessarily completing all those upgrades. And there are also ways where we can work with compartmentalizing certain parts of our legacy technology and making APIs available for new applications. And the third option that is also interesting to explore is actually to have some of that legacy code rewritten with the help of AI.

So there are ways both in which we can address the challenges with traditional legacy systems, but also where we can proceed without necessarily completing those investments. Now when it comes to the triangle, I think you're right to say that from a product perspective, it's probably where progress has been the least thus far in terms of introducing and implementing AI capabilities in the product.

Where we have thus far seen the best impact and the greatest achievements thus far has been in running. And what we're highlighting in this quarter as well is, of course, an interesting opportunity working with a growing and exciting AI community in Sweden and the Nordics. So we'll continue to, of course, monitor this closely, but there are certainly areas where we can accelerate with AI implementation in parallel with legacy upgrades.

Yes. And if I just may add, it's interesting, we have the IMF, IAF trip to Washington, where all bankers met last week that it is a clear distinction, the one selling AI capabilities between the ones buying them and selling them and how much value has been created lately. So this third point that Christoffer made, the third leg is actually us banking the AI community, which is doing very, very well. On the capital repatriation preferences, so let's say that if we are above 300 as we have stated target board mandate to be in the range of 100 to 300, we have one type of dialogue, and that is how to best come back to the range where the 300 is the upper end.

That's the discussion we've had for 2 -- 3 years when we -- from the day we had to cancel the dividends post COVID. And of course, that's kind of the new now. If we're in the range, we have a more forward-looking discussion in the Board in December, where we typically have room for both. So don't assume that you cannot do a share buyback only because you're in the range. However, there is a different discussion. It's more about lending and if we want to retain it to improve business of over and beyond 15% return on equity.

If there is a reasonable degree of probability, we know how to do that in the coming years. We'd like to be able to capitalize on that. If not, then, of course, it becomes more of a question of how to repatriate capital to the shareholders with a base, 50% of profits go in the form of dividend. And as you can see in history, we've used both extra dividend in combination with share buybacks to look at, but that's the forward-looking, and I also would say, just the numbers, you need pretty significant loan growth numbers for this not to be -- for SEB not to be able to do capital repatriation in the combination of 2 or 3 types. So it would be lovely if that would happen, but that's a luxury problem.

We will now take the next question from the line of Nicolas McBeath from DNB Carnegie.

My first question was on the NFI line, which came in a bit below in recent quarters in Q3. So I was wondering how you think about the -- how the lower interest rate environment is impacting this revenue line. With your current macro outlook for 2026, how confident are you that your previous indication of the past 16 quarters average is a good indication where the normalized NFI line should be? And how do you think about that given the ultimate macro outlook for next year with, yes, maybe lower interest rates and possibly also lower volatility than what we've seen in the past few years?

Thank you, Nicolas. I think the -- within that number that you have in the NFI, for us, these are, to a large extent, customer-related income. So taking aside the strategic stakes in the mark-to-market and the valuation gains that we present separately in the XVAs, we have a significant proportion of our FICC business booked within NFI. And within the FICC, we have the fixed income, currencies and commodities. And if I look at the third quarter, we had after the very high level of volatility in the second quarter, a lower level of volatility in the third quarter in FX, which resulted to a somewhat slower activity related to our customer demand.

Now within fixed income, on the other hand, activity levels remained high with credit spreads at very low levels, issuance continues, and there was a clear demand to prefund during those favorable conditions. Within commodities, we are, as you know, the one Nordic bank that does offer this, and we have seen that contribution growing. But of course, there's an element of volatility, but we think that the underlying structural development there is also constructed.

So as we look forward, there are effects driving this. The volatility in FX space and the demand for FX products will be impacting that part of the FICC booked in NFI. We also have the steepness of the yield curve, which impacts the treatment of the inventory and the mark-to-market of the inventory within the fixed income in NFI as well. But at this point in time, we have our range and I think that remains our best prediction for the future.

And then I had a question on like if you have any general remarks or thoughts how you're reasoning regarding the cost growth into 2026. I mean on one hand, you have lower rates, which are a drag on return on equity. But on the other hand, as you've alluded to in the call, potentially higher activity loan growth, economic recovery during next year. So do you think 2026 is a year to expand and invest more or keep the hiring freeze and try and defend the profitability?

I'll start and ask Christoffer to add. So the current, let's call it, plan of attack on cost control is the one that we, I think, launched last quarter or 2 quarters ago, and that is to change the pathway that we've been on for some years now of increasing investments in the bank and to tail that increase off. And as you can see this quarter, it looks to be supportive of actually happening.

We are in a different place now where we have a different trajectory. The purpose is to sit when we do our business plan in December and hopefully be in a position where we have freed up some operational costs that we can discuss with the Board and the management team how to redeploy. So it is still a different type of forward outlook now than we've had in the last years, and that is more cost control, be cautious and handle resources a little bit more until we have a clearer look on the income outlook because we really need to have a high return on equity and a low marginal cost of income, so profitability secure if we were to start investing more.

And then there are many other things must do investments in banks. So there's no lack of holes to put all this money in order to maintain a good and solid and robust infrastructure. But it is the same tonality we've used now for a couple of quarters. There's no change in that, and that goes beyond year-end. It's actually to have a little bit of extra flexibility going forward. That doesn't mean that the decision in December where we set the cost frame for '26 will be up, flat or down. It just means that there will be a discussion to be had and we'll communicate it as always in conjunction with the Q4 report.

And then just a detailed follow-up question. Could you please give us the AirPlus implementation costs for Q3 and how you think about the implementation costs in 2026?

Yes. The AirPlus implementation cost in the third quarter was around SEK 120 million, which means that we, year-to-date, have taken a little bit less as a run rate, which leaves a little bit more in the fourth quarter. And we have guided to around SEK 700 million in implementation costs for the full year.

And for next year, how do you think about those costs developing?

Well, as I referred to earlier, we are now reviewing whether there are parts of the implementation program that should be accelerated. So we'll be coming back to that together with the cost outlook for 2026 together with our fourth quarter results, Nicolas.

We will now take the next question from the line of Riccardo Rovere from Mediobanca.

Thanks a lot for taking my questions. I have 3, if possible. The first one is on the NII indication, Christoffer, that you provided early in the call, meaning NII to bottom out 3 to 6 months after the last half. Now raising in Euro area should be done, Riksbank has cut 25, okay, I understand the impact on the equity side, but the federal reserve should cut much more aggressively and you have a much larger amount of U.S.-denominated liabilities than assets is SEK 300 billion larger amount of liabilities in dollars. So I was wondering why the rate cuts by the Federal Reserve should not have a mitigating impact or the only 25 basis point rate cut by the Riksbank.

And by the way, also this quarter, what you -- this indication should have happened and did not materialize, NIIs is actually up quarter-on-quarter. So I was wondering why you keep reiterating that given the Federal Reserve cut expected in the coming quarters? The second question I have is, on the 290 basis point buffer, if I'm not mistaken, this includes the whole SEK 50 billion of RWA done -- imposed by ECB on your Baltic operations. Just to confirm my understanding correctly.

And if I understand it correctly, 290 is already at the top of your range in terms of management buffer. But you are expecting to go back to that level in only 3 months. And because if that is the way I understand, it's just a matter of how you want to return excess capital rather than if you can keep the current capital return. So what is your thinking about that?

And then I have a question, a curiosity that's more a curiosity. Overlays go up by SEK 100 million if I'm not mistaken. Some of the Nordic banks have actually reduced them or brought it to 0. They're using it progressively, releasing those. Why are you keep accumulating those overlays? And when do you expect this to come to an end or this to be used at some point or released or allocated.

Thank you for your questions. I'll start, and I'll let Johan contribute as well, and we're just going to make sure we have the questions correctly. So if I start with the overlay, that is an assessment that we do every quarter. And we take into account geopolitical developments, sometimes we change our macro outlook and assumptions and it's a continuous evaluation of our various exposures across our portfolios. And you have also seen in quarters that we have released some of those overlays and in this quarter, we're adding. And it's hard for us, of course, to comment on how other banks are proceeding with this, but that is our process.

For the net interest income, you're right, we are reiterating the expectation of a 3- to 6-month lag from the last rate cut until we see the trough. What happened in this quarter were a couple of technicalities that led to an increase in net interest income sequentially. One is the number of days. We also referred to the deposit insurance fee that is booked over the year. That happened to tilt a little bit more favorably for NII in this quarter. We had a positive FX effect. And we also saw some beneficial treasury contributions, partly from the funding cost and what we have been referring to as repricing effects or timing effects.

So as we then look forward, we continue to see pressure on deposit margins as the rate cuts will make their way through the balance sheet. And also bearing in mind that some of our transaction accounts both for corporates and households are down to 0, which means that, of course, the further down we come in the rate cycle, the more any incremental cut will have as an impact.

And finally, to your comment around the U.S. denominated deposits, those are primarily wholesale deposits. So those are priced off of market rates, and that's effectively a margin that moves with market rates rather than having an impact as they are being discretionary priced, but they are market rate linked. On your question...

This will go down. The Fed will cut, this stuff will go down, the cost of this stuff will go down. If they does, when they cut. Of the wholesale fund -- this wholesale funding, and it's SEK 400 billion.

Correct. And then, of course, the impact will then be on the asset side when Feds are being cut when we have U.S.-denominated loans that they are funded by.

Sure, but it's smaller the amount. The delta is smaller. The liabilities are much, much larger than the assets in dollar, much larger. SEK 300 billion.

Right. And I think what we have also mentioned when it comes to the U.S. denominated deposits is the fund that we're also placing with the Fed. And that is effectively us operating in the U.S. with our balance sheet, and we will collect deposits from U.S. financial institutions and placing with the Fed. And that is effectively a relatively opportunistic business that we have been running there, and that goes to an element of lumpiness between quarters, but that accounts for a sizable part of the U.S.-denominated deposits as well.

But what I see is longer than SEK 188 billion cash at the Federal Reserve, I guess, and you have SEK 409 billion deposits, which you say is wholesale is going to go down. This one number is more than twice the other. So I don't understand how this cannot be positive regardless FX and all the other stuff, calendar days, whatever.

No, I think this is one of many moving parts in the balance sheet. So when we are looking at the impact in totality from rate cuts, there are various dimensions moving in different directions. And this is one impact that we get from the development of the Fed funds. We have other parts of the balance sheet that's impacted by the ECB rate and others from the Riksbank. So it's taking all these into consideration together where we conclude that running this through our balance sheet as it looks today, we expect the trough. It doesn't mean that all the variables go in the same direction. Some, to your point, might be contributing positively, but the net of it all, we expect to result in a trough 3 to 6 months after the last cut.

And on the SEK 290 billion.

Yes. Sorry, can you repeat that question, Riccardo?

The question is that SEK 290 billion is already the top of your rating, the top of your management buffer. And that 290 includes the whole SEK 50 billion, which should be, despite, as I remember, phased progressively, not if I'm not mistaken, you got SEK 10 billion this quarter, maybe you will land another SEK 10 billion next quarter, I don't know. But the real number is the SEK 290 billion.

So that is already at the top of your buffer. So how do you see this? Is this -- were you expecting it to be already basically at the top of your buffer only with the whole impact of the ECB imposed add-on after only 3 months. Because there has been, let's say, some discussions around the impact of this stuff into -- mostly 2026 is affecting your capital return blah, blah, blah. How do you see that?

Yes, I think we understand that.

I can just start, Riccardo, with confirming that we have taken in this quarter the equivalent of 18 basis points or SEK 10 billion phase-in of REA in the Baltics, and we're showing that the remaining, what we estimate to be another 70 basis point impact would take our pro forma buffer to 290 basis points, where we have booked so far in this quarter, SEK 10 billion of that.

So just to be clear, that is pro forma today. So I think you're absolutely right. It's the 290 if we would technically have deducted all of it and it would have been over. But as we -- for accounting reasons and other things, couldn't or wouldn't do that. So we just showed it pro forma. Then you have, as I think you alluded to, now capital generation, in the dynamic analysis going forward, we'll, of course, continue to increase this number, everything else being equal. And therefore, I think we will have a better position when we get to Q4, and we will have to look at the current capital position then in a quarter to then for the board deliberations on repatriation. Was that an answer?

Yes, yes, yes, definitely, that's an answer. So 290 before, then you start accruing the dividend, 50% payout or whatever it is. And then the rest, we'll see. But the starting point is 290.

Correct.

We will now take the next question, question from Bettina Thurner from BNP Paribas Exane.

I would just have 2 clarification questions, please. The first one on NII. So you have been quite helpful over the past 2 quarters to try and isolate the temporary effect on the net interest income base. For this quarter, should we look at the effects in treasury that you mentioned before, of repricing quicker. Is that the SEK 100 million? Or would there be other parts of the NII that you would also expect to get out again or reverse partially in the last quarter of this year or first quarter of next year?

And then the second question would be on the dividend. At the start of this year, you said you had the intention to pay out a semi-annual dividend next or in the next year. Is that still the plan? Or are you still deciding on that? If you could just give us more update on that, please?

Thank you, Bettina. So on your first question on net interest income, I think the number that you're referring to, the SEK 100 million or so as a positive impact in Q3 from those timing effects is the number that you should have in mind for that effect going forward. And for the semi-annual dividend, you're right, that is something that we mentioned at the start of the year, and we have ongoing dialogues with our shareholders, and that's something we'll come back to when we report our fourth quarter results and come back to the capital question.

If I can just double check. So it's not set in stone yet, let's say, on the semi-annual dividend?

Correct. That's correct.

Thank you. That's all the time we have for questions today. I would like to hand back to Johan Torgeby for closing remarks.

I'd just say thank you, everyone, for your participation and your interest in SEB and look forward to seeing you soon.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the SEB Financial Results Q2 2025 Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker day, Johan Torgeby. Please go ahead.

Good morning, and welcome to SEB's Second Quarter Results Presentation. As customary, you can follow the slides from our website. Starting with reflecting a bit about the macro situation, I think it's sometimes helpful to make the distinction between risk and uncertainty. The typical risk definition is something that is measurable, something that is tradable or insurable or hedgeable, and you can monitor and you can have risks going up or down in one's portfolio or business engagement. Here, I just show 2 classic risk measures, that is the risk premium in the credit market here measured as the credit default swaps and also the stock market and its outlook for the future. And both risk measures indicate that everything is actually quite benign. That feels a bit surprising to say as uncertainty, which is the definition, something that is not known, not hedgeable or quantifiable is actually very close to record highs. And here, that represents by trade policy uncertainty index, which is absolutely at the same level not seen since 1920s.

This is a quite unique situation where the financial markets over the last quarter has behaved very, very strongly, whilst we see geopolitical risks, cyber risks, trade risks and other quite elevated. For SEB, this means that the client base typically has a little bit of cautious stance. Despite financial metrics such as credit swaps and stock markets, very encouraging, we still see there is a little bit of cautiousness in the system and not at least when it comes to consumption and investments.

Going to the next page, we classify this quarter as a very solid financial performance quarter. Volumes grew in a broad-based fashion, where we saw growth in lending, both corporate and retail, growth in deposits and also net sales positive for asset under management. In particular, we do highlight the contribution from Corporate and Investment Banking that had a very strong recovery from a fairly slow April and then really caught up during May and June, also capturing a very high share of the flows and transactions executed in the market.

AirPlus is on track, and we have this morning also announced a continuation of the preapproved SEK 10 billion of share buyback from the FSA for 2025 and a continuation for the next quarter with SEK 2.5 billion. Return on equity, we note at 15%, cost to income of 0.41, core equity Tier 1 ratio of 17.7% with a capital buffer of 290 basis points. A few noticeable events during the quarter on the next page, Page 4, is first, we continue our efforts in terms of being progressive around deploying new technology within the bank and not at least within the area of artificial intelligence. This quarter, we announced in a consortium with several other companies, an investment in a supercomputer from NVIDIA. This is really to secure access to very strong capabilities for the long-term future in order to be able to use whatever comes our way when it comes to AI in the future in a secure manner. Also this quarter, we had a few customer satisfaction scores, not at least for interest rate derivatives, FX and debt capital markets investment-grade issuers, all coming out with very strong results.

Turning to Page 5, we have the development of the credit portfolio and the loan growth. Here, we can see that lending actually grew quite strongly in the second quarter, both Q-on-Q and year-on-year. This is really breaking the most recent 3 or 4 quarters of a trend where we've seen a very stable sideline movement. A bit of caution is that we had a very strong catch-up effect after a very slow April, which meant that there was a lot of events and event-related financings that actually helped this number to increase. Those are short term in nature and not a guarantee for the future. In the other areas of the loan portfolio also grew, albeit at a more modest pace.

With that, I'll hand over to Christoffer for AirPlus update.

Thank you, Johan. So turning to the next slide and a brief update on AirPlus, as Johan just mentioned. There are 3 important drivers of the turnaround project within AirPlus, all of which are progressing according to plan. Starting with the rightsizing of the organization, we have now agreed with all FTEs expected to leave during the course of this year, impacting some 350 or so staff. And secondly, we have discontinued operations in all markets that we were planning to exit, which includes 28 noncore markets. And finally, AirPlus has successfully during the quarter, migrated away from its old technology platform onto the new cloud-based tech stack, which will also form now the foundation for SEB Kort corporate business going forward.

So with these 3 achievements, we're confident that we will meet the target of breakeven before restructuring charges in 2025, and we can enter into 2026 with a positive business momentum based on a strong product offering of the 2 combined entities, a market-leading technology platform and a period of internal restructuring now largely behind us. Our target for 2026 is to be profitable, including implementation charges.

Turning to the next slide and the financials. The total operating income for the second quarter of SEK 19.6 billion is down marginally from the previous quarter. Net interest income is down sequentially by a moderate 1%, reflecting the continuous downward development of interest rates. which was partly offset by a broad-based increase in both loan and deposit volumes that Johan was referring to. Fees and commission income is flat compared to Q1. So following the soft start to the quarter during the month of April, May and June did develop favorably, resulting in a robust performance for the period as a whole. As Johan mentioned also, it's particularly pleasing to see that within Corporate Investment Banking, we're able to capture a lot of the business opportunities that did materialize in the period.

Net financial income declined by 10% from the previous quarter despite, I would say, considerably more challenging market backdrop, and that's particularly, of course, in the beginning of the second quarter. Operating expenses declined by 3%, resulting in a profit before expected credit losses and imposed levies of SEK 11.6 billion. That's effectively in line with the previous quarter. Taking into account the exchange rate movements year-to-date, we are, as usual, providing an FX adjusted cost target and the FX adjusted cost target for 2025 is SEK 32.7 billion. That's a reduction from the SEK 33 billion, which is now reflecting the stronger krona. We also maintain the range of plus/minus SEK 300 million, and we feel comfortable with that cost target for the full year '25.

As we have mentioned in recent quarters, following a period of investments, we are now entering into a phase of cost consolidation, and we have stated that we expect underlying cost growth this year to decline from previous years, and that is also reflected in the target for the full year. We also see the opportunity to leverage new technology, not least AI as a driver of productivity, which we did explore in some more detail in the previous quarter. So as part of this consolidation and to ensure that we do fully leverage the investments that we've undertaken thus far, we have introduced a pause on external hiring, of course, with the exception of critical positions. So this is a pause. So by definition, it is temporary, and we will evaluate the impact as we proceed.

Net ECL, expected credit losses amounted to just under SEK 300 million for the quarter. This is a decline from the previous quarter and corresponds to a 4 basis point ECL level. Within that net ECL figure, we have increased our portfolio overlays by around SEK 400 million, and that is primarily to reflect the uncertainties related to the impact of the trade tariffs and what Johan mentioned in his introduction. That said, our overall asset quality remained stable in the quarter. As we mentioned in previous quarters, imposed levies are expected to decline during the course of this year, starting now in the second quarter, and this is primarily related to the solidarity contribution in Lithuania.

For the full year, we estimated imposed levies of around SEK 3.5 billion. That's a small upward adjustment from the SEK 3.4 billion we stated in Q1, and we should expect a total levy for next year of a similar magnitude as this year. A tax rate of 20.6%, very much in line with our expected 21% tax rate, a net profit of SEK 8.2 billion, up 5% from the previous quarter and return on equity of 15% with a common equity Tier 1 ratio of 17.7%.

So flipping to the next slide, we look at the development of the net interest income. And we can see that the negative impact from FX, which is around SEK 100 million was largely offset by the positive day effect, which is the same order of magnitude. Market rates during the quarter have tracked largely in line with policy rates. So there's been no sort of meaningful repricing effects that we saw previous quarters when market rates are tracking ahead of policy rates. Looking at the development across the divisions. Corporate Investment Banking had a positive impact in the quarter from higher lending volumes, as we mentioned, but also an elevated NII from our Investor Services business. This is linked to the dividend season. This positive effect from volumes and Investor Services was largely offset by a lower NII contribution from the markets activity. So markets NII is now back to a more normalized level.

So the sequential decline of about SEK 200 million compared to the previous quarter for the division is effectively the result of an internal funds transfer pricing, the IFTP effect that we mentioned previously and is fully balanced out by a positive effect in the treasury NII. Within Business and Retail Banking, the decline in the quarter is the -- reflecting the impact from lower rates on deposit margins with here also an offsetting effect of better volumes, primarily on deposits where inflows have been higher than is normal for the second quarter season. We've also continued to experience pressure on mortgage margins in the quarter, although there were some stability and signs of improvement towards the end of the quarter.

The Baltic NII reflects the lower ECB rates in the quarter, partly also here, offset by higher volumes, both loans and deposits, not least in retail mortgages, where we have in the quarter originated a record volume of mortgages. So broadly, loan growth remains healthy and competition remains stiff. Finally, in treasury, we see the positive effect of the IFTP that I mentioned within CIB and also some benefits from lower funding costs. Looking forward, we continue to expect our NII to bottom out some 3 to 6 months after the latest rate cut, as we've previously mentioned. And based on current market rates, this is a little bit further out than what we said at the end of the previous quarter. This is, of course, always a function of where market rates stand, but also bearing in mind that the offsetting effects of volume growth, both loans and deposits that we saw in this quarter should help mitigate the negative impact of future rate cuts.

Moving to the next slide and the development of the net fee and commission income. As Johan also mentioned, Corporate Investment Banking performed very well in the quarter, supporting fee income, both related to advisory and lending fees. And the latter primarily driven by structured finance and a lot of event-driven corporate loans. Investor Services benefited from the higher activity, as I mentioned, in the dividend season, also reflected in fees and commissions. And overall, it is just pleasing to see that we have maintained or even expanded our market shares across the CIB franchise.

So now we're heading into Q3 with all the summer months that typically means somewhat lower activity across capital markets, although we do feel that we are very well placed to capture opportunities when they arise. Fee income from asset management and custody was actually negatively affected by the asset levels in the quarter. So even if equity markets started and ended the quarter pretty much in the same place, our asset-related fees are calculated on a daily basis, so therefore, the headwind in the quarter. Net new assets, as Johan also mentioned, amounted to SEK 30 billion in the quarter, which is pleasing to see, of course, in a volatile quarter that we continue to see solid inflows. We are continuously bringing new products to the market, and we've also continued to show good performance across our investment management products.

Turning to payments. The increase in payments and card fees is, of course, impacted still by the consolidation of AirPlus. So the underlying growth rate there is closer to 4%. And the decline sequentially from Q1 is broadly reflecting the weaker start to the quarter and the impact more broadly on spending and travel from the macroeconomic situation.

If we turn to the next slide and net financial income for the quarter, the NFI declined from the previous quarter, and this is reflecting a lower contribution at least from fixed income following a very strong Q1. We should also recall, of course, that the start of the quarter, as we mentioned, was characterized by this wait-and-see mode among a lot of our customers and then activities picked up gradually throughout the quarter. So overall, a commendable performance against a challenging backdrop. We should also mention the NFI supported by some valuation gains of our strategic holdings, and that's primarily our holding in Euroclear, where we also received a dividend this quarter. The XVA on the other hand, went the other way. And we can just note that the 16-quarter average has now nudged up marginally to around SEK 2.5 billion per quarter.

Turning to the next slide, we would like to provide you with a bit of an update of our expectations for future regulatory effects on our capital buffer. And I would like to start with the IRB repair program. So as disclosed in our communication from this morning, we have received feedback in relation to the IRB repair program in our Baltic banks. Based on this feedback, we estimate that we will have a transitory increase in REA of about SEK 50 billion, translating into a capital impact of some 80 to 90 basis points of CET1 buffer on group level. This transitory increase will remain in place until our models in the Baltics are approved. And it is difficult to estimate when this will happen, but it is likely to be a number of years. The dialogue with ECB is ongoing, and we expect to recognize this effect gradually in our capital calculations starting somewhere towards the end of this year or beginning of 2026. And we see this effect being absorbed by the management buffer.

As you know, we already hold a Pillar 2 add-on of around 100 basis points related to ongoing IRB work since 2023. We expect this add-on to stay in place and to be removed once all our models have been approved. And as stated in the communication, the outcome of the updated IRB models in terms of impact on REA will be subject to regulatory approval.

Turning to Basel IV, an update there. The day 1 effect, of course, has come and gone, as you know, with an impact broadly as expected. We can also note that the EU implementation of FRTB, the fundamental review of the trading book has been postponed once again now until 2027. So the remaining impact of Basel IV is related to the phasing in of the new standardized method and the output floors. This is sequenced into 2 steps. So first, we have the impact of the output floors being phased in by 2030. And then secondly, we'll have the expiry of the transitional agreements and arrangements in 2033. So for us, with a high proportion of large corporate clients with investment-grade characteristics, it is really the expiry of the transitional arrangements and more specifically within that, the treatment of unrated corporates, that is the most relevant development.

We are nonetheless confident that we will be able to largely mitigate this impact by extending the rating universe of our corporate portfolio. And we believe that we can do this at a very manageable cost to the group. Now bear in mind, this is 8 years out. There can, of course, be changes along the way, but we are prepared and we plan for what is currently on the table.

If we turn to the next slide, we look at the development of our CET1 buffer during the quarter. We started the quarter at 280 basis points and closed at 290. Retained earnings contributed just over 40 basis points. And here, you can see the impact on REA from the pickup in loan demand that we referred to a couple of times throughout the presentation. And you see the increase of our balance sheet consuming about 27 basis points of CET1. Asset quality and FX effects in the quarter were only modest.

Turning to the next slide, and we'll have a look at our asset quality and balance sheet metrics, a familiar slide. We've remained active in funding markets throughout the quarter, and we ended with a robust funding and liquidity position. A LCR liquidity ratio at 130% and the net stable funding ratio at 112%. CET1 buffer, as mentioned, ending the quarter at 290 basis points.

And a final slide before I hand the word back to you, Johan, just going through a brief reiteration of our financial targets. We continue to target a dividend payout ratio of 50%, a CET1 buffer range of 100 to 300 basis points above the regulatory minimum and a return on equity competitive with peers and an aspiration of 15% over the cycle.

With that, Johan, back to you.

Thank you. Then I'll round up, and it was pointed out to us last quarter that we were missing one slide, and that was the operating leverage slide that we've been using since 2011 and of course, the development of jaws. Here, we brought it back, and it is quite interesting, I think, to reflect a bit. Between 2016 and 2021, where you had no real headwind or tailwind coming from a change of interest rates, we generated a very healthy compounded average growth rate. Then 2, 3 years ago, we got that enormous tailwind coming from the increase in interest rates where, of course, the jaws worked extremely well. And now we are closing in on the end of this normalization where income is dropping down as rates are coming down and whilst we decide ourselves on the cost of the group.

And I'll just reassure you that we continue to use this as a filter on anything that we do. The very simple idea is, of course, to always allow for a medium- to long-term strategy of the things that you can control, aiming at generating income that increases more than cost, hence, creating positive jaws. As we have increased cost, you can also see in the slide that the increase is tailing off. We do have a few levers at our disposal, and I'll just point 3 of them out now. We are thinking about proactively reducing the cost growth, as Christoffer mentioned earlier. We will also try to outright get down in order to reinvest some of this in the group. And also, of course, there is a new brave world out there in how you deploy and engage with new technical capabilities such as AI. And this is very much intact, and it is interesting to see that the first half of 2025 kind of hits on the underlying growth rate between 2016 and '21, just disregarding a few years there where you get a lot of things for free on the financial result as interest rate went up so fast.

With that, I will thank you all for your attention and hand over to the operator to open the floor for Q&A.

[Operator Instructions]

We will now take the first question from the line of Martin Ekstedt from Handelsbanken.

First one, you have in the past stated that buybacks will continue as long as the management buffer stays above 2%, I believe. So in light of this new 5% RWA add-on that you announced today, do you see that there will be a risk that there will be a temporary break between buyback programs at some point after the fourth and final program based on the SEK 10 billion that you currently have approval for? That's my first question.

Thank you. This is, of course, something that was vetted and discussed at the Board meeting we had yesterday. And the conclusion was not to change anything. So even though this is, of course, a future negative impact from the increased RWAs for REA, it doesn't change. So we also announced this morning that we continue with the SEK 2.5 billion for this quarter and the SEK 10 billion for the year is unchanged. And then there will be technically a new decision for the Board, which I cannot speculate what it will be in 1 quarter. But no change despite that fact that you pointed out that we are coming into the buffer will continue.

Okay. Great. And then if I could stay with this 5% RWA add-on, please. So how does this differ in purpose from the earlier 100 bps add-on that you have the capital requirements, i.e., what is the purpose of each of these? And then just to confirm, both of these are temporary. And you mentioned the new one would likely be in place for years, you said. So what is the reason for this? Is this a process pertaining to the Baltic region in particular, which is expected to take a long time? Why is that? Are you working with local regulators, which have a longer time period basically?

Yes. I try not to be too long-winded here. First, the noncompliance for the next-generation credit models has already been handled by the Swedish FSA in its first instance, and it resulted in a 100 basis point, call it, add-on for the group. They are, of course, our home regulator, and they just do that for the whole of SEB. Now this one that comes today is ECB for the 3 Baltic states. And there's a slight difference in supervisory methodology. So this is something where the credit models needs to be updated to the new and ever-changing high group standards. And we have, of course, today flagged that we don't think these will be approved with the last feedback we got in the near term. These credit models do take years to redevelop and change, and that's why we want to be very clear that this is not something you fix in a month or 2. And this is the third version of model updates I've done in my career, and they do can take a very long time.

The explanation of the 5%, I would also say that in the ECB type of supervision, you are either a bank that has IRB or you're not. If you are not, you are around the standardized capital risk weights, and you cannot be somewhere in between. Therefore, we have been very prudent today, just acknowledging that we are not today approved on our credit models. And therefore, this amount of SEK 50 billion or 5% of RWA is very much in line with what would be the case in a transition to become an IRB bank again. And why it's so significant is obvious, it is because SEB run one of the lowest risk portfolios of all banks. And therefore, the distance between getting the credit we think we deserve for that low-risk exposure compared to standardized, it's a very large distance. So there's a handful of banks I can think of in Europe that has a similar position, but most do not.

And yes, to your last question, these are temporary or transitory is the word we use today as they are there not because of any risks have been identified or any capital needs to be added, but really as an add-on as you have not the process concluded on how to get IRB models approved.

We will now take the next question from the line of Markus Sandgren from Kepler Cheuvreux.

So I was just thinking about the hiring freeze you're doing. Is that if in hindsight, have costs run away a bit too much? Or why are you -- why do you need to implement a hiring freeze?

Yes. It's a methodology which is a method that is very common. And you think about it like this, we've added about 3,000 people to the group over the last 5, 6 years. So we've had a very ample ability to reinvest in SEB. Now it is the pace of increase. We already 1 year ago, flagged that we need now to lower the pace of cost increase and FTE increase. That is, of course, you see today, very much intact. And now we take one further step to reduce the uptick that we've seen in the last few years in order to come to a more, let's say, consolidate the resources a bit. The easiest and friendliest way to do it is stop adding external people to the firm. And then you do that for a temporary -- a period of time until you don't need it. So that's the only reason in order to change the trajectory of the cost development.

We will now take the next question from the line of Patrik Nilsson from Goldman Sachs.

I just had a question on net fee and commission income. It seems to be -- have been a very strong quarter despite a lot of macro volatility that we've seen. And meanwhile, you discussed this as well, the average AUMs were down Q-on-Q, but have probably recovered as we've gone through the third quarter. So I'm just wondering how we can think about the trajectory for the remainder of 2025 because it looks to me like you've had this challenging quarter and you still did better than expectations, and now you have a lot of tailwinds going into the remainder of the year. So it would be very helpful to hear your thoughts there.

Yes. If I start with fee and commission, the quarter was very, very a tale of 2 stories. It was really dampened activity after the 2nd of April. As you know, in March, we had a pretty constructive view of the world when rates are coming down, and we thought that activity-based banking where we charge fees and commission would increase. Then we had a very strong recovery in May and June. So we actually had one of the most active 2 months on in history with DCM, debt capital markets just exploding, particularly in May and then a lot of ECM, equity capital markets, capital raisings, IPOs, et cetera. It is very hard for me to share outlook because of this fact because I'm always worried that there's a catch-up effect after a very weak April.

You see the quarter as a whole ended up very, very strong, still from a low base, but there's definitely something that has happened. If you look at all the different volume metrics we have, which are the leading indicators for the P&L, they are looking better. So both were -- lending growth was 7% year-on-year. We haven't seen that for 4, 5, 6 quarters. Corporate Investment Banking doing very well. Deposit growth was noted and AUM net sales, which is the future AUM was also very constructive. It was really payments, which is related to consumption, which was the weak point, whilst all more or less fee and commission lines were good.

So that started bad, ended up on a high note. AUM was the kind of something different. AUM was lower because there was a dip during, but we ended the quarter or where we stand today is close to an all-time high. So of course, that works a little bit with a lag, but we also were very happy to see that for a few quarters now, maybe even a year or so, we've seen some more positive net flows this quarter, I think it was SEK 30 billion in -- for net sales for assets under management.

And then maybe just to add, as I flagged as well in the remarks, of course, we're heading into Q3, which is a couple of summer months, but we're going in with a good pipeline and a good outlook. So of course, will be subject to market activity, but we feel confident with the position and our ability to capture whatever business comes around.

We will now take the next question from the line of Nicolas McBeath from DNB Carnegie.

I was wondering about the comments you made on the NII because if I understand it correctly, you said that the market NII, which was elevated in the previous quarter, that's normalized in the quarter, but then there were some other positive impacts from Investor Services and treasury that benefited NII in this quarter. So could you explain -- do you expect those normalize with a negative impact going into Q3? And if you could say anything more kind of similar to what you did last quarter when you expect NII to trough given the current interest rate outlook?

Yes. Thank you. I think you're summarizing it well with the effects that we highlighted with the market's NII normalizing and the positive effect from investor services and the lower funding cost, and they largely offset each other. And then, of course, you have the positive impact from volumes both on loans and deposits in the quarter. When it comes to the outlook, as we mentioned, the 3 to 6 months lag from the latest rate cut to see the trough phase our best estimate as the rate cuts work their way through the balance sheet. Having said that, though, of course, when we start to see volume growth, that will have a mitigating impact on that development.

Right. But is there anything in terms of this investor services benefit that we should kind of assume will be a negative delta going into Q3? Or is that at a normalized level?

What we did mention is that there is an investor's positive effect, which is seasonal, attributable to the dividend season. So there are higher flows that drive balances in certain types of investor services accounts, which are contributing positively seasonally in the second quarter. So yes, there is a seasonal effect in the Investor Services contribution.

Right. And then shifting topics a bit. I was wondering whether you have an updated time line for the ongoing German tax reclaims as it's now been 5 years since you announced. The German Tax Authority made its first request. So do you have anything new to share there?

No, there is no news to share on that topic at this point.

All right. Can you say anything, what's the current like expectation in terms of time line when you think those could be resolved?

No, I would just reiterate the processes I've always understood it. It's a 5-year process. We will, of course, take it all the way to iron out what is what if it ever comes up. And there are -- of course, there's a tax authority that first needs to say something to us on what we actually are deemed to have made incorrectly, and then that will then be processed. We have said that from the commencement of that, which has not yet happened, it's a 5-year process.

But is it a fair kind of conclusion that it's -- given that it's been 5 years now that you anticipate those processes to kind of approach some kind of conclusion now?

No. I don't dare to assume that. I think these things are very political, very difficult to predict. But there's no indications that they would shut it down either. So I think it's just a wait and see mode and the process should start at some point, but it's actually closer to 11 years. This started in 2014, but still no conclusion in how this should pan out.

We will now take the next question from the line of Magnus Andersson from ABG SC.

My first question is on the corporate growth quarter on quarter and the overall activity, can you tell us whether that is from any particular regions or areas? And also if there are any high margin lending in there, which is linked to strong [Technical Difficulty] position across the business [Technical Difficulty] in the quarter, which might take off...

Can I interrupt you, please? Sorry. Your line is so bad that we cannot hear. Would I -- can I suggest that you dial in back again, and we'll take this question and see if you get a better connection?

Yes.

Thank you.

No problem. We will go with the next question while Magnus rejoins. The next question is from the line of Tarik El Mejjad from Bank of America.

Just one question from my side, please, on volume growth, both on loans and deposits. You've clearly reported an uptick in lending 1% year-on-year, quarter-on-quarter. But Johan, I think in your introductory remarks, you sounded a bit at least cautious about this trend given that it's maybe just a catch-up on a very weak April. Could you maybe a bit go more in detail on that point and give us a bit of an overview on the dynamics for your mortgages in Sweden and on the corporate side as well on the activity?

Sure Tarik, thank you. First, just so we talk about the same thing. The corporate lending was up 4% Q-on-Q and 7% year-on-year in constant FX, so take away the FX effect. And here, you're correct. I had -- that's a very high shift, a very strong shift -- positive shift in growth than we've seen for 5 quarters or so, particularly the 4% Q-on-Q, which is, of course, a very high number. So 3 things that I just caution to just put that into the future. Number one, it was of short-term nature.

So as we had a very active event-driven success generating the fees and commission this quarter, it also came with significant balance sheet commitments in conjunction with those events. These are pre-IPO bridges. It is bridges for M&A, it is bridges for capital takeouts, et cetera. Those are short term in nature. In a good market, they always come. So they can be constant, but I don't dare to assume it yet. Then the catch-up effect, you never know if you kind of get a little bit extra because everyone paused for a month and people still need to do refinancings. They still need to pay their bills. And if you don't finance yourself or lend or borrow, you can get that little effect.

And the third one is it is less evident that the general economy, the broad-based economy is ready to start growing, investing and consuming. And that's also -- that's what we really want to see, and it will come, but I don't know when. And the disappointment here is really that the mother of all drivers is really consumption and investments and consumption is the weak point right now. So even though rates have come down significantly, everything else -- and you can see that in our payments number. So that's where you see that it is not happening. And I would also point to unemployment. So unemployment coming down, employment coming up, then that is when you will see that the monetary policy works, and that's when you could see the more broad-based. But regardless, it was a very strong quarter.

I just follow up very quickly. I mean, we discuss this every quarter, and I think everyone is just surprised on why in this cycle, the rate cuts did not have this quick positive impact on volume growth. Do you still see it as more cautiousness from consumer and maybe the depth of that down previous cycle? Or do you have any more evidence or element to explain that delay?

I just have my own thoughts and speculations, and that is the mother of driver in any economy is consumption. You can't invest and force people to consume your goods or services. You need the demand side of the economy to increase. I don't know, but we are, of course, discussing my initial remarks here today about uncertainty and risk. Uncertainty is exceptionally high. Unemployment in Sweden is high, if you think about retail in Sweden. There is a very high propensity to save. I am very surprised that we took down the savings ratio very significantly from an elevated level when rates went up and inflation went up. Now inflation has come down. And what happens is not consumption. It's actually more evident that savings is going up again.

So the savings ratio of double-digit number of your disposable income is very high. I can only contribute that to uncertainty. You'd like to be careful. You don't over consume, you don't overinvest. You still don't see enough 2-way traffic in the property market, the real estate market, the housing market. And therefore, I think there is very little problems for any company to satisfy the muted demand out there with cost. And that's why we would like to go up in order for them to then invest in better capacity to service a higher demand. So I think the uncertainty and geopolitical uncertainty, but not -- we are exposed here in the northern parts of Europe with the bank in Ukraine, and we have this debate that probably consumer confidence is a little bit somewhat hampered by having a war here around us. And you do feel it from time to time, not at least in the Baltic state in Poland.

We will now take the next question from the line of Magnus Andersson from ABG SC.

Do you hear me better now?

Very good.

Okay, good. It sounds like you answered pretty much my first question, although I only heard half the answer. But if I just follow up 2 things I didn't hear in there is if there were any particular regions or markets standing out in that corporate lending uptick quarter-on-quarter? And also if you, in any way, I guess, that's pretty high-margin lending that comes in, which is transaction-based, whether you could quantify any NII impact from that in particular? And secondly, just on cost there, following up on Markus' question. In what areas or what regions will you address with this cost reduction to free up resources for further investments?

Yes. On the activity uptick there -- it's broad-based geographically. Actually, we have -- it's all over in most countries. So there's no particular geography or customer segment. We were just doing -- we went through the whole list what we did in Q2, and it's very widespread. It's pharma, it's pharmacies. It is corporate services, it's financial institutions. It's pretty much across -- it's private equity, it's private, it's public. So very, very broad-based. I would -- we have, of course, a little bit more coming -- positive coming from Sweden because this is where we did some of the very large transactions, but it was pretty constructive across the board. And looking at more retail business banking, I think Baltic actually outgrew the business corporate banking in Sweden. So also there on the lower than CIB, it looks to be fairly broad-based.

On costs, I'll hand over to Christoffer.

Yes. So on the cost initiative, it's a firm-wide initiative. So it's a question of to Johan's previous remarks, stabilizing the cost base after a period of expansion and introducing this pause on external hiring with the exception of critical positions, and that applies across the board to exactly your point, continuously make room for the investments that we want to do.

We will now take the next question from the line of Johan Ekblom from UBS.

Can we just come back to the capital for a second? And I just want to make sure I understood that. First of all, you're saying that the RWA increase in the Baltics basically puts you on standardized risk weights. So the SEK 50 billion is not a reflection of kind of the shortcomings of the model. It's rather a reflection of what they would have been under standardized. So that's the first question. And then the second related to that is, you make the point that, one, there is mitigating actions. Two, there is the Pillar 2 add-on that should go away over time. But ultimately, I mean, capital generation of SEB relative to the peer group is hampered by this, right, in the sense that you've had this 50% increase in risk weights in the Baltics.

We haven't seen that magnitude in other places. We've seen the output floor impact where you are an outlier. And whether it can be mitigated or not, I guess, it's a headwind that you have that some of your peers don't. So how do you think about your competitive positioning from that perspective? And then lastly, if there is that much mitigation to be done, can you help us understand timing and cost of that mitigation? Because I guess it's not free either financially or in terms of management resources.

So I think on your first question, you're right to describe the capital add-on as a reflection of the equivalent of standardized rather than a reflection of the model accuracy. I think that's a correct way to read it. On the second question around the mitigation, just to clarify, the mitigation that we're mentioning and that we're referring to in the presentation is related to the discontinuation of the transition arrangements related to the phase-in of Basel IV and the primarily related to the unrated corporates. And our mitigating actions that we're talking about there is effectively to increase our rating universe. So more and more of our corporates become rated. There's a number of ways for us to do that. One is to get external ratings.

We also have a number of examples where we have subsidiaries of companies that are unrated, and they could become rated by getting the same rating as their mother company, and that's something that we can -- we have ample of time to put in place until this comes into force. So those are the type of mitigating actions that we're looking at. And our early estimates of the cost primarily then related to external ratings is what we refer to as very manageable in the context of the group. So we see that as a small investment to put those mitigating actions in place.

We will now take the next question from the line of Namita Samtani from Barclays.

Sorry, just related to the IRB models, how deep into the management buffer can you go? Like could you operate at a 1% management buffer, for example? And my second question, are you excited by the German stimulus program? And are you happy with the size of your German business? Like would you consider some M&A there to capture some of the potential positive impact?

Thank you, Namita. As to the how far into the buffer one can go, the question is, well, as long as we are within the boundaries of the buffer, there are -- there shouldn't be any problems. So technically, that would be in the range between SEK 100 million and SEK 300 million. Obviously, when you start going down closer to the lower end of your buffer, there is always a prudent discussion that one need to have that you prepare for mitigating actions, and that is very normal for any banks that when capital is consumed for whatever reason, that you have all plans and you also need to disclose these plans should something happen. But there are no kind of limitations as such, then there can be preferences. But I'd just like to remind everyone about why one have buffers. This is exactly one reason why you have them and you're supposed to use them. It is unforeseen events of which one can be supervision and the outcomes of supervisory actions.

Germany, are we happy? I'm pretty happy. This is a very good part of SEB and our exposure in Germany feels better than ever because of the stimulus packages and not at least because of resilience, security, infrastructure and defense. We do have hundreds of customer -- large corporate customers in Germany that are all, of course, turning to a much more positive stance for the future as you can quite easily identify that the tone has changed dramatically since January and February, where we pointed to Germany as the weakest part of our business. We are not considering anything which is not organic. So when it comes to acquisition, et cetera, that's something that we do not have in the plans that we -- in the current business plan.

And also, as you know, acquiring businesses in banking is a very tall feat. So it's all organic. We're also very happy with the credit exposure. So the risk side of our German business is very well maintained. But it's very different to be optimistic, relatively speaking, on Germany of all countries. And we have been very committed to Germany for a long time and happy to be there.

We will now take the next question from the line of Riccardo Rovere from Mediobanca.

Thank you very much for taking my 2, 3 questions, if I may. The first one is on NII. I just want to be sure I understand your thinking. Basically, my understanding is if the balance sheet remains as it is today, the trailing effect of the rate cuts that we have seen over the past quarters would bring NII down, and this should bottom in 3 or 6 months, depending -- but then I understand that part or completely or you just don't know, maybe part of this decline should be offset by volumes growth, lending deposits and so on. Is that the right way of understanding your comment on possible NII trajectory? So bottom now mostly related to the margin side.

You're absolutely right.

Yes.

Perfect. Great. The second question I have is on IRB and capital requirement. I just want to be sure I understand. Today, you have SEK 990 billion RWA and you have a capital requirement of 14.7%. If I understand correctly, and maybe I'm not, the SEK 990 billion will go to SEK 990 billion plus SEK 50 billion, the day this is in place, everything else being equal. Would the 14.7% capital requirement become 13.7% or not?

Yes. So you're correct. The SEK 990 billion will then add the SEK 50 billion, and we expect this to be a gradual phase-in starting towards the end of this year, early next year over a couple of quarters still to be discussed with the ECB. And the minimum capital requirement of 14.7% will remain unchanged.

That will stay unchanged. The 14.7% will stay unchanged?

14.7% is fixed but bearing in mind that the SEK 50 billion we're all mentioning is transitory until the models are approved.

All right. Okay. And then on this SEK 50 billion, let's assume second that this exposure is made by only one company, only one, and this is unrated. The day that you get an external rating on the SEK 50 billion, would the SEK 50 billion remain SEK 50 billion? Or would it become SEK 45 billion, the day you get the rating, the external rating?

No, Riccardo, it will still be SEK 50 billion because the rating is relating to Basel. This is completely different. So this is only related to when you do not have your IRB models approved, they will just say that as you don't -- as we haven't -- we don't have an agreement on what capital and what risk that capital should equate to, you have to then assume at some point in time to just bluntly add regardless of your risk profile, if it is rated or not, if it's BBB, AAA or single B, you have to just add it in order to follow the standardized model-ish. And then there are different methods to do it. So that one is very, very strongly correlated to -- do you have models approved or not. All the other things are still true what you said. So if you did have one, you had it unrated, you would have a significant lower capital requirement towards that credit in Basel framework in the future if it got rated. But it's not relating to the SEK 50 billion.

On your first question there, you're asking about the 14.7%. There is also in there the 100 basis points of Pillar 2 add-on. And once all the models are approved, that will be removed and then it will be 13.7%.

The Swedish...

Yes, exactly, the Swedish one. So basically, now you have -- not a double counting. You have a double burden. You have a burden on by ECB and a burden in Sweden.

Yes. And actually [indiscernible] Baltic one. So that is something that we, of course, will be talking about as well. So it's 1% of the group, the Swedish one.

Okay. So there is -- well, a partial -- let's call it this way, a partial double counting on the burden, if we may say so on the Baltic operations. So we have the RWA on one side and the Swedish FSA on the other side at least partially. Okay. I understand.

We will now take the next question from the line of Jacob Kruse from Bernstein Autonomous LLP.

So I guess 2 questions. Firstly, just on the German tax case. Could you just talk a little bit about what developments have happened since you last communicated, which I think was in '21? And if the scope of that investigation remains unchanged compared to the previous communication? And then secondly, just on the strategic plan, I think you...

Wait -- in '21. Is that what you said?

'23, sorry, yes.

No, that's okay. Yes. Sorry, go ahead.

And then secondly, just I think when you set out your strategy a couple of years ago, you talked about becoming a Northern European bank as well as SME and mid-corp investment banking in the, I guess, Nordic market. Could you again just talk a little bit about what you have done there and if those ambitions remain the same? Yes. And yes, I guess that's my question.

So I can't remember exactly it was '21 or '23, but the kind of movements over the last couple of years started with a very negative for the case. This is the developments in the German, call it, the larger case for the whole country when it comes to the treatment of withholding tax. A parallel to this has been the criminal transactions where you actually reclaim tax you never paid. So there are 2 things that are gone. So during '23 and I would say, yes, '23, this was a negative where there was a tendency from the prosecutor in Cologne and in media to marry the 2 together. They are very, very different. SEB has as far as we know, never ever been involved in the reclaim on tax that never was paid, but we have done the withholding tax optimizations for institutional clients, which is the debate was that accurate or not in order to whom should pay that withholding tax. That's the case.

Now that regime has lately completely left the establishment of Germany, and there is a new one. And that has -- if I say like this, it's not continued. So there's, let's say, a very, very tough stance. It's a little bit less today, but these are all kind of reading media and around. And therefore, it's been very, very quiet over the last, I would say, year. Nothing really of substance have come. The process is also very unclear. And yes, nothing more to report. On the Northern European bank rather than the Nordic, well, first, it's a little bit of a technicality in the sense that when we establish ourselves not only in -- before we call it a Nordic German, and then we opened up in U.K. 10 years ago. And then, of course, now we have a home market philosophy around Switzerland, Austria and the Netherlands that you can no longer call a Swedish bank or a Nordic bank. It's actually just on paper, a bank that operates and have a desire to service clients in Northern Europe, pretty much everything about France. And we do have an office in Poland. And of course, we are a large bank in the Baltic states.

State of affairs, we went through a little bit in the financial disclosure. It's still too small to kind of make a huge difference in Austria, Switzerland and the Netherlands, but it's definitely large enough to be interesting and exciting for the long term. I think we would classify it like this. We have established ourselves very well in Austria and Switzerland. The German-speaking part has been. It's been a little bit trickier in the Netherlands, but it seems to be going well now. And please be reminded, this is very small. It's very modest. We talk about a few client executives who cover 10 to 20 clients each.

So we are talking about 50, 60, 70, that type of range of large corporates in those 3 countries that for the long run, can add 1% or so of income growth in a very stable manner. And this is very much our philosophy to year in and year out with a long-term perspective, outgrow on the income side. This is a small contribution to continue to do that in 5 years for the coming 10 thereafter. And we've done that very successfully with Germany and the U.K. and actually also in Norway, Denmark, Finland, which we started in 2009, where before that, we were predominantly a Swedish bank.

So yes. Was that okay? Clear?

Yes.

We will now take the next question from the line of Shrey Srivastava from Citi.

My first one is going back to this capital point. I understand the point on unrated corporates, but that's more of a 2033 point, if I'm not mistaken. If you look on a transitional basis, i.e., in 2030, you still set to face about a 7% RWA uplift. Is there anything you can do on this? Any mitigating actions you're considering or any commentary that you'd like to further give on this? That's my first one.

No. I think at this point, those are the 2 effects. We can just note that, that effect is the smaller one of the 2 when it comes to our impact from phasing in. But that phasing in of the output floors will come gradually over that period and will come through in the risk-weighted assets.

Okay. Cool. And the second question, again, on the Swedish mortgage margins, I think you ticked up a little bit towards the end of the quarter. We've seen a little bit of a recovery in Swedish mortgage volumes. Have you seen a marked sort of increase in activity post the most recent rate cut? Are there any catalysts you think would encourage further growth? And how soon after the sort of volume trend picks up, would you expect the margin trend to follow?

Yes. I think the broader credit demand from the household side, I think, comes back a little bit to the comments that Johan made on sort of the standoff-ish approach that we've noticed among the households. There is, as we saw in this quarter, a little bit of a tick up in credit demand from households related to mortgages. We see a small increase in house prices compared to last year. But -- and we also take a little bit more market share this quarter. As far as the margin development is concerned, what I mentioned is that there is continuously pressure on mortgage margins, but we did see a stabilization throughout the quarter and a marginal tick up towards the end of the quarter. But I continue to believe that there is a link between a broader pickup in activity levels and growth in the mortgage market and a development of the margins. So we'll continue to monitor this closely.

We will now take the next question from the line of Markus Sandgren from Kepler Cheuvreux.

Just 2 follow-ups. Speaking of the processes, how is it going with the U.S. authorities regarding AML? Is that -- is there no activity? Or is anything happening? And then secondly, about this capital issue, how is the discussion with the FSA going? Will they -- I mean, now you get more in the Baltics, will they do anything on the group-wide add-on?

Okay. I'll start with the -- nothing to update on the U.S. It's very, very slow and quiet. There is, of course, a regular contact as we are a -- we operate in the U.S. So nothing really to report. We have a little bit of wait and see. Then on the capital add-ons for noncompliance, not approved credit models, we have had the discussion with the Swedish FSA previously some time ago, ended up being the 100 basis points for the group of increased minimum requirement. And that's all we have for now. And now, of course, on top of that, we've got the Baltics as we have discussed at length on this call. And that's all we know. That doesn't mean that things can't change in the future, but we have no indications of what that would be.

We will now take the next question from the line of Riccardo Rovere from Mediobanca.

Just a very, very quick follow-up again on RWA. One day, if I understand it correctly, the 100 basis point capital requirement imposed by the Swedish FSA will go away, but the risk-weighted assets in Sweden should go up by an amount that at the moment, probably we don't know and it is not disclosed, right? I don't know when this is going to happen, but this is an accounting, if I'm not -- if I'm correct, if I understand it correctly.

Yes, that's correct. And the time line of that is still unclear.

Still unclear. And the magnitude of that, I don't remember if you have ever disclosed any kind of indication on that, Christoffer. I just don't remember, honestly.

No, I just refer to what Johan just mentioned of the 100 basis points add-on to reflect the noncompliance of the IRB models at group level.

Okay. And maybe a quick follow-up. Can you explain why ECB thinks that your internal models in the Baltics is not compliant? What does it mean?

Yes. I mean it's -- let's say it like this. There is a -- when you do the model investigations that you regularly do with your -- a little bit of history, everything -- the last ones we did, we started in 2010, and they all got approved between 2015 and '19. That's the models we currently operate under. I would say and then the [ TRIM ] program came and everything changed in the beginning of 2000, and we should have new models in place, I think it was 2022, but there's no hard deadlines. But you need some type of certainty that we can agree before you kind of say that, no, this is not going to be adequate for now. That's where we are. It's very process oriented. This has nothing to do with risks in the bank. It has nothing to do if we are adequately capitalized or not. It is more about formalistically that do you have all the bits and pieces that the EBA's recommendation interpreted by the SSM and then reviewed in these internal model reviews where they have. And you can have differences of opinion.

And these are very, very complex. It's probably one of the most, if not the most complicated thing I know is to have hundreds of quants on both sides of the table trying to agree on how a model should be validated with the right key statistics for statistical certainty. Data is an obvious problem, ironically because we have so little losses. When you do estimates, they tend to be quite poor because we have data issues. You can't really fix that except for buying data from other countries or other regions where you don't operate and trying to find some statistical significance. There are many technical things around model validation, how those things should be done and et cetera.

So I would say that there is also -- we have -- just so it's clear, we have an enormous proud bank for the last decades in terms of risk culture, how we manage risk, and you can all see the outcome since the '90s debacle over the last 30 years or so to prove that we have lower risk. That's what we're talking about. In order to deviate from what is standardized to get credit for what you deem yourself to be a more, call it, less risk prone model, you need to prove it. And these are changing all the time, how you prove it and what certainty you need to do it. And that is -- this is very much also for me, a tendency for supervision in Europe now. It's becoming tougher and tougher all the time to prove your argument, and I would say, in a technical and quantitative measure. So those are the -- I would almost argue that all the points that we are debating here how to fix are of technical nature.

There are no further questions at this time. I would now like to turn the conference back to Johan Torgeby for closing remarks.

Well, then I thank you all for participating and asking good questions. If we don't meet in the next couple of days, I wish you all a good summer. Thank you.

Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.