Morning, welcome to Nordea's second quarter 2026 results. I'm Ilkka Ottoila, Head of Investor Relations.

As usual, we'll start with a presentation by Group CEO Frank Vang-Jensen, followed by a Q&A session with Frank and Group CFO Ian Smith. Please remember to dial into the teleconference to ask questions.

With that, Frank, please go ahead.

Good morning. Today we have published our results for the second quarter of 2026.

This was, again, a strong quarter for Nordea. We drove good momentum across business.

We attracted new customers and deepened existing relationships. We achieved strong growth in savings and investments.

All of this ensure we were firmly back to year-on-year income growth for the quarter. In fact, total income exceeded EUR 3 billion.

We were last there in 2024 at the peak of the higher rate environment. This highlights not only the strength of our diversified business model, but also our focused growth-oriented 2030 strategy.

We generated strong fee income and other ancillary income, and importantly, net interest income has now started to move in the right direction. Moreover, this quarter, we also grew income faster than cost, which is always our aim.

It's good to be back to positive jaws. We're now six months into implementing our 2030 strategy, and our progress is starting to show through in our performance.

I'll touch on some examples during the call. Of course, the world around us remains uncertain.

The conflict in the Middle East continues to raise risks for the global economy. European countries in general, and the Nordics in particular, have so far navigated higher energy costs and other challenges remarkably well.

Perhaps most encouragingly, we are seeing a greater willingness among companies to invest. The structural changes on the way in Europe's economy are creating significant opportunities, and Nordic corporates are well-positioned to capture them.

In technology, energy, defense, and infrastructure, as well as in the industries that have long been a mainstay of the Nordic economies like forestry, mining, and steel. Equally, Nordea is uniquely placed to help our customers address the opportunities using our large balance sheet, Nordic scale, and sector expertise and customer offering.

We did just that in the second quarter, supporting high levels of customer activity and driving strong growth in business volumes. Let's take a look at the highlights.

Beginning with our return on equity, which was very strong at 15.9%. Earnings per share were up 3% year-on-year at EUR 0.36.

Total income was up 4%, supported by an 11% increase in net fee and commission income, and a very strong net fair value result. Strong demand for our savings and investment products, along with excellent performance of our funds, helped us increase assets under management by 16% to a record high EUR 505 billion.

Net interest income development was also positive in the second quarter. We increased corporate lending and deposits both by 9%, building on the strong start to the year.

In households, mortgage volumes increased by 2% year-on-year, and retail deposits were up 4%. While down 1% year-on-year, NII was up 1% quarter-on-quarter, increasing for the first time since policy rates started coming down two years ago.

Net fair value result was up 11%, a very strong result. Costs were flat year-on-year, excluding foreign exchange effects.

Our credit quality remains very strong. Net loan losses and similar net result amounted to EUR 61 million or 6 basis points, well below our long-term expectation of around 10 basis points.

Likewise, our capital position is strong, and we continue to deploy capital to drive profitable growth. Our CET1 ratio was 15.7% at the end of the quarter, which is 1.9 percentage points above the current regulatory requirement.

Our strong performance and position is reflected in the improved full year 2026 guidance we are publishing today. We reaffirm our lower guidance of greater than 15%, but expect an improved cost-to-income ratio of 44%-45%.

Let's look at the results in more detail, starting with the income lines. As mentioned, net interest income development was positive in Q2, supported by the higher business volumes.

The effects of earlier rate cuts now appear to have worked their way through. During Q2, lending and deposit growth was strongest among corporates, both up 9% from a year ago.

We are pleased with the strong first half across our corporate businesses. The higher activity shows confidence among Nordic businesses, but it is also a direct outcome of our strategy.

We have built strong relationships with our customers, which means we are almost always at the table when opportunities arise. At the same time, we continue to invest to ensure we have a strong capacity to support our customers.

Household customers are also increasing their activity. Across the Nordics more broadly, households remained focused on strengthening their savings and investments, and that contributed to higher retail deposits, which were up 4%.

Mortgage volumes in Q2 were up 2% in the market that were still otherwise slow and only gradually picking up. In Sweden, our fastest-growing market, we increased mortgage lending by 5%.

While the mood broadly remains cautious, there are clear signs that consumer confidence is on the rise. Finland in particular showed some encouraging signs this quarter, with confidence reaching the highest level since early 2022.

Our net interest margin for the quarter was 1.54%, compared with 1.57% in Q1. Net fee and commission income was up 11% year-on-year, with growth in all fee categories.

This is encouraging as growing cross-sales, especially in savings, is a key part of our 2030 strategy. Demand for our savings and investment products remains strong, and our expanded advisory coverage is delivering good results.

During Q2, customers continued to invest through our retail funds and pension products, and we welcomed a significant number of new Private Banking customers, which led to solid net flows. Assets under management were up 16%, surpassing EUR 500 billion for the first time.

Our focus is on offering customers products that are relevant to their needs. Nordea's Empower Europe Fund is a good example.

We identified a long-term investment opportunity in Europe's transformation and created a solution that brings together expertise across Nordea. A year on from its launch, the fund has now reached over EUR 860 million in assets under management, making it one of our most successful launches ever and reflecting strong customer interest in themes such as energy resilience, reshoring, and defense.

Savings fee income was up 13%, driven by the higher AUM and positive net flows in investment products. Our international channels, which have generally performed well since last summer, saw some outflows during the quarter amid geopolitical uncertainty and increasing rates.

Q2 net fair value result was very strong, up 11% year-on-year, and a clear improvement on Q1, when conditions were more difficult. Customer activity was high through most of the quarter, especially in foreign exchange and interest rate products.

Activity in equities and securities financing was also at a good level. Market making was much stronger this quarter as the interest rate environment normalized.

With customer activity back to normal, we continue to expect net fair value to generate roughly EUR 1 billion in annual income. Costs were flat year-on-year, excluding foreign exchange effects.

The stable cost development reflects the structural improvements we have made in recent years. These continue to support productivity and efficiency across the group.

We are, of course, not stopping here. Under our 2030 strategy, we are continuing to simplify processes, improve productivity, and make better use of our Nordic scale, while also making focused investments towards our strategic growth priorities.

The realized savings give us the capacity to absorb inflation and continue investing significantly in the business while keeping overall costs under control, as we did in Q2. We're in a strong position to continue delivering positive jaws also in the second half, when year-on-year cost growth will likely slightly pick up against a very strong second half last year.

The Q2 cost-to-income ratio improved to 44% from 45.1%, and that keeps us nicely on the path to where we want to be in 2030, with our target of 40%-42%. Credit and asset quality remains very strong.

The resilience of the Nordic economies continues to be reflected in our customer base. Households remain financially solid, while Large Corporates are generally well-positioned, prudently funded, and well-capitalized.

At the same time, we continue to grow in a disciplined way, supported by a diversified portfolio. Our underwriting and credit management approach has done us proud over the years and remains consistent also in this environment with higher corporate activity.

Our loan losses are very low and are expected to be contained within our long-term expectation of 10 basis points. For Q2, net loan losses and similar net resolve amounted to EUR 61 million or 6 basis points, driven by a small number of corporate exposures.

Our capital position remains strong and is comfortably supporting our good lending growth. At the end of the quarter, our CET1 ratio was 15.7%, 1.9 percentage points above our current regulatory requirement.

As previously communicated, we will pay dividends twice a year going forward. Our board of directors has decided to pay a mid-year dividend in August of EUR 0.34 per share, amounting to approximately 50% of our net profit for the first half of 2026.

The mid-year dividend is the first part of the total dividend distribution under our dividend policy, which stipulates a 60%-70% payout ratio on full year profit. Now turning to our business areas.

In Personal Banking, we delivered solid lending growth and generated strong fee income. Our mortgage growth, 2% in the second quarter, was led by Sweden and Norway, two of our strategic growth areas.

In Sweden, where we again increased our mortgage market share, we are clearly maintaining good momentum. We do not take that growth for granted.

We remain focused on attracting customers through better service, higher availability, and a stronger customer experience. Across the Nordics, housing markets are recovering gradually.

Customer caution remains, but further increased applications for loan promises suggest demand is building beneath the surface. Competition for mortgages remains high, which creates some margin pressure.

This is not new to us, we continue to manage it carefully while capturing opportunities to grow. Total lending volumes increased by 1% in local currencies year-on-year.

Deposits were up 4%. More customers are choosing Nordea for a broader range of their financial needs, which is supporting our deposit growth and enabling cross-selling opportunities across the group.

During the quarter, we launched the new Nordic Index Fund, designed to broaden our savings offering. The fund offers a simple and cost-effective way for customers to invest in Nordic companies and gain exposure to the long-term growth potential of the Nordic region.

We believe products like these will help us attract, in particular, young and self-directed savers, and over time, support a stickier and more resilient fee income base. The share of customers with recurring savings has been increasing over the past three years.

During the quarter, recurring savings inflows were up 8% year-on-year. Net fee and commission income increased by 11%, mainly driven by the higher savings payments and card fee income.

Total income decreased by 2% year-on-year but was up 2% quarter-on-quarter. Return on allocated equity was 14%, and the cost-to-income ratio was 51%.

In Asset & Wealth Management, we continue to drive robust growth in income and assets under management. We had another strong quarter in Private Banking, one of our six strategic growth areas.

Here, we attracted many more new customers and grew net flows of EUR 1 billion. We continue to invest in our advisory capabilities and have now completed the Nordic rollout of our direct advisory service, which was first developed in Norway and has delivered encouraging results.

We're also implementing our plan of hiring advisors, the teams that bring in and take care of our customers every day. Their onboarding is progressing well, and they are getting up to speed in their new roles.

Investment products AUM was up 17% year-on-year. Our international channels saw some outflow amid uncertainty in the Middle East and increasing interest rates, is mainly related to a single client reducing its holding in sustainability products.

Wholesale net flows remained broadly resilient and were marginally negative for the quarter but showed a pickup in June. Life & Pension is another important strategic growth area for us, and we continue to make good progress.

Here we are supporting customers with their long-term savings, pension, and protection needs while making the solution a natural part of the broader Nordea relationship. We maintain good momentum across all four home markets.

Life & Pension assets under management increased 23% year-on-year. Gross written premiums in the quarter amounted to EUR 3.6 billion, up from EUR 3 billion a year ago.

Total income was up 12% year-on-year. Return on allocated equity was 38%.

The cost-to-income ratio improved by 1 percentage point to 44%. In Business Banking, we performed very well, delivering strong fee income and volume growth across all home markets.

Lending volumes increased by 6% in local currencies year-on-year, led by Denmark, Norway, and Sweden, while growth also picked up in Finland. Deposit volumes grew by 3% and were also up in all markets.

We have seen increased intensity within capital markets, we supported several customers in executing successful IPOs. During the quarter, we continued to invest in our digital capabilities to make Nordea the leading digital bank for small and mid-sized businesses.

We are seeing good traction. Customer growth accelerated this quarter.

A big part of that came from the improvements we have made this year to our onboarding process. It is more user-friendly, leaner, and more automated, helps entrepreneurs and small businesses get up and running with us more quickly.

In addition, our Nordea Business mobile app reached an all-time high Nordic rating, with the number of users up by more than 10% from a year ago. Total income in the second quarter increased by 4% year-on-year, driven by volume growth and higher ancillary income, while AUM were up 23%.

Return on allocated equity was 16%, the cost-to-income ratio improved to 43% from 45% a year ago. In Large Corporates & Institutions, we continued to proactively support customers with their growth plans, delivering strong results while building out our capabilities that will support future growth.

During the quarter, we launched a new supply chain financing solution, continued to increase AI adoption, and made further upgrades to our markets platform. Together, these investments are helping us serve customers better and win a larger share of the business.

We could see that in the quarter with solid ancillary income growth across product lines. Lending growth, which was strong in the first quarter, stayed strong, increasing by 14% year-on-year.

Denmark, Norway, and Sweden all contributed to the growth. Deposits were up 17%.

Activity in our capital markets business likewise remained strong. In debt capital markets, we arranged more than 200 transactions during the quarter for a broad range of issuers.

Our capabilities are also increasingly earning us the right to support customers on their most important strategic moves, including a number of significant transactions in our markets. For example, we acted as sole financial advisor and book runner in the acquisition by Kesko, the Finnish retail group, of DNB Bank's specialist distribution business in the Nordics.

Overall, sentiment in the equity capital market also improved, with Nordea facilitating several high-profile transactions and securing a leading position in the Nordic initial public offering league table year-to-date. Nordic companies are getting firmly into growth mode, we are pleased to be supporting them across a broad range of financing and advisory needs.

Total income was up 15% year-on-year, driven by strong net results from items at fair value and improving net interest income. Return on allocated equity was 16%.

The cost-to-income ratio improved to 38% from 42%. To sum up, this was again a strong quarter with high business activity and income, flat costs, and a very good result, all in line with our 2030 strategy ambitions.

We go into the second half of the year with confidence. The business is performing well, our strategy execution is on course, with visible progress across all key initiatives.

The Nordic economies are also showing their strength, and we are well-placed to support customers as they pursue new growth opportunities. Our strong performance and position are reflected in our full year 2026 guidance.

We continue to expect a return on equity of greater than 15%, while we now expect a cost-to-income ratio of 44%-45%. Our ambition is to become the undisputed best performing financial services group in the Nordics.

The progress we made in the second quarter shows that we are moving steadily in that direction. Thank you.

Operator, we are now ready to take questions.

Yes. Good morning.

The first one on capital, I think that the small deviation you have versus consensus in terms of the Common Equity Tier 1 ratio is probably because many of us had included the share buyback approval in Q2, which didn't materialize. I'm just a bit curious, Ian, you said at the Q1 conference call that you thought the consensus expectations were at a reasonable place, which I think back then was around EUR 1 billion for this year.

Could you please tell us how you look at this now, if it has changed, if you see, for example, large growth opportunities or any inorganic growth opportunities? Because also when I look at your target, it's 150 basis points, but it seems like you are steering closer to 2% rather than 1.5%.

That's the first question. Secondly, just on your volume, still very strong obviously on the corporate side.

When I look at quarter-on-quarter development FX adjusted, looks like your largest market, Sweden, is clearly the star performer here. Norway is doing well, although it's abating a bit at a quarterly level.

Denmark looks like the runner-up and Finland number four as usual. All this looks a bit better here.

How do you think in a year's time, do you see any potential change in this pattern or is it still Sweden that will lead the way?

Great. Thank you.

Good morning, Magnus. Yes.

First of all, let's start with capital and the share buyback position. When we exited Q1, we'd had a strong quarter in terms of growth.

I think I did indicate that our priority remained supporting growth with capital. At that point, it looked like that we would have both good prospects of growth and the ability to meet expectations on share buybacks.

Nothing's changed in terms of our priorities. First of all, we look to deploy capital to support growth.

We had a really good Q2, I think as you've acknowledged, in terms of growth opportunities across the business, and particularly in terms of delivering growth in corporate lending. You know that we have strong capital generation.

We always prioritize growth and then after that, any excess we would think about distributing to shareholders. I would not get too focused on that we operate at a little bit higher than our 150 basis points management buffer.

Generally speaking, the way we think about this is we look at what's our capital generation for the year, how do we deploy that into growth, and then what is left over for other things. As you say, both organic and inorganic growth is always on our mind.

Our primary focus is on growing EPS and when we think about the trade-off, for example, between deploying capital into supporting profitable growth versus other uses such as buybacks. I think if we can deliver profitable growth, we still see a better contribution to EPS, particularly at today's share price levels from versus buybacks.

We're always thinking about balance there. For the rest of the year, we go into the second half with a really strong pipeline and high levels of activity.

We feel pretty good about growth, particularly in our corporate business. I think that we're always open to trimming excess capital when we generate it.

You can rest assured that if we do see the capital start to build, we'll be looking at the opportunities to trim that. Buyback's still an important tool in the armory.

I think the outside world understood that equation when we spoke last time, and in fact, lowered expectations a little bit on buybacks for the second half of the year. Whether or not we hit those levels, you can be sure that we are deploying our capital into spaces that will improve EPS, whether that be growth or whether that be managing down the capital base.

I think we're still in a good balance, but we're really pleased to see the growth, and that's where we prioritize deploying our capital.

Yeah. Just if I may follow up there.

For modeling purposes, we should probably expect you to remain at the management buffer somewhat above 150 basis points rather than trimming it down to 150 basis points. Is that correct?

I think that's a reasonable assumption, yes.

Yeah.

On volumes. Look, a strong quarter, particularly on the corporate side again.

I think you've got the, in terms of the order of performance, you picked that up correctly with the strongest performance in Sweden, running through our different markets with a stable performance in Finland. A year on, it's hard to tell.

We're seeing opportunities in all of our markets. I think that's the beauty of our spread across the Nordic region, which is that we'll find opportunities wherever they arise.

I can't make a guess as to where we'll be.

Okay. Thank you very much.

Thank you, good morning. First, an integrity question on Personal Banking, where return on equity dropped 2% in between quarters, it looks like loan loss provisions is the main contributor to this.

Finland looks like a consistent underperformance and some basis points provisions on loans. Can you share a bit more on what's going on there?

The loan loss ratio has crept up to 30 basis points in Finland. That, I guess, is not low for retail banking.

If you have it through the cycle group guidance of 10 basis points, I would not have guessed that mortgage banking to be the one to pull in the wrong direction there. Actually also a question on Sweden in terms of loan losses.

In Personal Banking, Sweden jumped to 9 basis points in this quarter, which actually represents the largest swing of any country quarter-on-quarter. Could you spend some time on that market too?

You've taken very strong share of net new mortgage lending there over a period, meaning your book might be more skewed towards later cohorts than what is the case with some of your peers, for example. It would be great if you could give us some more clarity there.

Thanks.

Yes. Hi, Martin.

At the overall level, the reason for movement in loan loss ratios and things is we had a significant release of management judgment buffers in Q1. That broadly explains the movement into this quarter or the change, if you like, rather than there is no deterioration in credit quality.

Absolutely none at all. That also, it's management judgment movements by and large, that contribute to the movement in hedged return on allocated equity.

When you focus in on Finland, across the board in our portfolio, that does attract a slightly higher net loan loss ratio. We have a slightly different mix in that market, with a slightly larger proportion of consumer finance business, which tends to push up the average loss ratios.

Nothing untoward in there. It's simply a question of business mix in Finland versus our other markets.

What you saw in Sweden is related to management judgment releases in Q1. There's nothing going on in the underlying portfolio that pushes that up.

Okay, understood. Secondly, if I could ask around Norway and NII.

I had a look, given what your peers reported earlier this week, on a year-on-year basis, you're up 7% in mortgage volumes, but you're down 25% in terms of NII. That partially seems natural, as Norges Bank was cutting rates last year.

The question to me is whether the repricing failed in the Personal Banking business coming once the eight-week notice period is over in Norway, are you starting around now, I guess. If that can compensate for competitive pressure on margins that we've seen in the meantime.

You seem to be growing the mortgage book in Norway at a rate well above systemic levels, right? Which raises the question if you've sacrificed on margins recently beyond what is just after the base period effect funding pulling in the wrong direction there.

Putting some numbers on this, you dropped 30 basis points in NIM in Personal Banking in Norway, I guess, over a year. Most of this is mapping quite well to the Norges Bank rates cut in 2025, there's some compression still ongoing over recent quarters, right?

If you could add some more flavor to that one, please. Thank you.

Yeah. Thank you, Martin.

The picture in Norway, certainly from a I think you've picked up the main movements, which is related to what we've seen in terms of rates. Of course, that will change as we digest the most recent rate hike and absorb the impact of notice periods.

Of course, as we see further hikes as has been indicated by Norges Bank. You see that effect continue.

I guess the difference in relativities, you talked about one of our peers and what you were seeing there. A little bit is the structure of our retail business in Norway.

We don't have as strong a deposit position as some of our peers. We're working very hard, and you see our deposit growth over the last couple of years.

We're working very hard to eliminate that imbalance, it's a medium to long-term gain. We're making good progress.

I think that's the key difference between us and some of our peers there. We need to strengthen our deposit base, and we're very focused on that.

That's the principal reason for the relative disadvantage, and I think you've picked up correctly the rate impact there.

Okay, thank you. That's a good explanation.

Thanks. That's all for me.

Yeah. Hi, here is Sofie from Goldman Sachs.

Thanks a lot for taking my question. On one of the slides that you mentioned that SRTs are kind of helping your lending fees.

A couple of years ago, maybe two, three years ago, you did a lot of SRTs. Could you kind of just comment on how we should think about the fee income, but also the capital impact from these SRTs?

Does the fact that you're seeing better lending fees from lower SRT costs mean that some of these SRTs are coming back on your balance sheet? How should we think about it?

My second question would be around your capital. I know there was a previous question on share buybacks, but could you also just remind us if there are any capital tailwinds or headwinds we should be mindful of?

Is there any update on the IRB corporate models that you can give us? Thank you.

Thanks, Sofie. On the SRT question, hopefully, I can deal with that pretty swiftly.

We simply comment that because one of our SRTs ended during the quarter, we're no longer paying a fee on it, and that helps with the growth in lending fee income. It's really nothing more than that.

Our position on SRTs is unchanged. We use them sparingly.

We've got about EUR 5 billion of RWA coverage from SRTs. It's not a big part of our capital management.

We're simply calling out there that one of the transactions closed, and as a result, that is a contributor to the year-on-year growth in lending fees. On capital, and the various ups and downs, nothing new to report or certainly of significance.

In terms of the things we see ahead of us, we've flagged for some time, that we would expect to see some benefits from retail model remediations. We've previously talked about between EUR 4 billion and EUR 6 billion by the end of 2027.

We've delivered a couple of billion of that so far, but that's still something that we're working on. There was a small change in Denmark, in relation to their commercial real estate systemic risk buffer.

They tweaked that a little bit, by increasing the exempted exposures. If that's reciprocated by the Finnish FSA, it would reduce our CET1 requirement by a tiny amount, maybe 2 basis points.

Nothing really to call out in terms of changes there. On non-retail, now as we've said repeatedly, we don't include any benefit from non-retail models in our plan.

Neither should you. We have no news to share at this stage.

The approval process is ongoing. ECB undertakes a very detailed, rigorous review.

When we've got something to share, of course, we'll do that.

Okay. That's very clear.

Just a final question. On M&A, how do you think about M&A opportunities in the Nordics?

I could take that one. Thank you.

We welcome the opportunities when they arise. We, of course, have a view on the ones that we would like to own.

Right now, they are not for sale. Of course, it's a living material.

Right now, we have nothing to share. It is on our action list.

Organic first growth and then M&A if the right target appears. Of course, the Nordic brings a number of opportunities which we actively are following.

Thank you. That's very clear.

Hi. Good morning.

Thank you for taking my questions. On the costs, as you execute on your plan, could you walk us through the key drivers of your cost base in the second half of this year?

Specifically, which areas offer the greatest flexibility for cost reduction, and which components of the cost base do you see as the most challenging to reduce, and why? Looking ahead to 2027, consensus currently implies a cost-to-income ratio of around 43.5%, excluding the regulatory charges approximately 1 percentage point lower than in 2026.

Would you consider this as a reasonable trajectory, or are there any factors that could materially influence the cost-to-income ratio from here? Thank you.

Yeah. Thanks, Gulnara, and good morning.

We're making good progress on cost. We've been flat year-on-year in the first half of this year.

That's a tougher task to deliver in the second half because we managed our costs pretty intensely in the second half of last year. The comparative period is quite a low start point.

We're doing a bunch of things, as you know. We talked about these at our Capital Markets Day.

Both looking to deliver structural cost reductions through our Nordic scale initiatives. Then managing day-to-day productivity, which is absolutely essential because we start each year with 4% payroll cost inflation to deal with.

Key drivers for H2 of this year, it's the usual wage inflation, and that we continue to invest across our business. We'll offset that with all of the usual actions on productivity and some of the benefits of our structural cost reductions.

A couple of unusual elements. From 1st of July this year, the VAT rules have changed in Norway, and that's maybe something that hasn't been flagged too prominently up to now.

What those new rules say is that when companies charge services into their Norwegian businesses, they now need to add VAT. That probably adds around EUR 10 million a quarter for us and is a new factor in the second half of the year.

I guess, if we think back to what's our commitment to our ambition, we talked about delivering within 2% CAGR across the strategy period to 2030. I think that's a good way to think about things.

We obviously have a little bit of FX pushing up costs this year. I'd say for the second half, we might see a little bit more net cost growth than we saw in the first half, but nothing significant.

Your question on 2027. We haven't guided yet for 2027, I guess I'd take you back to what was our commitment at our Capital Markets Day.

We said there we were going to reduce our cost-to-income ratio in 2030 to somewhere between 40%-42%. We highlighted that because of the pace of investment and also income growth, that progress might not be linear.

You can expect our cost-to-income ratio to come down in 2027 versus 2026, but we're not guiding in any detail at this stage. I think you have the building blocks there to make your estimate.

Thank you.

Good morning, and thanks. Corporate deposits also grew very strongly in the quarter, up 17% year-over-year, especially within Large Corporates.

I'm just wondering how much of that deposit surge, particularly LC&I Denmark is up 24%, reflects sticky operating balances versus short-term transactional flows that could reverse. A follow-up on cost.

It is flat year-over-year, which is impressive, and now we've tightened also the guidance somewhat. Is the improvement driven by higher top line from the ECB hike in June, which will positively affect NII in H2?

Or is it rather that EUR 190 million restructuring charge that will result in cost savings later this year?

Hi, Jacob. Thank you.

We were really pleased with our corporate deposit growth in Q2. We saw 3% growth in Business Banking and 17% in Large Corporates, as you say.

That's really across the board. There's always an element with corporate deposits of some move a little quicker than others.

We're a relationship bank. Where we're winning these deposits, it's because of the strength of that relationship.

I think it's reasonable to expect that there's an element of this that is sticky. We continue to work at growing volumes, both sides of the balance sheet.

While maybe the top slice of some of that deposit growth can move around a little bit, it can be event-driven. It's still indicative of a positive trend.

On cost. We've tightened the guidance for this year.

Important to understand, this is both sides of the equation in the cost-to-income ratio. We continue to be constructive on the income outlook.

I talked a little bit about in the previous question that we might see slightly higher cost growth in the second half than we saw in the first half. I think the thing to focus on is we expect to deliver that cost-to-income ratio between 44% and 45%.

I think consensus was heading in that direction anyway, having seen our progress.

Got it. Thanks.

Morning. Thank you for taking my questions.

My first question. When I look at brokerage and advisory fees for this quarter, they were down year-on-year and flat quarter-on-quarter.

It's kind of not the trends I was expecting if I look at other banks. What do you think is happening there?

I just would've thought the big push in corporate lending would help you to some extent there. My second question.

In RWAs, there were some tailwinds this quarter from data improvements. Do you expect this to continue?

Thank you.

Sure. Morning, Namita.

Let me correct you a little bit. We grew both year-on-year and quarter-on-quarter in brokerage and advisory.

That followed a period where we hadn't seen such strong growth because of lower transaction volumes. It's good to see us back on a growth track there.

We're investing in that business. We're still the best DCM house in the Nordics, and the numbers bear that out.

We had a decent second quarter in equity capital markets and the work we're doing to improve our broader investment banking franchise with key hires and other things is helping to deliver improvements in that space. I think we're making progress.

We'd like to see all of those elements of the business firing strongly on all cylinders. I'm pretty confident we'll see that continue to develop positively.

In capital, the sort of RWA benefit that we saw from data improvements, there's a bit there about just general cleanup and progress. A small amount of that was delivering on some of the retail remediation that we've talked about by the end of 2027, making progress on that.

I think we'll always see good husbandry on RWAs helping contribute to managing them down. Probably not as big an offset going forward as we saw now.

There were a couple of different items in there. I hope that helps.

That's helpful. Thanks very much.

Thanks for taking my question. Good morning, everybody.

A couple, if I may. The first one, Ian, if you could shed a little bit of light on how we should be thinking around the contribution of the deposit hedge to your NII in a higher rate environment in Finland and Norway, and maybe one day in Sweden too.

The second question, I just wanted to be sure I understood you correctly when it comes to the priorities for capital usage. My understanding, and correct me if I'm wrong, please, is that organic growth comes first.

The dividend policy stays as it was, 60%-70%. Buyback, I understand you're putting a bit less emphasis on this.

Not clear to me whether buyback comes ahead of this or after eventually M&A opportunities, bolt-on acquisitions, stuff like that. Somehow related to that, do I understand it correctly that you have in mind to maintain a management buffer in the 150 basis point region ahead above your requirement?

Thank you.

Yes. Thank you, Riccardo.

When it comes to deposit hedge, we saw a small positive contribution in Q1 and a small negative contribution in Q2. I think you should really think of that as just flat.

In an environment of relative stability on rates, it's a fairly neutral contribution from deposit hedge. Despite some of the thoughts about whether we might see a hike or two, we still think of this as a relatively stable environment.

I think of hedge contribution as neutral for the moment, and that's probably the right way to think about it. On priorities for capital, I think you got it pretty much right.

Let me explain a couple of the nuances. Provided we see profitable growth or accretive inorganic opportunities, that's always going to be our priority because that's what drives the long-term health of the business and EPS accretion.

Our dividend policy is really important to us. We have always said then we think about buybacks.

I think that's the right sort of order. I think it's natural that there's less emphasis on buybacks in a situation where we're seeing really good growth opportunities.

We always have it there as the tool, and we've always thought about it like that. I really think we're being true to what we talked about consistently.

Just to be clear. On the 150 basis points of buffer to regulatory requirements, that's part of our capital policy.

That sits above the regulatory requirement, and we're currently operating around about 40 basis points north of that at the moment. I think you pretty much got the order of priorities right there.

Thank you. You're very, very clear.

Thanks.

Hi, thank you very much for taking my question. I actually only have one on asset management.

You mentioned the outflows this quarter were driven by a single client sort of withdrawing a little bit from sustainability linked strategies. If I look at the overall AUM, 74% is in ESG strategies, and two of the last four quarters, you've seen outflows from sort of ESG strategies.

If you could shed a bit more color on the sort of conversations you're having with clients and how your appetite for sort of ESG has developed this year versus last year and in recent months. Thank you.

Hi, Shrey. Thanks for the question.

I'll start with some of the mechanics and then Frank might want to just give a perspective as well. We're a really good ESG house.

Always have been. It is a very popular product, particularly amongst our Nordic customers.

When we think about our sort of core Nordic franchise for our savings business, we saw really good inflows across Life & Pensions, Private Banking, and the core retail business during the quarter. Really solid there.

Where we saw the outflow that you refer to, which is a single client making a sort of asset reallocation decision. I guess that's what's happening in the world at the moment.

It did have a substantial effect in Q2. The preference for ESG products, particularly amongst our core Nordic franchise, remains strong.

Just remember It's Frank speaking. Just remember that the core of our business is around 87% being Nordic, experienced super strong net flows.

EUR 1 billion, for example, in Private Banking, almost EUR 1 billion in Personal Banking, Life & Pension firing on all cylinders. We have this 13%.

Business Banking, by the way, also very positive by, I think it was EUR 1 billion, as I recall it. We have this international business.

It has two legs, a wholesale one and an international institutions one. There, we have around 12%, 13% of our AUM.

Of course, some of them that has been heavy within sustainability has changed their opinion in regards to that question right now. There is also some that has reacted based on the steep increase in interest rates during especially the first half of the second quarter.

That business is just much more volatile than the Nordic stable, very profitable, high margin business. The margin is also very, very much lower.

You will see some volatility there, I think. The margins are very low compared to the Nordics, and the totality is actually doing quite good.

Understood. Thank you very much.

Operator, we'll take the last question now.

Hi. Thank you very much for taking my question.

I guess just two. Firstly, you've been growing well in the Business Banking space as you flagged, and I think talking to other parties in the market, I guess there's an impression that you've been relatively aggressive on price and potentially risk.

I guess I wanted to ask what you see as the main levers that you've been able to pull to outgrow many of your competitors. Also on the topic of competition, I think a lot of the banks, including yourselves this quarter, have flagged competitive pressures as a driver of margin compression.

I just wanted to ask, to what extent is this a Q2 situation that has been developing? To what extent is it more of a general comment on the state of those markets of, let's say, the last three, four quarters?

Thank you.

Frank speaking. Hi.

Thank you for the question. Should we start with the Business Banking growth?

Actually, there's not really any change. We have been growing our Business Banking for quite many years now.

Denmark has been a little bit slower. It's clearly picking up now.

There's no magic. It's hard work, it's intensity, it's hunger and activity.

When you look at, for example, Norway and Sweden, we have been growing above market for exactly these reasons for, I don't know, five years, perhaps six years, seven years. No magic there and no silver bullet.

Of course, the margins are squeezed, but not really a lot on the corporate side. Why it's so crowded right now and everyone wants to be within the SME space is also because that or due to the markets business, the retail business is muted in the Nordics, and the reasons for its muted is actually because of the same reason as the corporate book is growing.

There is a lot of investment. I would think we are looking into a quite strong cycle now, investment cycle now on corporates due to more defensive actions, but they drive growth.

Defense, resilience, energy, preparedness, cyber technology, AI, and growth and supply chains investments. These are coming from a little bit more defensive starting point, which doesn't matter right now because it will lead to a lot of investment needs, either with equity or with lending.

That is also what is problematic for the household sector, as the household sector has low consumer confidence. It is building, but it's still quite slow markets.

That leads to lack of growth within that business, which then makes our peers looking into other parts to find the growth. That is why it's a bit crowded now.

The household business is improving, or the markets are more active. We do see consumer confidence coming up.

Finland has now, which has been the, by far slowest market, has the highest consumer confidence in four years now, but it takes time. As long as we have that part of the market, so the consumer market that is not really active, there will be a tough competition on the remaining parts.

That is what you see. We have had no change in approach.

We are very profitable, as you also can calculate in this business. Of course, we play to win, and we are.

There's no change in credit policy. That would be the most stupid thing one could do.

The price is as it is. Yeah, that's my best answer.

Great. Thank you very much.

All right. I think we run out of time.

Yes or not. Thank you so much, everyone.

Thanks for the questions. You know where to find us if you have anything you want to discuss.

Else, I'll wish you a great summer. Thank you so much.