Svenska Handelsbanken AB (publ)

Good morning, and welcome to this presentation of Handelsbanken's results for the first quarter of 2026. We can conclude that the bank reported yet another solid quarter.

Operating profit increased by 9% compared to Q4 and the ROE amounted to 14%. The main income lines, NII and fee and commissions were stable.

While the lending growth in Sweden was held back a bit by a general slow Swedish economic growth, it was again very encouraging to see that the lending growth trend in the U.K. and the Netherlands continued both on the household and on the corporate side.

This has now been a consistent trend for more than a year. The savings business continued to perform well with market shares of net inflows into mutual funds far exceeding the market share in our books in both Sweden and in Norway.

Cost efficiency is always a top priority in the bank. And again, we saw expenses declining.

The net asset quality remained very strong with more or less insignificant credit losses once again. The capital remains robust.

The anticipated dividends for the quarter earnings were increased a bit in order to calibrate the CET1 ratio to 17.2% or 250 basis points above the regulatory requirement compared to the 285 basis points in the previous quarter. The anticipated dividends amounted to SEK 2.93 per share or 91% of the earnings generated in the quarter.

When we look at the longer-term value creation for our shareholders, this solid Q1 report fits well into the picture of the bank's resilient business model. As illustrated in this graph, the growth in equity per share plus dividends has not only been consistently stable over the past decade, but also growing with an average of 14% per year.

And if zooming in on the past 5 years, the average growth rate has been even higher at 15%. And not to forget, this has been achieved in a decade, which includes everything from negative interest rates, Brexit, a pandemic, war then in the Ukraine, inflation and interest rate spikes, stresses in the real estate sectors, et cetera, et cetera.

This is what we strive at always generating for our shareholders and also what the shareholders should expect from a bank like us. This stability is, of course, not achieved by coincidence and not just of our way of working.

It's a result of the chosen markets and geographies. Our four home markets share the following common traits.

They are all stable democracies with large economies, rule of law applies and the political and regulatory landscape are stable. It also helps if there are culture similarities and shares of values.

Not only the assets, but also the cash flow from our customers are stemming from stable Western European economies. In such markets, the Handelsbanken model has a chance to stand out with a unique offering and a higher customer satisfaction than our peers.

It is, of course, also essential that there are large bases of potential customers with the right risk profile and that we have a demand -- and have a demand for our offering, hence, offering material scope for long-term profitable growth at a suitable risk level in stable markets. And just to add a small remark, given the recent themes into the financial markets, we have no exposures to private credit.

Before going into the financials for the first quarter, just some comments on the recent business development in these four home markets. Starting with Sweden, which accounts for 76% of the profits in our home markets.

Handelsbanken is the largest lender in Sweden when summing up household and corporate lending. It's therefore fairly natural that the soft general economic growth in Sweden translates into fairly flat lending volumes in the past quarters.

Deposits are growing somewhat, but the key growth is seen -- clearly seen in the savings business, where we consistently for the 1.5 decade, have seen market share of net inflows into our mutual funds far exceeding the market share of our outstanding volume by more than 2x. In the U.K., we had a long period after Brexit with declining lending volumes, mainly due to customer amortizations exceeding new lending.

Since more than a year, the trend has clearly shifted to a consistent lending growth quarter-by-quarter on both the household and the corporate side. Also, deposits have increased over the past years as well as the savings business.

The U.K. is a market where the customer satisfaction really stands out the most when comparing with our peers in the market.

In Norway, we stated 2 years ago that we needed to see a better balance between lending, deposits and savings, and the situation has improved since. While lending volume have dropped over the past year, mainly due to intense competition, growth has been seen in deposits and in particular, in the savings business.

Over the past 2 years, the market share of the net flows into mutual funds in Norway has been more than 2x the market share of the outstanding volumes. This means that we are deepening the relationships with existing customers and adding new customers, which bodes for improved profitability over time.

And finally, the Netherlands. Just like in the U.K., the distance to peers in terms of customer satisfaction is particularly large.

Lending growth has been very strong, as you can see in deposit -- and despite the drop in deposit last year, the longer trend has also been positive. And what is even more positive is that we now see also -- we now also register a sound growth in the savings business with steady growing assets under management.

Now if we look closer at the financials of the fourth quarter compared to the previous quarter -- the first quarter, sorry. ROE amounted to 14% and the CE -- cost/income ratio was 39.5%.

In Q1, a VAT refund of SEK 1.1 billion was booked. An adjusted basis, the ROE was 11.7% and the cost/income ratio 42.8%.

Operating profit increased by 9%, but declined on an underlying basis by 3%. NII and fee and commission were marginally down, headwinds mainly related to day count effects and FX.

Income increased by 3%, but declining by 3% on an underlying basis. Credit losses amounted to SEK 35 million or 1 basis point.

Regulatory fees decreased as the previous quarter included a booking of a charge for the interest-free deposits at the Central Bank. Now if we switch over and look at the quarter compared to Q1 last year.

NII declined by 13% and 10% adjusted for currency effects. The decline is related to lower margins in the wake of lower short-term market rates.

Net fee and commission income, on the other hand, increased by 7% adjusted for FX effect. The key driver was again the savings business and strong inflows and positive market developments.

All in all, total income dropped by 6% on an underlying basis. Underlying expenses dropped by 1% despite the annual salary revision that comes into force on January 1 each year and also the general cost inflation.

Last year, we had a net credit loss reverses and the regulatory fees were flat year-on-year. All in all, the underlying operating profit was down by 12%.

Now if we take a closer look at the NII development compared to the previous quarter, we see that NII dropped by 1%. Volume growth contributed with SEK 20 million in the quarter due to lagging effects on interest margins from lower short-term market rates in the previous quarter, the net of margins and funding contributed negatively by SEK 67 million.

Deposit guarantee fees were lower this quarter, the decline being explained by fees being elevated last quarter as the final bill for that year was received and paid. The day count effect due to 2 less days in the quarter and the currency effects due to a stronger krona on average has created some headwind, as you can see.

Net fee and commission income dropped slightly in the quarter. The bulk of fee and commissions related to the savings business, especially in the mutual funds business.

The positive effect on fees from the strong net inflows were, however, offset in Q1 by a negative day count effect as well as negative mix effects with an increased share of the AUM asset under management in lower fee funds. Other fees were seasonally down.

The high market share of net inflows into mutual funds have added significant customer asset under management under -- to the bank over time. As illustrated in this slide, the bank has now accumulated net inflows into Swedish mutual funds at almost 2x the run up over the past decade.

This success comes not only from appreciated offering and strong performance in the funds over the years, but also the bank's distribution capacity where advisers are close to and have deep relationship with our customers parallel to an appreciated offering and distribution in our digital channels. Now over to the expenses.

A trend of increased cost was broken in 2024. And since then, the expenses have trended down despite annual salary revisions and general cost inflation.

The bank is now in a good position in regards to cost efficiency. As illustrated in Q1 when costs continued down on both quarter-on-quarter and year-on-year, it's deeply rooted in our culture and among our employees to always look at new ways of becoming even more efficient.

Next slide show our asset quality and credit losses. Over the past decades, credit losses have been very low, which they should be in the bank with our risk appetite.

Since the outbreak of the pandemic in 2020, the sum of all credit losses has been SEK 50 million or on an average, SEK 2 million per quarter. And that includes the period from the pandemic, sharp savings -- sharp swings in policy rates and inflation, the disruption of supply chains following years -- following the war in the Ukraine and Middle East, et cetera, et cetera.

Still more or less no credit losses. If we compare the credit losses to our closest peers, the bank also stands out over the decade.

In particular, in volatile times, difference in underlying asset quality has shown. In Q1, the credit loss ratio was 1 basis point.

Perhaps needless to say, asset quality remains very strong. The bank is in a very solid financial position.

Credit risks, funding risks, liquidity risks and market-related risks are prudently managed and the capital position is strong. The anticipated dividend in the quarter of SEK 2.93 per share equals to 91% of the earnings in Q1 and is yet another step to gradually adjust the capital position in the bank.

The CET1 ratio now stands at 250 basis points above the regulatory minimum compared to the 285 basis points in the previous quarter. The bank should, however, always be considered one of the most trustworthy and stable counterparts in the industry.

This is also the view by the lending rating agencies who rate the bank the highest among comparable rates globally. And this view was again confirmed and further enforced last evening by Moody's, who upgraded the bank's baseline credit assessment rating to A1 from A2.

This put the bank in a very exclusive group of only a handful of privately owned banks globally with the highest BCA rating by Moody's. Finally, to wrap up, Q1 was a solid quarter with increased operating profit and ROE, although including a positive contribution from a one-off VAT refund.

Q1 NII and fee and commissions were stable and costs declined. We see lending now growing consistently in the U.K.

and the Netherlands and also in the savings business broadly over the markets. Our way of doing bank is appreciated by customers where they experience close relationship with us, and it's also seen in the external surveys in all of our well-chosen home -- stable home markets.

Asset quality remains just as strong as it should for a bank with our risk appetite and the capital position is very strong, and we took another step down in the target range by anticipated dividend equaling to 91% of the earnings in the quarter. Finally, I'm also happy for our shareholders that has seen share price reached an all-time high during the quarter.

And with those final remarks, we now take a short break before moving into the Q&A session. Thank you.

[Break]

Hello, everyone, and welcome back. This is Peter Grabe, Head of Investor Relations speaking.

And with me, I have Michael Green, CEO; and Marten Bjurman, CFO. As always, we would like to emphasize that we appreciate that if you ask one question at a time in order to make sure that everyone gets a chance to ask their questions.

With those words, operator, could we have the first question, please?

I was just wondering regarding the -- in total, SEK 6 billion in AT1 capital you issued late in Q1 '26, whether the main reason was to be able to go down further in your management buffer or if you expect the higher volume growth going forward or a combination of both? And related to that, also, if you could confirm that the coupon will be taken directly in other comprehensive income rather than in NII...

Magnus, this is Marten speaking. Yes, I had a little bit of a difficulty hearing your first part of your question, Magnus.

But I assume that you talked about the AT1 that was issued late in the quarter and booked in Q2. And it's fair what you said, it's correct what you say that this is an equity instrument.

It will be booked in the equity and the interest rate, if I may call it that, the coupon, that will be booked also in the equity, yes.

Okay. And also the reason for it that you have your next call in March 2027 of USD 500 million.

What was the main reason for doing this now? Was it to be able to go down the management buffer volume growth?

Or...

Well, there are various components into that equation, Magnus. But obviously, we didn't have a full box of the AT1, if I may call it that.

This provides flexibility to the bank. And as you know, the 2 outstanding AT1s, they are in U.S.

dollar. This one is in Swedish krona.

So yes, it's -- and then we take it from there. We'll see.

But the main reason is that it provides flexibility for the future.

I was thinking about you, Michael, you mentioned that you're going down gradually in terms of capital buffers. Can you give some guidance on -- I know that the Board is deciding what you will pay out.

But since you have gradually reduced this buffer in your accrual of dividends, where are we heading within the range, please?

Yes. This is Michael speaking.

I don't think you should read that much into the adjustment this quarter. But it's -- the bank is in a position where we are running the bank very operationally strong and we have a cost -- the cost in place and all that.

So we have gradually come down in our target range. And when we look at the world outside and we compare what's going on there with how our customers behave in terms of risk, we don't see anything that really sticks out.

So our customers, they are in very good shape. And the risk we allocate for is taken care of in our internal risk models.

So I don't see the need for having SEK 285 million now. So we will -- we just take it down to SEK 250 million.

And then as you just said, we decide where to go when we come into the -- what we anticipate now for the year, and then we take the decision in the Board for how we recommend the -- for the shareholders to -- on the dividend side when we come into the Q4 report.

Yes, so I understand. But what do you mean by that, you shouldn't read too much into that you change it because you do change it because you think it looks good.

So there must be some message in that.

Because it looks good.

So but let me underline a little bit also. Again, I think bear in mind where we're coming from.

We have -- we're coming from SREP plus 5% or 6% and then we took it gradually down, as you know. And we felt the need to guide a little bit to say that reinforce that the message that, yes, we have this interval, it is set, and we are slowly moving into that.

Now as we are within the interval, we don't feel the need to guide that much further on a quarterly basis. So you shouldn't expect us to draw the line anywhere within the range.

Now we are in the range, it feels great.

On your cost outlook, please, could you walk us through the key moving parts in your cost base for the next 3 quarters that we should be aware of, specifically, where do you see flexibility for further cost reductions versus what could be the areas of additional cost pressure? You previously mentioned that you have completed the centralized cost-cutting program, but do you expect more efficiencies to come through from elsewhere, for example, from the local branches?

And if you look at your headcount, it's down 1% quarter-on-quarter. Do you expect any further reductions in the number of employees to come through?

And how should we think about your Oktogonen contributions going forward?

Okay. Well, maybe my answer will be a little bit disappointing to you because we will not guide on the costs going forward.

But it's very true what you say. We have that initiative behind us now.

We have no plans of broadcasting yet another of those initiatives. But rather, we are staying very true to our culture, our model where every employee within the bank is extremely cost cautious and very sensitive to increases in costs.

And this quarter was extremely successful when it comes to cost as well. It was even to me, a little bit surprising actually.

But again, I think that you shouldn't expect it to go further down. We are at a level now where we are extremely confident that we can run the bank the way we want.

We have resources to spend and invest where we want to spend and invest. And -- but this model is extremely decentralized.

We will not interfere with our home markets. We will not interfere with our branch office managers.

So ultimately, they decide. So therefore, we cannot guide any further.

And what about the headcount?

Headcount number is basically the same, maybe a little bit boring answer. But still, if a home country wants to expand in terms of number of employees, they are free to do so if they have good reasons to do it.

So I don't foresee any big shifts either upwards or downwards in terms of full-time employees.

And just to add on, when Marten says we -- the decision-making for resources, both in headcounts and other cost initiatives that they could happen throughout branch networks and product or whatever. It's not that we don't guide and we don't steer, but we follow them closely.

So it's a very sharp following up in terms of cost efficiency and the returns on the investment we do. So it's not do as you like.

It's do what you think is necessary, and we will keep a very close track on what's going on.

So a little bit of a follow-up here on costs. I mean you've been reducing cost continuously now for, it feels like 8 quarters roughly.

And I mean, when we speak to quite a few banks, they see that there's a lot of IT investments relating to AI and whatnot. And when we speak locally and we hear people gossiping or talking, it doesn't sound like you are clearly ahead of the pack in terms of those investments.

So is it a risk that you have underinvested now over the last years because a lot of the savings have come from IT, if nothing else?

The short answer is no, I don't think so. I think it's more of a matter of how you're running your development within the IT space.

We were heavily dependent on consultants for a very long time. We have now -- we are now at another place in terms of that mix between employees and consultants.

So that's one thing. But the other thing is that we are running our IT development in another way now.

We have much more control, generally speaking. In terms of AI, are we lagging behind?

Are we the first mover? I don't think it's in our nature to be the first mover in terms of trying out different AI solutions.

That being said, though, I'm extremely confident that we have navigated through these challenges and opportunities the right way so far. It's a broad area.

It opens up a lot of opportunities, not only for the bank, but also for our customers. We're following it closely.

We have quite a number of initiatives that are all the way from ideas to fully implemented and up and running successfully. So it's a broad range of initiatives.

So I'm not worried for that matter.

So as a CFO, it's not that you want more resources, but Michael thinks you need to slow it down still? Or what's the balance between you?

No, no. We don't -- the balance is very good between my CFO and myself.

So -- but just for the record, I totally embrace the technology and the development of that, and that's a very wide area, and we invest largely in things that we need -- that we see could fit well into our customers and also for ourselves in terms of efficiency reporting, whatever. So I'm very interested in that, and we have a quite good pace actually.

So I don't really have the feeling that you described in your first question that we lag. I don't think we lag.

I think we do it in a very balanced way in the way we see it from my perspective.

My first is actually on the positive side, you've got the second consecutive strong quarter for loan volumes in the U.K. What is the profile of the new customers you're attracting versus the U.K.

incumbent? Has it materially changed versus your existing customer profile?

Thank you. No, no, it hasn't changed.

It's basically the same. It's the corporate lending growth that you see in U.K.

is very pleasing and the trend is continuing. So very pleased with that, generally speaking.

In terms of our customers, it's no new mix of customers. We are very true to our model in terms of providing financing to businesses that we understand that have strong cash flows, a strong repayment capacity and all that.

So no, the short answer is no. We don't have any new features into our model in providing financing to our customers.

Right. And my second one is, can you explain this 50 basis points negative impact on the CET1 ratio from other factors, including claims on investment banking settlements and rounding on?

I don't believe it's ever been called out before explicitly. So I'm wondering why it was so large this quarter?

Well, it is large this quarter due to natural reasons because I think that, that business where this derives from is typically slowing down in Q4. So when you compare the 2 quarters, this looks quite hefty.

But it's not. I think if you take this level, it could be a natural level for the coming quarters.

And I think you touched upon it in your question where it comes from. This is coming from the market making in the capital market side of the bank.

So this is really short-term claims. These are coming from market making and deals that are between settlement date and trade date basically.

So very short-term claims on our customers, majority in the fixed income space.

Okay. So this was a bit larger than you'd expect given the seasonality if you look versus the past few years?

No. I mean, this portion that I just explained is maybe 1/3.

The other 2/3 are so many items in so many parts. So it must be considered a regular quarterly volatility, many, many smaller items in that.

So I'm not surprised where we are. But again, you have to compare with a regular quarter.

And in this case, Q4 might not be that one.

I just wondered, it's just another quarter where Nordea is growing its Swedish corporate lending by 4% quarter-on-quarter and Handelsbanken volumes are flattish. So I just wondered why you're allowing another bank to take market share from you so much so that you're not even growing the Swedish lending book in the quarter?

And just a follow-up to that. I just also wondered why there's appetite to grow in commercial real estate in the U.K.

and Norway, but not in Sweden just based on how you grew this quarter. Are the competitive dynamics different in Sweden versus Norway and the U.K.

Yes. So the -- first of all, we don't allow competitors to take business from us.

We compete every day and you win and you lose some. In our -- from my perspective, the volumes that we've seen leaving the bank has mainly -- or absolutely the vast majority is -- it goes to the capital market side.

So it's not that any other bank is competing with us, and we do not have the capacity to compete that. So that's how it is.

And I'm not going to comment on Nordea's growth. That's -- I don't know what they do there.

But I think growing the lending book, it comes -- when you have market shares like we do in Sweden, you tend to grow, as we've said before, in line with the real economy growth in this country. If you want to grow more over time, you need to be very aware of pricing and risk, and we are conservative in that sense.

So we follow our customers. If they invest, we will grow with them.

And we will gladly compete and take business from our competitors. But in general, we grow in Sweden with our very, very strong corporates and private individuals.

And if you look at the market right now when it comes to corporates, what we see from our perspective when we talk to our customers is that they are a bit reluctant now to invest both when it comes to investing in factories and production, but also invest in real estate right now. So it's a bit on a standstill due to the uncertainty in the surroundings.

And when it comes to the private individuals in Sweden, we see a small pickup when it comes to buying new houses, and we have quite a strong inflow when it comes to that market, when it comes to the transition market when they buy houses. So we don't see a problem with this.

We -- in Sweden, we follow our customers when they grow and when they're not growing. When it comes to the -- as you probably noticed in the U.K.

and the Netherlands, we have the opposite. We have a quite strong growth there because the market share we have is quite low.

And that's what you should expect, and that's what I'm expecting with high ambition in these countries.

Sorry, could you just comment a bit on the differences in the commercial real estate U.K. and Norway versus Sweden?

Is it more competitive in Sweden?

No, I think there are competition everywhere we are because we're very strong and transparent countries with strong competitors. So I don't think any -- there is any difference there.

Here is Sofie from Goldman Sachs. I was just wondering how we should think about the net interest income in the other division, given that it was up 41%, I think, quarter-on-quarter.

Could you just comment on kind of what's the normalized run rate? Are there any headwinds or tailwinds we should kind of be mindful of?

And also, I know you don't guide on rate sensitivity, but if you could just help us kind of think about how we should model potentially higher rates in Sweden and also elsewhere in Europe, what the kind of moving parts are?

Yes. A number of questions there.

And the sensitivity to policy rates, yes, obviously, when we have -- as we had in this quarter, policy rates turned down late in the previous quarter, we will have an effect. And generally speaking, as you know, we benefit from higher rates rather than lower.

So -- but in the meantime, we have lag effects that you know of when these rates are cut. And it varies a little bit between countries.

But yes, generally speaking, we should expect now that, okay, policy rates were expected to go down further in U.K. and in Norway.

Now we don't -- we're not so sure anymore. Some say flat, some say even a little bit of a pickup.

Obviously, we will have an impact of that. It will take a little bit of time to bleed through that effect through the books as with all banks, I guess.

So that's where we are, and we don't guide any further than that.

But in terms of the other division, like -- yes, do you have any guidance on how we should think about the contribution from there because it's very difficult to model on a quarterly basis, plus 40%. So is there any way we could kind of think about how to think about the kind of volatility in this division going forward?

Yes. This is Peter speaking.

You can say that there are mainly two reasons. One is within the treasury department where actually both of these two items are within the treasury department.

And it goes up and down in between quarters and it's connected to what's allocated to the different segments. On a group basis, everything, of course, nets out.

But occasionally, you allocate out more from Central Treasury and sometimes you allocate out slightly less. And then furthermore, it's also a result of the -- of what you generate in our liquidity portfolio, i.e., the returns on the assets we have in the liquidity portfolio, which means that it can go up and down somewhat in between quarters.

But I think overall, you should see it as more of relating to components that generally are sort of intertwined with the allocations out to the respective segments.

Sweden loss cut rate in September, so say, around 6 months ago, would you say that now the balance sheet on the assets and liability side has absorbed the loss cut made by the Riksbank 6 months ago? Or should we expect a little bit more tail in the coming months?

Yes. Generally speaking, yes.

I think we have seen most of the effect, not all, but most of the effect for sure. So that's the short answer.

And let's assume for a second that short-term rates remain where they are. I mean, STIBOR goes up a little bit in the quarter.

That I suppose nothing of that is eventually visible in these set of numbers, I would say so. Am I right in saying so?

I'm very sorry, I didn't catch your question fully. Would you be able to repeat...

Yes, yes, sure. The STIBOR month was a little bit higher in the -- especially in the month of March.

Let's assume for a second that, that remains. I think it was 9 or 10 basis points higher in the month of March.

Let's assume that, that stays for a while. Is it fair to assume that in set of numbers, we have not seen anything from this 9 or 10 basis points higher level on STIBOR 3 months.

I think it's what we usually say. I mean the reason for us being with silent here is that it's difficult to give you a straight answer on that question.

I mean, obviously, as we always say that there are tons of factors that play in when we talk about the development of net interest of funding and margins. STIBOR is, of course, one component.

But how a particular STIBOR movement in between months or quarters directly will affect the NII is very difficult to guide on. And as you know, we prefer to stay away from guidance -- sorry, Marten, please go ahead.

I know you touched upon this, but just to double check here, what do you need to see for Swedish lending growth to meaningfully pick up in the next few quarters? I mean we're expecting Swedish GDP to grow maybe 2.5%.

Should we therefore see a read to you that you ought to grow 2.5% in Sweden? Or what's a reasonable way of looking at this going forward?

Yes. Great question.

Yes, I would love to grow 2.5%. That would be perfect for us.

And as Michael alluded to earlier, we have seen 1 or 2 tickets leaving the book in this quarter, not to other banks, but to the bond market. That happens, it can happen.

And what will it take for us to really set off the corporate lending? Well, I think -- and we've been talking about this quite a bit also during previous quarters that generally speaking, we will need the economy to pick up speed in terms of the recovery phase that we are in.

And everything that is disturbing that picture is obviously not good for business. So if we have globally, even if it's not evident in our books, but the appetite or the demand for credit needs to pick up speed.

That's where we are. We are not growing on our own.

We are growing with our customers. So if they have a need, then we support them, obviously, it's not more fancy than that.

I just wanted to pick up on some of the earlier comments you made around costs and AI, right? So I think in response to one question, you said, look, the staffing decisions are made at the branch level.

And at the same time, you feel like you're doing kind of enough in terms of technology and AI. But when we think about that, I mean, surely, technology and AI are investment decisions that had to be made at a central level and the benefits of AI are expected to largely come through in the -- in the form of lower staff needs.

So does that create a tension in your decentralized model? Do you think you are as well equipped to reap the benefits of AI as maybe some of your peers that run more centralized business models?

So Johan, thank you for the question. I appreciate that because this is actually a very good point.

When it comes to decentralized way of working and resources, that refers mostly to the branch business. And when it comes to decision-making in terms of infrastructure program, AI investments, which is obviously a larger ticket.

that's been taken care of within the management of the different areas, but also, of course, with the Head of IT, sorry. And we discuss that both me and Marten when it comes to these large investment programs that we run to make sure that we don't have any problem with holding back on time when it comes to develop new facilities, new prospects for doing business or creating efficiencies.

So this is not a decentralized way of working. The -- what we should do comes from business and from IT.

And then Marten and I and Head of -- Anton Keller, Head of IT, makes decision when it comes to the more heavy investments in this. So there's not a decentralized way of doing what you like when it comes to IT investments.

But do you not need full buy-in from the organization on adoption to make the investments work.

Yes. But that's not a problem because if the reason is correct and right and logic and good for the bank, everybody will buy in.

That's up to us to really make sure that the people understand why we do this. And I don't have any -- not once have I felt or heard that there is going to be difficulties in explaining the rationale when it comes to IT investment and spending because that puts the bank in a strong kind of competition position, which will be necessary all the time for a company to grow.

So I don't think there is any problem with that, actually.

Just one question then. So this quarter, you hiked your mortgage rates very late in the quarter and STIBOR moved earlier.

Could you just talk a bit about what you saw in the quarter in terms of timing effects? And maybe you could touch on as well any kind of balance sheet hedge offset you have there?

We saw none of those effects is the short answer. So yes, that's it.

And sorry, how is that -- I thought your list price would be determining the kind of role of the negotiated rates or the rates on mortgages. And obviously, your STIBOR, any kind of swaps into STIBOR would have moved.

So why would you not see any impact?

We reset the interest rate for mortgages the 1st of April to start with. So it's first every month is the cycle, if you will, where we reset these interest rates.

I'll just add that the price we get from the business when we do business with our private customers when it comes to mortgages is not -- it's -- the discussion stems from the list price, but it's not where we do business. So the cost for our branches when it comes to -- the funding costs for our branches, that it's volatile.

It comes from where the market rates are. And they will then push and they do business where they find there is a profitability.

So this -- the list price is just the way we start with the list price. We never do business on list price.

So the volatility in short rating -- short interest rates are taken care of in the day-to-day business on the branches.

So just to clarify then, so the STIBOR moves are -- the STIBOR moved in the quarter, you say your pricing on the list price changed on the 1st of April because I guess your list price changed at the end of March. But I understand that your front book is a negotiated rate.

But surely, as people roll towards -- if I have negotiated the rate, that will move with the list price. I think it will not move, but that plus the discount will be the role.

So I don't quite understand how you can have STIBOR moving up and list prices staying stable without having any impact in terms of...

So when you roll your 3 months interest rate period, we have another discussion with the customers. And then we set the new price for the next coming 3 months.

So I don't really understand your concern there.

Maybe I'll catch up with you. Yes.

And sorry, some follow-ups since we could only ask one question. So a follow-up and a real question.

And it's back to, I think it was Namita asked about the commercial real estate exposure. I mean you're one of the most commercial real estate heavy banks around.

And if we look in this quarter, the only growth is coming from commercial real estate, I think, in all markets, while other corporate banking is declining. Is that a strategy that you're happy with given that, I mean, the profitability of a CRE loan is normally lower than other types of corporate banking given what you can do around it and so on.

So are you steering the bank in this way? Or is it just happened to work out like this?

So Andreas, we don't steer the bank in which customer to pick and choose. That's for the branches to do.

If they find it suitable or they find the risk suits us well. We have products that could solve problems for a corporate or real estate company, we do that.

So it's the steering from my side. This is the way the bank is run.

We make sure that our branches are in a position to compete and then they choose which counterpart they want to do business with. And this is how the balance sheet will ends up in that case.

So it's not a -- it's not a choice from my perspective on where to do business. We try to compete on all segments.

We compete on industrials or we compete on commercial real estate business. It's up to the branches to do that, to choose.

Yes, that's fine, but the branches is quite significantly steered by a cost/income ratio and want to keep costs low, as you discussed earlier. But if they would then go after some other types of corporates where the margin could potentially be thinner and the cost-income ratio would be higher and then the benefits of doing some other type of business could be taken in the markets division in Stockholm.

So is the branch really the ones that would drive a higher profitability type of lending since they are driven by costs?

Yes, I say they are because what we do when we do business on the ancillary business, for example, within FX or other parts of the Investment Bank, that's been taken care of by refund, if you put that way to the branches. So everything comes down to the branches P&L anyway.

So that's just good. So we do...

But eventually...

Sorry.

But eventually, but you might have to live 2 years with a low margin until you do that business because you have to be committed to the company and so on.

No, no, that's not how it works. So you get instantly repaid from the investment bank when they do their trades or their interest rates derivatives or whatever.

That comes the month after. So that's not the way it works when we steer the bank.

Okay. Then finally, on your loan-to-deposit ratio in Norway at around 300%.

If rates now start to go up in Norway, which seems to be expected, is that a positive or negative for you guys?

It will eventually be a positive thing, Andreas, but it will take a little bit of time to adjust, obviously. So yes, but it's positive long term, yes.

We will immediately benefit from the deposit side, of course. So that will give a boost.

But then it's all about adjusting the lending book as well to the new market rate.

Yes, I was thinking that some of a very deposit-rich bank could afford to compete on the margin on the lending side, given that it makes so much more on the deposit side, will you guys have flipped the other way around.

Yes. But that's the way it has been for many decades now when it comes to the business and how we compete in Norway.

So that's nothing new.

All right. Thank you, everyone, for all the questions and for those of you who listened in.

And as always, you know you can always reach out to the Investor Relations department for any further questions and follow-ups. With those words, we wish you all a very good day.

Thank you very much.