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Edited Transcript of SWED A.ST earnings conference call or presentation 25-Apr-17 6:30am GMT

Thomson Reuters StreetEvents

Q1 2017 Swedbank AB Earnings Call

Stockholm May 16, 2017 (Thomson StreetEvents) -- Edited Transcript of Swedbank AB earnings conference call or presentation Tuesday, April 25, 2017 at 6:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Anders Karlsson

Swedbank AB (publ) - CFO

* Birgitte Bonnesen

Swedbank AB (publ) - CEO and President

* Gregori Karamouzis

Swedbank AB (publ) - Head of IR

* Helo Meigas

Swedbank AB (publ) - Chief Risk Officer

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Conference Call Participants

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* Adrian Cighi

RBC Capital Markets, LLC, Research Division - Equity Associate

* Alice Mary Timperley

Morgan Stanley, Research Division - Research Analyst

* Andreas Hakansson

Exane BNP Paribas, Research Division - Research Analyst

* Anh Khoi Do-Thoi

JP Morgan Chase & Co, Research Division - Senior Analyst

* Anton Kryachok

UBS Investment Bank, Research Division - Director and Analyst

* Geoff Dawes

Societe Generale Cross Asset Research - Equity Analyst

* Jacob Max Kruse

Autonomous Research LLP - Partner, Scandinavian Banks

* Jan W. Wolter

Credit Suisse AG, Research Division - Head of European Banks Research

* Johan Ekblom

BofA Merrill Lynch, Research Division - Analyst

* Magnus Andersson

ABG Sundal Collier Holding ASA, Research Division - Analyst

* Maths Liljedahl

Nordea Markets, Research Division - Senior Analyst, Financials

* Matti Ahokas

Danske Bank Markets Equity Research - Head of Equity Research-Finland

* Peter Kessiakoff

SEB, Research Division - Research Analyst

* Rajesh Kumar

* Riccardo Rovere

Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst

* Ronit Ghose

Citigroup Inc, Research Division - MD, Head of European Banks Research and Global Sector Head for Banks

* Willis Palermo

Goldman Sachs Group Inc., Research Division - Equity Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the first quarter report 2017. Today, I'm pleased to present Gregori Karamouzis, Head of Investor Relations. (Operator Instructions) Gregori, please begin.

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Gregori Karamouzis, Swedbank AB (publ) - Head of IR [2]

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Thank you. Good morning, everyone, and thank you for dialing into this call presenting our first quarter result. With me, I have our CEO, Birgitte Bonnesen; our CFO, Anders Karlsson; and our CRO, Helo Meigas.

With that, I'll hand the word over to Birgitte.

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [3]

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Thank you, Gregori, and welcome to our first quarter call. We have, as you've seen, a very strong quarter where we succeeded in mitigating the headwinds of increased resolution from fee, seasonal and day effects. On the upside, we have the one-off gain from the sale of Hemnet and increased volumes in mortgages in Sweden.

Despite a more subdued demand in the corporate space, Swedish Banking has started seeing more activity and a slight pickup in volumes. As mentioned in previous quarters, we have a goal, a 1, 2 position, and we delivered in all areas of our plan.

This quarter, activity in the organization has been extremely high. We have created a CVM unit. Working with customer value based on data, proactivity and relevance in the offers, we have delivered a large number of new services to the customers across the different products and business areas. The digitalization of the lending process reached one goal this quarter and delivered a fully digital consumer loan functionality in Sweden.

We also entered into collaboration with the fintech, Mina Tjanster, which is an app for managing different service agreements in Sweden. This we do both for revenue reasons, but a lot for loyalty reasons. It complements our own services, and it increases customer satisfaction.

In Baltics, we launched Smart ID, which is an app identification and signing of agreements. This is something that will enable the use of digital devices even more and significantly change the way of doing business in the market. It is a true game-changer.

These are just 3 examples of deliveries, and they show the areas that we focus on. We will come back to other areas. One that I will just mention before I go to figures, that the inflow we've seen in Robur and the funds area for the first time in a very, very long time, and it's a quality net inflow.

We'll come back to this, but all in all, the first quarter shows an ROE of 15.9%, strict cost culture of 0.38 in cost/income, a strong capital buffer of 250 basis points and a continued loan and loss level. Our previous guidance on costs, credit losses and credit growth remains.

And with this, I'll leave the word to Anders.

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Anders Karlsson, Swedbank AB (publ) - CFO [4]

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Thank you, Birgitte. I will as usual, first walk you through the highlights in each of the 3 business segments and thereafter sum it all up at group level. Lastly, I will mention the quarterly developments with regards to our capitalization.

Before starting, I just want to remind you that we have made some reporting changes in the quarter that have impacted the business segments, although the group reported result is not impacted. This means that some historic figures for Swedish Banking and large corporates and institutions are not directly comparable. I will comment on them specifically. The biggest reporting change, however, is how we report the compensation to the savings banks, and that is reflected in restated historical figures.

Now moving to Swedish Banking. They delivered a strong underlying result. NII was flat in the quarter despite increased resolution fee, fewer days and transfers of customers and volumes to large corporates and institutions, all in all, SEK 250 million in headwind. The strong underlying NII is mainly due to further back book mortgage margin expansion and loan volume growth, but also slightly increased deposits and corporate margins.

Mortgage margins on new lending fell about a couple basis points in the quarter. A positive stock market development and net fund inflows, as Birgitte mentioned, improved asset management income, income from cards was seasonally weaker. The sale of Hemnet to the real estate advertising website generated a one-off tax-free capital gain of SEK 680 million. Asset quality continued to be resilient.

Turning to Baltic Banking, yet another quarter with a resilient performance. NII was negatively impacted by fewer days and FX effects, while increased private lending volume supported income. Mortgage lending margins and deposit margins were flat in the quarter, while corporate margins were slightly down. Net commission income was negatively impacted by normal seasonal effects, both in cards payments and asset management. And I want to remind you that in Q4, we had a performance fee in asset management in Latvia, which is not coming back in Q1. Expenses were slightly down due to seasonality and FX effects, and asset quality continued to be solid.

Lastly, looking at LC&I. LC&I delivered a somewhat lower result before impairments. NII was impacted negatively by the increased resolution fund fee, fewer days and lower average lending volumes in the quarter. Also, positive one-offs of around SEK 40 million in Q4 impact the comparability. The customer transfer from Swedish Banking increased NII this quarter with approximately SEK 90 million. Net commission income was lower in the quarter compared to very strong Q4 due to seasonal effects and performance fees in Asset Management cards and brokerage.

Net gains and losses were also lower versus the very active Q4. And trading income, especially within FX and equity, was slower in Q1. Also, valuation effects and derivative exposures, quarter-over-quarter, impacted negatively. Credit impairments in the quarter were lower than in Q4 and yet again came from provisions in the oil-related segments. Helo will talk more about the outlook in the oil and offshore portfolio in a short while.

To summarize this on group level, we delivered another strong set of results. Mortgage volumes and margin expansion supported NII and mitigated the negative pressure from the increased resolution fee and fewer days. Commission income was lower due to seasonal effect. Activity is high in the market, which bodes well for remaining part of the year, at the same time, as we have inflows again in our asset management business.

Net gains and losses were lower in the customer-related part, but was supported by better result in Group Treasury. Normalization in the FX swap market, following some volatility over year-end, reversed the negative valuations from Q4. The Hemnet capital gain mentioned earlier will be part of the distributable result in 2017. Expenses came in seasonally lower in the quarter.

Let me spend a few minutes on Group Treasury result and expenses for 2017 before I move on to capital. Our Group Treasury result guidance for the full year of 2017 remains. That means total income looked at by combining NII and NGL and excluding the one-off gain on the VISA transactions is expected to be about the same level as in 2016. This, of course, assumes no change in interest rates, covered bond spreads and FX swap rates. The outcome in the first quarter does not change the overall guidance, but the outlook on NII and NGL has slightly changed. NII is expected to be around the same level as in 2016 and so does NGL.

Looking at the expenses for this year. As a consequence of the reporting changes we made during the quarter, moving the variable part of the compensation to the savings banks to NII, we adjust the total expense guidance for full year 2017 to around SEK 15.8 billion.

Turning to capital. Capitalization remain strong with a Common Equity Tier 1 capital ratio of 24.2% and a minimum requirement of 21.7%, including a countercyclical buffer increase to 2% and current risk exposure amount levels as base. Our buffer to the minimum requirement remains solid at around 250 basis points. We still await clarity on primarily the expected Basel proposals and the subsequent implementation by the EU before we will set our management buffer level.

The CET1 capital base was adversely impacted this quarter by around SEK 0.5 billion as a result of lower discount rate than valuing our pension liabilities, the so-called IAS 19 effect. Risk exposure amount increased by SEK 16.6 billion, mainly due to model adjustments relating to default frequencies in the corporate portfolio. As part of the model review, in conjunction with preparations for submitting the planned model related to the increased capital requirements for corporate exposures that the Swedish FSA took a decision on last year, we found that one of the corporate models has been underestimating the default frequencies. To rectify for this problem, we have, as a consequence, decided to hold more capital for expected PD increases already in Q1 2017, leading to high-risk exposure amounts, which is captured in the other credit risk category, while waiting for the model update to be approved by the Swedish FSA.

Let me now hand over to Helo to walk you through the asset quality.

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Helo Meigas, Swedbank AB (publ) - Chief Risk Officer [5]

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Thank you, Anders. We continue to have strong credit quality now in our market, both Swedish Banking and Baltic Banking so reversal from Q1, with SEK 3 million and SEK 66 million recoveries, respectively. In large corporates and institutions, we report SEK 408 million credit impairments in our oil and offshore portfolio. This is in line with what we communicated during the previous quarter that we may see further provisioning need during 2017.

Referring back to the guidance we gave last quarter, which was 10 to 15 basis points credit impairments to the total credit portfolio, as Birgitte mentioned, will remain the same guidance for this year. We have not seen improvement in the oil-related industry. And even though there are first consolidation transactions ongoing, the situation remain strained and further provisioning during the year may be needed.

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Gregori Karamouzis, Swedbank AB (publ) - Head of IR [6]

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Thank you, Helo. Operator, we'll hand back to you, and happy to take any questions from the audience.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Magnus Andersson from ABG.

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Magnus Andersson, ABG Sundal Collier Holding ASA, Research Division - Analyst [2]

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A few questions on NII. First of all, you talked about continued expansion of back book Swedish mortgage margins of 3 to 4 basis points, if you can say something about for how long you expect this to continue. And secondly, I note that your NSFR is now 109%. The previous, Anders, you talked about a target level of 103% to 105%. And roughly, I think we were discussing around SEK 100 million NII impact per percentage points in NSFR, if you could give us some update on that target or how do you expect to arrive there. Also, finally, more technical perhaps, but if we could get the resolution from the increase of SEK 183 million, quarter-on-quarter, per business area which facilitates the analysis. Yes, that's it on NII.

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Anders Karlsson, Swedbank AB (publ) - CFO [3]

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Thank you. As always, relevant and difficult questions to answer. But on the mortgage book or the repricing, it can sort of divide the stock or the back book in 2. One is the 3-months floating that is sort of constantly repriced, and then we have around SEK 200 billion of fixed mortgages coming in, and it's primarily in the latter part that you see that the mortgage expansion -- the margin expansion is continuing. When it comes to NSFR, I kind of regret that I haven't mentioned that, but I still stick to that we shouldn't have a higher NSFR than necessary. Why we are at 109% now is that we have, since the capital market has been very benign and we have a fairly large maturities in the year, we have front-loaded the funding agenda, so there is no sort of ambition to keep up the 109% NSFR going forward. And the third question was about the resolution fund fee booked in this area. I have this number, but I'll ask Gregori, too.

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Gregori Karamouzis, Swedbank AB (publ) - Head of IR [4]

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Yes. Magnus, as you can see in the back book, the resolution fund fee, the total for the quarter was SEK 343 million. And if you look at the approximate split that we gave you in the press release on April 3, 66% of that belongs to Swedish Banking, 26% to LC&I and 8% to Baltic Banking, so that's the SPL of the total fee. The deltas in the quarter were an increase in Swedish Banking of around SEK 130 million versus last quarter and SEK 95 million increase in LC&I versus last quarter, and the Baltic Banking correspondingly then decreases with the difference.

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Magnus Andersson, ABG Sundal Collier Holding ASA, Research Division - Analyst [5]

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Yes. Sorry, on the back book repricing, the SEK 200 billion, for how long do you think this will continue? Should we expect the same amount in the coming quarters, that magnitude?

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Anders Karlsson, Swedbank AB (publ) - CFO [6]

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It's not evenly spread in terms of maturities, but it goes on for a couple of years still.

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Magnus Andersson, ABG Sundal Collier Holding ASA, Research Division - Analyst [7]

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Okay. And just one final question on capital. Do you know anything more about the timing or the phasing-in of corporate risk weights?

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [8]

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We have started the preparations for submitting the model, actually, to SFSA, but it will take a bit of time. So we expect to submit it in, definitely before the year-end, in the later part of the second half of the year. But then it's up to the SFSA when they would give us the approval for this, but most likely '18.

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Operator [9]

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Our next question comes from the line of Andreas Hakansson from Exane.

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Andreas Hakansson, Exane BNP Paribas, Research Division - Research Analyst [10]

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Yes. And following up on Magnus' questions on NII. Could you just continue? You sent out a press release in the quarter saying that you're repricing parts of the SME book. Could you just give us a bit of detail to that? And when do you expect to see a positive impact on that repricing? Also, could you give us a number? You mentioned in the text that the rising interest rates did have a positive impact in the quarter. Could you tell us the size of that, please?

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Anders Karlsson, Swedbank AB (publ) - CFO [11]

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Thank you, Andreas. On the first part, which is the repricing on the corporates, it is a, as we also say, it's a small portion of the corporate portfolio. It's around SEK 40 billion. That is with a sort of rate -- the base rate is administratively set by us. It's not an IBOR-related base rate. So the bank sort of have the possibility to set the rates ourselves. We did that in March, 40 basis points was the increase, and you can calculate the yearly effect of that which is 160. Obviously, not that much in the quarter, though, since it was in March. And then we have seen, but again, it's not a trend, we have seen that in some sectors, we have been able to reprice even on the IBOR-related lending. But the ones we mentioned is that. The other question was about how much...

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Andreas Hakansson, Exane BNP Paribas, Research Division - Research Analyst [12]

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(inaudible)

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Anders Karlsson, Swedbank AB (publ) - CFO [13]

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Yes. Sorry. Please repeat the question.

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Andreas Hakansson, Exane BNP Paribas, Research Division - Research Analyst [14]

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Now it was if you could give us the size of impact of rising interest rates that you mentioned in the text.

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Gregori Karamouzis, Swedbank AB (publ) - Head of IR [15]

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Is it on deposits rate, particularly on the LC&I?

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Andreas Hakansson, Exane BNP Paribas, Research Division - Research Analyst [16]

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Yes.

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Anders Karlsson, Swedbank AB (publ) - CFO [17]

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It's -- I would say it's between 1 and 2 basis points.

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Andreas Hakansson, Exane BNP Paribas, Research Division - Research Analyst [18]

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Excellent. And then just final question, we talked about the back book mortgages, and you said that the front book declined a bit in the quarter. Could you tell us -- you then sometimes reprice mortgages up in the quarter, what's the outlook for the front book from here, if you could?

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Anders Karlsson, Swedbank AB (publ) - CFO [19]

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That's a very good question. I think we also increased our rates. But as we have said in the past, and we'll stick to that, we will not be the first movers. So we -- I think that what you will see, if anything, if rates continue to increase is incremental, small changes step-by-step by us and different actors in the market.

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Operator [20]

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Our next question comes from the line of Willis Palermo from Goldman Sachs.

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Willis Palermo, Goldman Sachs Group Inc., Research Division - Equity Analyst [21]

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I have 2 questions. The first one is on the fee income. You mentioned that there were some quality inflow now from Robur. And I was wondering if you could elaborate in terms of quality, what do you mean and where do you see those inflow coming from and if we can talk about trend reversal in that business now? And what kind of growth do you have in mind going forward? That's the first question.

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Anders Karlsson, Swedbank AB (publ) - CFO [22]

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Okay. If we'd start with the asset management book, we mean by high quality is that it's big money, it's private individuals buying into our funds. Institutional moneys, as you know, are a bit more volatile. As far as the action comes on how we sort of proceed with asset management and our initiatives there, I hand over to Birgitte.

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [23]

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We have, this year, we have a very ambitious plan for the savings area, overall. And we have increased our activities in support for the branches and also in the digital channels for sale of savings products. We've also increased the activity and changed a big part of Robur. We have a new CEO in Robur, the asset management company. And all -- for example, all our funds now have a sustainability profile. We have launched 2 new funds this quarter. This is the first time in years, I would say, and they have been extremely successful from the beginning, sold really, really well. So this is what we see. We'll continue working intensively with the asset management company and with the frontline in support. And it's primarily pensions we are targeting, and that has been successful so far.

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Anders Karlsson, Swedbank AB (publ) - CFO [24]

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And just to add to it, I mean, this inflow has a limited impact on the income in the quarter, obviously, and that is more related to the fact that the stock exchange or the markets have been very benign.

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Willis Palermo, Goldman Sachs Group Inc., Research Division - Equity Analyst [25]

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Yes, of course. And just related to that, do you still believe that you still continue to have a more attractive pricing than competitors? Are you saying this is also part of the variable now, do you think it started to materialize?

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [26]

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We have a very attractive offering. You can have anything from funds where you pay 10 to 20 basis points up to very actively managed about 125. So we say we have -- this is the range where we move. And within that range, we have a very good combination of different funds. So I think our offering, as a whole, is very attractive.

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Willis Palermo, Goldman Sachs Group Inc., Research Division - Equity Analyst [27]

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Okay. And the second question was on the cost and most specifically on the trajectory you would expect for the full year. When we annualize the first quarter, it's currently running above the full year target. If you could please remind us about the initiatives you started last year and the magnitude and indicators, maybe an idea of the timing when they will fit through the cost line to meet the target of 15 point something?

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Anders Karlsson, Swedbank AB (publ) - CFO [28]

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Around 15.8. Yes, if you take 4 and multiply it by 4, it becomes more than 15.8, so it's a very good question. I mentioned it before and it's still very relevant, it will although come during the year. We have a lot of procurement initiatives going on, and they will pay off as the year goes along. We have near-shored a large number of services and FTEs to the Baltics, that is gradually coming into the cost, on a positive note. And thirdly, I expect us to see fewer FTEs during the year within the bank. So I'm very confident in that sense. But the first quarter is a bit on the higher end compared to 15.8, but that's the ambition and that's the target.

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Operator [29]

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Our next question comes from the line of Anton Kryachok from UBS.

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Anton Kryachok, UBS Investment Bank, Research Division - Director and Analyst [30]

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Just 2 questions, please. One, following up on the net interest income and the mortgage margin trends. Given that mortgage pricing has lagged a little bit with the pace of the increase in STIBOR, I was wondering if you can lay out the key constraints in your mind that have prevented you from passing up the mortgage book on the front-end at the same pace as the rate rises? And a second question, please, on the inflation in REA that we have seen this quarter. Can you just confirm that the change related to the technical default frequency was caused entirely by your internal review rather than the regulator having a look at the models? And have you finished reviewing all of the models and are you still in the process of doing that on the corporate side?

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Anders Karlsson, Swedbank AB (publ) - CFO [31]

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To start off with your question on the mortgage repricing. I think that -- I mean, first of all, we are not changing list prices as STIBOR moves, that would be new prices everyday. So you will see, as I said earlier, an incremental shift upwards if STIBOR stays or further increases. So it takes time. It will be gradual. It's not something we do on a daily basis. As far as the risk exposure amount, I will hand over to Helo.

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Helo Meigas, Swedbank AB (publ) - Chief Risk Officer [32]

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On your first question, yes, I do confirm that this was purely our own finding as part of the regular model review and because we started to prepare for the model update. So it also went to the regulator and said that we have found a deficiency. About the reviewing goal we model, this is an ongoing process. This is not something that is done within 1 year, so we continuously review the models and see whether the actual default frequency in the models are in line with what we see in the real life. So this is an ongoing process. But we don't expect any further significant adjustments as we have this quarter.

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Anton Kryachok, UBS Investment Bank, Research Division - Director and Analyst [33]

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That's very clear. I'm sorry, if I may just come back to the mortgage margin question. I'm curious to understand how do you think about passing on higher interest rates to the consumers on the mortgage side. Do you -- you've relayed that the benefit that you get on the deposit side from higher rates versus your mortgage pricing and you kind of look at the 2 together? Or do you look at mortgage prices separately, only in conjunction with your funding cost and kind of ignoring the benefit you get from deposit margin expansion in a rising rate environment?

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Anders Karlsson, Swedbank AB (publ) - CFO [34]

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Okay. Thank you very much for reminding me of the deposit fees because that is a very relevant comment. No, we are not looking at them together. When you look at the pricing in the mortgage market, you see that there are different actors acting differently in this quarter. Some are more aggressive than others. We have said that we will follow the market. We will not be the leading player in terms of repricing, and that is what we continue to work with. But it will be incrementally rather than any major shift in pricing. But you shouldn't view them as -- we don't view them in combination. We view them as separate products, and pricing are separate.

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Operator [35]

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Our next question comes from the line of Jan Wolter of Credit Suisse.

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Jan W. Wolter, Credit Suisse AG, Research Division - Head of European Banks Research [36]

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Yes, Jan Wolter here from Credit Suisse. Can you hear me okay?

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Gregori Karamouzis, Swedbank AB (publ) - Head of IR [37]

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Yes, we can.

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Jan W. Wolter, Credit Suisse AG, Research Division - Head of European Banks Research [38]

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So first on the NII sensitivity, when I look into the disclosures in the fact book this quarter, it looks like it's now SEK 4.8 million NII increase for a 100 basis point higher interest rate. So although we can discuss what the right number is, what drove the increase between the fourth quarter and the first quarter, just in principle? So that's the first question, if you have any details on that.

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Anders Karlsson, Swedbank AB (publ) - CFO [39]

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Yes, Jan. Thank you. The main reason for the change in the sensitivity is the fact that STIBOR has increased. And as you might remember, we have a chunk of corporate loans where we have lowered the rate. So when rates move closer to 0, you will get a sort of higher effect from -- in the sensitivity calculations. That is the main reason for it.

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Jan W. Wolter, Credit Suisse AG, Research Division - Head of European Banks Research [40]

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Okay. That's very clear. And then, I think, when we look at the model adjustment that Swedbank disclosed this quarter here, I think listing the REA by around SEK 20 billion, SEK 22 billion, I think, is that related to the oil book only? Because the lending, the oil lending-related book is around SEK 26 billion when I look into the presentation. So I think REA increase of SEK 22 billion, just wondering what book should we look at because SEK 22 billion increase of a book of SEK 26 billion gross lending, that seems like a lot.

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [41]

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No, it was not only oil book. It was actually consist of 2 parts. One is related to the whole recapture, the late payment related to our leasing contract. And then the second part is about the oil. And bigger bulk is actually related to the leasing contract. So this is a purely technical matter, it has nothing to do with a change in the credit quality. We -- basically, what it means is that if a client is over 90 days overdue, we need to kind of register it as a default, and we have had process deficiencies in capturing these. In reality, all these clients, even if they have been in over 90 days overdue, have actually paid, so we have not had credit losses. So this impact we expect to come out from the models over the, basically, 4 to 5 years' time as, kind of, basically the time rolls forward.

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Jan W. Wolter, Credit Suisse AG, Research Division - Head of European Banks Research [42]

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So how big is the leasing book which drove, together with the oil and offshore book, this REA increase?

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [43]

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Yes, the REA increase, it's about 2/3 comes from the leasing side and 1/3 from the oil. But it's the problem with the model is that it's not about the types of the leasing book. It's actually if you have a total client exposure and you have -- and nobody in one single contract, then it kind of contaminates the whole exposure. So that's related to the clients who have leasing contracts, at least they have been over 90 days old.

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Jan W. Wolter, Credit Suisse AG, Research Division - Head of European Banks Research [44]

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Okay. And the final question here, the repricing of corporate volumes outside the books where the contract is based on an administrative rate, could you say anything about what are the most likely volumes that we can see repricing and where the company intends to offset the higher cost from the resolution fund?

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Anders Karlsson, Swedbank AB (publ) - CFO [45]

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Yes, if you look at the corporate portfolios, we have said in previous quarters, with the continued subdued demand in large parts of the corporate sector, the competition is very fierce. So we have seen anecdotal evidence of it, but it's not really happening the way we thought. The only sector where we have seen a possibility and also acted on it, more specifically, is in the real estate sector. So we will see as the year moves on, Jan. I don't have a much better answer than that.

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Operator [46]

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Our next question comes from the line of Matti Ahokas from Danske Bank.

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Matti Ahokas, Danske Bank Markets Equity Research - Head of Equity Research-Finland [47]

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Two questions from my side as well. Firstly, regarding asset quality. You say that credit impairments were in line with your expectations. Does this mean that we should see write-backs in the Baltic operations with this magnitude also in the following quarters? Second question is regarding the Swedish mortgage market. You also have in your presentation a slide showing the house price growth in Sweden. And recently, Moody's said that Sweden is 1 of the 4 countries most vulnerable in the world for house pricing correction. How have you taken this into consideration in your risk management, volume appetite and pricing measures in the Swedish mortgage market?

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [48]

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Well first of all, the credit impairments and our guidance and if it was in line, we comment on it on a total level, not on a business area level. I mean, the write-backs in Baltic Banking, we have said it previously that we expect them to come to an end. They continue coming in, but I continue to read that we do expect them to come to an end. We don't expect to see further write-backs of the same magnitude going forward. So guidance is only on a total level. As to the mortgage market, we continue to be very confident about the credit quality in the mortgage market. We do see our clients' buffers increasing because of the general increase on the households' wealth as well as because the mortgage cost or housing costs are at a very low level. And that was also confirmed by the SFSA in its recent mortgage review. So of course, if the house prices continue to go up, then the kind of the agility or the kind of the house price itself will increase, so the probability for correction is higher. At the same time, this, we believe, will primarily be affecting consumption, not whether our clients are able to pay the mortgages or not.

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Matti Ahokas, Danske Bank Markets Equity Research - Head of Equity Research-Finland [49]

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So if I understood you correctly, you haven't basically taken any significant measures to kind of prepare for this?

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [50]

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No, what we -- I mean, what we have been working on, we have the debt-to-income cap, which we have not changed, this is that [ 500 base ] percent. We do look at some of the -- kind of the more vulnerable sectors of our portfolio where we see that the affordability margins are smaller and if they also have high LTVs and they have -- they are borrowing very close to our debt-to-income cap, then we are more cautious with them, and then we ask them to kind of look at the increased amortizations. But LTVs are going to remain at a very low level. And in general, we have not made any significant changes in our origination criteria.

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Anders Karlsson, Swedbank AB (publ) - CFO [51]

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So just to remind you that the LTV of the Swedish mortgage portfolio, on average, is around 50%. So even if you see a price correction, there is a big buffer.

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Operator [52]

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Our next question comes from the line of Geoff Dawes from Societe Generale.

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Geoff Dawes, Societe Generale Cross Asset Research - Equity Analyst [53]

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Two questions from me and then a quick clarification, if I may. First of all, in the questions. If I look at the shipping oil portfolio, the absolute level of (inaudible) line actually declined quarter-on-quarter and you had quite a big step-up in the coverage ratio, which was the reason for the new losses. Can you just talk a little bit about the dynamic and specifically whether you're at both an NPL level and a coverage ratio that you're happy with? Or if we go through the year, that coverage ratio will need to go higher again? Second question is on the mortgage volumes. You've obviously been growing at a slower pace than the market overall. Can you just clarify, is that a pricing issue? Or is that kind of a reticence or a caution issue, at least regarding new volumes? And then finally, the clarification. You mentioned net interest guidance in the opening section being flat year-on-year, so flat in 2017 versus 2016. Can you just clarify, was that Swedish Banking? Was that the group? I didn't quite pick it up, sorry. That's it.

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Anders Karlsson, Swedbank AB (publ) - CFO [54]

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So let's start from the end then. The guidance I gave you was on Group Treasury, and that was the combination of NII and NGL where I said that 2017 will be in line with 2016. So it had nothing to do with Swedish Banking.

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Geoff Dawes, Societe Generale Cross Asset Research - Equity Analyst [55]

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Got it. That's clear then, that's good to clarify.

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Anders Karlsson, Swedbank AB (publ) - CFO [56]

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And the second question was about the volumes in the mortgage market. It's a combination of both, actually. As Helo alluded to, we are a bit more cautious in specific segments where you can see that the vulnerability is higher than what we want to see. And it's also price issues. It's a combination of both.

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [57]

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And then on your question on the coverage ratio. We are comfortable with what we have now, but we are guiding that we may need to take further provisions during the year. It will depend on how the restructurings will be finalized. And if there is a need to make further provisions, then we do.

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Geoff Dawes, Societe Generale Cross Asset Research - Equity Analyst [58]

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Okay. But I guess, the dynamic that I'm looking at, it's roughly that 41% probably reflects some NPLs where you don't expect any losses and some NPLs where you expect quite a big build up over the year, which is why you've got absolute NPLs coming down at the same time as coverage going up? Is that correct?

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [59]

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Yes, that's roughly correct. That's the range where we have also been kind of previously.

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Operator [60]

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Our next question comes from the line of Ronit Ghose from Citi Group.

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Ronit Ghose, Citigroup Inc, Research Division - MD, Head of European Banks Research and Global Sector Head for Banks [61]

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It's Ronit from Citi. I just wanted to follow up on the volume question from Geoff. Specifically, if I look at loans, if I adjust for FX, FX movements quarter-on-quarter, am I looking at, basically, a flattish loan book, plus or minus 0% loan growth? And in terms of thinking ahead for the rest of the year, I'm just wondering how much of a deceleration. Do you think Q1 is a bit of a one-off, a seasonal one-off? Or is there a bit of a deceleration of loan book? On the other side of the balance sheet, on the deposit side, corporate customer deposits are up quite strongly, up 34% Q-on-Q. How much of that jump in the quarter is FI deposits? Can you give us some feel of what the underlying corporate client deposits are like? Your retail deposits are flat again, quarter-on-quarter. I'm just trying to get a sense again of the underlying business momentum here. If I strip out the -- you usually have a big FI deposit swing in the first quarter. And my final question is to circle back to all the questions you've had on mortgage pricing. Now of course, I understand, when STIBOR moves, you're not going to change your list prices everyday, Anders. But the 2 to 3 basis point decline we saw in the front book, if STIBOR continues to rise on the same magnitude as Q1, should we assume a similar type of front book decline? Or would the ambition be to absorb front book pricing pressure?

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Anders Karlsson, Swedbank AB (publ) - CFO [62]

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Thank you. A lot of questions. Let's see if I remember them all. Otherwise, you have to remind me, but the first one on volume development. You can see 2 things happening in the quarter. One is that mortgages is growing in Swedish Banking and also corporate, to a certain extent. In LC&I, you see corporates decreasing. There are 2 reasons for the volume development in LC&I specifically. One is that there are couple of large corporates that has repaid their debt and gone to the debt capital markets, which was expected. And the second thing is it's not that we cannot take volumes, but it has been, to a very large extent, a price issue. When it comes to Baltic Banking, it's more or less -- you could say, you see growth, in particular, in private, but corporate is fairly flat. If we go to your next or your last question, because I don't remember the one in the middle, about mortgage pricing. I stick to what I say. The ambition is absolutely to reprice if STIBOR goes up. As you know, it's a competition out there. And as I also said, we will incrementally do it because I don't think that it is wise to have a very volatile list price in a volatile underlying market. So the ambition is definitely there. And when it comes to the deposit volumes, you're right, it's -- the increase you see in the quarter is primarily related to LC&I and its financial institutions, to a very large extent. So I don't view it as sticky and we are charging for it.

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Ronit Ghose, Citigroup Inc, Research Division - MD, Head of European Banks Research and Global Sector Head for Banks [63]

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Right. Just to clarify, Anders, so deposits private clients flat, corporate deposits up SEK 120 billion, SEK 130-odd billion, SEK 115 billion?

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Anders Karlsson, Swedbank AB (publ) - CFO [64]

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Yes, yes. And that's the -- the other part of it is Treasury. That is related to the short-term money market fund placement from the U.S. They tend to disappear at certain points in time, and then they come back.

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Ronit Ghose, Citigroup Inc, Research Division - MD, Head of European Banks Research and Global Sector Head for Banks [65]

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Totally. So if I take out those money market fund deposits, what's the underlying corporate deposit balance like? Is it sort of flattish? Is it growing? How big the U.S. fund number is?

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Anders Karlsson, Swedbank AB (publ) - CFO [66]

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I'd say it's very large. It's around SEK 90 billion, I would say. So the underlying deposit growth is around SEK 30 billion. But in that, you have some financial institutions. So I wouldn't say that it's a strong growth, but the corporate deposit growth, it's not strong at all. It's there, but it's not strong.

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Ronit Ghose, Citigroup Inc, Research Division - MD, Head of European Banks Research and Global Sector Head for Banks [67]

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Okay, that's really clear. Can I just have one clarification? You talked about there's a bit of pricing issue, given the volumes on the loan side. Was that specifically on LC&I where you're talking about corporate?

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Anders Karlsson, Swedbank AB (publ) - CFO [68]

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Yes.

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Operator [69]

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Our next question comes from the line of Peter Kessiakoff from SEB.

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Peter Kessiakoff, SEB, Research Division - Research Analyst [70]

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Most of my questions have been asked, but some detailed ones, however. Firstly, on payments. I think that you're mentioning in the report that you made some price adjustments now in Q1, following, I guess, the interchange fees cap that came in slightly more than a year ago. If you just can elaborate a bit on that? And then secondly, in terms of risk exposure of the market risk, which were down now in Q1 as well, and they were down in Q4. And I think back then, back at the Q4 report, you mentioned that it should probably pick up again in Q1, but it declined again. If you just can elaborate a bit on that as well.

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Gregori Karamouzis, Swedbank AB (publ) - Head of IR [71]

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Peter, it's Gregori here. On the first question on card payment, and what it really is, is that the card providers, Mastercard and VISA, have changed their pricing models, and particularly VISA, towards the end of last year. And that is now shining through or coming through in the first quarter. So it's fee and pricing and rebate changes that those 2 providers have made.

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Peter Kessiakoff, SEB, Research Division - Research Analyst [72]

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Okay. So the kind of additional decline that we saw in Q1 is -- that's -- you can see that on your run rate?

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Gregori Karamouzis, Swedbank AB (publ) - Head of IR [73]

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Yes, that's sustainable. Correct.

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Peter Kessiakoff, SEB, Research Division - Research Analyst [74]

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Okay. And then my question on market risks?

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Anders Karlsson, Swedbank AB (publ) - CFO [75]

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I think it is extremely difficult to view it as a trend, Peter. Market risk in between quarters is volatile, so I wouldn't even dare going into giving you a trend on market risk.

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Operator [76]

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Our next question comes from the line of Adrian Cighi from RBC.

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Adrian Cighi, RBC Capital Markets, LLC, Research Division - Equity Associate [77]

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This is Adrian. I have 2 clarifications, please, one on NII and one on asset quality. On NII, apologies if I missed this, but can you specify the front book mortgage margins are still above the back book level? And then second one on asset quality. Your net accrued impairments in the quarter were 9 basis points with, obviously, a significant chunk coming from the oil-related impairments. However, at the beginning of the call, as I understood, you've reiterated your full-year guidance for, basically, full year levels, in line with '16 levels. Do you expect oil-related losses to remain at these elevated losses for the remainder of this year? Or do you have a buffer in your guidance for potential deterioration in the rest of the book?

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Anders Karlsson, Swedbank AB (publ) - CFO [78]

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Okay. Thank you. Starting off with the mortgage book. If you look at the back book and the front book, the gap is closed. What I said is that when you look at the back book, it consists of, you can say, 2 different parts. One part is the one that is running on floating rate 3 months it's in, and the other part is fixed rate, which was written a long time ago. The one that is written a long time ago, which is equivalent to around SEK 200 billion, there is still a gap between front and back. But on average, the gap is closed in this quarter.

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [79]

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And then on the credit impairment, we guide for 10 to 15 basis points. We are at 9 basis points. I think we are well within the guidance. Where does it come from? We -- majority of it is, in the guidance, is related to the oil portfolio. The credit quality in the home market continues to be very strong. The first quarter, we have had no credit impairments, but this is not normal. One should have credit impairments when one gives out loans to customers. So of course, within this number, there are some credit impairments for the rest of the market of our portfolio as well.

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Operator [80]

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Our next question comes from the line of Daniel Do-Thoi from JPMorgan.

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Anh Khoi Do-Thoi, JP Morgan Chase & Co, Research Division - Senior Analyst [81]

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Just 2 questions from me. The first one is on IFRS 9. I think, last quarter, you mentioned -- or you estimated the impact to between 40 and 80 basis points. Just wanted to know whether that is still the case. And secondly, on mortgages, I believe the FSA had made a few comments to this quarter that they would like to see a lower share of household on floating rate mortgages. Is that something that you're actually currently seeing, particularly as rates begin to rise? Or is that something that you're expecting to see? A bit of thoughts around that would be helpful.

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Anders Karlsson, Swedbank AB (publ) - CFO [82]

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Okay, thank you. To start off with IFRS 9, we have said 40 to 80. And clarity comes as time goes by, and development internally is progressing. What we see as we speak is rather an effect of 30 to 60 basis points. On the floating versus fixed, you can see that it's been a healthy debate in the media around that in Sweden lately and you can see a gradual shift. Some clients are moving more into fixed than floating, but it is very gradual. It's not a significant jump.

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Anh Khoi Do-Thoi, JP Morgan Chase & Co, Research Division - Senior Analyst [83]

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Can I just follow-up on that fixed versus floating a bit? I mean, I guess, as I look at your lift prices, it's sort of encouraging customers to move out in terms of duration. So I just wondered if that is something that you're actually actively steering your customers towards? And then secondly, what would that actually mean in terms of margins if customers start to increasingly switch out to longer-duration mortgages?

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Anders Karlsson, Swedbank AB (publ) - CFO [84]

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I see your point. Yes, we -- when we -- I mean, we talk about sustainable lending. And when we look at customers and their repayment capacity, that is taken into account. So if you are on the weaker side, we definitely recommend people to at least partly fix some of the rates. And you're perfectly right that the list price curve is a bit flattish, so if -- which essentially means that, as we speak, the margins are a bit lower on the fixed rate than on the floating rate. But as you also know, market rates are moving all the time, so we'll see where that ends up. But it's a gradual shift, and I personally think that it's good that people are fixing more from a risk perspective.

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Anh Khoi Do-Thoi, JP Morgan Chase & Co, Research Division - Senior Analyst [85]

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Okay. And sorry, just a follow-up, one last time. The margin differential that you mentioned, could you just give us a feel for how much that is, let's say between a floating and, let's say, a 5-year mortgage?

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Anders Karlsson, Swedbank AB (publ) - CFO [86]

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If you look at the last 6 months, it's been varying between 0 and 40 basis points, less margin.

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Anh Khoi Do-Thoi, JP Morgan Chase & Co, Research Division - Senior Analyst [87]

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Okay. And on average, somewhere in between? Or...

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Anders Karlsson, Swedbank AB (publ) - CFO [88]

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I don't have that on the top of my head, but that could be a fair assumption.

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Operator [89]

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Our next question comes from the line of Johan Ekblom from Bank of America.

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Johan Ekblom, BofA Merrill Lynch, Research Division - Analyst [90]

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My questions have been covered.

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Operator [91]

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

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Riccardo Rovere, Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst [92]

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A couple of questions, if I may. The first one is on risk-weighted assets again. How much of the kind of SEK 20 billion you reported increase you reported in this quarter can be considered as an anticipation of what could come after the approval of the PD models from the Swedish FSA? This is my first question. The second question I have is on oil-related loan losses. I'm a bit confused. Now you are taking all these losses, but the Brent price has started collapsing more than 1.5 years ago. So I was wondering, why such a long time? First. And secondly, you have increased coverage ratio. The exposure is going down. You have updated PDs, LGDs, all the model stuff, but you keep saying that you might continue to have provisions related to the oil and gas exposure. And I am just starting to understand why, after the provisions, after higher coverage ratios you might have more to come in the coming quarters, if I get your comments right.

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [93]

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If I start with your question regarding the REA increase, yes, all of it, all of it is what we expect we need the one as part of the model update, and this is our best estimate as of today. Then on kind of the dynamics of the provisioning in the oil portfolio. I mean, of course, oil price is an important variable when we look at the underlying quality and how our clients are doing. However, the bigger impact is related to the investments. And there have been expectations that we will see improvement in the market in the end of 2017/'18. 2017, we now expect to be a very difficult year for the oil sector because the occupancy rates for the rigs and the supply vessels are at historic levels of prices. For the services and also in profitability in that market is very low, so clients have difficulties with their cash flows. We have not finalized fully the first phase of restructurings. This is one uncertainty why we think that before we will say how much credit impairments we need, we need to finalize the work we are in the middle of. We also see that there may be -- already, we are starting to see clients starting to restructure their exposures again because the market has not been improving. This, however, we don't think will result in a further credit impairment as we see it now. But it is a difficult situation, and that's why we'll continue to guide on the possibility for the further credit impairments during 2017.

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Riccardo Rovere, Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst [94]

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Right. But wasn't this the case over the past -- the same story over the past 18 or 24 months? What has changed? We know it should be a little bit better, no, than maybe 18 months ago.

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [95]

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No, but I mean, we have had -- there has been no change in the story. This is exactly what we have been telling. These are -- this is a sector with a difficult situation in front of it. We have exposures which need restructuring where we have multiple stakeholders we need to agree. Things takes time. The input to the situation is oil price, which is very difficult to predict to any of us. There are adjustments ongoing in the market, but we don't think that there has been a significant improvement compared to 2018. So I believe we have not changed our story.

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Riccardo Rovere, Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst [96]

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Okay. Okay. And if I may, a very final question. What is your base case assumption with regard to monetary policy from Nordics bank from now going forward?

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Anders Karlsson, Swedbank AB (publ) - CFO [97]

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That's a very good question, Ricardo. I think we have given you the guidance through our macro economist. And it's really -- the expectation is that it will start to -- we will start to see some increases in the repo rates in the beginning of next year. But again, as you know, the central bank of Sweden need to act in sort of harmony with what the ECB is doing. But we stick to that, and we'll see.

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Operator [98]

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Our next question comes from the line of Jacob Kruse from Autonomous.

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Jacob Max Kruse, Autonomous Research LLP - Partner, Scandinavian Banks [99]

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Just I guess, 2 questions. Firstly, on the cost side. You say that this quarter is a bit higher, then you get the benefits. Does that mean that when we get to Q4, you should have an exit run rate that is below your current target 15.8%, so that when we look at '18 and '19, you could see cost declining on an absolute level relative to this year? And my second question -- I guess, my second question was just on -- you used to, a couple of years back, have this big IT simplification program in place where I think you had 1,100 systems or products and 800 systems, and you were bringing those numbers down. Is that still an ongoing process? And where are you now? And what could be the benefits from doing that?

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Anders Karlsson, Swedbank AB (publ) - CFO [100]

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Thank you. To start off with your first question, not necessarily. So I understand why you ask it. It really depends on the investment agenda that we have. So the run rate at the end of the year, let's come back to that. When it comes to the second question, I think, absolutely so. If you're listening into the strategy we talked about, which is to digitalize basically all our retail daily banking products, in order to be able to do that and to get the efficiencies out of that, you need to continuously rationalize within the both product spectrum, but also in the IT. But that is something -- it's actually progressing well, but it takes a lot of time. But that is definitely part of our ambition going forward.

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Jacob Max Kruse, Autonomous Research LLP - Partner, Scandinavian Banks [101]

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But if you -- you just -- if you -- in 2012, you had 1,100 products and 800 systems, I think you said. Do you have those numbers now?

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Anders Karlsson, Swedbank AB (publ) - CFO [102]

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I don't have them on the top of my head, no.

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Operator [103]

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Our next question comes from the line of Maths Liljedahl from Nordea.

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Maths Liljedahl, Nordea Markets, Research Division - Senior Analyst, Financials [104]

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Just a clarification, if I may. You say that NII in Group Functions or Treasury, specifically, is very strong from -- or positive effect from the covered bond repurchase. Is it possible to quantify that? And how should I -- you also say that you will have more covered bond issuance in 2017 compared to 2016, so how should we think of this going forward? Also, we know the relationship between gains and losses and commissions and NII here, but should we see this as a very strong quarter in Q1 because you also guide that NII level for 2017 could be at about the same level as in 2016. So how should we think about this going forward?

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Anders Karlsson, Swedbank AB (publ) - CFO [105]

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Thank you. To start off, I think you could roughly say that SEK 100 million comes from 2 things. One is the -- as you remember, we bought back SEK 34 billion of covered bonds in Q4, which is giving an ease on the NII. And then we also had some favorable spreads in the basis swaps helping us. But all in all, that's around SEK 100 million. And on your second question, we will -- as we have large maturities in the year, we will continue to buy back covered bonds. But the effect will not be as evident in those because more of the volumes are at amortized costs, so that's why we keep the guidance on NII and NGL the way we do.

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Operator [106]

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Our next question comes from the line of Alice Timperley from Morgan Stanley.

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Alice Mary Timperley, Morgan Stanley, Research Division - Research Analyst [107]

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I've got 2 questions. First one, you mentioned that you've been able to reprice some of the STIBOR-related lending in your corporate book. Can you perhaps just give a bit more color on the segments that you've been able to reprice? And secondly, thinking ahead to January 2018, can you just talk us through how you're positioning for PSD2 and how we should be thinking about payments fees, I guess, in particular, going forward?

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Anders Karlsson, Swedbank AB (publ) - CFO [108]

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On the first question, it's primarily within the real estate sector that we've been able to see. Certainly, pricing in the corporate portfolio. And as far as PSD2 comes, I hand over to Birgitte.

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [109]

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Yes. As you know that we are the largest payments bank in all our whole markets. And the way the strategies that we have on PSD2 is that it's a combination of collaboration with other providers and internal development. And I think we have a very ambitious plan, and we'll be able to roll it out as it comes in.

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Alice Mary Timperley, Morgan Stanley, Research Division - Research Analyst [110]

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And in terms of the plan, are you able to give us a bit more color on that, please?

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Birgitte Bonnesen, Swedbank AB (publ) - CEO and President [111]

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I don't think that there's so much to say other than, with a position like ours, we have plans in all areas, the omni-commerce, e-commerce space but also the aggregation space. So we're working with strategies in parallel to be able to sort of maintain the position we have today and also to be able to go into PSD2 to be able to continue to catch that -- the market share that we have today.

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Operator [112]

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(Operator Instructions) Our next question in the line comes from the line of Rajesh Kumar from Societe Generale.

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Rajesh Kumar, [113]

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Rajesh from SocGen. Two questions from me as well. First off on funding plan, you said that 2017 funding will be higher than 2016. Any more color on that, especially on sub-debt issuance? And next on MREL, do you expect the final requirement to be way different from what we know now? And on the same topic, what are your thoughts around issuing non- preferred senior?

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Anders Karlsson, Swedbank AB (publ) - CFO [114]

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Yes, to start off with the funding plan. It's a combination of 2 things. It's the majorities you see in the year, which is higher this year than it was in the past year, and then we also try to factor in the net growth between lending and deposits. I would -- to give you some flavor of it, it's around SEK 180 billion of issuance. And we have done so far, I think, SEK 85 billion in the quarter. And that's what I meant with the frontloading. As far as MREL comes...

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Gregori Karamouzis, Swedbank AB (publ) - Head of IR [115]

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Yes, let me jump in here. It's Gregori. Yes, we have estimated the requirement to be around SEK 8 billion, based on the documents that the National Debt Office sent out a few months back. We don't have any reason to adjust those calculations for the time being, but we will know what the exact number will be at the end of the year when we have the resolution, discussion with the National Debt Office. And they are keeping this window themselves open to make adjustments if there are any clarifications further at the European level. And then when it comes to us issuing on preferred senior, for sure, I mean, the requirements that has been described to us includes these type of instruments. The question is the timing. And the timing will depend on a number of things. First, we want to know what the requirements are. We want to see how long it will take for the insolvency law to be changed in Sweden to be allowed to issue those types of instruments. If we make the assessment that it takes too long and we want to get starting, we might look at different structures that are being discussed in the market, as you know, with calls -- and different structures, basically, that allows you to either buy back or convert those instruments into something that is eligible later on. So timing is -- we're not in a hurry. It's a consideration that we are working on and thinking of, but we're not at all in a hurry to come to the market early.

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Operator [116]

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(Operator Instructions) There appear to be no further questions, so I'll hand back the conference to the speakers.

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Gregori Karamouzis, Swedbank AB (publ) - Head of IR [117]

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Perfect. Thank you, operator, and thanks, everyone, for participating, for all the good questions. We'll see you later in the week and speak to you if you have any further questions. Thank you.