Good morning, everyone, and welcome to the Nordea 4th Quarter 2018 Web Conference, where we will present the results. My name is Rod Marveen. I'm Head of the Investor Relations. And with us today, we also have Casper von Koskull, the President and Group CEO and Christoph Reitz, the Group CFO. And we will start with a presentation by Casper, and then we will open up with a Q and A with Casper and Chris.
So Casper, please go ahead.
Thank you, and good morning to everybody. Let me start with an overview. When I look at 2018, I can say that it's been characterized by really key deliveries in our transformation. We are today a more focused, a simpler and more resilient bank. We do now operate in the banking union, of course, as of 1st October of last year.
We have a much improved risk and compliance platform following considerable investments in 2018, but also the previous 2 years. Our digital capabilities are further developed and now enable enhanced customer experience and increased efficiency, so a much stronger platform going forward. However, revenues have been challenged. The underlying results are not where we want them to be. Let me make that very clear.
However, on cost and cash spending, they are reduced according to plan, which I'm very pleased, and we will continue to deliver on that. We have strong credit quality, and we have a solid CET1 ratio of 15.5, in line with the expectations and, of course, the new way of calculating, so not comparable to the past. With that, Nordea Bank Board is going to propose a dividend increase of €0.01 to €0.69 And that proposal will be made later, and will then, of course, be taken to the AGM. Let me give a few highlights from the 4th quarter. Looking at total revenues, they are 3% up quarter on quarter.
NII is up 5% from the previous quarter. And however, now on the on revenue side, the net fair value line is actually down 11%. This is driven by the very tough trading environment we had, particularly towards the end of Q4. When we look at loan loss levels, they continue to come down, and we now expect that also going forward, the loan losses will actually stay around the average level we had in 2018, really showing that we have very solid credit quality in our book. On an annual level, when I look at 2018, it is clear that it featured challenges in all of our revenue lines, and overall operating income came down 5%.
I'll come back to a little bit more detail on the revenue challenges. We did reach our cost target of 2018, So we are below 4.8 when we exclude the goodwill write down related to Russia, which was €141,000,000 We also reached our target of higher net profit in 2018 than 2017, and this actually includes the goodwill write down of Russia. So without Russia, our net profit would have actually been 6% higher than last year, which was actually our target. Let me look at the revenue, and I already mentioned we are not happy with the results, particularly driven by the revenue challenge that we have. We have seen new regulation coming into force.
We also have had a much tougher operating environment, particularly the trading environment, the market environment. And I do have to recognize that we have also had a focus that has been too much inwardly focused. We have done a lot of things to strengthen the bank, putting it in a better position, but that has also meant that we have been inwardly focused. Year on year revenues are down 6% when I look at the continued operations in local currencies. Revenues are also down because of structural deals and particularly pressure in 3 specific areas.
On the structural deals, they are mainly related to derisking and related to our focus on the Nordic area and Nordic markets. So there have been very clear strategy to derisk and focus on the Nordic. The 3 areas where we see particular pressure, number 1 is really savings and investments, where there has been outflow, especially in the high margin areas. Here, new regulation has impacted negatively. And no doubt, particularly the Q4 turmoil that we saw had an impact on asset under management.
Market making activity. Our trading or trading environment has been extremely difficult, particularly in the Q4. The Q3 wasn't easy either. So I would actually say this has been challenging throughout 2018. And then in the more traditional business, we have lower household lending margins in all four countries.
Looking at net interest income. We've seen actually lending volume growth in both household and corporate, But the margins have, of course, been impacted by rate movements. Deposit margins are improving, which is positive, but lending margins, as I said already, particularly in the household side, continue to come down. The good news here is that the pressure in the Q4, particularly towards the end of Q4, was less than we had seen throughout 2018, so definitely an improvement towards the end of the year. We had lower resolution and deposit guarantee fees in the Q4 as we had expected.
Net interest income is actually up 1% if we look at the underlying business that we have. Now you see actually a picture, I think, which illustrates quite well the margin pressure on the household lending side. Margins are down anywhere from 3% to 26% in the 4 different regions that we have. You see particular pressure in Sweden and Norway. Norway lending margins are down, but there, of course, we also see an offset with higher deposit margins.
In Finland and Denmark, the margins are less under pressure. We do expect that this continued pressure on margins will continue, although not as fierce as we saw it, particularly towards in the beginning of 2018. On net fee and commissions, overall fee and commission is up 2% from the previous quarter. Corporate advisory fees picked up from a very low level in Q3. And asset management fees were up mainly due to higher volumes in the beginning of the quarter.
Towards the end, of course, we had a lot of turmoil. Here is to note that when we look at net fee commission income, we did invest our private banking activity international private banking activity in Luxembourg, and we also had lower than expected performance fees, again, given the turmoil towards the end of quarter. In assets and asset under management has been impacted, 1, by the divestment of Nordea Life and Pension in Denmark and also by, as I already mentioned, the sale of Private Banking International in Luxembourg, which actually structurally takes down our asset under management. Also in the Q4, the challenging market condition reduced asset under management. I think particularly towards the end of the quarter, we saw this happening.
When I exclude the structural deals that I just mentioned and the turmoil in the Q4, asset management or asset under management is down roughly €5,000,000,000 So in this picture, you also see really a rebasing of our Asset Management business. So now with the structural deals out of the numbers, it is really from this level that we will have several initiatives to grow the business going forward, and we feel very confident about that. Net fair value, I have already said, was particularly challenged in throughout 2018. I think what pleases me specifically is that we had very strong customer business. And particularly in the Q4, it actually shows the value of our strong customer franchise.
The Q4 was actually, from a customer business perspective, the strongest quarter in 2018. No doubt, the worsening market conditions, they pressured market making activity, I. E, the trading activity, particularly in the Q4. I think we saw specifically very widening spreads in the 4th quarter. And actually, when you look at asset performance overall, 4th quarter was the worst since 2,008.
That led, of course, to weakness, especially in the credit trading book and mortgages and covered bonds. And Nordea, being the dominant risk taker in the Nordic bond market, both corporate and covered bond, Clearly, we experienced a challenge in the Q4 in trading given our position in this business. The costs to me are very positive. We do continue to take down costs, and they are down according to plan. Costs excluding goodwill write downs and excluding the Russia goodwill write down, is roughly now at €4,700,000,000 in line with what we had planned and in line with what we had also communicated.
We have a number of staff down by 5%. And here, you also have to remember that we have depreciation and amortizations going up according to plan again. So we the overall cash cost actually is coming down more. We expect to take down cost 2021 by 3% compared to last year. And also when I look at 2019, we will be lower despite the fact that we have bought Jensidige Bank.
We also expect cash costs to be up to 10% down to 2.21% compared to last year. And of course, cash costs will also be lower this year compared to last year. So very pleased in the development there. Cash costs, I have already mentioned, is very important. And when we look at just from 2018, we were down actually 12% since the year before.
And this is really a broad based reduction in cash spending, which, of course, impacts particularly our dividend payment capability. What's actually happening in our cost base is that you see really a workforce shift taking place, one, because of the regulatory landscape and 1, of course, the way we serve customers. We have meaningfully reduced our number of staff in our personal banking side, of course, due to the fact that we are digitalizing the business and increasing efficiency and where we see 2 areas where the workforce increase is actually coming in is 1 on risk and compliance, driven by financial crime prevention. And I have already mentioned, I'm very happy that we have fundamentally strengthened this platform over the last 3 years. And of course, we see an increase in technology and data management driven by the digital drive that we have.
The number of employees in Poland has more than doubled from 1200 to over 3,000 over the last 3 years. Particularly in IT, we are increasing our activity in Poland, and this trend in increasing staffing in Poland will also continue. So a kind of a shift in the whole workforce and also in the way our cost base actually is being structured. On lending and asset quality, asset quality remains strong, and the positive trend here on lower loan losses continued also in the 4th quarter. We had reversals mainly in shipping and offshore and also in Russia, and loan loss levels actually ended at 5 basis points for the quarter.
Gross impairment rate also down by 6 basis points from the previous quarter where we had and now it's at 182 basis points. We do and I mentioned this already earlier, we expect that the loan losses will actually remain low, and they will remain at the 2018 average level also now at least the foreseeable as we can see going forward. Common Equity Tier 1 ratio is in line with our expectations at 15.5. Again, I emphasize here it's a new way of calculating now when we have moved into SSM. Our CET1 ratio requirement is at 13.9 and our management buffer, which stays unchanged at €2,500,000,000 I think it is also worth highlighting that our risk exposure amount, RWAs, have gone up by 35,000,000,000 euros and is now standing at €156,000,000,000 1 driven by that the Swedish mortgage risk rates floors are now put into Pillar 1.
And the ECB transitional measures of SEK 25,000,000,000 that we have certainly in the transition period now when we have moved into the banking union. As a result of all this, Nordea Bank Board is going to propose a dividend per share of €0.69 which corresponds to a payout ratio of 91%. Maybe taking again a step back. When I look at the past 3 years and particularly 2018, we are delivering on our transformation. We are now a more focused, a more simple and more resilient bank.
We are operating within the banking union, also following our branchification. I think we have made a major shift in our structure, And we are operating in an environment now where we have predictability, stability, and we believe that we should also have a level playing field. We have fundamentally changed our technological and digital capabilities, so we can leverage our scale and increase our efficiency going forward. And I think very importantly in the environment where we operate, we have a satisfactory platform for risk and compliance operations. More work needs to be done, but we are fundamentally a different bank today than we were 3 years ago.
We are delivering our cost efficiency plan, credit quality remains strong, and our balance sheet is robust. All in all, I think we are well prepared to manage the bank successfully throughout the cycle, well positioned to continue the transformation that we're on. So today, where we are is, 1, we have strong cost control where the trend is down year on year also in the years to come. And we also believe that we can continue to take down cost after 2021. Of course, we review the cost all the time, but we also need to calibrate cost and cost reductions based on revenue so that we strike the right balance to ensure lower structural cost at the same time when we can increase the revenue and revenue momentum.
The strong risk management and attractive risk profile is in place. We have very robust capital and funding position. And as I've said, we have an unsatisfactory revenue development. We want we know that. We are not happy with that, and we will address and tackle that.
And that's also going forward the main focus, increasing business momentum. Let me say a few words on really digital and digital transformation. To us, the whole transformation is really based on a set of capabilities. It's not one thing. It's a set of capabilities, and those sets of capabilities are now starting to fall in place given the heavy focus and investments that we've done, particularly over the last 3 years.
The way we look at it, our vision for a mature digital capability, what really needs to be delivered to have it is, of course, a digital front end relationship bank. That's the front end where we can be anytime, anywhere and easy to deal with. That is actually starting to fall in place. We need a digital backbone operating on one platform, fully automated end to end. This is where we actually reduce complexity.
This is also where our core bank system investments come into place. And then we need an agile, lean way of driving the business. So all three elements, all three layers need to be in place, and we are now starting to see all the pieces falling in place that you can see on the picture here. When I look at the past 6 months, we have actually completed several key deliveries. I'll mention just a few of them.
1 is the new mobile front end launch in Sweden, which we already have in Finland and we will also launch over in this year into Denmark and Norway. Customers can now access savings and investment products on their mobiles. Our Nova chatbot reached instant resolution for over 25% of the inquiries or requests in Finland. We have now rolled out a group wide advanced analytics platform, And we have continued to develop Nora, our robo advisor and its functionalities. Last year, we had 115,000 advisory meetings on Nora, and now only in January, we are already at 30,000.
So we can see how the whole digital and going through digital is giving results. So realizing this vision, the foundation of digital capabilities will drive structural costs down, but it will also increase business momentum where we can have better customer experience, better retention and growth in the customer side. So it's both momentum business momentum and cost. And of course, it's also improved resilience in our systems that is important. So the foundations are now in place, and now it's all about driving the adaption and continue the rollout.
So I think the pieces are falling well in place. I've talked a lot about structural cost efficiency. And just to be clear what we mean by that. One is that we are increasing the use of AI and robotics, clearly a way of driving down structural cost. We have a big workforce shift with a ramp up in Poland and Estonia.
We are simplifying our product and service offerings. So we are not doing that many products, which means also that both maintenance, new launch, etcetera, will be cheaper. And we are now starting to leverage our scale and gain efficiency where we consolidate common units. This is IT. This is in operations, and this is also in business risk management.
And then lastly, what we are doing is we are really partnering on infrastructure, and we're also outsourcing some of our infrastructure. All these efforts will structurally lower our cost base. When we look at income, which I think is a key driver of further and future returns, I'm convinced that we have the expertise, we have the products and we have the services and the platforms today to really increase the business momentum. Our position in the marketplace is such. We also have the organization in place.
No doubt, I've said it earlier, we have been too inwardly focused. Given what we have done over the last 3 years, we can shift that. And the number one priority is actually get the business momentum back because we have the pieces in place. We are investing to increase our presence, particularly in Norway and Sweden in Private Banking, where we have a very strong position and strong offering, same thing in life and pension. We have, as you know, bought and acquired Jensid Bank, which we expect to close that transaction in still during the Q1 of this year.
And we have new distribution channels within both Asset Management and Wholesale Banking with the aim to increase top line and business momentum. Also on the mortgages, I think we have regained momentum particularly towards the end of the year. We have adjusted our price. We are competitive. We have increased our accessibility to our clients, and we see a significant improvement here in Sweden, where we were particularly maybe challenged particularly in 2017 and into 2018.
But this takes time, but I think we are very much on the right path. So to conclude, what is 2019 all about? It is about creating shareholder value by increasing business momentum and continue to drive down structural cost and structural cost efficiency. We can use our scale, One Nordea, to do it. We can use the technological capabilities and platforms that we have now put in place.
To be very clear, this is all about execution. The pieces are there, and it is about executing on increased momentum and structural cost. Of course, culture is key here. I'm a big believer that culture eats strategy for breakfast. So it's all about execution, and I think we're well positioned to do this.
Thank you all. And I think I give back to Rodney, and we will have some Q and A now.
Thank you, Casper. Yes, you are now able to press the phone or to start asking questions. And it's going to be both Casper and Christopher Rees, the group CFO, who will answer questions. So we'll start with Matti Ahokas, please.
First question is from Matti Ahokis from Danske Bank. Please go ahead. Your line is open.
Yes, good morning. Two questions, please. Kasper, you identified the pressure or the revenue pressure in 3 areas. How do you see these developing and going forward now in 2019? Doesn't seem that at least in market making activities and the lending margins, we would see an improvement altogether.
And the other question is regarding net interest income. Now with the kind of lower regulatory costs on NII, is this the kind of normal run rate we should be expecting in 2019?
I'll maybe take your the first part of your question. When I look at particularly the market making or, let's say, trading, of course, the environment is challenged. But when I look at the result that we did, particularly in the Q4 on the customer side, it actually shows the strength of our platform. It is very clear that when you had the big dislocation, which actually I said from an asset performance in Q4 was actually kind of worse than we've seen in 2,008. Then when you see a dominant risk taker that we are one of the dominant risk takers in particularly the bond market, it's not surprising that Q4 was challenging.
I actually see that we are very well positioned to actually improve and compete well in this area. If anything, the customer flow actually shows it. So then on Asset Management in general, I think there's you can see the structural. Actually, the development there has been relatively positive. If I take out the structural deals, which are basically life and pension, I take out the Luxembourg sale and then I actually take only one, the stable return that had has been our star product has had some difficulty, we actually have inflow in asset management.
So when you actually look at just these three elements, 2 structural, 1 maybe I think a little bit of a one off, we actually have inflows. I think we're well positioned and particularly have we looked at now new bought new product and new distribution in Asset Management. We're well positioned. But we will then have that new baseline and actually take it from there. So those 2 make of course, that means that we need to work hard, but I'm pretty confident that, that's the right way to go.
And your question on NII. Good morning, everyone. It's Christopher Rees here. Yes, this has to do with the treatment of deposit guarantee fees and resolution fees in terms of the transition to the banking union and the split year treatment there. So these this is more of a onetime effect.
I would like to note that for Q1, as we are now in the banking unit under IFRS, all the majority of resolution fees will be booked in Q1. So in Q1, we will book therefore a resolution fee north of €150,000,000 next year rather than on a running basis. So you should be aware of that. And to answer your question, therefore, the resolution fees in totality for next year will be very similar to what they were in 2018.
But booked in Q1, you mentioned?
The resolution fee will be booked in Q1, the majority of it and the deposit guarantees fees will be booked per quarter. And the deposit guarantee fees are roughly SEK 50,000,000 per quarter.
Great.
Thanks.
The next question goes to Peter Kasekoff, please.
Yes. So Peter Kaseko from SEB. Please go ahead. Your line is open.
Yes. Thank you. Good morning. So first of all, just on the trading income side, which has been subdued for or the income development has been subdued for 2 quarters now at least. We're at least a month into 2019.
Have you seen any change in the underlying performance? Or should we expect similar level going into Q1? And what do you expect for 2019?
Yes, you're right. The trading environment has been challenging. And as you are aware, we had also some significant valuation adjustments because of the market movements in Q4 last year. And as Karsten mentioned, it's the greatest asset price movement since basically 2,008. And of course, that has been a challenge.
But the customer business, as I mentioned, has actually did improve, in particular in Q4. So we hope that we bring some of that with us. In terms of our outlook, given the market environment and given the uncertainty regarding the outlook, it is phenomenally difficult to estimate the direction. I would say that we continue to drive the franchise. We want to continue the client business.
And I think the guidance that we have given for net fair value in the long term remains. However, for the next few quarters, it's very difficult to give an outlook. And I would suspect that we would be challenged to meet the lower end of the guidance that we have given. But January has started more positive than December.
Okay. Okay. Then on more kind of nitty gritty, you mentioned that cash cost is improving on the cost side. And I think a year ago, you mentioned that you expect other intangibles to peak at SEK 2,500,000,000 by 2020. Is that still the expectation?
In terms of peak of the intangibles, that is indeed the expectations. And we are also as you know, we are shifting the composition of our cost base because depreciations are going up over the next few years as well. So the cost guidance for 2021 is actually net cost, also including the consumption of or absorption of the Yen Sidoti Bank. As part of that, we expect cash cost to what Kasper said before to be up down up to 10% in 'twenty one.
Okay. But so the SEK 2,500,000,000 still remains in place?
Yes. Okay.
Then just last question. Could you elaborate a bit on NII sensitivity for the Swedish rate hike? What do you expect there?
Yes. For the 25 basis point rate hike in Sweden alone, then we expect approximately €50,000,000 positive effect annualized. So full year 'nineteen effect is approximately €50,000,000 And that is almost exclusively coming from deposits.
Right. And I think going back maybe a few months, I think you talked about 2 rate hikes in Sweden impacting €160,000,000 which would imply then that 25 basis points would be EUR 80,000,000. Has something changed the last few months? Or was it just that it wasn't even split in the 50 basis
points? And how it's improved?
No. The SEK 100 and SEK 100,000,000, I think, I don't really recognize. We have said more than SEK 100,000,000 and that is still valid for 50 basis points. And that goes for Sweden alone. And then of course, if you look for the group, 50 basis point is close to €400,000,000
Okay. Okay. I'm happy to.
It might also be worth pointing out that, of course, this is assuming a straight pass through into lending. And of course, we have indeed raised some of our mortgage rates in Sweden, but not by the full amount of what the Riksbank did. And on top of that, we've also not raised it in linearly across the curve. So we've actually reduced some of our rates. So this will not be a straight pass through, and therefore, the effect might be slightly lower.
Okay. The next question goes to Magnus Andersson, ABG. Please.
Yes. Please go ahead, Magnus. Your line is open.
Thank you. Good morning. Just if I start with a broader question. On your business areas, when I look at the profitability in your various business areas, you're at 9%, 10% in Personal Banking, weighed primarily by Finland 8% to 10% Commercial and Business Banking 5% now down from 8% in the last, I don't know if it's 4 or 5 quarters in Wholesale Banking, while Asset and Wealth are at around 30%. Could you say anything about what you deem as a reasonable sustainable profitability levels in respective business areas since obviously, you repeatedly have stated throughout the call that you're unhappy with 2018 and primarily the income development.
When you are happy, so to speak, where will profitability be in these business areas?
Well, happy, I mean, it's only pigs who are happy. So I mean, the thing is that we are not satisfied with the profitability. So the only way is up. And that goes basically for all BAs. Then we have not expressed an explicit ROE target.
But as you know, our relative target our target is to have a relative ROE that's better than peers, and that's not where we are right now. So we will work hard to improve the ROE in all business areas.
Okay. And the 12% target for wholesale stands, I guess?
Yes. That's not ROE. It's ROCAR, but that still stands.
ROCAR, yes. I'm talking about ROCAR.
Yes. That's correct.
Okay. Okay. But no answer then. And secondly, on dividend, is there anything restraining you from paying out more than 100% of EPS if you would like to do that?
I mean, technically, no. But I think, of course, this is a discussion always with where we are and where the alignment is and the regulators. But technically, there's nothing that I know about.
Okay. And then on transformation costs, which came in much lower, I think there seem to be some restatements, but around SEK 70,000,000 to SEK 80,000,000 for the year. Previously, you talked about, I think, SEK 500,000,000 to SEK 600,000,000 throughout this transformation period and originally €150,000,000 for 2018 down to €120,000,000 and now it's €70,000,000 to €80,000,000 is why is the transformation so much cheaper than you originally expected?
Yes. It has come down lower than we expected. Part of it is because the cost of the transformation in terms of packages and so forth is actually lower than estimated. And of course, as we go forward, we will have transformation cost every year. And we will have it to 2021 and we will have it beyond.
It's a normal course of our business. And really what we look at is the total cost of the business. Please also note that this we're coming in at 4,738, excluding Russia goodwill in 2018. And that is sub-thirty or so 1,000,000 lower than we expected. And of course, we bring that back into the flight path into 2019.
Then Magnus, if you may remember, when we started to discuss the transformation cost in 2017, we said that we want to have them as running cost, not restructuring charge, because we felt that, that was a good way to put pressure on the BAs to do this transformation as cheap as possible. And what you now see is actually that they are delivering the transformation cheaper than possible. So the €500,000,000 to €600,000,000 will be lower. We don't guide an exact number, but I mean we are already in 2018 some €75,000,000 lower than expected. So that means that it's at least €75,000,000 cheaper than we initially expected.
Yes. You spent half of what you expected. So that's perhaps reasonable going forward as well.
Correct.
Yes. Okay. Good. And finally, just on the sensitivity. I think it was there were 2 answers there.
Ron, you said SEK 50,000,000 annualized on the rate impact. And then it looks like that was the number you talked about earlier. But then, of course, you haven't repriced everything during Q1. So I guess if it's €50,000,000 annualized, it should be €37,500,000,000 or so in 2019 since you don't get full impact in Q1. Is that correct?
Or
Yes. We will have a relatively yes, you're right that you will not see a lot in the Q1. So it's basically from Q2, but you will see some. You will see roughly half of the impact in Q1. So call it close to 40, 45.
Okay.
Yes. Okay. Okay, good. Thank you.
And before we go to the next participant, just as a reminder, if you do wish to ask a question, please press And the next question is from Jan Walther from Credit Suisse. Please go ahead. Your line is open.
Jan Walther here, Credit Suisse. If I could just return to the trading business and the net fair value there guidance or indication of €275,000,000 to €325,000,000 per quarter. Could you just confirm if you said or think that it will be difficult to meet the lower end of that guidance now in the coming quarters? And secondly, it looks like wholesale banking Other is the is where the issue is. You highlighted that you have had a good client good client revenues throughout the year.
Could you just give some color what wholesale banking other or the issue is there? I suspect it has to do with the risk management, but still give some color what the real issue is, which you do not expect to be solved in the next few quarters. And secondly, I think you said something about Resolution Fund regulatory fees being booked in the Q1. How much will be booked in the Q1? And will that be the total resolution fund and regulatory fees for 2019?
My final question is, I think that Casper commented on margin and the outlook that still see margins being under pressure. In what region in the Nordics do you see that going forward? What would be the area where you see the most margin pressure and then the pecking order there where you see the least, especially on the retail side? Thank you.
Okay. Thank you. I think that was 3 good questions there. So the outlook, yes, I think that's the long term outlook that we remain. The trading environment remains challenging, and the outlook is very uncertain.
And I think you see the economic indicators in Nordic environment softer as well. So I think given the environment and the that we've seen and also the uncertainty that we have, I think it will be difficult in the next few quarters to reach the lower end of that guidance. And you are right that it is Wholesale Banking Other. And that is really the trading, you could say, the trading activities in our FICC business that has been challenged. Firstly, remember the composition of Nordea.
We're one of the largest traders in for our clients in the Nordics. And some of the there's been a huge asset price change in the Q4, in particular, the largest one since 2,008, and that has had an impact on our trading activity. And also in particular, we hold inventories and trade in the secondary market for our clients. And those inventories, of course, have repriced in Q4. And in particular, in some of the mortgage and kind of bond pools, and that is more and especially given our size in Denmark where that has had an impact as well.
So it is really the trading activities. So if we see more liquidity, more activity as we go forward, we will very believe that this will be recovered. In addition, wholesale, of course, have a lot of initiatives to ensure that they improve and drive this going forward. In terms of NII, yes, it is resolution fees will be booked in Q1. It will be €152,000,000 of the resolution fees.
I believe we will still book some in the following quarters around €11,000,000 or so per quarter. But the deposit guarantees fees will be booked quarterly next year. In terms of margins, I think and going back to the retail, I think, NIBOR well, Norway, I think the margins depend very much about the development of NIBOR and how quickly you can reprice that. So right now that is negative, but normally that has actually been there's more rate sensitivity towards that. Stibor is where we or sorry, in Sweden is where we've had more of the pressure, although we have seen it slightly stabilized towards the end of the quarter.
In Finland, I think it's still some pressure, but it's been more stable. While in Denmark, the mortgage margin has been reasonably stable, but there, of course, the consumer lending business has been coming down. So in Denmark, it's more the lending mix that remains the challenge.
And then if I just may on the resolution fees to give you the numbers. I mean for this year, we have had approximately €250,000,000 of total resolution and deposit guarantee fees. That we expect to be largely unchanged for 2019. But then as Chris said, you will see the bulk of the fees in Q1. So when you do the quarterly forecast, you should add some €170,000,000 for Q1 and then some €25,000,000 for the remaining 3 quarters.
But year on year, the guidance is unchanged at the large the same size as in 2018.
Just to be clear, this is very consistent with how European banks booked the resolution fee. The reason it has not been booked this way is because of Swedish regulatory and accounting rules. Given that we are now in the banking union, this is in line with other reasons and peers.
Thank you. Just if you could just clarify, I think previously you discussed that the lower Swedish resolution for 2019 would give in the area of €50,000,000 to €60,000,000 lower resolution fund cost visavis2018. So this is not the case then?
Sorry, I missed the first part of the question. Could you please repeat?
Sure. I think that previously you discussed that the lower Swedish Resolution Fund fee for 2019 would give at least EUR 50,000,000 lower Resolution Fund costs for 2019. I think now you're saying that the total cost for resolution fund and the post guarantee fees will be unchanged 2019 year over year?
Yes. John, the difference is very easy. As you see in the Q4, the resolution fees were €60,000,000 lower €59,000,000 lower than in the previous quarter. So the 2018 level is down. Before, we said around €300,000,000 Now it would be around €250,000,000 So that 2019 expectations are unchanged, but we came in lower in 2018.
Sure. So you're saying that the NII for Q4 is basically the right starting point for 2019 then? Correct.
Thank you. The next question comes from Mats Liljedahl.
Yes. Mats, please go ahead. Your line is
open.
Yes. Good morning. Sorry to really have a hang up on the resolution fund fee. But could you just clarify what you said that more most of the resolution fund fee will be taken in Q1, but the deposit guarantee fee will be €50 per quarter. Was that correctly?
So if you say the resolution funding has been €250,000,000 in 2018, most of that effect will be already in 2019 in Q1, just to clarify. Thanks.
Okay. I'll try and make this clearer. Yes, the majority of the resolution fee will be booked in Q1 in line with European practice. The deposit guarantees fees will be booked quarterly, and they will be roughly €15,000,000 per quarter.
So the number we would advise you to put in your Excel sheet is approximately €170,000,000 for Q1 and then approximately €25,000,000 for the remaining 3 quarters for both Resolution and DGS.
But to be clear, the totality remains the same. This is just an accounting change and alignment with European rules.
So it seems to be no further questions. So thank you very much for this event. Thank you for calling in. And you're always free to call us later on. And then we hope to meet many of you in London, too, on Friday morning.
Thank you so much.