I think that was my cue. Rob Nabil here from Nordea. Welcome all of you who has called into this international telecom conference. With me in the room, we have Thorsten Heigenbergensen, Chief Operating Officer and Harry Capri, Chief Risk Officer and also Andreas and Talbot from the IO team. So we would like to start with a short introduction by Torsten Hary, and then we will open up for questions.
So Torsten, please.
Thank you. And I will not go through the slides. I'm sure you have seen them in the investor presentation. But let me just make a few reflections on the result and how we see the situation currently. So first of all, I think it's positive to highlight that our repricing efforts starts proving to work.
I think we have moved pretty swiftly on the market side, and we still trust that what we have said for
a while that we see a
quick potential in our SME portfolio across all the Nordic countries, but mainly in starting in Denmark and Norway. And I think much of this is something we can control. So it's somewhat independent on the macro picture basically also to a certain degree, the competitive situation. So that makes us relatively certain
that we will have this
short turning curve on the NII and the true inflection point in Q4, where I think we will start seeing a year over year positive growth in NII. So I think this is one good observation. The other one is that we have talked quite a lot about our reliance and investments in some of our strong product franchises and our strong distribution on these products. And I think the development team on the asset management side, the corporate advisory side, the risk management product side is a proof of concept of that these investments are now paying off, and they make a strong foundation in the NCI line. I think also that Q2 is another reflection of the fact that we are managing cost at the same time as we are investing for the loan.
We have group projects and performance related salaries up $60,000,000 from Q1 to Q2, and we still have cost volumes significantly lower, including inflation, etcetera. And I think it's no, it's due to our efficiency or running efficiency measures. So again, a good picture there. And in relation to this, as I said, I think it's a sign of strength that at the same time as we have the environment we have, we are making significant investments, not only euro wise, but of course, also effort wise in building the long term foundation for further strong growth and sufficient operations. Heavy investments in technology, in simplifying the bank, the products, the processes, the systems and heavy investments in compliance.
And I think we should also look on the current performance in light of that this are close to peaking now, all these efforts. And of course, many of them will not have their full payback before some years, but just stating that we are delivering the current financial performance on the back of all these efforts also taking place. And finally, on eluding a little to the capital discussion, I think we again also see that our strategy and our principle of we have a strong principle that we should not generate excess capital. It's a principal view. Excess capital have in this very proven dangerous for having around.
Management gets has a risk of getting true risk happy if there's structural excess capital. So we will continue to have the view that excess capital should be repatriated. We will continue to go for enhancing ROE, Management should enhance ROE and not so much else. And I think that what we're doing on all the aforementioned factors is exactly what we should do as management. And we feel confident that we are having generating a lot of strong profit, and we are managing our balance sheets in a very careful way.
So to the point of also saying that we are relatively confident currently on that we'll be able to meet also the updated capital requirements from the year. So that will be my opening remarks, and then I know Ari, you will say a little on our asset quality. Yes, thanks.
Our loan losses in this quarter were relatively stable level compared to previous quarters so that we have at this level of losses now in 8, 9 consecutive quarters, which is still within this long term average level of 16 basis points. Now they ended up at the level of 15 basis points. So in that way, no big surprises and negative surprises, not positive surprises either in this quarter. One issue which may raise some attention is that our impaired loans, they were up by 4%, roughly €200,000,000 €225,000,000 in absolute terms in this quarter. The reason for this is 3 individual customers.
And the fact that all these customers are quite well collateralized. For example, the biggest one of these, which is representing half of the increase, I. E, euros 100,000,000 is guaranteed by ECA, Export Credit Agency. Means that our individual loan losses for these new impaired loans were relatively small, and thereby, our provisioning level at the group level is somewhat down. We are highlighting this quarter that what we have said even earlier that there's start to be and we see clearly increased risk levels in oil and offshore side.
And we are giving some information on this quarter on one of those portfolios, the overall size of our oil and gas plus oil services plus offshore portfolio is roughly SEK 7,000,000,000 75% is still considered as healthy, but SEK 25,000,000 25% is with higher risk. We anticipate that from this portfolio, we will see increased losses both in individual level as well as collective provisioning level. But nevertheless, because the relative size of this portfolio in Nokia context is relatively small, so it's only 1.5%. It should not show significant or have showing significant impact at the total lowest levels at the group. The size of these portfolios in terms of I'm still in offshore and oil services, Well, I'm glad the size of those portfolios in terms of customer demand is relatively small.
I think that I have mentioned this in even in the previous discussions. So that, for example, in offshore segment, we have 30 customers. In oil segment, we have 40 customers so that we are very able to manage these customer by customer bases and working very close to these customers. Quite many of these offshore customers are now going through refinancing or restructurings. In other parts of the portfolio, the risk levels are stable or even down.
So that, for example, out from this €127,000,000 loan losses we booked in Q2, more than half, close to twothree are coming from oil related customers. So that means that the rest of the Fluentorke is very healthy and of good quality. I will stop here.
Thank you, Thorsten Harris. Operator, we will now open up for questions from the audience. Please go ahead.
Thank We have our first question from Felipe Palermo from Goldman Sachs. Please go ahead. Your line is open.
Hi, good morning. Thanks for the introduction. I have two questions. The first one on capital. So Nordea is now above the SREP new SREP requirement of 17%, thanks to these 40 bps coming from a transaction that you plan to close out.
A quick question on this transaction. What is it exactly? And is there a risk to lose earnings related to that? And going forward, you mentioned a number of initiatives on top of earning generation to continue to build your capital. What areas of business you're thinking about or what regions would you think about non core being able to dispose?
And the second question is on NII. I understood that the guidance is still to see NII at best being flat year on year in 2016. What in your view are the main drivers and from which region would come the increase? And secondly, what is in your mind that NII could look at worse this year compared to last year? Thank you.
Yes. Thank you. I think that on the synthetic certification deal we are about to do, I think we have said that the P and L impact will be in the level of €30,000,000 net. And I think we at the webcast, we said that this will be shown up on NII. This is actually not the case.
We will the structure will work in the way that it will all be, you can say, have a payment, then it would show up as a plus. And on the other way around, if it's a net premium to be paid, it will show up a in short, you can say, on the net fair value. So that's the way it will work. And then we alluded to a number of other initiatives that has been started long before this and is part of our, you can say, normal ongoing re enhancement efforts, I. E, identifying customers, segments, business lines that are not profitable and where we think that it will structurally be difficult to or organically will be difficult to restore the necessary profitability.
So we can be further risk protection deals, not significantly risk transfer deals like this one. I don't think you should expect that near term, but it might be other type of risk protection deals. It might be divestment of certain noncore assets. And they will typically not sit in a geographical dimension. They will sit in a business line type of dimension.
And the fact that we have this plus you can say the underlying strategy we are pursuing of especially in our SME portfolio is why we feel confident that we can deliver on also the current higher capital requirements. And on NII, I mean, the drivers are mainly the repricing on the lending side. It pertains not least to improved already having improved quite significantly margins. On Swedish mortgages, we have stopped the fall of mortgage spreads in Norway. We have a relatively stable situation for now in Denmark, but we have announced price increases that for real will kick in, in Q4.
And in Finland, there is still a small potential. And on the corporate side, we have said in connection with the SME strategy that we will do significant repricing on the lending side, and we start seeing that works, not just in Sweden and Norway. And finally, we are also not least in the SME segment. We are also on the deposit side, which is charging more and more customers with the negative rates. So that's the key drivers and some flavor also on the geography.
Thank you very much.
Thank you. We'll take our next question from Matti Nahrkas from Danske Bank. Please go ahead. Your line is open.
Yes, good afternoon. It's Matti Agus here from Danske Bank. Two questions, please. Firstly, on this PD inspection and the SREP outcome. How much would it impact your core to 1 ratio if you would have to use the exposure weighted PDs?
I'm sure you've done a lot of calculations. Some kind of sensitivity on that would be extremely helpful. The second question is on this risky part of the oil and offshore portfolio. Ari mentioned €1,800,000,000 What kind of loss levels do you foresee in this portfolio?
Yes. If I could start on the I don't think, as such, we can refer to a PD inspection. We have a good dialogue with the Swedish FSA relating to the clear statement that Swedish FSA have done on the sector level that they want to and they think that corporate risk weights for Swedish banks should go up. And I think it's also fair to say that this will happen in different ways from the different banks. And it's also so that they have not if we look aside from the leakage that has happened, it's true that they are having a number of questions relating to our PDs and ADFs.
And they are making a number of calculations, and we are providing a number of numbers. And they have made, as we have said, the first type of initial assessment is included in the add on that has now been done. And then they will revert end of September with their final conclusion on corporate risk weight, including the PD issue.
And then this expected loss levels from this whisker part of the oil offshore oil portfolio, It's very difficult to give or actually, it's impossible to give any kind of precise estimate. What we have done, of course, already now is that we don't have, for example, in our offshore portfolio, we don't have any individual losses so far. We don't have any impaired customers so far. What we have done is that we have built up our collective provisions for this portfolio. Currently, we have around €90,000,000 of collective provisions just to cover increased risk for individual losses in this portfolio.
Also, we have taken some or increased some more collective provisions also in some other parts of the bank. For example, in Retail Norway, we increased by €10,000,000 of provisions because there are some smaller auto service related clients. So that I think that the loss level we saw this quarter, which was in this offshore, was 20 €8,000,000 €27,000,000 of this collective provision increase. Then we had a few individual losses in other parts of the portfolio, mainly related to all services clients in land based. Here, we are and as I said that roughly half or more than half of our Q2 losses are deriving from these riskier segments.
And then I would say that, that's my best estimate around the level for the coming quarter so that it may be so that we are we if there are no individual provisions coming shortly, then we continue to increase our collective provisions just to cater for these increased levels. If we start to see more and more individual hits in these segments, then perhaps there is not so much need at least in short term to increase collective provisions. But putting this all together as we have said that somewhat higher level of losses from these levels are now during second half of this year. And then also, it looks like that, that will continue to first half of twenty seventeen. I don't have more precise outlook guidance to keep at this point.
Great. Very helpful. Thanks.
Thank you. Our next question is from Anton Kreychok from UBS. Please go ahead. Your line is open.
Good afternoon and thank you for the presentation. Just two questions, please. Firstly, I just wanted to clarify your point on corporate PD reviews. Did I hear you correctly that part of the increase in SREP requirements already comes from the review of probability of default and actual default rates in your corporate book? That's the first question, please.
And the second question on the strength of net interest income in Norway. Can you please share a little bit more color on what drove that and how sustainable the strength is? Thank you so much.
Yes. No, I think the way we can phrase it is that as part of our draft SREP letter and on the corporate risk weight issue, Sweden have made an initial assessment on our corporate risk rates that they should increase with 3% this point. And that assessment includes, you can say, all currently available information, you can say. They have not specified anything detailed on PD as part of that, but they have said that this includes what they know as of today. But they have also said that they have not concluded on their review on our PD ADF issue.
So it might mean that the at the end of September, that means that there will be no additional capital requirement or there might be a higher capital requirement. We don't know at this point in time. The NII in Norway is improving by, of course, where we expect it to improve it. As I said, the very intense price competition we have had on Norwegian mortgages seem to have stabilized. So we now have a lower level than earlier, but we have a stabilization on margins on mortgages.
We have improvement of deposit margins in Norway. And finally, we see that the price increases we did and have done have been doing in Norway on the SME, not yet SME portfolio, we start to show up as improved corporate margins in Norway. And we think there are potential to continue to reprice. So that's the basis for the assessment that NII will also improve. And we also still have some volume growth in Norway even though it's coming slightly down, I think.
Adding to that also, you can say that if
you look at the quarter on quarter trend, you're absolutely right that it looks like a very, very strong trend that you should look at the Q1 Q2 in relation to the Q4. It was a quite significant drop in the Q1, and that was related to a technical aspect of the NIBOR moving in an unpredictable way, but not in a favorable way in the Q1, and then we got it back in the Q2. And then you can also add that in the 3rd quarter, as Torsten alluded to, we expect an improvement coming from the margin increases we have done in the Q2. So the risk you can say is that there will be a rate cap in Norway in September, which I believe is our economists view and then the others as well. So if that rate cap will come then in September, that will then partly take out the positives that you would see in the Q3, but that will then come in the Q4.
I hope that gave you a clear view about the trend in the coming quarters.
Very clear. Thank you very much.
Thank you. We'll take our next question from Jan Wolter from Credit Suisse. Please go ahead. Your line is open.
Yes. Hi, Jan Wolter here, Credit Suisse. Excuse me, many thanks for taking the questions on the disclosure today. So going back to the corporate risk weight again, are you saying that the 50 basis point increase in corporate risk rates, if we take out the maturity factor adjustment there, which was 20 basis points, but those 50 basis points, that is the 3 percentage point increase in corporate risk weights. But the bank does not know today whether or not that includes any change in the principal, you calculate the PDI going from a PD which is weighted by the number of defaults and not the exposure weighted PD?
That's my first question.
I'm not sure I fully understood your question on maturity. The maturity effect is 20 basis points. It is not included in the 50 basis points. So again, the way it's articulated is that all inclusive, the Swedish FSA currently assess that our corporate risk weights should increase with 3 percentage points, all inclusive, all factors including. They are then, however, saying that they make one disclaimer, and that is that they have not fully concluded on the assessment of our PD-fiftyf situation, I.
E, we need to say that there is a risk that they will come back and say this was not enough, but they might also put that this was fine. So it is an you can say it is an all inclusive assessment of how much our corporate risk ratio increase. And I think it also show that the issue is that they have clearly stated that they want corporate risk ratio to go up. And I think they have also indicated that there are different, you can say, elements in play for the different Swedish banks, but that corporate risk weight for all the Swedish banks should go up. And they have initially assessed the €250,000,000 But the uncertainty factor is the PD level of Companion Control.
Okay. Many thanks for that. And just two other questions. First, if there were to be meaningful RWA inflation from here for one reason or another, would the bank then be willing and have the ability also to mitigate that meaningful RWA inflation? Or how do you think about that?
No. But I think that we need to comment on what we know. We know now that the capital requirement is set for approximately 17% by the end of the year. We know the buffer we have to fulfill, at least 50 basis points. And we think that as of now, we think that we'll be able to mitigate that.
And then we will wait and see what the result of the final is or any other development might be. So I don't think we can we cannot speculate more on that for now.
Okay, many thanks. And the final question on the disclosure today around the Panama Papers. Out of the 5 62 or so offshore structures in Nordea Luxembourg, do you know today how many of those are U. S. Citizens in terms of the ultimate beneficial owners, please?
Now I'm not an expert in the Panama litigation. I think it's true.
Yes, that was stated in the report, but that was, as I read it, out of the 161 or so which were investigated or out of the 129 that were investigated? Or is that the 2 of those U. S. Nationality of the total 529 sorry, 562 Offshore Structures, you're saying?
If I may, let's come back with an exact number. But the reason we only we didn't look into all these offshore structures, and the reason is we only looked at what we perceive as high risk. So we didn't go through the trusts and foundations, which are low risk. So I would assume, but let's come back on that one, that the nationality on the trusts and foundations are less sensitive. So we looked into the sensitive names and they were pursuing.
Okay. That makes sense. Many thanks.
Thank you.
And sorry, and yes, to add sorry, Jan, to add that 0 of those accounts have been blocked.
Yes. Thank you.
Thank you. We'll take our next question from Omar Kinan from Deutsche Bank. Please go ahead. Your line is open.
Hi, good afternoon. Thanks very much for taking the question. I've got a further question on capital and then a further question on the Panama, the private bank investigation. So just first on capital, understand that today on a pro form a basis, Nordea has 20 basis points of management buffer, shall we call it, before perhaps any incremental impact from any leftover PD investigation. So I guess conceptually in the second half, there needs to be a build of 30 to 130 basis points of core Tier 1 to get to a 50 to 150 basis point management buffer.
Do you expect these measures will come through more in the Q3 or the Q4? And also, could you comment about whether we're thinking about the scale of capital build correctly, if there's something we've not thought about? And then my second question is on the private bank investigation. I guess the outstanding issue is if there's any fine. Can you give us a timeline on when we will hear from the Swedish and Luxembourg FSA?
And I guess given the investigation said that these were kind of compliance and governance procedures, are there lacks compliance and governance procedures you found, are they the same shortcomings that the DKK 50,000,000 fund that was paid last year is full? Thank you.
Yes. No, but first of all, on the draft SREP, I mean, no capital requirement, but of course, is not expected to be enforced before we have the final report. So and now, of course, we have a number of clarification and other discussions, which previously, say, as part of the normal process. So on the exact you can say on the exact numbers and the exact timing, we will be wiser when we come closer to the final report. And I don't think we can comment so much more.
We have, as I said, pending initiatives, and we have a current we have a current gap based on the pro form a number of around 30 basis points to the minimum capital requirement plus 50 basis points. But again, it depends exactly on the phase in and exact timing on some of these new requirements. On the Panama case, I honestly don't know exactly. We know that both the Luxembourg authorities in Sweden will now initiate their own process. They have received, of course, all the material.
And I think at least as I have found in Sweden will now start their own process of reviewing all the material and then that will ultimately come back, I assume, at some point in time. But we don't know their timing on the time they will need to conduct these own exercises.
I can just add, so that the Luxembourg FSA is conducting their inspection right now. So the original timetable was that it should have been closed more or less already at the same time as our own internal inspection. It started later than planned, and now it's still ongoing. But it will be concluded quite soon. And then of course, we know and I think that we know what is happening in Luxembourg earlier than what is the Swedish FSA's conclusions in the Q4.
Great. Thank you. If I could just push my luck and add one further question. Just on net interest income, I was surprised by the strength of the lending margin improvement. I think it was €16,000,000 in the quarter.
Now how much of the €100,000,000 is specifically that €16,000,000 We talked about the €100,000,000 annualized figure, which is €25,000,000 per quarter. Is this €60,000,000 increase, is it most of that done? Or is there still more?
I think you relate to some earlier indications we have given of the growth potential. So but of course, that was an early estimate on I think you used the term that what some of the new actions would could be on top of the ongoing. So I think it's very difficult to reconcile. But I can say that the key drivers has been what I have mentioned. And as we say, there are both, you can say, the development.
We have seen the full year effects and then there are the pending increases. And we have indicated certain sizes for them. But reconciling with 100, I don't think we should try to do it with an early estimate.
Yes. I think it's better if you our guidance is that we will see a sequential improvement from the Q3. And then from the Q4, we expect a year on year improvement. If you just look at the last year's Q4, it was 12.03 percent
and it
was around 11.7 So that I mean, you should not expect a sharp improvement, but there is still more improvement.
Okay, got it. Thank you very much.
Thank you. We'll take our next question from Johan Akbholn from Bank of America. Please go ahead. Your line is open.
Thank you. Just two questions, if I may. First, if we can come back to the synthetic risk transfer and just so I understand how this will impact the accounts. Is it right that the loans will get or recognized as a derivative instead as of Q3 and but that you will continue to accrue interest on it and there will be a charge through the fair value line?
Yes. The you can say the reference portfolio are all the loans will stay on our balance sheet. And then the you can say the CDS, we are basically buying from the SPV that will be accounted for derivative.
And you mentioned $30,000,000 as the cost. Is that an annual cost or?
Yes. That's an annual cost post tax.
Perfect. And then just to come back to the SREP process. I mean, the my understanding has been that the PD changes would be a Pillar 1 impact. And I guess you are now signaling that this will all be a Pillar 2 impact. Is that something that has changed in how the regulator wants to implement this?
Or is this your best guess as of today?
We are not guessing. But what is going to happen is that ultimately, of course, this will be implemented as Pillar 1. But what Sweden has said is that as they are they have still not fully decided that we should, as you can say, a prudent measure, we should already now start implementing and as the Pillar 1 measure is not ready yet, we will have to do it as Pillar 2. So the 50 basis point Pillar 2 add on will basically be at some point in time will be replaced by the Pillar 1 measure. So there's a faster way, you can say, to give us an equivalent to a 3 percentage point risk weight increase.
Thank you.
Thank you. We'll take our next question from Adrian Chiqui from RBC. Please go ahead. Your line is open.
Hi, there. This is Adrian Chiqui from RBC. Thanks for taking my questions. Two follow-up questions on capital, please. Positive credit risk migration contributed some 14 basis points to your capital this quarter despite a deterioration in the energy portfolio.
Can you give us any color as to which portfolios you're seeing this improvement? And do you expect energy portfolio deterioration to impact your CET1 in the second half of the year? And the second question also related to the capital. You had no impact on capital from IAS 19 this quarter. Can you please remind us what discount rate you use for your pension liabilities?
And do you see any potential impact from this in the second half of the year? Thank you.
Yes, I think well yes, sorry.
I can start to comment on this credit quality then rating migration impact on RIA. So actually, we have seen negative rating migration and RIA impact naturally in shipping offshore portfolio energy portfolio and in some other selective areas. But it's kind of big portfolios, especially on the retail side, household as well as SME big portfolios that we have been seeing overall migration. It's very difficult to give estimation either in this area so that how the future look. But of course, as said, we will expect that shipping offshore, especially offshore, ratings will go down and perhaps some other more selective parts of portfolios.
But because the relative size, still it's very difficult to see that type of trend that all of a sudden our overall migration should start to be negative to Korea. And then it's not of course, we have to also remember that these are not this kind of static portfolio so that we are, of course, driving business more and more to highly rated customers in all areas so that then even if individual customer ratings in some areas could go down, then the way the exposures the majority of exposures are doing more and more to these kind of high rated customers.
Yes. Okay. Sorry. On the defined pension plan question, I think we had a negative impact of net €89,000,000 in Q2.
Let's see. I mean, the net OCI was currency translation net of hedges. So it was those two items almost netted out each other. So it's a very small level overall.
Okay. Thank you.
Thank you. We'll take our next question from Jacob Kruse from ArcelorMittal. Please go ahead. Your line is open.
Thank you. I just wanted to ask you if you could give any discussion around what assets you might be looking to sell? And specifically, would the Baltic business be still core? Or would you consider selling that? Or would this be more the kind of partially harder stakes that you would look to sell?
No, I don't think we can comment further on it. But I think, as I said before that, the type of divestments of noncore activities we are looking at currently is you should more think about it in a, you can say, asset or business line dimension rather than geography dimension.
Okay. When you cancel the Baltic, I mean, I think we have been very clear now for the first time that we are committed to the region. So we have no plans to leave that region. Yes. Okay, great.
Thank you.
Thank you. We'll take our next question from Chris Manners from Morgan Stanley. Please go ahead. Your line is open.
Good afternoon, everyone.
Two questions, if I may.
The first one is, I guess, you had a good bump in trading revenues in the last week of the quarter after the EU referendum in the U. K. I just wanted to see how your trading has continued and sort of client activity after the Brexit vote, whether it's maintained at a decent pace or whether you've seen the tailing off? And my second question was on the rollout of the new platform. I guess that you've actually gone live with deposits for your employees in Finland.
It seems to be going well in June. Just maybe if you could flesh out for us what the next steps are and how well it's going, that'd be fantastic.
Yes. I don't think we, as such, should start commenting on the development in our trading, but think we entered pretty strong actually and if anything carried that into July. But on simplification, product for external customers. As you know, the current pilot is mainly with employees as customers, and next phase in that is to make the pilot a full scale product, which will happen beginning first half of the year next year. And then, of course, from there, do in-depth, you can say, evaluation of that before we start accelerating the introduction of more products in more countries, but very positively and according to plan on the core banking platform project.
Super now, that's encouraging to hear. Thank you.
Thank you. We take our next question from Daniel D'Alpoix from JPMorgan. Please go ahead. Your line is open.
Hi, good afternoon. Just two quick questions. First one on capital, second one on provisions. On capital, the 3 percentage point increase in corporate risk rates that you have now estimated, can you perhaps give us an idea of how proportionally that is distributed across the geographies or whether that's largely related to Swedish exposures? And then secondly, on the provisions, I think you've now mentioned that for the more for the offshore and also for the segment.
But you just give us an idea of what the provisions are for the entire oil and gas book? So that's the SEK 7,000,000,000 or so that you have on Slide 14. And then just related to that, the 75% in terms of healthy exposures, as you call them, does that correspond to internally investment grade rated exposure?
If I may, on the first one on capital. Just to make it clear, it's not us that have made an assessment and come to the 3% risk weight increase.
So just to be clear,
it's a number given by Swedish FSA that and that is maybe back to be clear. They have made an initial assessment of what the total corporate risk weight should be for Nordea Group by not only Swedish exposure. They have said that as they have not fully concluded PD yet, they think that as based off So and they have then eliminated the associated capital required for that. And they're taking that Pillar 2 and they will compare that Pillar 1. So it's not our own assessment.
This is and it is a we can call it a top down approach for now by Swedish FSA. So that's also why I think we can I understand all the questions and we also have a number of questions? But we will have to wait to see the final outcome of this. But at least for us, it's, of course, a clear indication of where we should be heading at, at least. So yes, I think that is what we can say on that.
In this oil segment, if I understood your question correctly, I was asked what is our provision level in the oil segment. Currently, we have made roughly SEK 70,000,000 of individual allowance fees in that segment, so that there are some individual clients with provisions, some impaired loss with provisions, but still the levels are relatively moderate. And we don't see that that is perhaps the most risky segment is that of oil companies as such. There are some smaller players which have been hit. Then this split of healthy and unhealthy portfolio, There's a healthy portfolio.
We have also included somewhat lower rate than this 4 minuteus, which is our internal threshold for investment grade. So that because we're talking about critical portfolio that is then already to live with below investment grade. So that in our measures or in our rating classes, we are talking about the rating classes 3- and then lower.
So what's the split in terms of investment grade and investment grade, please?
No. Then actually, I just have that split now in top of my head of this breakdown. I have to come back to that because I can't calculate on top of my head 7 what is then these 4 minus investment grade because this is the way we now put down this portfolio so that I don't give the wrong information.
Okay, Nathenari. Thank you very much.
Thank you. And now we'll take our next question from Per Grundtors from SEB. Please go ahead. Your line is open.
Yes, thank you. I think a question for me, maybe a little bit nitty gritty. You are guiding overall for NII to improve during the second half. I hear that you previously have talked about Danish commercial margins as a driver for higher NII going to the second half. Is that correct?
And what size of loans, what sort of clients do you expect to be able to hike margins on? Is this company specific or is it something you are seeing overall in the market that Danish margins could be raised going into the second half?
I think we have indicated that there are more to be done in Denmark on the Commerzbankings side, but we are talking about that. A lot has been done. But as we also alluded to, for example, we are charging more and more of these customers negative rates. So from 25% of the deposit charge, negative rate to now 30% to 50%. And as we have also said before, we have a long, long list of SME customers in Denmark, and it takes time.
All the bigger ones have been taken. So in Denmark, I mean, you can say that the potential are getting smaller, but there is more to be done. What we are saying is that the potential now is bigger in some of the other countries, and we are doing the same there and should expect bigger impacts in Sweden, for example.
Okay. Thank you.
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Thank you, ladies and gentlemen. That concludes today's conference call. Thank you for your participation. You may now