All right. Hello. Hello, everyone, and welcome to DNB's pre-close call for the Q2. As we always say, and start to say that to remind you that the reason why we are holding this call is to remind you of the information and communication that we have given the market, which could affect the Q2 results. We will also give you some market statistics, which is, of course, publicly available. I will start with the NII and the capital, and Anne Engebretsen will continue with the rest of the P&L. Let's start with the NII, and we start with the number of interest days, which this year, the number of interest days in the Q2 is the same number as it was in the Q1. We reported volumes in the Q1, which was the loan growth was +0.7. FX adjusted, it was -0.2%.
Statistics Norway continues to report lower credit demand in the market. As we have said in the past two quarters, we expect to see muted loan growth in the first half of this year and then a pickup in the second half. Obviously, for DNB, profitable growth remains the focus. On the FX side, we have seen actually a weakening of the average Norwegian krone, which will have a small positive volume effect. On the margin side, we still have a small tailwind from full quarterly effect from the last repricing, which had an effect from the 20th of February. As we said in Q1, we saw a continuation of a trend whereby customers moved deposits to higher yielding alternatives, causing a negative mix effect on the margins.
Additionally, we saw a negative mix effect from higher margin SME deposit volume being replaced by lower margin public sector deposits. The central bank updated their rate path, and now with the central bank rate at 4.5%, expected to stay flat until the beginning or the first half of 2025, and then a gradual decrease to about 3% by the end of 2026. On the capital side, in Q1, we reported a CET1 ratio of 19% with an FSA expectation of 16.8%, meaning we have a buffer of 220 basis points. Last week, we announced a 1% share buyback program, and this will have a negative effect on the CET1 ratio of minus 30 basis points. And as you know, we did receive an authorization from the General Assembly of 3.5% for the year.
On the FX side, we actually had a strengthening of the Norwegian krone when we look at the end-to-end change, and we have a slightly positive effect on the CET1 ratio. The sensitivity here is 10% change in exchange rate, or the 10% change in the NOK will give approximately 20 basis points in CET1. Also worth mentioning is the Norwegian FSA has recently sent out a hearing memo with a proposal of increasing the risk weights for mortgages from 20%-25% and a CRE from 35%-45%. This is exactly the same proposal as was given in 2022, and two years ago, the Ministry of Finance declined this proposal. If this proposal this time will be approved by the Ministry of Finance, this means a negative effect of 80 basis points on the CET1 ratio. The hearing deadline for the bank's response is September 4th.
And then over to you, Anne Engebretsen.
Yep, sure. Thanks. We'll start with commission and fees and other operating income. Investment banking services, as I'm sure you recall, typically see a seasonally higher activity level in the Q2 compared to the first, and we continue to see high market activity, especially in debt capital markets. Real estate brokerage sees a similar seasonal trend in the sense that they have also typically a higher activity level in the Q2 compared to the first, and we see positive market development both in terms of price levels and the number of transactions in the market for residential housing. That said, the sale of new builds is still at record low levels. Asset management, we see a positive market development. We see that positive market development drives AUM higher per public market statistics available from the month of May. And a quick note on net insurance results.
This, of course, is materially negatively impacted in the Q1 of every year after the introduction of IFRS 17 due to the fact that we have to book or recognize expected losses arising from loss-making or onerous contracts in the Q1 of every year. So that's a Q1 effect every year. Moving on to net gains on financial instruments at fair value. Customer revenues in DNB Markets, or FICC, typically sees a higher activity level in the Q2 compared to the first. The mark-to-market effects on the AT1s and the basis swaps will be announced shortly after quarter end, as we usually do. And a reminder on the outstanding AT1 amounts. For U.S. dollars, we have $1.55 billion outstanding, and for Swedish kronor, we have SEK 4.95 billion outstanding.
Moving on to costs, a seasonally higher activity level as we typically see in the Q2, all else equal, leads to a higher cost level. Market expectations for salary inflation in Norway for 2024 is now at 5.2%. The annual centralized wage negotiations were concluded in April with a frame agreement of 5.2%. This will have a partial effect from May 1st and the remaining effect from July 1st as in previous years. And finally, on costs, a reminder on pension expenses. As we've said before, normalized pension expenses are expected to be slightly higher than NOK 400 million a quarter, and the compensation scheme is primarily linked to the development in global equities, which, of course, has performed well year to date. Impairments and asset quality. The portfolio is still carefully monitored, and we are still generally comfortable with the risk in the portfolio.
As you know, impairments will vary from quarter to quarter, driven both by potential changes to macro input factors in the ECL model and/or company-specific events, as we've seen in past quarters. And given the elevated level of uncertainty we are experiencing these days, given the macro picture, it would be natural to see more company-specific events. But again, we do not yet see any systemic areas of concern in the portfolio. And lastly, just a heads-up on changes in reporting. As you may know, we announced some reorganizations in DNB in early May. These will be reflected in reporting in the Q3, so not this Q2. And finally, a kind request to please submit your consensus estimates to Andreas by close of business on July 3rd. And with that, I think we conclude the call.
Thank you for your attention and wish you a good rest of the day. Thank you.
Thank you.