Good afternoon, everyone, and welcome to DNB's Capital Markets Day. A warm welcome to all of you here in London and everyone who's following us on the stream. My name is Rune Helland, and I'm the Head of Investor Relations. Today's presentation will give you some further and deeper insight into how DNB will enhance our competitiveness and deliver strong, profitable growth going forward. Our CEO, Kjerstin Braathen, will start by taking us through the Norwegian macro picture, DNB's strategic positions, priorities, and levers to deliver on our new financial targets. CFO, Ida Lerner, will give you more details on how we are reaching our financial goals and how we will deliver on our dividend policy.
The five next speakers, sorry, the five next speakers representing our business areas will explain how each and one of them will contribute to the Group's ambitions to step up competitiveness and deliver on our return on equity targets. Head of Personal Banking, Maria Ervik Løvold, will take us through how they will take advantage of its unique market position with two strong, complementary brands and a market-leading digital platform. Head of Corporate Banking Norway, Rasmus Figenschou, will show you how they will build on its number one position and leverage on DNB's broad product portfolio and industry competence. Harald Serck-Hanssen, responsible for large corporates, will give you insight into how they will capitalize on its leading positions both in Norway and in selected industries globally, and how they will accelerate Nordic growth by collaborating with DNB Markets and Wealth Management. Next up is Alex Opstad, Head of DNB Markets.
Alex will show you how DNB Markets will accelerate growth, leveraging on the Carnegie acquisition. And finally, before we take your questions, Head of Wealth Management, Håkon Hansen, will go through how they will capitalize on robust and recurring growth combined with a scalable operation. Before we start, I'll have to remind you that the acquisition of Carnegie is subject to regulatory approvals. So let's get started. Please welcome our CEO, Kjerstin Braathen.
Thank you. Thank you, Rune, and a warm welcome to you here in London and those following us online, and a particular thank you to London for welcoming us with this typical Norwegian weather that we've had throughout the day. We've been looking forward to this day. We've been particularly looking forward to the opportunity for a broader representation of our team in Group Management to take the stage and tell you about their views and plans for their business ahead. In my presentation, I will endeavor to take you through three main parts. Firstly, talking about our consistency and our track record of delivering on financial targets. Secondly, talking about our unique position and our environment for doing business, which we find quite attractive.
And thirdly, obviously, talk through the new financial targets for the coming three-year period, as well as the strategic direction and levers to deliver on these. First, I would like to report back on the targets that we announced in our Capital Markets Day here in London two years ago. We have delivered. We've consistently delivered on these in the past two years, as we have delivered on previously communicated targets and ambitions. Briefly, the status on the four main targets are: return on equity still our most important target. We raised the bar two years ago to deliver above 13%, have consistently delivered above that, and the status for the past 12 months is a return on equity of 16.4%. Cost efficiency, an important driver in our business to both be competitive and deliver returns.
We have consistently delivered below the targeted cost base of having a cost base of less than 40% of our revenue, and in the past 12 months, the cost-income ratio has been 35.4%. Our balance sheet remains rock solid, with a Core Equity Tier 1 ratio of 19% and a leverage ratio of 6.3%. For the year 2023, we paid out 63% of our earnings back to shareholders through cash dividend and share buybacks, fully in line with our dividend policy. I share a couple of further highlights on the slide describing the developments since the previous Capital Markets Day, or more precisely, since the end of 2021. As you can see, lending and deposits are up by 14.5% and 14% during this three-year period, or close to three-year period.
Lending in personal customers is up by 3.9%, also impacted by the integration of Sbanken that has strengthened our position towards the personal customer market. Return on equity up 5 percentage points, cost-income down 8 percentage points, and it is supported by a favorable macro trend and a resilient economy, but also by a solid performance from our team across the business. This illustration demonstrates a long and consistent track record of delivering resilient earnings over time. Our capital base in this close to 15-year period has more than doubled, whereas our earnings have close to tripled in the period that you see illustrated here. This does speak to the environment we're operating within, but also to the strategic choices and the direction that we have taken that has led to targeted profitable growth and an operation leading in efficiency.
Three things that I would like to highlight as particularly important since the previous Capital Markets Day is, one, our ability to reprice and improve earnings in an environment with increasing interest rates. Secondly, the integration of Sbanken, as already mentioned, resetting and strengthening our platform in the personal customers area, and the low cost of risk, demonstrating a resilient economy, but also, we believe, demonstrating the high quality of the decision made in relation to risk-taking. Our dividend policy is well known to most of you. It has been the same for many years, and we have consistently delivered for many consecutive years, including the years of the pandemic. For the avoidance of doubt, it consists of three pillars. First, we aim to pay out more than 50% cash dividend of our earnings every year.
We have an ambition to increase the nominal cash dividend per share per year, and we use our share buybacks as a flexible tool to manage around the desired and required capital level. We believe that our commitment here clearly is demonstrated through both our understanding and our track record and belief in the importance of paying back excess capital to our shareholders. Now, moving over to our position, where we are today and the environment for our business. We have a unique position in an attractive market environment with a robust and growing economy as our primary market. We're a clear market leader across all customer segments in Norway, including leading position on pension, transaction banking, and investment banking. Furthermore, we have a strong brand, and we have a proven track record of executing on strategy and delivering on targets.
Our international presence is built around our activity in Large Corporates and International, as well as investment banking, with an increasing presence and activity in Stockholm, New York, London, and Singapore as our main hubs. We do follow our Norwegian customers abroad, but above and beyond that, we also engage in several industries globally. More particularly, we have a world-leading position across the maritime sector and a strong one across all ocean industries. And in the international part of our business, we have recently strengthened our presence and activity, in particular in renewable energy and healthcare. Our international position represents a flexible platform to grow, and we are able, when needed, to grow independently of the growth of the Norwegian economy. Now, over to the Norwegian economy. It is moving towards a soft landing.
We expect growth to pick up again from next year, and it is so that rates have moved higher and stayed higher for longer than we anticipated two years ago. The main reason for this is both an economy performing better and the resilience being stronger than what was expected a couple of years ago. Growing consumption is expected to be one of the drivers for economic growth. Also, growth in real disposable income, as well as growing house prices, both will represent positive growth impulses into our business. The current key policy rate is 4.5%. We have not yet seen the first rate cut from the Norwegian Central Bank. It is expected to come sometime during the first half of next year. And in total, the Central Bank expects an aggregate of five rate hikes. Rate cuts, sorry.
This means that rates will gradually move down towards a level of 3.25%, a level that is substantially above the level where it was entering into the pandemic. More than 80% of Norwegians own their own home, and roughly 95% of mortgages are structured with flexible rates. This creates an environment where the Central Bank can rapidly and materially impact the economy through measures taken under the monetary policy. With 14 rate hikes in recent years, the strong resilience of Norwegian households has been clearly demonstrated. Furthermore, Norwegians have a very strong culture for amortizing on their debt, and this reflects back on their households in two manners in a cycle with increasing interest rates. Firstly, the burden of the increased debt service is much less if you consider the total increase related to debt service, whereas if only considering the increased interest payment only.
Considering interest payment only, it's more than doubled from the 14 rate hikes. However, considering the increase in the total debt service burden to the household, it's an average only up by 15%. Secondly, they have an increased flexibility from the option of postponing installment for a period. This flexibility has, however, been used to a very limited extent during this cycle. The most important thing for financial and social wealth still remains the fact that people have a job. Unemployment is very low in Norway, less than 2%, and it is expected to stay low for the coming three-year period we're talking about here today. I would now like to invite you to reflect on the Norwegian economy in somewhat of a longer-term perspective and reflect a little bit around the larger trends that are impacting many economies these days.
More specifically, climate, demographic trends, digitization, and geopolitics with the need to invest in defense. Norway is well positioned for change. Not only do we have the natural resources, but we also have the human resources and the capital. The graph you see here on the left, it illustrates Norway's relative flexibility to adjust in their competitive position through wage movements, and this is there due to structures in place related to the wage regulation processes. More specifically, you can see this as an example, looking at the competitive position of the manufacturing industry and see how their competitive position has increased substantially over the past 10 years due to their change in wage cost, which is also impacted by the currency. Last but not least, Norway has one of the strongest fiscal positions in the world.
This muscle can and will be used as an efficient lever to adapt to a changing environment in the years ahead. Now, I would like to highlight that what I've talked through now is what we believe to be the most likely scenario for development going forward. Bear in mind that Norway is a small and open economy that will be impacted by the development that happens around us, and that we are in a situation where geopolitical risk and uncertainty is higher than normal. We run and plan for our business in accordance with the most likely scenario, but we're always prepared for a more adverse outcome and have the strength and the capabilities to manage that from our strong position and surroundings.
But all in all, we find that the environment surrounding our business, as well as our position, represents an attractive environment to run our business within in the coming years. Now, we turn to the future financial targets and our plans to deliver. These are the four main financial targets for the period 2025 to 2027. Return on equity remains the most important financial target, and as you may have seen, we have raised the target to delivering a minimum of 14% on the back of both a unique position as well as a favorable environment. For cost-income, we maintain less than 40%. Bear in mind that that is an increased ambition level given the expected approval and following merger with Carnegie. That is a business that has a higher cost component. Capital, we list the current expected and required level, which is at 16.7%.
We will maintain that plus a buffer above, and our dividend policy remains the same. We have several levers and accelerators to help us deliver on these targets, and I will focus the rest of my presentation on some of these levers as we move ahead. Firstly, talking about enhancing customer value. Furthermore, talking to specific opportunities and priorities to target future profitable growth, and talk about how we benefit from being a digitally driven digital leader. The first two are quite self-explanatory, but maybe I should develop a little bit on what I mean by being a culturally driven digital leader. First of all, tech is as much, if not even more, about people and competence than it is actually about technology.
Secondly, as the largest financial institution in Norway, we play a very important and critical role in society, and this is a role that we take very seriously, and thirdly, our success and ability to deliver will always remain with our people and our ability to attract, retain, and develop the best talent, so natural to start with enhancing customer value, and it is a clear priority for us in the coming period to enhance customer value through increased digital engagement and further opportunities for our customers to both solve and acquire what they need on our digital platforms. We have a good starting point. Norwegians, in general, they trust banks when it comes to delivering financial services. In fact, 77% of Norwegians say they prefer to buy their services from a bank rather than a fintech or a big tech company.
Furthermore, we have a strong track record of building customer loyalty also in a digital business environment, and on average, both our SME, corporate, and personal customers hold a large number of products with us. Both Maria and Håkon will talk about how we will speed up the relevant content, digital interactions, and advice towards our customers across our digital platforms. The same goes for SMEs that Rasmus will talk about, and our position digitally towards our SME customers has substantially strengthened in the past two years with a doubling of the number of users, and now more than a third of our customers in the SME area actively uses the digital app to manage their daily business.
Our increased focus on customer value has already yielded results, and I list here a few of the select innovations that we have issued in the market in the past 6- to 12-month period. Firstly, our small business customers can now get a yes to a liquidity credit, a working capital facility in 38 seconds. Recently, a couple of months ago, we launched a revenue-based finance solution for our customers, still as a minimum viable product, but clearly a product that we see is needed and wanted by our customers. And going forward, we will do more of these. For profitable growth, we aim to increase our competitiveness in our already strong positions in Norway.
We typically build our business from strong positions in situations that are important for our customers, such as being the number one choice for young people when they're looking to buy their first apartment or home, such as startups when entrepreneurs are looking into starting their own company, or when they're in a period of growth needing capital as well as other financial services. The future focus is to increase competitiveness, and it's demonstrated by, among other, two clear priorities. Firstly, increased focus and management efforts in the SME area. Corporate Banking Norway has now been split out as a separate business unit and a part of group management.
It has benefited both our business and our customers to have all of our Corporate Banking business together in one unit, but now is the time to build on those advantages and develop the business further, which Rasmus will talk about in his presentation. Secondly, for personal customers, we will build strength in two attractive, strong, and complementary brands, DNB and Sbanken. We are excited about the opportunities we see after a period that has been impacted by the integration and the following aftermath with Sbanken, and Maria will develop in the future plans in her presentation. The Nordics remain a very attractive region for us for further growth, and jointly, the Nordics actually represents the 11th largest economy in the world.
It's interesting to note that at a time where the UK and many other European countries are struggling to attract initial public offerings, Sweden and Stockholm stand out. According to the Financial Times, more companies have been listed in Stockholm during the past 10 years than in France, Germany, the Netherlands, and Spain combined. Growing our activities in the Nordics is something that we have been talking to you about for quite some time, and we have delivered attractive organic growth in this area. You can see this underpinned by the fact that we have close to doubled our revenues in this area in the past five years. With the announced acquisition of Carnegie, we are positioned to further accelerate the growth of our Nordic activities. Carnegie is a leading Nordic investment bank and asset manager.
Furthermore, our businesses across DNB and Carnegie are highly complementary across geography, industry, competence, as well as products. Once we receive the required and necessary approvals, our plan for integrating the two businesses in DNB and Carnegie. We approach them more in terms of a merger than we do as an acquisition. We plan to also rebrand the businesses DNB Carnegie, and we have spent a lot of time on future potential as well as people and culture and have found that we have a business thinking that is very much alike. Alex, Harald, and Håkon will develop more on this in their presentations later on. We continue to see the savings market as structurally attractive, and we aim to capture an increasing share of this growth.
One lever to unlock further growth is a close cooperation across our unique coverage model, where we have a leading position in banking across all customer segments and a leading position in pension. We have also built the largest digital platform for savings and investments with 730,000 customers and growing. The structural attraction in this market continues to be driven by several factors. Reforms already put in place incentivizing consumers and businesses to save more and invest more for their pension or for their employees. Furthermore, we still see that Norwegians, despite having increased their savings activity in mutual funds, still save substantially less than our neighbors in Sweden and Denmark. We have already seen attractive growth in this area. If we look at how the assets under management from defined contribution and retail savings have developed over the past five years since 2019, they're up by 86%.
Looking at the recurring savings in our personal customers' area, it's up by 77%, and the fact that 92% of the sales of these products in saving in mutual funds happen fully digitally in our savings platform clearly indicates the scalability of this model. Håkon will also come back and develop more on this later. We have a leading digital position, and we will continue to invest in our leading digital position. We are well advanced in our cloud journey, and 62% of our IT systems are now either built or migrated to the cloud, and this is important for us in order to maximize all of our capabilities, including the power of data. We constantly strive for simplicity, and the focus on decommissioning systems we no longer need has been high, and in the past five years, we've decommissioned 490 different IT systems.
More specifically, we've decommissioned close to all the systems that came in with the Sbanken acquisition, and only those systems are saving us NOK 215 million per year. The cost efficiency and power of doing this is even larger than the 215 million because in future, we now benefit from being able to scale and develop on one common DNB platform. Priority number one in this area will always be security and stability of operations, while at the same time, we work very hard to increase the pace of innovation. Now, in recent years, we have been able to both increase substantially the number of changes that we inflict when we innovate into the systems, while at the same time reducing by 91% the number of days that are impacted by IT incidents.
As for AI, we have been actively using AI and machine learning for years, and we are well underway in exploring and using the next generation AI. Tech, again, is much more about culture and competence than only being about tech, and we broadly invest in our people exploring and using tools such as the MS Copilot, and we're already testing and using AI in fraud detection, co-coding, as well as customer service, including chatbots, with very promising results. We believe in the transformative power of artificial intelligence, and we believe in that for many industries, and we position for this in the financial industry. We value and strive for real societal impact in many areas. Our position in sustainability has been clear, and we have for many years now integrated our work of sustainability into our business processes.
We have been very clear on our strategy all along and on the principle that the best way, if not the only way, is to do this together with our customers and to do this in supporting them on their transition journey. Furthermore, stopping financial crime and stopping escalating attempts to commit fraud towards our customers remain at the top of our priorities. We invest substantial amounts in security every year, as well as into our culture and competence to protect both values and people. We believe that the only way forward here is by transparency and cooperation, and this is why we share all of our insight and research into this area, as well as actively engaging into cooperating across both private and public entities in Norway and the Nordics. We're also highly motivated by and believe in the importance of giving back to society.
Sparebankstiftelsen DNB is our second largest owner, and they and their team do a fantastic job in making a difference in society. With their share of the profits from DNB, they support projects which benefit children and young people both nationally and in regional communities across Norway. And we are both motivated and proud to have been able to distribute more than 7 billion NOK over the past five years to support these very important initiatives. Last but not least, our people, and our people remain the most important foundation for our success. The war for talent is intensifying, and our societies are facing a situation where our populations are increasingly getting older. A leader that I am quite inspired by once said that it's not going to be the companies with the best products that win in the future. It's those with the strongest culture.
Our business and strategies are built on a culture of putting the customer first, doing the right thing while at the same time getting things done and working together as one team. And I find that the team as a whole is quite excited and energized about continuing our work to pull the business further in that direction. At the same time, it's rewarding to see that we continue both to attract the top people and that such a high number of our employees are willing to recommend DNB as an employer. The only way to succeed is also not only to attract a diverse workforce, but to perform as a diverse and inclusive team. We're well underway on this, but we will never rest our efforts to build the best bank possible for our customers, for societies, and in particular for Norway.
I will land with this slide and reiterate my main points of a consistent and long-term track record of delivering on targets of our unique position and attractive environment to do business in the coming years, and as well as of our strategic levers and accelerators that will help us deliver on these targets. And with that, invite Ida on the stage to develop more on actually how we will do that.
Thank you, Kjerstin. I would now like to dig in a bit deeper into our financial position. In this presentation, I intend to update you on what we have delivered since our last Capital Markets Day, provide you with additional information on the drivers supporting strong profitability, continuous cost efficiency, and a capital position which will enable us to continue to deliver on our dividend policy also in the years to come.
As Kjerstin mentioned, we have delivered on our financial targets communicated two years ago, and we are strongly committed to also deliver on the targets we are setting now for the coming years. Strong profitability from our positions in the personal and corporate customer segments, a focus on effective cost measures, as well as sound risk management. This, in addition to a solid capital position, provides the basis for our ability to deliver a return on equity above 14% in the coming years. Our dividend policy, as Kjerstin said, stays firm, with an ambition to increase our nominal cash dividend by on a yearly basis and paying out more than 50% of net profit and utilizing share buybacks in a way to optimize our capital position also in the years ahead.
Profitability has been strong in recent years, driven by increased interest rates, but also strong activity levels across our customer segments and strengthened position in areas that are strategically important for us also when looking ahead. The Norwegian economy, as Kjerstin pointed to, remains robust, and while the key policy rate is expected to start to trend down in March next year, interest rates are still expected to remain at higher levels going forward. Our customers are able to manage the increased interest rates, and with the growing positive sentiment across our customer segments, we maintain our long-term ambition of having a profitable loan growth across the cycle through the cycle of 3%-4%. The key policy rate has gone from 0.5% in January 2022 to 4.5% as of today.
During this period, we have implemented 14 repricings towards our customers, which in combination with profitable volume growth both in deposits as well as in lending volumes has supported the NII increase. When looking ahead, we expect the momentum we saw in the second as well as in the third quarter this year to further intensify with higher activity across our customer segments. This is expected to be driven by low unemployment, increased real wages, growth in GDP, and growth in sectors where we have industrial competence also outside of Norway, as Harald will come back to. Our ambition for long-term profitable annual loan growth of between 3%-4% therefore stays firm. Other operating income from customer activity has continued to increase, and we've noted a compound average growth rate of approximately 7% since 2020.
This is a testament to our communicated ambition of growing the commission and fee base higher than lending volumes and provides a strong foundation also for future income potential. The strong position we enjoy across fee-related income, the enhanced position that the Carnegie acquisition will bring, leads us to lift our position or ambition for annual growth within commission and fees from 4%-5% on an annual basis to now being above 9% through the cycle. During the past few years, we've noted a particularly strong growth in assets under management as well as in investment banking. We are well positioned within savings and pensions through our strong position in the Norwegian market across defined contribution, corporate customers, as well as personal customers.
This is, as Håkon will come back to later on in his presentation, particularly important in light of the structural changes we've seen within pensions, but also across the board when it comes to mutual funds as well as stocks that are gaining attractiveness among our customers. On top of that, we have made successful investments into our investment banking portfolio and platform across products, industries, as well as geographies, which Alex will come back to in his presentation. These positions, combined with a broader product offering in commission and fees, as well as the acquisition that Carnegie brings along, leads us to lift our ambition of increasing the annual growth in commission and fees to being above 9%.
As Håkon and Alex both will come back to in their presentation, the combination of DNB and Carnegie will further strengthen our market position, product offerings across the Nordics, and increase our fee-related income. DNB and Carnegie are complementary, both when it comes to products, industries, as well as geographies. Carnegie has a particularly strong position in Sweden, and through DNB and Carnegie's combined broad-based product offering, we will be able to provide our customers with even better services and solutions. Estimated net profit contribution from Carnegie is NOK 1 billion in 2025. Included in these numbers are the full year effect of the previously acquired companies by Carnegie, some non-recurring costs related to IT as well as restructuring, as well as higher expected market activity.
When looking ahead towards 2028, when we expect to have been able to deliver on a large share of the synergies that we've identified, net profit contribution from Carnegie is expected to be NOK 1.8 billion. The uptick is expected to be generated through capitalizing on the broader product portfolio towards our respective customer bases and by additional advisory and financing activity. Approximately NOK 450 million of these synergies are expected to stem from markets and NOK 350 million coming from the Wealth Management business. In addition to this, there will be further potential from our offering of our broader Corporate Banking product base to a broader customer base. These are, however, not taken into account in the NOK 1.8 billion estimate. Now moving on to costs.
We are continuously focusing on cost efficiencies across the group, and we have seen the cost- income ratio decrease from 39% in 2015 to now being 35.3% on a rolling 12-month basis. This comes as a result of increased income, but also strong cost culture across the group. During the period shown behind me, we have made investments into technology, KYC, but also strategic investments, which in addition to delivering increased revenue also has brought along increased costs. We have concurrently with investments taken out synergies, improved automation and efficiency, and modernized our core systems, which is reflected in our cost levels remaining at the same level as 2015, also adjusted for cost and wage inflation. A strong cost culture and cost control allows us to take advantages of opportunities as they arise. We continuously focus on staying ahead and proactively take measures.
This is most recently evidenced by the reduction of 500 full-time employees, which is estimated to have an effect, a one-off effect of NOK 450 million, which will be taken in the fourth quarter this year. After Capital Markets Day in 2022, we announced the plan for cost initiatives of between NOK 1.5-2 billion towards 2025, and we have delivered. As of today, these initiatives have reduced our gross costs by NOK 1.6 billion. Some of these synergies stem from the integration of Sbanken, as Kjerstin pointed to, and are primarily related to the decommission of IT systems, but also economies of scale in third-party contracts. In addition to that, we have also noted further optimization of our IT systems through modernization and also reduced usage of external consultants. A new and upgraded sourcing system has, in addition to this, improved our supplier cost control.
Looking ahead, we maintain a strong focus on cost effectiveness and have identified further gross cost reductions of approximately NOK 3 billion. This is a prerequisite for our competitiveness and our ability to deliver strong and value-adding services to our customers. We see further potential when it comes to digitalization and automation. Areas of focus here are in particular increasing straight-through processes, automation of internal processes, and utilizing AI tools and data insight tools to enhance productivity and efficiency in the years ahead. There are also potential to further streamlining and reducing the complexity in our product portfolio. In addition, there is, similar to what we've already seen through the modernization of our payments infrastructure, significant potential to achieve cost efficiencies as well as increase our competitiveness in relation to the ongoing tech modernization initiatives.
We are also seeing additional potential to leverage further on our scale, focus on standardization as well as our negotiating power with third parties in the years ahead. Now moving on to asset quality. We have a solid and well-diversified portfolio with a proven resilience across cycles. The focus on rebalancing the credit portfolio from cyclical industries to a larger diversification across industries, as well as increasing the relative share of personal customers, has reduced cost of risk through cycles, as can be seen on the slide. Our personal customers are accounting for approximately 50% of our total exposure at default and more than 90% of it being related to mortgage lending and only a very limited part of it towards unsecured credit.
We have also a robust and diversified corporate customer portfolio, with more than 93% of it being in low or medium risk, and no single industry accounts for more than 10% of exposure at default. 26% of our corporate lending book is towards small and medium-sized enterprises, where the vast majority of the exposure is in Norway, which Rasmus will come back to later on. In our large corporate area, we continue to work along the industry strategies with a focus on originate and distribute. In addition to having a strong footprint in the Norwegian corporate area, we follow select industries internationally where we have a strong industry competence. Now on to capital. We have a strong capital position with a resilient CET1 capital ratio. Solid performance has since 2015 generated capital to shareholders of 223 billion NOK, an average increase of 9.5% per year.
70% of our total capital generation has been distributed to our owners through dividends as well as share buybacks. Our first line of defense is our proven ability to generate consistent high earnings, which builds capital over time. DNB Life, our life insurance business, has a solid position with a solvency ratio of 259%. This, in combination with the guarantee portfolio, which is in runoff, as well as a strengthened market position within defined contribution, provides a solid position for increased dividend payouts and capital repayment in the years ahead. For ordinary dividends, the policy states that DNB Life can pay up to 100% of net profit if the solvency ratio is above 140%. The strengthened position within defined contributions provides a solid basis for increasing the nominal ordinary dividend in the coming years.
As can be seen from the left-hand side of this slide, the guarantee portfolio is now in runoff. This is in combination with a reduced interest rate sensitivity. This should give further potential for upstreaming of capital, similar to what you saw last year. Upstreaming of capital is subject to NFSA approval, but our calculations show that there should be potential for a total payout of capital, i.e., ordinary dividend and repayment of capital or upstreaming of capital of approximately 30 billion NOK over the next 10 years, further supporting the overall group's dividend policy. So, given the solid capital position and a strong profitability, we remain committed to our dividend policy with a payout ratio above 50% and an increased nominal cash dividend year on year. Our leverage ratio is high, also compared to Nordic as well as European peers.
This provides significant resilience, which is also supported by the EBA stress test from 2023, where you can see a lower drop in CET1 capital ratio relative to our peers. We have delivered a solid annual capital generation over the past three years, with an average profit generation adding 350 basis points to our CET1 capital ratio. The solid headroom of 230 basis points, the strong capital build from profitability, potential yearly effect from the dividend, as well as the upstreaming of capital from DNB Life, is expected to absorb the one-off effect of the Carnegie acquisition, as well as providing a sound platform for future dividends in the years ahead. So, summing up, we are well positioned to deliver on our financial targets. We have a strong position in the personal customer segments as well as the corporate customer segments.
This combined with the diversified product offering provides a solid foundation for income growth in the years ahead. We will remain cost-effective and are continuously working on identifying cost measures to ensure competitiveness and efficiency. We have a solid and well-diversified portfolio with reduced cyclicality. This provides a solid platform for continued strong profitability, which in turn supports our already sound capital position. And with that, we are well positioned to continue delivering on our dividend policy. I thank you for your attention and now leave the floor to our head of Personal Banking , Maria Løvold.
Thank you so much, Ida. I'm very pleased to report, like doing this. I'm very pleased to report solid development and a positive outlook for Personal Banking in DNB. We are a clear market leader in key product areas, strengthened through our two brands, DNB and Sbanken.
We offer a wide range of attractive customer products and services, and we have a track record of building loyalty, and our market-leading digital platform is a highly scalable tool for further digital sales. All of the above are drivers for further profitable growth, and let me elaborate on that. I'd like to start by showcasing that we are by far the largest player in the Norwegian market, with a wide gap to peers in all relevant product areas. We are about twice the size of our closest peers in loans to personal customers, even considering planned mergers in the Norwegian banking market. Our deposit portfolio is more than three times that of our closest peer. It's a testament to our strategic acquisitions, but also our status as a universal bank, and strategically important in a long-term perspective, we also have the leading positions in savings for personal customers.
This is evidenced by our market share of accounts for savings in share and mutual funds, where we are more than two and a half times the size of our closest peer. Furthermore, 48% of the Norwegian population are customers of DNB, and 40% of them, they have a DNB card. We have over 11 million digital weekly touchpoints with our customers and potential new customers, and even though Norwegian banking customers prefer digital services, we see that local presence is crucial for maintaining good customer relationships, and we currently have 52 key locations across the country. All in all, we will take advantage of our unique market position and digital platform to keep on delivering profitable growth also in the years to come.
And to elaborate further on our market position, we have a solid development in both deposits and loans over the last few years, with a strong deposit-to-loan ratio of 61%. And with 14 rate hikes over the last period of two years, combined with a highly competitive market, I'm very impressed by the Personal Banking team. And as we see an increased market activity, we are confident that we will experience further profitable growth when activity levels rebound. We have had a strong income development over the last few years, mainly driven by customer repricing following the central bank rate hikes, which has given us a higher margin income. But the income has also been driven by volume growth and income from other product areas, such as payment, real estate broking, and non-life insurance.
A strong income growth combined with cost discipline and close to zero loan losses have increased our operating profit over the last few years. Return on allocated capital has shown an overall positive development over the past six years, where strong resilience during COVID was followed by a clear uptick to the current level. We have a proven track record of building loyalty and customer value. A key driver for this is fulfilling a wide range of customer needs by offering a lot of relevant products and services. For instance, our mortgage customers have an average of 5.7 DNB products, such as debit and credit card, non-life insurance, savings schemes, and so on. On average, 98% of our mortgage customers, they have a DNB card, and 85% have a salary account.
The share of mortgage customers with monthly savings schemes in mutual funds or accounts is 59%. This comprehensive use of DNB product increases the value of each customer and reduces the likelihood of customer churn. We are therefore very pleased to see that survey results showing that DNB customers in general use fewer providers to cover their banking needs. As mentioned initially, we have two strong and complementary brands in DNB and Sbanken, giving us the opportunity to reach different market segments. The DNB brand is a universal bank brand representing a wide range of financial products. Our customers are first and foremost served digitally through our online bank or our mobile banking app, but we also provide personal service when needed.
The Sbanken brand is a digital-only bank brand representing a more narrow product range, catering to customers who want to do their own banking in their mobile banking app. These are typical, a bit more tech-savvy customers with good personal finances and maybe a bit less complex banking need. In addition to this, DNB has traditionally been very strong in the housing market, whereas Sbanken is strong in bank switching and refinancing. We will now increase our efforts to position the two brands by offering innovative products and services and by using Sbanken as the spearhead for further digitalization and leveraging also DNB's size for scaling up.
Another key driver for growth is DNB's unique position in the Norwegian digital market, which gives us a good opportunity to engage with our customers on a regular basis, because 46% of the population have logged into one of our digital channels the last three months, and the DNB and Sbanken app are by far the most widely used in Norway, as 34% of the population are active users, so both the number of active users as well as the frequency of use is increasing, with active users logging in more than seven times per week, so in general, our customers are moving from physical and online banking to mobile banking. For instance, to the right here, the share of payments and transfers completed in our mobile banking apps is increasing, reaching over 80% this year.
As regards digital sales and personalized digital communication, we have been digitalizing our customer journeys for years, and we will strengthen our efforts also in the years to come. So far, this has, for example, resulted in a 98% share of digital sales of savings schemes in mutual funds and accounts, an 81% share of digital sales of car loans, and a 58% share of DNB brand customers refinancing their mortgage digitally. We are also currently going digital with non-life insurance, reaching a share of 23% of digital sales this year. To further increase digital sales, we will enhance personalized relevant advice to our customers in all our relevant digital channels. A concrete example to the right is that customers with a substantial amount deposit in their current account get a personalized message informing them of other options, such as a fixed-rate deposit account.
And we see a conversion rate of 10% of those who have clicked on this message. So even though we are well underway on our digital sales journey, we still see a massive potential here, and that we will leverage going forward. In addition to all of this, we are taking advantage of our unique market position and size by continuously standardizing and streamlining also our work processes. New digital solutions have simplified and improved our work processes and reduced our average handling time by 8%. And this has led to a reduction in FTEs in our customer service center by 13% since 2022. At the same time, we are continuing to improve our customer satisfaction, with over 90% giving us a top satisfaction score after being in contact with our customer service center.
Lastly, I'd like to mention that we are utilizing AI technology and that the results so far are promising. For instance, our AI-driven chatbot is under constant development and now understands 35% more of previously unsupported queries and 100 different languages. All of these form an important basis for an even more self-served, smooth, and efficient banking experience in the future. To sum it up, the key drivers for further profitable growth are we are a clear market leader with two strong and complementary brands, allowing us to increase our market reach even further. Being number one in digital services, we will work on turning more and more digital touchpoints into personalized sales and effective use of technology to meet future customer needs and to excel at cost efficiency. Thank you very much. Then I will leave the floor to Rasmus, Head of Corporate Banking Norway.
Thank you, Maria. I'm here to present a robust foundation and promising outlook for Corporate Banking in Norway. My three key messages are that we're building on our market-leading position. We deliver products and industry competence to deliver further growth. And lastly, we will continue our digital efforts to create strategic positions and cost-effective service. First, let's look at the business area as a whole. As you see on the left, our portfolio is diversified. It encompasses everything from the real estate sector, public sector, to all SMEs covering all industries in Norway. We hold the number one position within the real estate sector, underpinned by a conservative underwriting policy based on cash flow and industrial ownership, resulting in a healthy portfolio that the last few years of challenging market conditions have proven.
Also, underpinning the strong economic result is the backbone of providing all necessary products ranging from sale and purchase to mergers and acquisitions. Within the public sector, we also hold the number one position, servicing almost all the state entities, and 10 out of 20 of the largest municipalities. This results in a strong and profitable deposit base as well as transactions. In fact, 25% of our deposit base is from the public sector, and a third of all our transactions within the corporate side is from also the public sector. Lastly, most of my presentation will focus on the SME market, so it suffices to say now that we hold the number one position, and it is highly profitable. Now, let's see what these strategic positions offer of value creation.
On the left, you will see that Corporate Banking actually accounts for a substantial portion and has been growing considerably over the last half year and constitutes actually roughly a third of the total income of DNB, and it has increased by 13% every year over the last five years. As we turn our attention to the right, we see an even more impressive return on allocated capital over the last 18 months or so, above 23%. To service such a diverse portfolio with different customer needs, we balance cost to serve with meeting customer expectations. Our deposit base, as seen on the left, has grown by NOK 150 billion over the last five years, primarily driven by profitable deposits from the public sector and international organizations. It's also important to note the significant deposit base from our many SMEs, providing a resilient and profitable core.
Moving our attention to the right, the deposit growth, along with our ability to grow product income faster than the loan book, has resulted in a robust growth and increasing importance of our diversified product offering. This success is boosted by our close collaboration with DNB Markets, which Alexander will get back to later. On top of that, we're building on established positions within treasury management, pensions, and a growing position within insurance. SME and large corporate has been one joint area for the last five years, and this has positioned us to service SME clients with a broader product range, including investment banking services, fixed income, and trade finance solutions. We've built on the strength of the respective entities and given the best of both to our clients. We build on this strong foundation as we now continue as two parallel business areas.
As separate areas, we, as Corporate Banking Norway, have gotten a clearer seat within being based in the group management of Kjerstin and a clearer voice through that. We also have seen more external interest, both from media and me standing on this stage being another proof of that from the investor and analyst side. Lastly, from our customers, we see that this is an acknowledgment of their importance, both within the bank and to the Norwegian society as a whole. The SME market is important to the Norwegian society and to DNB. 99 out of every 100 businesses in Norway are SMEs, and they provide more than half of the value creation and more than half of the employment within Norway.
DNB serves more than one third of all corporates, and this ranges from the smallest startup to the cornerstone businesses all around Norway. Norwegian SMEs typically rely on a single bank to meet all their financing needs or all their financial needs, which makes them highly profitable and attractive due to the high number of products they use. One in four of every newly established business chooses DNB as their financial partner, a position we aim to strengthen as we go forward within startup and growth companies, as pointed out too by our CEO. As mentioned, 235,000 corporates in Norway choose DNB as their financial partner. We service them through a model combined with local presence, with world-class digital service offering, and are present in 48 branches all across Norway. 75% of our customers are primarily serviced digitally, supported by a corporate contact center open six days a week.
Similar to what Maria alluded to, after having been in dialogue with our corporate center, 90% of the customers give us top rating in response. I would also highlight the two other segments that are highly profitable and with high customer satisfaction. They are more than 25% of our customer base and are all serviced by a relationship manager. As Norway's largest bank, we attract talent and expertise from across the country and combine with our international service offering. This is a value proposition that the local savings bank cannot compete with. For entrepreneurs and startups, we offer a dedicated team that provides free advisory services to startups and high competence on industries that are most relevant to the Norwegian economy. As the only bank in Norway, we offer InvestEU funding to support growth companies within digitalization, innovation, and sustainability.
Combined with being the largest distributor of funding of Eksfin and Innovation Norway, this is a valuable market value proposition to growth companies. They better address their financial needs, especially of companies that are experiencing rapid growth, bridging their challenging financing gap. Another distinguishing factor is our full-scale product and service offering, which is highly valued by our customers. In fact, 80% of our customers have more than four banking products. Our goal is to deliver hassle-free digital services that enable our corporate customers to thrive in a cost-efficient manner. Since we last spoke at our Corporate Capital Markets Day, our corporate mobile bank, as mentioned by Kjerstin, has more than doubled. In fact, more than 50% of our customers use it, which equates, just to put that into perspective, to more than 20% of all corporates in Norway.
We continue to integrate new solutions such as tax integration, and as Kjerstin spoke to, have released innovative new products like working capital credit and revenue-based financing to add customer value and earnings. These products are based on credit engines that are automated and giving us cost efficiency and greater customer experience. We will undoubtedly see further progression in this field in the years to come. We offer these services with an ever-increasing understanding of the customer needs and when to offer them through better analytics of great data sets that we have in the bank, and some of the traffic and engagement on our digital platforms drive both customer value and cross-selling. I would argue that the strongest testament to this position is the 23% daily engagement we get from the users on this platform. That's ranging from startups to CFOs of larger established businesses.
Our investing in customer-centric digital solutions not only enhances customer value, but also accelerates service efficiency and thus reducing costs. Similar to what Maria alluded to, we see here summing up from these two graphs, we see that our customers are able to self-service more on our digital services and thus also reducing the traffic on our customer call center. This comes from a dedicated effort between the tech side and those meeting the customers day to day to achieve this result. To conclude, Corporate Banking in Norway is highly profitable, and the SME market in Norway will continue to be attractive on the back of a strong Norwegian economy. We will continue to build on our competitive advantages across all segments and with a leading digital offering, wide and relevant product range, and industry competence with a global perspective offered to all regions of Norway.
In sum, we offer all the benefits of being a large bank with local presence and know-how. And with that, I offer the stage to my brother-in-arms serving the international and large customers. Harald.
Thank you, Rasmus, for a kind introduction. Ladies and gentlemen, my job here today is to let you know how we've delivered on the targets we communicated two years ago, and I will also point the way to the future to make you comfortable, to convince you that large corporates and international, we will continue to deliver on the long-term profitability of DNB. We will achieve this through building on our unique position in Norway, as well as selective industries internationally. We will exploit opportunities from a growing client base that we've seen over the last couple of years and also a broader product range.
We will also accelerate the Nordic growth in close collaboration with our good colleagues in DNB Markets and Wealth Management. As you can see from the graph or the chart to the left, we've delivered an annual lending growth of 3.3%, with deposits increasing much, much faster. Pre-tax operating profit has been growing much faster than lending volumes, thanks to good cross-selling supported by the originate and distribute model, as well as good cost control. This, in turn, has resulted in a solid growth in return on allocated capital, and I'm pleased to say that over the last 12 months, we have received an 18.5% return on capital in the Large Corporate and International area.
These strong results reflect what I would call an exceptional position among Norwegian large corporates, and it demonstrates the success that we've had across the selected industries based on our international footprint, where, of course, this lovely office in London is a good example. The Nordics, however, represent an increasingly important share of our international business, yielding more than 40% of its total income, with the remaining non-Norwegian business distributed across selective low-risk geographies. The two colorful donuts that you will see to the right show that our exposure is well diversified and that we've actually continued to reduce the risk towards cyclical industries and industries with a potential transition risk. We're also stepping up as advisors to top management and owners across a broader range of industries, such as healthcare and renewables, in addition to our traditional strongholds in industries like shipping, oil service, and seafood.
Thanks to our seamless cooperation with markets and Wealth Management, we can deliver high-quality and full-scale offering to our clients, not only in Norway, but also internationally. And as you will see from these two donuts or wheels on the left, we have, over the last five years, decreased our dependency on lending income from 53% in 2019 to 48% today. And this, of course, means that non-lending income now represents more than 50% of our income mix. The chart to the right illustrates an average annual increase in cross-selling income of more than 9%. And we strongly believe that the Carnegie acquisition will provide us with an ideal foundation to further accelerate this growth in non-lending income. In addition, we also see a very positive development in transaction banking, where we are now leveraging the modernization of our payment platform.
We've seen a strong increase in the success rate on strategic tenders, which again, as you will see, has increased our market share on transactions in Norway from 31% to almost 40% last quarter. Not only are we a clear number one in Norway in terms of volume, we're also ranked number one in terms of quality, as you will see from the last Prospera survey. This, of course, gives us additional benefits. On the large corporate side, we now have more than 100% deposit ratio. We also increased the cross-selling of other daily banking products, such as trade finance and guarantees. To the right, you see an interesting, I'm not quite sure, Camembert in French.
80% of the revenue in the combined Corporate Banking segment now comes from clients with payment services in DNB, demonstrating how transaction banking, in many ways, acts as the glue between us and the clients. And on that bombshell, I will move on to our international business. And I will tell you why we are so proud of this and why we believe that it is so valuable. Firstly, it provides a strong contribution to our income. As you will see from the graph to the right, it's grown from NOK 3.6 billion to NOK 5.3 billion since 2019. Secondly, it provides flexibility in terms of our volume growth. Thirdly, through our international network, we build deeper industry competence, and we attract talents, talents that benefit all of DNB. And finally, we give our customers access to important international Capital Markets.
Looking more closely at the Nordics, we have continued the successful operation in Sweden, and we've become increasingly active in Denmark and Finland, with a strong growth rate, albeit from a low base. The Carnegie acquisition, I would like to say, because it resonates so well with the LCI ambitions in the Nordics, and personally, I am thrilled that it will also give us the pan-Nordic footprint in Wealth Management that will enable us to take advantage of the growing family office segment in the Nordics. As Alex will elaborate on next, we're also complementary in terms of industry expertise. So overall, this acquisition will help broaden our product offering, and this is important. It will give us the ability to leverage our balance sheet to an even larger extent.
As our CEO pointed out, DNB has a solid position as a preferred sustainable banking partner to our clients, and we continue to deliver in line with the NOK 1,500 billion target. We're also on track when it comes to the ambitions we set in the transition plan, and I believe that we successfully take advantage from the business opportunities provided by the large capital needs we see in the renewable industry, as well as the increased demand for various types of sustainable financial products. I'm very pleased to share with you this slide because I think it provides - it's a bit, maybe a little bit of too much information - but it provides a good example of how we use our industry competence and global positions to develop new positions.
I think the best example is probably ocean maritime industries, and you have to keep in mind that here DNB has the number one position globally in both equity Capital Markets, debt Capital Markets, and syndicated loans. This, in turn, has enabled us to generate NOK 6 billion in cross-sales since we met here two years ago, and it has given us a 22% return on capital in these industries. And I would say that the dominant presence we have in these industries has allowed us to take a leading position in a whole new value chain related to future energy sources. Because as these industries transform and converge, we are ideally placed to be the strategic financial partner of choice for our customers.
Examples of this you see to the right being, for instance, the electrification of the ferry sector, offshore wind projects, offshore service and installation vessels, carbon storage, just to give you a few examples. So to conclude, LCI will continue to punch above our weight by further developing the originate and distribute model and delivering on three main growth drivers. We will leverage our industry positions through competence and long-term client relationships. We will strengthen the product base and further increase cross-selling. And finally, we will accelerate our Nordic position in close cooperation with Wealth Management and DNB Markets. And on that happy note, I am happy, I'm happy, happy to introduce you to the one and only Alexander Opstad.
Thank you for that introduction, Harald.
At our last Capital Markets Day, we highlighted that the dynamic within European investment banking ever since the financial crisis has been one where U.S. investment banks have gobbled up market share at the expense of European rivals. However, we also pointed out that regional specialists like ourselves have been thriving in this environment, as we typically compete for a different subset of clients below the tier one corporates and financial institutions where pricing is more challenging. In addition, key messages were that our business is benefiting from local currencies and local knowledge in Capital Markets, while simultaneously enjoying regional scale as one of the largest Capital Markets and investment banking platforms in the Nordic region. Lastly, we pointed out that we have a well-diversified business across products, geographies, and industry expertise, ensuring robustness across our business.
All these points still apply today, and I look forward to updating you further on the strategic positioning of DNB Markets, in particular in light of the recently announced acquisition of Carnegie and the planned renaming of DNB Markets to DNB Carnegie. In the past two years since our last Capital Markets Day, the positive momentum in our business has only accelerated, as we've enjoyed tailwinds from our continuous investments in products, technology, and people. Top line has grown some 25%, with improved profitability exemplified by a return on allocated capital in the low 40s the past 12 months. The business mix remains the same. Our FICC business steadily accounts for about half of our revenues, where we continue to be the leading bank trading in Norwegian kroner and associated products.
Our number one position globally in NOK FX trading remains difficult to emulate because it builds on the captive trading flow of local corporates, and as with all products, flow products, strong market share tend to be self-reinforcing. The FICC business typically thrives in somewhat more volatile market conditions, while the more pro-cyclical securities and advisory businesses perform best in calmer markets. This creates a stability in our business, allowing for continuous investments and long-term decision-making. That approach has driven a 9.1% annual average growth rate in income since 2019, with customer income growing even faster than the total. In addition to continuous investments, I would like to highlight the cooperation with the other business areas in DNB as a key source for success. Together, our business areas bring a holistic set of solutions to our clients.
Our most satisfied and profitable clients will typically be clients that buy a wide range of products across our Wealth Management, Corporate Banking Norway, Large Corporates, and DNB Markets business areas. One prime example of where alignment yields competitive advantage is the industry strategies that Harald elaborated on earlier. Highlighting some recent developments in our sector strategies, I would first like to zoom in on the maritime shipping sector, a subsegment of ocean industries. While DNB has many decades of experience lending to the segment, the position we've built in investment banking is of newer vintage and, quite frankly, an unlikely position for a Nordic bank to hold. Because in shipping, we are the global market leader across M&A, ECM, and DCM.
DNB has reduced its lending towards the sector by approximately half in the past 10 years, but actually grown revenues through being a holistic advisor across all financing opportunities. The position has been built through strong cooperation between Large Corporates and DNB Markets, while standing on the shoulders of an industry cluster with a long and proud Norwegian legacy. We believe there are key learnings in this journey that are applicable to other more emerging sector strategies, one being renewables and infrastructure, where we are the market-leading advisor in the Nordic region. One of our key selling points is our global capabilities and investor reach. We're active in all hemispheres, as exemplified by some of our recent advisory mandates for tier one infrastructure investors, including advising Macquarie on its co-investment into Norsk Hydro's renewable assets and selling hydropower assets for Brookfield in California.
We believe we're uniquely positioned for continued growth in renewables and associated infrastructure, propelled by investments linked to the green transition. Lastly, I want to highlight healthcare as an area where we want to capitalize on the position built in large corporates. In 2023, DNB Markets made a strategic investment into Back Bay Life Science Advisors, a Boston-based consultancy and M&A boutique. Together, we have formed the business partnership DNB Back Bay to develop business opportunities by combining DNB's product breadth and expertise with Back Bay's sector knowledge. I'm happy to report that we are booking the first significant fees from the corporation in the current quarter, having closed a buy-side mandate for Novo Holdings within Animal Health and having executed a bridge loan with a Nordic high-yield bond takeout for German CDMO business KD Pharma.
I hope that these short examples illustrate how we, through combining sector knowledge and product competence, are able to punch above our weight also beyond the Nordic region, which again makes us very competitive in our core geography. We foresee our industry strategies to underpin organic growth going forward, and with the proposed addition of Carnegie, we also aim to grow our sector strategies standing on the shoulders of industry clusters in the wider Nordic region. With the Carnegie acquisition, we will, subject to regulatory approvals, embark on a new phase of our growth journey. Our ambition is to become the clear leader in Nordic investment banking services while developing global positions in select sectors. We furthermore aim to be ranked as the number one provider in the region across relevant Capital Markets and investment banking product categories, with a strong commitment to quality.
With access to DNB's balance sheet, DNB Carnegie will combine strong advisory services with products that allow for deal facilitation and de-risking. On the back of our combined international distribution capabilities and DNB's international network, we see us as the preferred bridge between Nordic and global Capital Markets. For example, capitalizing on DNB Markets' position in the U.S., where DNB currently executes more than twice as many transactions as the closest Nordic peer. With moats in our business being built primarily through track record, we aim to be the bank in our region that executes the highest numbers of advisory deals, and maybe most importantly, we will continue our shared relentless focus on client centricity, and on the back of all these points mentioned, we will be the employer of choice in our industry.
Our starting point will be a business with almost NOK 12 billion in annual turnover, further enhancing our regional scale, but it's not that starting point that gets us most excited. It is the growth opportunities that are available to the combined firm. First of all, as you know, we're highly complementary in a geographical context, as witnessed by our combined front office presence to the left, and Carnegie will enhance DNB's strong position in Norway, and vice versa, DNB will enhance Carnegie's strong position in Sweden. Carnegie provides DNB with a full Nordic footprint through its strong positions in Finland and in Denmark, while DNB brings an international network to the combined business through our offices across 13 countries outside the Nordic region. Importantly, we also complement each other on a sector basis.
As you're well familiar with, DNB has its DNA and strong position in asset-heavy sectors, including then, for instance, shipping and energy, while Carnegie's DNA primarily sits within more asset-light sectors such as technology, consumer and retail, and business services. And together, we will be a force in Nordic healthcare. Lastly, and maybe most importantly for synergies, we would like to highlight the complementarity within products. Carnegie is particularly strong within security sales and research, ECM, and M&A advisory, and will be complemented by DNB's broader product offering, amongst others, including a strong DCM offering, FICC products, and additional security finance, bridge financing, and underwriting capabilities. In short, we foresee realizing synergies through selling more products to the same clients and more products per advisory mandate in line with the current DNB Markets business approach.
If we look at our existing ECM, DCM, and M&A clients, they on average utilize other DNB Markets products at a 1.6x rate compared to advisory mandate income. While we say that income synergies constitute the majority of synergies, we also foresee efficiency gains over time, and lastly, in a more simple form, profitability in our business is exponentially linked to market position. Number one positions and such are incredibly valuable, as we have demonstrated through our position in Norway, and on that point, we are consequently very confident that our combined business has an excellent starting point. Looking at deals in the Nordic region, we're happy to see that the combined DNB Carnegie track record points to executing almost twice as many M&A deals as number two. Similarly, almost twice as many ECM deals.
Lastly, we're a close second in Nordic high yield, where we obviously aim to compete for the number one spot over time. In equity sales and research, we will cover more than 600 companies with unrivaled quality on the back of DNB being top-ranking in Norway for many consecutive years, which is similar to Carnegie's position in Sweden. Of course, the combined firm having the ambition to compete for the top spots in Denmark and Finland as well. With regards to international distribution, it's the market leader in Nordic equities merging with the number two player according to Extel. The combined market position will make us incredibly relevant for both investors and issuers alike, and we look forward to developing it further together with our new colleagues, again subject to regulatory approvals expected sometime in the first half of 2025.
So in summary, I hope I leave you with a better understanding of our competitive positioning, both in terms of our regional capabilities as well as our international sector strategies. We believe strongly in our diversified product portfolio, the value it creates for our clients, and the robustness it creates for our revenues. On a standalone basis, we are confident in how our competitiveness has improved in recent years, and we remain excited on our future growth prospects, not the least the opportunities available to the combined DNB Carnegie business. Thank you very much for your attention. As with any good program, we have saved the best for last, and it's a great pleasure to hand it over to my colleague, Håkon Hansen.
Thank you, Alex. You're way too kind.
It's a great pleasure for me to wrap up this session with a dive into Wealth Management's figures, development, and future growth opportunities. Let me start with a short introduction of the business unit Wealth Management. Wealth management consists of private banking, our asset management company, and our life and pension company. We also produce and distribute all saving products together and in close cooperation with Maria and her team to the Personal Banking segment. In total, we have close to NOK 1,500 billion in client volume with roughly 850 employees. The significant growth in all business areas over the last few years has cemented our position as the leading wealth manager in Norway. DNB holds the number one position in all significant Wealth Management and saving segments. Let me start to the left. First of all, and probably most important, our operating model functions very well.
The key to our success lies in the seamless internal collaboration within Wealth Management and across other business units in DNB. For example, we leverage the strong relationships in Corporate Banking and large corporate international to enhance cross-selling of ancillary services like pension and asset management products to our Corporate Banking clients. Looking at the bar in the middle, consistent and sustainable growth in operating profits across all areas showcasing our ability to drive value and capitalize on market demands. Over the last 10 years, we have increased the bottom line tenfold, and we will surpass NOK 5 billion in net profit for the first time this year. Looking at the wheel to the right, you can see the diversified income mix with three resilient and fairly independent income areas. A slump in the market for one of the segments does not necessarily affect the two others.
Let me bring your attention to defined contribution. defined contribution was launched in Norway back in 2001. It took almost 10 years before it got any traction. Today, defined contribution is the largest savings scheme in Norway. We have seen a significant growth over the last five years, and I reiterate a projected increase to NOK 250 billion by 2027, as stated in 2022. As Ida mentioned, defined benefit are no longer for sale in private sector in Norway. The defined benefit portfolio is mature and in runoff with a very long tail. The average client is 62 years old in defined benefit portfolio. defined contribution portfolio is, however, immature. The average client in defined contribution is 39 years old, meaning it is still many years before the payout ratio will hit the underlying volume growth. defined contribution systems are legally required in Norway, ensuring sustained growth for our portfolio.
Our business follows a classic S-curve trajectory. It took some time to gain momentum, but is now in a prolonged phase of rapid growth. The pace of growth will remain strong for several years, continuing to deliver a double-digit CAGR. This year, we have NOK 15 billion in annual inflow from defined contribution clients. The underlying wage growth and new clients will push this higher in the years to come, as the contribution from the employer is a percentage of the salary. In addition, we have NOK 10 billion in recurring inflow from fund saving agreements. The combined inflow of NOK 25 billion in recurring fixed savings, together with our number one position, is a resilient platform for capturing future growth. DNB Private Banking has demonstrated remarkable growth in client volumes, and we have a solid number one position in Norway with more than two times the size of our closest peer.
With the Carnegie acquisition, we will surpass NOK 700 billion in client assets and become a Nordic player. Income has experienced a CAGR of 12%, underlining our commitment to scaling high-value services for our clients. One strategic focus is deepening relationships and increased share of wallet to family offices and ultra-high net worth individuals. We already have an active relationship to 61% of this segment in Norway. To finalize this slide, please have a look at the matrix to the right. The Carnegie acquisition strengthened DNB's private banking offering, adding value to our Nordic strategy with geographic presence and by expanding our capabilities and complementarities in the years to come. Our asset management company has also seen strong scalable growth with a substantial increase in client base and market share.
We have a very solid number one position, domestic Norway, and with the Carnegie acquisition, we are closing in on the gap to our Nordic peers. The income from asset management has grown at a CAGR of 11%, while at the same time, the pre-tax profit has grown at a CAGR of 21%, reflecting our scalable business model and strong demand for our product and services. We have already implemented a net fee model plus platform fee for all our funds. The platform fee is now booked as income in the personal customer segment. The margin reduction in asset management due to the net model and the strong index trend seen over the past years is more than offset by volume growth and improved client mix. There is a fierce competition in the digital savings market.
The fact is that a number of our tier one peers in the Nordics have lost out to digital-only platforms. We, however, are uniquely positioned as a tier one player in that we have successfully managed to maintain the top position with our app called Spare. In Spare, we have an open platform with more than 700 funds from more than 100 different producers. Despite the large selection, more than 85% of funds sold through Spare are DNB funds. We take this as solid evidence for our strong brand, robust performance, and attractive product mix. Going forward, we will continue to develop Spare to meet the needs for more active and interested clients, and with a digital initiative, Montrose by Carnegie, we can now explore the opportunity to expand our leading Norwegian digital position.
We aim to distribute more content like analysis, webinars, and digital advisors, making sure that our clients become smarter after every visit. We will also streamline and simplify the customer journey. Spare will be a one-stop shop for all your investments. To sum it up, with a robust and well-proven integrated business model, diversified income and product mix, and attractive recurring flow, we will maintain the leading position for Norwegian savers and investors. Through Spare and DNB.no, we are the leading digital distributor in Norway with attractive and scalable growth. We will leverage the Carnegie acquisition for Nordic growth in private banking and asset management. DNB aims to remain as the leading wealth manager in Norway. Thank you for your attention, and I leave the floor to Kjerstin and Ida for the Q&A. And Even, of course.
Thank you so much, Håkon. I would like to step up.
Thank you, Håkon, and thank you for watching the entire season of DNB's Group Management. All at once, we have time for some questions, and please wait for the microphone so that everyone can hear your question. We'll also take questions online for those following the stream. Yes, in the back.
Hi, good afternoon, and thank you very much for the presentation. This is Tarik El Mejjad from Bank of America. So, two questions, please. First, on the Carnegie deal, and maybe more specifically to DNB Carnegie ex-DNB Markets division. So, how are you confident to actually execute on the integration? I'm really curious to get more insight on what's the culture, I would say, gap between DNB Markets and Carnegie, especially on the IB side.
Also, how do you see the integration of Carnegie within a large commercial bank and keeping the entrepreneurial and high growth profile of Carnegie? Second question is on capital and dividend. I mean, if you take the, I mean, you explained very well on the long term, the growth, the original distribution of the corporate, and the upstream of dividend from the insurance to keep capital generation strong. But in the short term, given the impact of 120 basis points from Carnegie and potentially impacts from the add-ons on the CRE and mortgage in Norway, how should we think about the share buyback resuming in 2025? Can you give us an indication when should we expect that to come back? Thank you.
Thank you.
I'll endeavor to do the first one, and then Alex can jump in if he thinks that is adding, and then Ida do the second. But first of all, I would again say we announced this a few weeks ago, so now we're in the process of waiting for approvals. But needless to say, I mean, we've had a dialogue, and we've worked together already for quite a long time, and with a specific focus on people and culture and business thinking, looking into compensation structures and other elements. And I would say overall, we have found that our business thinking and the similarities were much larger than we actually anticipated to start with. I think Alex and Tony, Tony who's also here today, have discussed through a lot of the potential issues that we both have experienced from and have worked with in previous transactions.
And all of them have been detailed out and considered when we're planning the future integration. We're still just at a planning phase. And it's also a reason why we're saying we will approach this more like an integration than an acquisition, because it is to, in particular, if we're looking at investment banking, more similar-sized businesses with different strengths. So we are resolving as many issues as possible, I would say, prior to actually getting started. And I think a comfort that I find from this is that the picture stays the same as we broaden out to the number of people, and now it's more specifically all people have been onboarded, and we find that it's easy to agree on the common excitement as to the future of the business.
Now, you also ask specifically about how we view integrating a company and an activity like Carnegie into a large commercial bank. I would say we will do that step by step by safeguarding what is of value and building on a strong platform. I think we have experience in this from how we already do this, having a large investment bank who has scaled above and beyond our positions as a commercial bank, but leveraging the advantages of being a commercial bank, and overall, our identity and our source is being a commercial bank. It will always be that, but we have a proven track record, I think, from DNB Markets already from over the years and scaling our global positions that has been built over many years, and this is a culture and a business think and an approach that we will bring forward.
I think it is a key argument to say that this is a revenue synergy business, which means that we will do this jointly together, safeguarding value, leveraging on the very strong positions and values we get from the number one positions that Alex has talked about. Would you like to develop, Alex?
I thought that was a very thorough answer. Yeah, just stand up on the stage if you want to answer. I think that was a very thorough answer in all respects, Kjerstin. We are in the same business today. There are plenty of Carnegie people working in DNB Markets or previously employed with Carnegie. There are plenty of DNB Markets people working in Carnegie at the moment. And just speaking for myself, the Carnegie people working at DNB, they look exactly the same as everyone else, and they've suited well in.
It's down to the complementarity of the business that has initially piqued our interest and also driven the interest to the closing or to the announcement of the transaction. But I don't think we would have been there if it wasn't for the very constructive dialogues we've had with Tony Elofsson, his management team, and his senior employees. That's given the comfort in the fact that this is indeed very achievable to run a successful integration. Then I think the number one retention mechanism you always have is being a very competitive business. And hopefully, we've given some clues as to the competitiveness of the business and how we view that post-integration.
And in terms of capital, I mean, you're right in saying we're very well capitalized at the moment with the 230 basis points headroom to the NFSA expectation.
Also, when we received the latest SREP, where we decreased from 16.8 to 16.7, I think the only thing I can point to is really reiterating what we said in terms of dividend policy. We will continue focusing on increasing our nominal cash dividend year on year, and then we will utilize share buybacks as the optimizing tool, kind of, to optimize the capital position. In short term, it might be that we're kind of decreasing or not utilizing the share buybacks. But again, I think if you're looking ahead and long term, that should definitely still be room for that going forward in a long-term perspective, also looking at the profitability and the generation that we have, the strong generation capabilities we have in the business.
Is there another question in the back? Yes, Jacob. Thank you.
So just to continue on the Carnegie acquisition, can I ask, are these going to run separate P&Ls? And if revenues go down, is there fixed elements that might become visible? And also on that, you kept your growth target in lending at 3%-4% unchanged, but I think you do highlight some opportunities in mortgages and Corporate Banking . So just why are you not more aggressive on that side? And then I just wanted to touch on fees as well. You have this 9% across the cycle ambition. I would imagine there are areas that grow slower in terms of mortgages or, sorry, real estate brokerage, for example. So just which are the big sort of growth drivers and what kind of levels are you looking at there? Thank you.
Thank you, Jacob.
Firstly, Carnegie will continue to run as a separate subsidiary out of Sweden, also then including parts of what is DNB Markets today, which is very similar, if not identical, to the business model we have in the U.S. today related to our investment banking operation. This, however, will not necessarily or undoubtedly will change how we are reporting on a group level. So that will be the level of transparency on this. Harald quite specifically talks about leveraging our balance sheet, and Alex talks about access to a balance sheet. That doesn't necessarily mean that we will grow more. We believe 3%-4% is a sustainable growth level, and we do believe in scaling the turnover of capital that we lend to the large corporate business. And this thinking will be the same.
And I would say first and foremost, we are looking to build these businesses as capital-light businesses. That has been a clear priority to grow the capital-light part of our business. And this gives us a step change in fee level for DNB overall. So this is not a tool to grow our balance sheet as much as possible. This is a tool to improve the profitability and the offering to our customers of the group as a whole. And a balance sheet consideration for large corporates is more a tool than it is the overarching goal to grow it as much as possible. We have a strong platform that will enable us to grow somewhat regardless of the growth pace in the Norwegian economy. We believe in that because we do not believe a long-term strategy is merely based on cost efficiency in this business.
But where we really target the growth is capital-light. Will you touch upon the fees? Sure. In commission and fees, you're right in saying that there are areas that are more in terms of our core products that we believe will continue to develop also profitably in the times ahead. But the areas that we specifically point to where we see a strategic position that we also believe that we will see a continued growth is in asset management related to pension and also investment banking overall. The other areas we still believe we have a good momentum and a strong growth, but again, more in line with the overall development that we've seen up until now.
And sorry, just on the fixed cost in Carnegie, if revenues don't develop, is there a guaranteed element or a fixed bonus pool or anything like that that we have?
I think we have the answer to that is no. We have commented in general that there are certain agreements related to retention, but it would not be right to call it a fixed cost element related to Carnegie overall. Thank you.
Yes, and there's a question also in the back.
Hi, Shreya Srivastava from Citi. I just want to ask, I sort of understand why you've kept the greater than 50% nominal, the dividend payout ratio for the interest of flexibility. But I'm interested as to why your CET1 target doesn't move to more of a management buffer. I mean, we know qualitatively that you wouldn't need to keep as large a buffer as the Swedish banks given your Pillar 2 guidance. But just in terms of how we should think about what you'd be willing to pay down to. Thanks.
Yes.
We haven't quantified, as you know, the buffer that we intend to keep on top of the Pillar 2 Guidance, which is already a significant buffer also when comparing to, for instance, our Nordic peers. We have a Pillar 2 Guidance of 125 basis points, which is, of course, higher than our Nordic peers or our Swedish peers. What we've said is that we would like to have a buffer on top of that that manages more in terms of ensures that we can grow profitably, but also ensure that we are able to absorb FX fluctuations, for instance, which does not necessarily impact the overall Core Tier 1 capital ratio as such, so we haven't quantified it, but again, I know that this is an area that you would like us to quantify it even further.
But it's more that we don't want to have too much of a buffer on top of the buffer. And again, pointing to the Pillar 2 guidance of 125 basis points, already there being a management buffer from the NFSA.
Yes, Johan from UBS.
Thank you. Just two questions. First, on the gross cost saves. I mean, if we go back and look at the past two Capital Markets Days, it looks like the gross cost saves you have probably done, they've offset the majority of kind of underlying inflation. And yet we've seen cost growth of probably 3%, 4% on average. So when we think over the next three years, is it the same kind of report? Let's exclude Carnegie for a second.
Is it the same kind of cost growth that we should think of going forward that the 3 billion NOK takes away most of the underlying inflation, but there's a substantial investment component that we need to factor in on top of that? The second question is just looking at, just trying to think a little bit about how the underlying margin has developed in the domestic business, both on the Personal Banking and on the SME business. Because the charts that we were shown basically show very strong volume growth in 2019-2021 with no growth in profits. Then it shows almost no growth in 2022-2023, but profits shooting straight up, which happens to coincide with rising rates. It almost looks like the underlying margin is steadily declining and the upshoot in profitability is very much interest rate driven.
So maybe just how you think about that going forward. If we assume 3% volume growth, is 3% the right kind of profitability growth we should see? Thank you.
Thank you, Johan. I'll start with the latter and then I can talk to the cost. I think you're comparing two very particular periods. I mean, 2021, the pandemic and lowering rates and 2022-2023, very sharp increasing interest rates. Both of them are impacted first by a rate decline and then by a rate increase. I think it shouldn't be read into that that margins are declining. I'm not recognizing that we see that across our numbers from where we stand. On the contrary, I think we've been able to improve margins if you look at the NIM as such and compare the NIM to previous periods with the same type of rate, for instance.
You will be able to track that there's a clear margin improvement. Keep in mind that we've also increased our deposit to loan ratio substantially, and there has been growth across all sectors of the deposits. So I think to an extent, our growth in Norway will be impacted by the growth in the Norwegian economy. That's why I can't say 3% is the right number for Norway. What we can say is that there's been a substantial and swift pickup in our activity and performance on the personal customer side once the noise a little bit around banks in general and us in particular settled down, and once we've been able to focus on delivering enhanced value to customers, and we had a better performance in October than I think we've had in the past 14 years or so.
So there is no such thing as this not being impacted at all by what we do. I think that's a strong message that we want to convey. So we will grow as much as we can, as we've done recently and previously in personal customers on the one hand and SMEs on the other hand. You saw from Rasmus's slide, it's been 6.9%, I think, on lending over the past six years. So it's impacted by the growth in Norway, but not fully controlled by the growth. And I think there is a room to improve margins. And I think if you would compare our third quarter numbers in personal customers, for instance, to other peers where you can see their margin development in Norway, you would see that there are clear differences and not necessarily in our disfavor, I would say, on the contrary.
And just adding to what Justin said in terms of the combined margins have been fairly stable if you look at it related to our customer segments. On the gross cost side, you're right in saying that, yes, we are doing this to ensure that we also mitigate the effects from inflationary pressure. That is still not at the level of where the Norwegian central bank wants to have it. Wage growth is still higher in Norway than what it has been historically. It's also expected to continue to be higher in the years to come. For us, it's important to continue focusing on cost efficiencies in the times ahead.
That means that we will need to reduce our cost base overall, but also to ensure that we continue to invest in areas that we believe are important, such as digitalization, automation, and straight-through processes, which indeed takes down cost further down the line as well. There are no significant investments that you need to take into account that we will continue investing into our technology platform. We will continue to invest in further digitalization. Modernization, as Harold pointed to in terms of the payment infrastructure, has been done over quite a long period of time. We will continue to modernize our core systems and by that ensuring further efficiency and by that ensuring further also competitiveness on our behalf, so there are no kind of significant investments that we foresee.
But again, I think looking at in order to be competitive in a highly competitive market and ensuring that we deliver value-adding products to our customers in the personal customer segment as well as in the small and medium-sized enterprises, we need to ensure that we are as agile and as efficient as possible also in the years ahead.
Thank you. We're running a bit on time. So if there is one or two more questions. One more from Jacob. And then I think we.
Thank you, neighbor, who hasn't asked maybe.
Oh, I didn't see you behind the light. Please go ahead.
Thank you very much, Patrick Nielsen from Goldman Sachs. So I had two questions. One on the fee and commission outlook. Would you say that you're also incrementally more optimistic on that side of the business even when not considering the Carnegie acquisition?
So maybe more on an organic basis. And then also you mentioned customer loyalty a few times during the presentation. How do you see the loyalty and stickiness having developed recently in the business within your customer base and maybe compared to what you've seen in the more long run, maybe in the past 10 years or five years or some kind of reference period? Is the loyalty increasing, decreasing, or is it similar as we've seen historically? Thank you very much.
Thank you. As to fee and commission outlook organically, even pre-Carnegie, Ida showed a slide where the past five years, the compound annual growth rate has been 6.8%. So we have outperformed the 45% we have indicated to you. And keep in mind, referring to Håkon's presentation, that there is somewhat of an exponential effect in what is accumulating under defined contribution and the saving schemes.
And the mere fact that he shows at some point that in the assets under management, the retail share has grown from 17%-25%. So these are the higher margin funds. And during the years behind us, the earnings from that have been offsetting a negative impact from the reforms we've been talking about. One pension account, changes in the pricing models. We are not seeing further sort of negative headwinds in that context. So that in itself sort of should indicate an opportunity to grow above and beyond that, just as an example. The same goes for the value of number one positions. We've strengthened our opportunity and position in healthcare, as Alex is saying. We're seeing promising development in Back Bay. So we are sort of continuing. We're not continuing statically to scale in an identical business.
We're building and broadening our investment banking and asset management business, both in terms of geography and products, as we've been talking about. And that continues and is visible in the numbers. Customer loyalty, I would say, for banking in general, in a digital world, customer loyalty, everything else equal goes down. Norway is one of the most mature markets. The Nordics is a very mature market. And Norwegians are typically changing their banks more frequently than others. So in that sense, we are working in a market where we need to be so good that the customer chooses us every day. And this is what we're working for all the time. And what we see, on the contrary to many other countries, I would say, that are more immature in digital, is that we have been able to build a relationship digitally with our clients.
Maria talks about 5.7 products in average for every customer who has a mortgage. Rasmus talks about 5.5. And that is where the loyalty lies. So I couldn't give you sort of the exact reference point overall. I think we're all living in a digital world where loyalty is something that is changing. But what we clearly see is that the loyalty with customers who have a broader product range with us, that's substantially higher. And even though they might, because they're focused on what the best offering is, they might move their mortgage, but they don't move the rest, which is why Maria also says 48% are using our digital platform as their everyday platform for banking or partly so, which makes it also very easy to get them back if the environment changes. We are close to getting them back.
And this is part of what I'm also talking about when I say we're preparing for a world where AI is going to be transformational. It is about having that daily interaction with customers. It goes for anything that is retail related. So the fact that now 50% of our corporate customers also actively use a digital platform to help them manage their business, that is the kind of stickiness and glue that we focus very much on that is extremely valuable in such a market and that we will continue to build on with increased efforts now in the coming years where we've talked about engaging with relevant insight. Be a little bit wiser when you leave the platform. That's the target for all of the interactions.
Thank you. If there are no further questions.
It was thank you for another. Jacob had one more.
You had one more?
Please go ahead.
Thank you. I just wanted to touch on the savings business a little bit. First off, you mentioned your Spare app. Could I just ask, if you compare that one to what Nordnet is offering in Norway, how close are you to that kind of level? And secondly, when it comes to increased savings rates in Norway on the capital market side, where is that predominantly coming from? Is that the drawdown of deposits, or is it a slowdown of mortgage repayments, or is it something else that would drive that? Thank you.
Correct me if I'm wrong, Håkon, but we actually have a higher number of users on our platform than Nordnet has on theirs. But we have come at it from slightly different angles, whereas they have started more on the professional, very active, interested type savers.
We have started from the retail up like we have done with Vipps and gradually making our way through now prioritizing activity and engagement and products for the slightly more advanced savers, which is why we refer to our platform as the largest in the market with the highest number of users. And of course, now we have soon completed modernizing the core, incorporating Sbanken's core and rolling all DNB customers over to that. So all of the folks, a much higher degree of focus will be on enhancing customer value, as I talked about in my presentation. But indeed, I mean, both are actively present in the market with slightly different competitive strengths. And I think each trying to move in one another's direction, but we're quite confident of the pace we're moving at. Savings rate, where is it coming from?
It's coming from. I wouldn't call it a combination, but I mean, inflation level and wage development is going to be attractive in Norway also going forward, growing even more than consumption. I mean, the leverage in the market for household has gone down in recent years for the first time in a long time because of the inflation level. But beyond that, there has been an increase in leverage on household that has also partly contributed to this historically, which may continue.
Thank you so much. With that, I think we are through. No further questions. Thank you so much for listening and for those following us online on behalf of DNB. Thank you so much.
Thank you. Thank you.