Hello, and welcome to the DNB Q4 conference call for investors and analysts. My name is Priscilla, and I'll be your coordinator for today's event. Please note this call is being recorded, and your lines will be on listen only. However, you will have the opportunity to ask questions at the end during the Q&A session. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you'll be connected to an operator. I will now hand you over to your host, Mr. Rune Helland, to begin today's conference. Thank you.
Thank you very much. Hello, and welcome, to all of you to this DNB's fourth quarter analyst call. Here in Oslo, we are represented by almost a full executive team, including our CEO, Kjerstin Braathen, and CFO, Ida Lerner. Before we take your questions, Ida would like to give a summary of the main messages for the quarter. Ida.
Thank you. Hello, everyone, and thank you for taking the time for this call today. The Norwegian economy continued to grow more than expected in the fourth quarter, and we expect GDP to come in around 3.6% for 2022. The Norwegian Central Bank has increased the key policy rate twice, by 25 basis points each in the quarter, and our economists expect two further hikes of 25 basis points each in 2023, one in March and one in June. Our economists project the key policy rate to then top out at 3.25, and then from mid-2024 gradually go down but stabilize at 2.75 during this planning period.
Consumption has remained strong, somewhat inflated though by some record sales in cars in November and December due to a change of tax incentives into 2023, but still a sign of resilience in the household's economy. Unemployment levels remained low at 1.6%, and even though we expect this to increase, it is expected to remain at low levels just below 3% also in the years ahead. Moving on to the Q4 results, which was a strong performance which also enables deliveries on our dividend policy. Return on equity came in at 16.2% in the quarter, driven by strong performance in the customer segment, but also an extraordinary low tax rate in the fourth quarter 2022. When looking at this from a normalized tax level position of 23%, the return on equity was, however, still 13%.
NII was up 14.8% from the third quarter 2022, driven by profitable growth and increased interest rates. Lending growth was 1.1%, whereof its personal customers accounted for 0.9%. When adjusting for an acquisition or repurchase of a portfolio from DNB Life, the underlying organic growth was 0.3%. In the corporate customer segment, we saw a lending growth of 1.3%, where SME accounted for 1.9% of the growth and large corporates 0.7%. When looking at the deposits, it was down slightly by 2.1%, but stable in personal customers, and we don't see any change in customer behavior there.
Also, when looking at corporate banking, where the deposits were down by 3.4%, this was predominantly driven by lower volumes with our customers in oil and gas who paid a petroleum tax in the beginning of this quarter. Net commission and fees were down slightly from an all-time high result in the fourth quarter 2021, solid performance from a diversified fee platform with strong contribution from asset management, money transfer and banking services, among others. Also a solid underlying performance in investment banking, predominantly in M and A and debt capital markets. Costs were up by NOK 1,075 million due to high activity levels in the quarter.
There was a activity in variable based expenses of NOK 323 million, non-recurring effects of NOK 125 million. The pensions expenses were up 199, approximately NOK 85 million above what would be considered to be normalized levels. Salaries reflect higher activity level and also further strengthening of strategically important competence, also as Kjerstin pointed to in the presentation earlier today, we are now at a level where we see that the number of employees is stable and is rather expected to decrease somewhat during 2023. When looking at the cost of risk, we have a diversified and robust portfolio with 99.1% of the portfolio in Stage one and two.
We take some net provision impairments of NOK 674 million this quarter, but there are no significant structured change in behavior among our personal customers or our corporate customers. It's actually rather the opposite. Stage one and two in corporate banking, we take an increase in impairment levels in commercial real estate, retail industries and services, but that's somewhat offset by reversals in offshore. Also, in other parts. When looking at Stage three, where we also take some additional impairment, that's due to the fact that we're moving over to model-based impairments in Stage three for the smallest part of the small to medium-sized enterprises. It's therefore connected to the increase we saw in commercial real estate, retail, and services in Stage one and two as well.
As you also saw, the board is proposing a dividend of NOK 12.50, and we have also announced a share buyback program of 0.5% starting now. With that, I think we open up for questions.
Thank you, Ida.
Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. We'll pause for a moment to allow everyone an opportunity to signal for questions. We will proceed with our first participant, Omar Keenan from Credit Suisse. Please go ahead, sir. Your line is open.
Hello. Thank you very much for taking the time. Could I please ask a question on net interest income? If I look at the other NII, which includes interest on equity, it seems to have had a more positive performance, this quarter and last quarter, than would have been explained by the increase in the interest on equity. Could you help us a little bit with the moving parts around that and just explain why the performance in other NII has been so strong? My second question is just on lending margins. Could you perhaps help us a little bit think about lending margins and what repricing lags may still be there? Thank you.
Yes. If you looked at the spreads on interest, or interest on equity, the main driver there is, of course, that you've seen that the NOWA money market rate has increased more than what we have done in terms of repricing towards customers, which is an effect that you will see on the interest on equity this quarter. Due to the fact that we have seen the continuous increase, I think the NOWA money market rate increased on an average by 92 basis points in the quarter. That's the effect that you will see on interest on equity. The effect from the repricings is actually in line with what we have communicated previously.
Actually, a little bit above that if you look at our numbers, on both the spreads and the combination of spreads and interest on equity. When moving over more to the lending margins, in terms of, as you rightly point to, we have a lag effect. When Norges Bank raised the key policy rate, which they have done twice this quarter of 25 basis points each, that. The repricing effect comes in the first quarter of 2023. This gives the lag effect, which gives temporary reductions in lending spreads, while we have a temporary increase in deposit spreads. This is also what you'll see in the spreads in consumer, in the customer segment.
Therefore, what we're saying in an increasing interest environment where we are today, it's really the NIM and the combined spreads that are important to look at.
Maybe just add with a couple of more words. The other net interest income has a higher contribution this quarter than previously. It tends actually to have a higher contribution in the fourth quarter, and it's really hard to decouple completely and give transparency. There is a higher result from treasury also having a positive result in the market where rates are moving, as lastly as Ida is saying, as they did during the fourth quarter. Overall, I think the picture is a very strong execution of the interest rate increases and price increases that we have done as a result of the central bank's rate increases.
We have done 70% roughly of the impact from the previous 3 rate hikes. There's 30% left to be had in the 1st quarter, which will positively impact the NIM. The latter, the last rate hike completely remains to be seen in our numbers this year.
That's great. Thank you.
Thank you. We'll move on to our next participant. V Sofie Peterzens from J.P. Morgan. Please go ahead. Your line is open.
Yeah. Hi. Here is Sofie from J.P. Morgan. My first question would be on the share buyback timeframe. On the press conference, it wasn't entirely clear to me at what the timeframe for the share buyback is. Is it only the first quarter, or is it kind of beyond the AGM? If you could just clarify the share buyback timeframe. The second question, sorry, would be on IFRS 17 impact. You say that the impact on Common Equity Tier 1 or it doesn't impact the Common Equity Tier 1, but your equity will go down by NOK 10 billion. Could you just kind of let us know when the equity will go down by NOK 10 billion?
Will it have any other P&L effects. Just a final question. In asset management, I see your performance fees were around NOK 161 million compared to NOK 30 million plus in previous years. Was there something extraordinary with the performance fees, or is NOK 160 million the new run rate? Thank you.
I can do quickly the latter and Ida can do the first two. There is an extraordinary... I mean, it's a solid performance in asset management in fourth quarter. There is a one-off effect of approximately NOK 40 million that is resulting from closing out the private equity fund, and we will do more of these, but you can't expect them sort of gradually on a quarterly basis. There is another seventy-ish contribution from performance management fees due to the outperformance on several of our fund projects that materializes in the fourth quarter.
Yes. On the share buybacks, it's a very good question, and it's important to highlight that the 0.5 is up until the end, the General Assembly. When we move into the next phase, that's also why we indicate that the board is expecting to ask for a similar frame, and as they have done previously and historically. The 0.5 is expected to hopefully be done before the.
Yes.
General assembly this year.
March.
In March.
Tenth of March.
10th of March. When it comes to IFRS 17, you are right in terms of this has an effect on the equity, of NOK 10 billion, but not on the core Tier 1 capital ratio as we pointed to before, and therefore does not have an impact on our capacity to pay out dividends. It will, however, reduce the equity base by NOK 10 billion and therefore has an effect on, for instance, return on equity. In addition to that, you have some accounting standards in terms of how we distribute or account or book both income as well as costs going forward that could potentially have an effect in terms of the P&L.
We've said that we'll come back to that later on, and this has an effect from the first quarter this year, 2023, with a backward-looking effect for 2022. You will have a comparative landscape from 2023 to 2022. That will come in the first quarter.
Since we have the head of our life insurance company, maybe you can add some more flavors to the description or...
Well, yeah, I can add is that the NOK 10 billion charge that we do to the accounting records of equity will, over the time of the portfolio, be reversed. I mean, it's not money that's lost. It will come back over the time. It's just a matter of, I mean, when you accrue the income on the guaranteed contracts.
Okay, that's very clear. Sorry, just one final question. When you close the Asia or the Singapore office, does that have any impact on future costs or revenues? The tax was just a one-off and we don't need to think about any P&L impacts from exiting Asia?
You don't need to think about any extra things connected to Asia. This was a one-off related to the closure of the subsidiary, and we still have an office in Asia and Singapore, and we'll continue to do so.
We've taken out substantial cost effects over the previous six-month period, so you've already seen those numbers.
Great. Thank you.
Thank you. We'll move on to Mr. Riccardo Rovere from Mediobanca. Please go ahead. Your line is open.
Thanks for taking my questions, good afternoon to everybody. If I may, just a quick follow-up on Sofie question on the buyback. What I understand is from now till the AGM in, say, a month or 2 months, you can execute 0.5% of your share count. You got permission by the Norwegian FSA for 1%, you theoretically can ask for a mandate at least for another 0.5%. If you ask for more than 0.5%, you need to get back to the Norwegian FSA and ask for permission and wait for their permission. Do I get the whole process right? That was what I remember when you were used to do buybacks before pandemic. This is my first question.
The second question I have is on the guidance on the loan growth and also on fee income. I mean, these numbers are always the same. You know, those have been the same for such a long time. We got pandemic, we got a war, we got oil prices going up and down. The whole, the whole world goes upside down, these numbers never change. I was wondering with the situation, with the situation that you're seeing today, what should we do with this 3%-4%? Given the stronger fee income that you posted in this quarter against expectations maybe, what should we do with the kind of 5% in fee income? Why that still stands, why that's never change? The final question I have is...
Was a bit confusing, at least to me this morning during the press conference. When you were asked about is Q4 cost base the run rate.
Is the answer a yes or is the answer is a no? I don't need more than that. Just yes or no. Thanks.
Thank you for your questions, Ricardo. It is true that we have approval for a 1% buyback from the FSA, we have to accomplish what we can during this program until March 10th before we move into a period where we're closing first quarter. We believe that we will at most be able to do the 0.5%. The current approval is based on the previous proxy given by the general assembly, which expires when they have another meeting, which is why technically we have to renew that and then re-ask the FSA to relaunch potential other buyback programs in the future. Guidance. You are quite right. We have kept both on loan and deposit growth and on fees quite stable and are saying through the cycle.
We've also said that this year or not this year, but 2022 we had a higher growth both in loans and deposits, which we've indicated throughout the year. A little more than 6% on loans and even beyond that for deposits if we exclude Sbanken, which obviously even takes it is higher. The reason for saying that we can have it is that we have a flexibility in the platform and the mix of growth. Obviously 2022 was a year with somewhat slower growth in the personal customers, and we have sort of made more than made up for mass with a very positive growth momentum in the corporate area, in particular record growth in SMEs.
We have the flexibility by also actively managing the capital that we deploy in the large corporate area and believe that over time it is healthy to have a certain growth momentum in the business, but are also very clear that we will continue to prioritize profitability over growth. All in all over time, given our platform nationally and internationally, we believe we should be able to deliver through different economic conditions, a growth in the area of 3%-4%. Fees 4%-5% also through the cycle, an indication that we are looking to grow fees more than volume. We are looking to grow our fee base. That is tough when interest rates are moving up and NII is moving up to the extent it is.
I think, we are systematically continuing to build strength in the platform and having a fee growth in the year 2022 of 4% after such a strong year in 2021 is a testament to that. Why can't we do even more? I think we'll stick to the 4%-5%. The strong contributors will continue to be, we believe asset management, overall investment banking, relative to how the market is performing. Transactionally, there were strong reopening effects in money markets and banking transaction category last year. I think what we show is that we have an increased resilience and broad platform on the fee side.
All of this is systematic work with, which requires higher growth than 4% or 5% in order to deliver that on the whole. Sorry for sort of sticking to our gun here, which is this, but we continue to say 3%-4% and 4%-5% over time, and we have delivered on this. On the cost base, the question is no, because we are pointing to seasonal and one-off effects that hit the quarter. We are pointing to the pension costs, which are approximately NOK 110 million-NOK 115 million higher than what you would consider a normal market. It is a mix. There's also part of the cost increase that is recurring.
Thanks, Kjerstin. Thanks for the no. Thanks.
Thank you. We'll move on to our next participant, Johan Ekblom from UBS. Please go ahead. Your line is open.
Thank you. Can we maybe start on net interest income? I mean, the last many rate hikes, the sensitivity has been broadly unchanged. And I guess conventional wisdom would say that deposit betas will rise at some point. How should we think about, you know, the fact that you're reiterating NOK 1.2 billion for the latest hike as well? Is there a kind of hangover from this to come once rates stop going up, but deposit rates will continue to creep, be it repricing or mix shift? That's the first question. The second question is just on the other operating income. It was an extremely strong quarter and you mentioned specifically the new Vipps MobilePay.
Is there a one-off effect in there or is this, you know, the business doing better or, you know, a change of kind of the accounting treatment due to the changed ownership structure? If you can help us understand that'd be very helpful.
We will try, Johan. Thank you for your questions. On the NII side, you, it's difficult to answer what you're asking for. What will the future look like? I think there's been a certainly a strong execution of the price changes so far, and we see positive results from that. In addition to that, we have kept the extraordinarily high deposit base that we have built up during the pandemic and still have a deposit to loan ratio of 75%, way higher than when we went into the pandemic. Now, you're basically asking about two things. Will the deposit base last or will people and businesses start spending the money? I think that's extremely hard to say.
What we can say is that we have not seen that to a large extent as of yet, and we believe that the Norwegian economy is going into a soft landing with a somewhat lower growth. It's not in any way a very, sort of, severe recession in any way. You are asking about the competitive dynamic. I think one interesting point is to look at our volume-weighted margins, which is the average of our margins out to customers. Largely, they are in line with what they were before the pandemic, indicating what is what is the average price out there to customers. We will continuously focus on having competitive pricing. We are operating in a very competitive market, but also a rational market.
We have seen that other peers in this market have followed our direction and raised the bar for their return on equity, and we believe this will be disciplining both in terms of how and where they allocate capital and what kind of margin mix they will be able to get from the market. How it will develop, we will have to wait and see as you will. Are very confident that we will be able to be competitive and will manage this as best we can. In relation to operating income, it is a very strong market.
You are quite right, there is a one-off effect for Vipps Holding that is related to the merger with Vipps and MobilePay of NOK 430 million or something.
399.
NOK 399, not to take off the depreciation. This is an accounting gain and reflects the value of the companies as at closing time. In addition to that, we have considerable value appreciation from our stock holdings from restructurings of more than NOK 800 million in the quarter. Through that, also absorb a negative of NOK 1.4 from Basisbank and AT1. It's a strong quarter from both ancillary companies as well as the stock holdings that we have from restructuring.
Thank you. Then just a clarification. Am I right in that the buyback will be deducted from capital in Q1, or has that been done in Q4?
That has been done in Q4. The 18.3% is after deducting the dividend and the share buyback of a 0.5%. Thank you for that question.
Excellent. Thank you very much.
Thank you. We'll move on to Eleni Dana from Morgan Stanley. Please go ahead. Your line is open.
Hi there. This is Eleni Dana from Morgan Stanley Credit Research. I wanted to ask a question about your three outstanding CoCos bonds. Do you plan to take any action on these now that the EBA has expressed concerns with infection risk? Would you consider calling them on their upcoming call dates this year?
We have said that we will not go into any dialogue about those CoCos until it has been finalized in terms of the the the final decision also from a regulatory standpoint in terms of taking in the the amendments we've seen from the European regulatory regime into Norway. It has been taken out from our Tier 2 stack, but it's still part of of the overall funding structure. We've said that we won't go into any further details until we have this finalized.
Okay. When do you expect that will be?
That is not in our hands. It's currently in the with the Department of Finance.
Okay.
Minister of Finance.
Thank you. We'll move on to Martin Leitgeb from Goldman Sachs. Please go ahead. Your line is open.
Yes, hello. Just a follow-up question, obviously related to NII outlook from here. I was just wondering if you could comment on your expectation how the kind of balance between loan and deposit ratio is likely to shift in the near to medium term. Just obviously looking at the period through the pandemic, which was characterized by pretty strong growth in deposits. Now, with rates being higher, do you see the chance that the opposite might happen? That higher rates create an incentive to use some of the deposits to repay some of the lending consumer have? Could we see a kind of a shift in a way of reduction in deposit funding going forward?
Related to the point, I just wanted to check what your expectations are in terms of deposit composition. You mentioned before you haven't seen much of shift yet in terms of consumer behavior. Would you expect such a shift to happen going forward? Thank you.
Thank you for your important question, Martin. I think the overall picture is that the mix of deposits, if you look at the personal customer part of the business, remains fairly constant with 75% in savings accounts. It doesn't seem as though households at large have started spending their reserves from the pandemic as of yet. Now, what will the future look like? What we see is that they continue to save in their savings agreements, somewhat less than before, but they continue saving.
Bearing in mind that we still expect the unemployment to remain low in Norway, we still expect the wage regulation this year to reflect more the level of inflation, which indicates that people should have a flat to maybe slightly growing disposable income. It doesn't necessarily indicate that we will have a reduction back to the levels we were before, but that is, of course, impossible for us to know. It is important also to highlight that a substantial part of the growth has come in corporate customers. It's not necessarily the same people who are lending, who are building deposits, so we don't expect to see a pure match where people will take the cash and pay down on their debt.
We know particularly certain industries that have gone very well during last year. You can talk about the oil and gas industry, the servicing industry, the shipping industry, the seafood industry that have reported very strong results, and we see that we are an attractive counterpart for these deposits. We haven't seen any shifts in behavior there either. We expect investments to hold up at a healthy level, but a little bit reduced also from last year. We don't really have any macroeconomic handles nor any signs in our portfolio as of yet that leads us to say that we do expect a major shift in our balance sheet.
That being said, if you take a very long-term view, is there a reason why a pandemic should lead to a shift in the balance sheet structure from 60% deposit to 75%? I don't know, but at least it has been way stickier than I think we believed in the early days of the pandemic.
Thank you very much.
Thank you. We'll move on to Jakob Kruse from Autonomous. Please go ahead. Your line is open.
Hi. Thank you very much for taking the question. First, if you could just help a little bit more on the cost side. The comment you made about the run rate versus non-run rate, taking out those NOK 200 million roughly of higher pension expenses and one-offs. I guess typically you have quite a lot of seasonality in Q4 as well. So would it be possible to say something around how much of this just step up versus Q3 or versus a normal quarter is seasonal? Also on the other side of that, if how you think about wage inflation for 2023 off that kind of run rate that we may end up with. Secondly, just on the Net Interest Income.
When you talk about 70% of the benefits having been taken in Q4, does that basically correspond to the spread benefit and the interest on equity that you show in your presentations, I guess NOK 1.7 billion or so of benefit? Would any further 30% to come in Q1? Yeah, I guess that's it. Thank you.
Yes. If I start with the cost, I'll just think I'll take you back to what we talked about initially just to make sure that we are on the kind of level playing field that we're talking about the same thing. What we mentioned in this quarter is that the activity in variable-based expenses, which is really kind of driven by the underlying activity as well as traveling activity, were up, were a base of NOK 323 million. That's extraordinarily high activity in the fourth quarter, and it's also then driven by the underlying activity. We had non-recurring effects of NOK 125 million, and that means that they should be exceptional and not recur again. In addition to that, the pension expenses were up NOK 199 million. That's approximately NOK 85 million more than what would be a normalized level.
Don't think that 200 is above normalized levels. When, when you talk about you look at the salaries part and also the number of FTEs we have. What we are saying is that, first of all, as we mentioned, we expect the FTE base to not continue to increase, rather kind of decrease likely during 2023. This is something that we work on a continuous basis. That will of course also impact the effects from the wage inflation. Wage inflation in Norway is expected from our macroeconomists to land around 4.8% in 2023 and 4.7% in 2024. It will be important for us to continue working on, efficiency, and further work on that in addition to the FTEs, going forward.
On NII, it was my endeavor to try to simplify that we have so many interest rate hikes behind us.
Primarily it's the three latter interest rate hikes that impact the fourth quarter positively. Roughly, we have taken in 70% of the estimated effect in the fourth quarter, which leaves then 30% more to come in the first quarter, and then fully the effect of NOK 1.2 billion that was given as an estimate today of the last interest rate hike that happened in December.
Okay. Okay. Thank you very much.
Thank you. Once again, ladies and gentlemen, if you would like to ask a question, please pre-press star one. We'll move on to Riccardo Rovere from Mediobanca. Please go ahead. Your line is open.
Thanks again. Just a quick follow-up, if I may. On risk-weighted assets, they're down a bit in this quarter. They've been a bit volatile during the course of 2022. Should we expect those to grow in line more or less with the book, or should we expect the models, redempting updates overall to have an effect over the course of 2023? A second question I have is on credit losses. If I understand it correctly, the NOK 200 million-NOK 250 million that you charged on commercial real estate, if I understood correctly what you said this morning, can be seen as a sort of overlay, although you didn't use the word overlay this morning. Just wondering whether this has been done on a prudential basis.
The second on the same topic, when you say there were roughly NOK 430 million provisions in other industry segments, what are those other industry segments? Can you clarify what was the impact in credit losses of shifting the calculation of ECLs on Stage 3 to according to internal models? The feeling I have, and correct me if I'm wrong, is that this happens once and everything is charged maybe in one go, but I may be, might be wrong. I just want to know whether this understanding is kind of correct and eventually how much that was. Thanks.
Yes. Let's see if I manage to pin down all the questions you had, Riccardo. Very relevant questions. The risk exposure amounts, that's mainly an effect of both FX as well as counterparty risk and positive migration in the portfolio. There is no change in terms of model calibration or anything like that that is there. Whether you will see the same volatility in 2023, it's difficult for me to say in terms of the FX element that is there. In terms of the counterparty risk, that should be less of an impact going forward. In terms of the credit losses on commercial real estate, I'll make it very simple for you. Yes, it's overlays. If that's what we want to call it.
It's adjustments because there are things that we aren't seeing in the underlying portfolio today, but uncertainty that we mean are there. That also goes for retail industries and service industries, where we see that there are potentially things that the model aren't able to capture, the models that are then used for Stage 1 and 2 in corporate banking, and now also for Stage three impairment levels for SMEs with a smaller exposure in our books.
That is not internal models, but the expected credit loss model, where we then have moved over to impairment assessments based on a model-based assessment, which we believe is both kind of prudent in terms of looking backwards, but also from an efficiency standpoint, it also enables us to free up some capacity in the first and the second line, in terms of that has previously been used towards credit assessments on these smaller customers. I hope I answered your question.
Yeah. Yes. One sec. It's 250 overlays.
We aren't quantifying the overlays, Riccardo. I'm sorry.
Okay. What I understand is commercial real estate, let's say mostly overlay. Then you stated on the other industry segments, which is 430, you stated provisions given models are not able to capture a possible loss. It seems to me that sounds overlay too, if I understood exactly your wording. It's like saying that the vast majority-
Sorry.
Sorry.
Sorry, I interrupted you.
No. No, no. Just, just saying that looks, sounds that the vast majority of the provisions that you charge in a quarter, good part of the NOK 670 is kind of overlay or macro provision. Let's put it this way, how the market call it.
Yes. It's.
Okay.
that are made, as we don't see that the model predicts the uncertainty that we believe is out there in those specific industries. It's important to say that this is predominantly commercial real estate, retail industries, as well as service industries, which are the sectors that we assess to be more vulnerable in the situation we are in today.
We aren't seeing any negative trends in the underlying portfolio.
All right. Thank you. Very clear. Thanks.
Thank you. We'll move on to the next participant, Maria Semikhatova from Citi. Please go ahead. Your line is open.
Yes. Thank you for the presentation. Couple of questions. Just first of all, wanted to follow up on NII. On the impact from the last repricing, this NOK 1.2 billion annualized, this is pretty much in line with what you guided for the last, let's say, three changes to prices. At the same time, we can track data and your changes on deposits. Deposit beta incrementally is clearly going up. Just wanted to check where you could compensate, let's say, for higher pass-through on deposits to keep the total annualized impact at the same amount. Related to that, I appreciate your comments that the share of transaction accounts broadly stable at 25%.
I believe you mentioned that there is a shift within the savings accounts. Maybe you could give us some color on the shift towards fixed towards term deposits and if you think that could be, you know, that could impact your NII from here. The other question is on capital distribution. Your dividend proposal effectively raises the bar for the future years. I don't know if you. I believe you don't guide for kind of total payout, but maybe you could share your thoughts on potential buybacks. Is NOK 0.5, that's a reasonable quarterly run rate from here given the very solid capital buffer?
Let's say you see any scenarios or headwinds to your capital position that would not allow to launch buybacks further after the end of this quarter? Thank you.
Thank you for your questions, Maria. I'm not sure that we see the same increased pass through the deposit base are, which is why we're indicating for a similar estimated impact on the latter repricing as we've done previously. I think the fourth quarter is a demonstration that we have been quite effective in taking those price increases through. Bear in mind there are rapid and rather large movements in interest rates, and these can give some variations. Overall, I think the execution has been in line or even somewhat better than what we've previously indicated. We have talked about tendencies of movements between accounts, but they aren't material enough to call them a shift.
I'd say there are some more interest, but there is no shift to speak of in the, in the overall asset mix as such. This is obviously something we are following very closely, being interested to see if there will be an increased interest from customers. Up until now, the picture is roughly stable in terms of the asset mix on accounts. On dividend, you're quite right. We have a very solid capital buffer. Our confidence in our ability both to support customers and distribute capital to shareholders are... The dividend policy remains very stable. We are committed to paying out more than 50% of the profits with an increasing nominal payout per share per year, and we'll use share buybacks as a tool to optimize around the desired capital level.
We aren't guiding for a specific amount of share buybacks and would like to sort of keep that through the year and consider how the market develops in terms of volume growth and other potential movements. Our commitment to over time payout excess capital to shareholders remains very firm.
Okay. Thank you very much.
Thank you. We'll move on to Nick Davey from Exane. Please go ahead. Your line is open.
Good afternoon, everyone. Two questions, please. The first one, as we've been listening to some of your Swedish and Finnish peers in the last two weeks, it seems that a few of them are focusing in a bit on Norway, trying to invest a bit more, and perhaps try and improve their cash management or deposit market shares. My question to you, I'm sure you won't comment on their behavior specifically, but I just wondered if you can talk a bit about to your corporate deposit market share, 38%, and your confidence in the sustainability of that number into the medium term or any kind of qualitative comments you can give us on, you know, your cash management capabilities and where they might differentiate from your competitors. The second question is more a curiosity.
Just looking at your liquidity portfolio and your LCR in dollars, which seemed to drop quite sharply in the quarter, and liquidity seemed to come out of US dollars. I just wondered if there's any changes in composition of liquidity or funding that's driving that shift? Just seemed a bit surprising to me. Thank you.
I'll have Harald, Head of Corporate Banking, answer the first one. Eva can do the next.
Yeah. Thank you, Nick. On the deposit side, we have experienced, very stable and very profitable, deposits on the
SME side, we have record high levels of deposits both on SMEs and large corporates. On large corporates, it tends to be a bit more volatile, we've seen a strong growth on the back of, I would say in particular, non-Scandinavian depositors viewing DNB and Norway as a safe haven in turbulent times. That's also allowed us to increase our margin on those deposits. It's obviously very difficult to predict how this will develop going forward. We've avoided being too competitive on the deposit margins to bring up the average. We could potentially find a good, better, you know, balance on that.
You have to keep in mind that we are very active in industries that have a super profit at the moment, such as parts of the shipping business, the energy business and also to some extent the seafood business. That is contributing to very strong deposit levels. As you can tell, I'm very reluctant to guide how that will develop going forward. You bring up a good point in terms of cash management, and I'm very pleased to say that we have won a record number of tenders on the cash management or treasury management side this year, in particular with Norwegian clients. We have some very big transaction customers in the public sector that has moved to DNB.
This will increase our cash management income, and it should also help us to keep deposits. We have achieved this on the back not of competitive pricing or aggressive pricing, but on the back of, for instance, a new corporate payment platform that provides better support for the customers on the cash management side.
Yes. On the liquidity side, there is no change in either risk appetite or anything like that. This is pure an effect of the optimization of the portfolio mix.
Okay. Thank you.
Thank you. It appears there is no further questions at this time. I'd like to turn the conference back to the host for any additional or closing remarks. Thank you.
Well, thank you. Thank you to all the participants. Thank you for your valuable questions. We hope you will have a excellent rest of the day. Thank you so much.
Thank you.