Hello, everyone, and good afternoon. Welcome to DNB's pre-close call for the third quarter. I'll just remind you that the objective for this call is to remind you of what DNB has communicated that could have effect on the Q3 results. In addition, we will give you some market data which is publicly available. We will not open up for questions. I will start on the NII and capital, and then Ida Lerner will continue and give you the rest of the P&L. To start with the NII, remind you that there is one extra day of interest in the third quarter, which will have an effect of approximately NOK 90 million.
On the volume side, we maintain our long-term credit growth target of 3%-4%, but expect to come in somewhat above this for 2022, given the high growth we saw in the first half and particularly the second quarter. That means we do not expect to see the same volume growth in the second half. NII effects from the rate hikes, just remind you that the remaining effect of the third rate hike approximately 50%, that means that we had an effect in the second quarter of half a quarter. We said that the annual effect of the third rate hike will be approximately NOK 1.2 billion. We will also have effect from the fourth rate hike that was effective from August 10th.
That is also approximately half a quarter effect. Here we said that the annual effect will be approximately NOK 2.5 billion. On the FX side, we had to look at the average change or the change in the average FX. Here we have seen that the Norwegian krone has weakened around 5%-6%, last time I saw, to the U.S. dollar. We have approximately 10% of the book in U.S. dollar exposure, so there will be a small positive effect on the FX side. Over to capital. In Q2, we had a CET1 ratio of 18%. The requirement is 16.7%. We have said that, including a full countercyclical buffer, the requirement in March 2023 will be 17.7%.
As we always do every quarter, we accrue 50% of the profit from the quarter. Also, remind you of the sensitivity to FX. Here we use end of period FX. We have seen a somewhat weakening of the Norwegian krone to the U.S. dollar, but also a strengthening to the Swedish krona and the euro. The sensitivity in total is with a change in the Norwegian krone of 10%, we will have an effect of 20-25 basis points. All in all, there will be a small negative effect from FX. We'd also like to remind you that the NFSA circular regarding fulfillment of the Pillar 2 requirement to harmonize with EBA guidelines. Pillar 2 requirement can now be partly fulfilled with AT1 and Tier 2.
I like to remind you that we have to await for the final SREP to find for the final capital requirement and the Pillar 2 requirement from the Norwegian FSA. Last year, we received the SREP in before Christmas. We expect to receive the SREP somewhat before that this year. To you, Ida Lerner.
Sure. Moving on to commission and fees. Investment banking services, just keep in mind that the third quarter is typically seasonally a somewhat slower quarter than the second and the fourth, for example. We also still see a lower activity level in ECM and DCM, given the prevailing market uncertainty. We see, however, a healthy activity level in M&A transactions. On the real estate brokerage side, we still see a lower number of objects in the market than we did last year. It's down approximately 10% year to date compared to the same period last year. On the asset management side, of course, the volatile capital markets, they continue to have a negative effect on AUM and on net flow developments in the quarter.
On money transfer, as expected, we saw a pickup in international traveling activity among Norwegians in the summer vacation period, which is a positive for card transactions and money transfers. With regards to the table of net gains on financial instruments at fair value, customer revenues in DNB Markets or FICC income, they have seen a healthy activity level in the quarter. The mark-to-market effects on the AT1 and the basis swaps will announce shortly after quarter end, hopefully, early next week. A reminder on the outstanding U.S. dollar AT1, that is still $850 million, same as last quarter. On the cost side, we don't really have any specific Q3 remarks or comments, but a few reminders, perhaps.
Market expectations or the central bank's expectations with regards to wage inflation in Norway is now at 4% for this year and 4.6% for next year. As we've mentioned numerous times before, we expect to come in somewhat above this, given the composition of our staff. Even though our cost base is primarily exposed to the Norwegian economy, we do have some exposure to international inflation levels through our third-party contracts. Of course, we continue to ensure that we don't under-invest in critical areas such as compliance and technology. Finally, on pension expenses, a reminder that the normalized pension expense in a quarter is around or just below NOK 400 million. The compensation scheme in this pension expense line is primarily linked to the development in global equities.
Impairments and asset quality, we're still generally comfortable with our portfolio. We have not yet seen signs of stress, but we continue, of course, to monitor this closely. A brief update on our CRE or commercial real estate exposure. We are comfortable with our exposure. It constitutes approximately 10% of our total book, 94% of which is exposure in Norway. Only 4% of the exposure is in Sweden, and 75% of the total book is classified as low risk. We continue to follow a strict credit strategy, whereby we primarily focus on cash flows, long leases, and lease counterparties. We primarily focus on industrial corporates rather than financially, you know, backed SPVs with project financing.
Of course, as you very well know, impairments will vary from quarter to quarter, driven by ECL model adjustments and company specific events, as you've seen in the past few quarters. Of course, you should not expect net reversals over time. Finally, a request, if you could please, submit your pre-consensus estimates by close of business, October fifth, which I believe is Wednesday of next week. I think that was it, Sverre?
Yes. Thank you very much, and have a nice afternoon.
Thank you all.