Good afternoon, everyone, and welcome to DNB's Capital Markets Day. My name is Mitra Negård, and I am Head of Investor Relations. It's great to see so many of you here today, and also a warm welcome to everyone joining us online. Today is about where DNB goes from here. We will explain how we intend to build on our leading positions, capture the growth opportunities across the group, and use scale, technology, and capital efficiently to drive value creation towards 2029. Our CEO, Kjerstin Braathen, will start by setting out our strategic direction and priorities. Later today, our CFO, Rasmus Figenschou, will bring this together and outline how we intend to deliver on our financial targets.
In between, our Group EVPs responsible for our key customer segments and business areas, Maria Løvold, Marianne Wik Sætre, Harald Serck-Hanssen, Alexander Opstad, and Håkon Hansen, will take you through the opportunities and priorities across their respective areas. We will conclude today's presentations with a Q&A session where there will be an opportunity to ask questions both here in London and online. With that, I would like to hand over to you, Kjerstin. The floor is yours.
Thank you, Mitra. Dear ladies and gentlemen, welcome to this Capital Markets Day here in London. This is a day that we have been looking forward to, and we always look forward to the opportunity to present a broader part of the team and to have this opportunity to talk to you more broadly about our business and our plans ahead. In my presentation, I will try to get across three key messages. The first one is that we raise the bar and we continue to set very high ambitions for our business, and it is backed by our strong track record of delivering. Secondly, that we are uniquely positioned to further scale profitable growth across the group. Thirdly, we have embarked on a transformative journey with AI and technology as an accelerator, and we do this with our people at the core.
We are operating in a time of unprecedented change, and there are numerous trends that are impacting the societies that we operate in. We are facing a new geopolitical reality, and economies are being impacted by higher inflationary pressure. The population is aging across countries, and customers' behavior and expectations are changing with an accelerating pace. However, few of these trends are so wide-reaching and fast-moving in the short term as AI. Some believe that AI will be an equalizer, that those who are the most favorably positioned technologically-wise and operating in digitally mature markets will be caught up by others through them leveraging this technology. We believe that AI will be a magnifier and that those who have been at the forefront of technology in digitally mature markets are the best ones positioned to take advantage of the structural change that impacts our industry.
In our presentations to you today, we will take you through how we are equipped not only to respond to, but also benefit from these trends. I will touch on our leading positions, our growth engines, as well as our plans to build further strength into our differentiators. Before diving into this, I would like to remind you of our strong track record of delivering on our targets. As in the previous years, this is also the case for the targets we set out for you here in London two years ago. Status so far is that return on equity comes in at 14.4% year-to-date. Our cost base is below 40% of our revenue, and our balance sheet continues to be rock solid with a common equity Tier 1 ratio of 17.3%, which is comfortably above the required and expected level by regulators.
All of these supports our ability to continue to deliver on our dividend policy. A few other highlights that I would like to mention since our previous Capital Markets Day is that our customer lending is up by a little more than 10%. Our net commission and fees are up by 47%, and assets under management in the same period by 68%. Diving deeper into the Nordic strategy will also be a key part of our presentations here today. No doubt, the Carnegie acquisition was the catalyst for lifting our ambitions in this area and has been a material contributor to the fact that we have 78% growth in revenues in the Nordics outside Norway in the past two years. We remain committed to delivering on our dividend policy, which remains unchanged.
We will continue to pay out more than 50% of our results in cash dividend, with an aim to increase the dividend per share per year. We will continue to use buybacks as a flexible tool to distribute excess capital and optimize our capital position. We now have a 15-year track record of paying an increased dividend per share per year. We are the only bank among the 40 largest in Europe to have achieved this, I believe. Moving on to our positions and the environment for our business. We have a unique position in an attractive environment with robust and growing economies as our primary markets. We have clear market-leading positions across all segments in Norway. We are well-positioned in the Nordics with a leading position in investment banking and more challenger positions in corporate banking, as well as wealth management.
Our industry expertise has led to strong positions and further opportunities in growing industries internationally. Altogether, these represent a flexible and robust growth platform. The Nordics, furthermore, represents a structurally attractive region. Combined, in fact, the Nordics represents the 12th largest economy in the world. The Nordics benefit from attractive opportunities in growth sectors such as energy, technology, and healthcare, from a highly educated population and digitally mature societies, with well-functioning and liquid capital markets, and a high level of trust in governments and institutions, coupled with strong public finances. With our leading position across Norway and our growing Nordic footprint, we are positioned for growth in one of the most attractive environments in the world. I will take a moment to dive a bit deeper into the outlook for the Norwegian economy, as this continues to represent our main market. The outlook for the Norwegian economy is positive.
GDP is expected to grow at 1.5% in the coming years, which is around trend. Among the most important indicators for a healthy economy is that people have a job. Overall, employment is amongst the highest in the world in the Norwegian market. Unemployment is low and expected to remain so in the coming years. This, combined with real wage growth in recent years, supports robust households' ability to drive economic growth further through increased consumption. The key policy rate has been hiked on two occasions in recent year. The main reason for this is that it has proven more difficult than anticipated to curb the inflation and get it down towards the targeted level.
Inflation going forward is expected to move towards the targeted level of 2%, and rates as a consequence to be lowered twice in the second half of 2027, bringing key policy rates to a level of 4% for the forecasting period. Over time, the Norwegian economy has also benefited from built-in stabilizers that further enhances the positive outlook, as well as the resilience of the economy. Norway is well-positioned for change, with competent and flexible workforce, an independent monetary policy, and capital. There is a high degree of mobility in the workforce, and on average, roughly one in four employment relationships is established every year. This allows Norway to have a labor market that efficiently allocates competence and capacity to where it is needed the most.
We have, on several occasions, also seen how an independent monetary policy combined with a floating currency have acted as stabilizers to maintain competitiveness in our industries and mitigate the impact of shocks. With a culture for floating rate mortgages, the central bank has a powerful tool to impact the economy. Above and beyond this, Norway has the strongest fiscal position in the world, a muscle that can and will serve as a lever to adapt to a rapidly changing environment, if and when necessary. Today, we share our new financial targets for the coming three-year period. We reiterate that return on equity is our most important financial target, and we raise our ambition and target a return on equity above 15% towards the end of 2028.
Cost efficiency is key to remain competitive towards our customers, and also to underpin our delivery on return on equity, and the targeted level moves down to 38% of the revenues from the end of 2028. Our capital target and dividend policy remains unchanged. We see three growth engines that will enable us to deliver on these targets. Mass market in Norway, where our trusted brand and clear market leader position provides a strong platform for further growth. The Nordics also represents a unique engine for growth, and we expect savings and investments to continue to structurally outgrow most other areas of the economy, and believe that we have a strong platform to capture more than our share of this growth. Firstly, over to mass market. We will continue to grow our customer base across personal customers and SMEs in Norway.
We enjoy a high level of trust for our customers and have a strong two-brand offering towards our personal customers. We have an unmatched offering towards SMEs in Norway, which has earned us the trust to do business with every third SME across the country. We believe in building loyalty and customer satisfaction through developing attractive products and services and delivering sound advice. We continue to see our customers increasingly engaging with us across our channels, as well as using a high number of our products. We have an unmatched distribution with more than 60 physical locations across the country, alongside the most frequently used digital interfaces. By leveraging this distribution, as well as technology and AI to drive innovation, we will provide better services to more customers faster than before. A few examples of what we have done recently.
We have redefined the mortgage process and just passed the first loan through the process last week. We use AI to empower and enable our advisors so that they spend more time with our customers and give better advice. In KYC, we have reinvented processes by scaling agentic AI and see now a 66% straight-through processing of the standard risk SME customers, and that number is increasing. Maria and Marianne will touch more on these examples in their presentations. in the Nordics, as our second growth engine, Stockholm has become known as the capital of capital across Europe during the past years, in large part due to highly active capital markets across both equity and debt. In fact, in the past five years, the Nordics account for 40% of all IPOs in Western Europe.
The Nordic high-yield market has grown 59% since 2020, while corresponding markets in Europe, Asia, and the U.S. have declined. With DNB Carnegie as the leading investment bank in the region, coupled with our ambitions to grow our share in Corporate Banking and Wealth Management, we are well-positioned to benefit. We continue to see results of our strategy to grow the Nordics through winning mandates on the back of a broader offering and increasing cooperation across the group. We have taken on new customers in Sweden at an accelerating pace and more than twice the pace that we saw last year. Our lending growth in the region is faster than anywhere else, with a growth of 13% year-to-date. We remain excited about these opportunities in the Nordics, and Håkon, Harald, and Alex will come back to this in their presentations later.
Thirdly, the savings and investment market has long been attractive, with structural market fundamentals supporting the trend of continued long-term growth. We have talked about our efforts to position ourselves to capture and unlock growth in this area, and we are clearly seeing how our unique distribution and coverage model positions us as a primary benefactor. Through strong cooperation across the DNB Group, our strategy is to continue to leverage leading positions across customer segments and products, such as pension and savings agreements across personal customers, to grow our assets under management. Through organic growth and acquisitions, our assets under management has doubled in the past three-year period. As you can see from the chart behind me, the sources of growth are broad-based across our business.
The growth from personal customers and private banking, where we have focused on building recurring net flows, has resulted in a growth rate of more than 30% in the past seven years. This comes on the back of our broad distribution with our investment advisors and digital channels. In fact, more than 90% of sales to our personal customers are done digitally, which underlines the scalability in our model. Both Håkon and Maria will add some more color on our efforts in this area in their presentations. For the remainder of my presentation, I want to focus on the four enablers that will be essential in order to deliver on our ambitions and for transforming the way we serve customers. Technology and data, artificial intelligence, our role in society, and perhaps most important of them all, our people, culture, and competence.
We continue to invest in our leading position in digital and technology. Two key priorities are faster innovation and more resilient operations, for obvious reasons. Our store needs to be open 24/7, and faster innovation is necessary to satisfy our customer expectations that are changing at an accelerating pace, but also to compete with a broadening spectrum of competitors. These priorities are not new for us. Over the past 10 years, the number of incidents have decreased by 90%, and pace of innovation grown by more than 300%. Further clear indicators and results bear witness of our strong position and continued progress. Our transition to cloud is far come with 80% of our applications now in the cloud, and we have built customer-facing features and products natively in the cloud since 2018.
Through the years of our history with numerous mergers and acquisitions, technical integration has always been a priority to ensure one single core or system per product area, and these are now being modernized piece by piece. Beyond all this, data powers it all. It's no longer about how much data we have, but about our ability to use this data towards our customers and in order to create value for our customers. It is indeed our data and our ability to use it that again enables our AI to become such a powerful force for transformation of our business. We deploy AI and develop it as an enabler along four dimensions in our business. First, growth and enhanced customer experiences through better and faster customer services with increased satisfaction from customers. We now see that 70%-80% of the requests are solved without human involvement.
We develop new products and features at a faster pace than ever before. Second, improved efficiency and scale. One of the areas already mentioned, KYC, where we've redefined the process and scaled agentic AI. Another is how IT risk is monitored and managed across the business areas with AI and AI agents at the core of the process. Reinforce security and defense. We deploy AI in our cybersecurity and risk monitoring to protect our customers from criminals. We used advanced models to uncover technical vulnerabilities that humans would not be able to uncover and fix them more rapidly than before. We are able to uncover attempts of cyberattack much faster through AI and the magnitude of data that this technology is able to analyze simultaneously. As we all know, time and speed is of essence when a cyberattack is looming.
This would not have been possible without our long history of automating and digitizing our processes, as well as ensuring that we can use our data. Fourth, by empowering people and culture. As with other technologies, this is still the case for AI. The most important thing for success is people. We continue to invest both broadly and more targeted across the organization, and we set clear priorities towards the areas where we believe the impact will be the biggest and focus on these to implement and scale new solutions. In a world that is becoming more fragmented, we believe that the role we play in society is more important than ever. We are very motivated by and believe in the value of contributing to our surroundings. The Savings Bank Foundation DNB is our second-largest owner.
The Foundation is one of the largest foundations in the Nordics, and they act as a force for good and making a difference for many communities across the country. The dividend they receive from DNB are used to support projects benefiting children and young people, arts, and culture across the entire country. We provide critical infrastructure that keeps the economy safe and moving. Our efforts and competence to combat financial crime protect our customers from fraud. We invest significantly in both people and technology to protect values, societies, and customers. Last year, we were able to stop NOK 9 out of NOK 10 of our customers' money in attempts of fraud. Altogether, meaning that we stopped NOK 3 billion worth of our customers' money from being stolen during that year. Lastly, we remain firmly committed to our strategy and efforts of being a driving force in the sustainable transition.
We work together with our customers to reduce emissions and help them on the transition journey, and we raise capital to scale and grow renewable energy sources. We are well underway to deliver on our target of raising NOK 1,500 billion of capital to sustainable projects towards 2030. Lastly, our success in transforming our business depends on our people and our ability to continue to attract, develop, and retain the best talent. Our people remain the most important competitive advantage, and as competition becomes more intense for talent, we continue to invest in building competence and culture, which we believe is the recipe for success. We are motivated by holding the position as the most attractive employer among business students and are highly ranked among students in computer science, engineering, and law.
Our highly engaged workforce is also reflected in the fact that eight out of 10 employees are proud to call themselves a DNB-er. I myself continue to feel privileged by the opportunity of leading such a committed team, working relentlessly to create values for our customers every day. In order to sum up again my key messages is that we raise the bar and continue to set very high ambitions for our business in the future. We are uniquely positioned to further scale profitable growth in an attractive environment, and we have embarked on a transformative journey accelerated by AI and with our people at the core. With that, I will hand over to my excellent colleague, Maria.
Thank you, Kjerstin. We already have a strong position in Personal Banking, but we see potential to grow further by deepening our customer relationships, building on our scale to accelerate profitable growth, and turning AI into measurable P&L impact. DNB knows Norway, and Norway knows us. We are around twice the size of our closest competitor in lending, 3x larger in personal savings, and roughly 3.5x larger in deposits. Our reach is broad, and it spans generations. More than half of Norwegian adults are DNB customers. But scale is only part of our story. DNB is the most top-of-mind banking brand in Norway, and we are highly trusted for financial advice. With our two complementary brands, DNB and Sbanken, we meet different customer needs.
The DNB brand combines a wide product range, leading digital services, and personal advice all over the country, while Sbanken offers a focused, mobile-only, and self-service model. The Norwegian lending market is highly competitive, but we have remained disciplined in how we price and grow our lending portfolio. This has enabled us to deliver on profitable growth. We have also seen a strong momentum in deposits, reflecting our customers' trust in us and giving us a greater flexibility on the funding side. You can see this in our financial performance. Return on allocated capital has remained strong at 17.7% for the last 12 months. This strong performance has allowed us to invest significantly in digital capabilities and customer journeys over the past two years.
We believe that these investments enable us to drive further profitable growth while at the same time improving the customer experience and lowering our cost to serve. Our customers are coming to us for more of their financial needs, from saving and payments to insurance and real estate broking. We see this in our numbers. Although lending and deposits still remains at the core of Personal Banking, we see that since 2022, net other operating income has grown at an average annual rate of around 11%, increasing the contribution from capital-light revenues. Saving is a good example. Income from assets under management has increased by 218% since 2022. We are seeing a strong growth in the underlying activity, with the number of saving agreements up 37% and monthly saving volumes per agreement is up 32%.
Income is also up 24% in insurance and 18% in real estate broking. Our revenue growth is increasingly supported by capital-light income. Active customers log into our mobile bank app more than seven times a week on average, and around 90% of payments and transfers are now made through our mobile apps. Engagement continues to grow, with the number of unique users up 6% since our last Capital Markets Day. But these engagements go beyond our digital channels. DNB customers have fewer banking relationships than customers of our closest peer, 1.7 on average compared to 2.2 or 2.6 for the digital banks. For me, this reflects our strong and loyal customer relationships that continues to deepen. The average number of products per mortgage customer has increased from 4.7 to 4.8, as Kjerstin also mentioned.
And to give you a last example, the share of mortgage customers with mutual fund saving agreements has increased from 22% to 25%. Over the past two years, we have systematically used data to identify the biggest customer pain points and the main drivers of calls, and we have focused all our innovation efforts where they have the greatest impact. As a result, customers now solve more of their needs digitally, and calls to our service center are down 27%. And when customer do call us, faster identification and natural language routing gets them to the right advisor quicker, saving each customer a minute per call. And additionally, AI-powered logging has cut the time advisors spent on administration between the calls by 35%. And this allow us to use advisors where they create the most value in more complex situations or when customers need or want personal guidance.
And best of all, we have improved customer satisfaction while achieving these efficiency gains. The share of customers giving us the highest satisfaction score after talking to us has increased from 84% to 92%. And together, all these improvements have enabled us to reduce service center FTEs by 24% over the past two years. Because we have really bold ambitions, 100% great customer experiences, and that requires a customer-first mindset in everything we do. So we are already delivering more with less, a better customer experience, more advisor capacity where it matters the most, and a lower cost to serve. We have been investing in digital assistance for years, moving from simple reactive chatbots to AI-powered assistance. And this is already happening at scale. Our digital assistants, Aino and Solve, already resolves most questions without human support, 70% in DNB and 80% in Sbanken.
And today, customers can already get a lot of answers about their own products, such as their mortgage rate, but they can also order, block, or close a card directly in the AI assistant. And we know that customers who receive advice, they are more satisfied. So now we are taking the next step in building the digital advisor of the future. AI will help us identify moments that really matters, reach out proactively, giving each customer a tailored experience, providing the right advice at the right time. And when the customers do want to talk to a person, the context will follow the customer from the AI assistant and to the advisor. And soon, we are introducing Solve 2.0 in Sbanken, giving customers better insights into their finances by analyzing their transaction and spending patterns.
And we will continue to expand how we support our customers in line with our ambition of providing 100% great customer experiences every time a customer is in contact with us. Mortgage remains one of our most important products and a key entry point into a broader customer relationship. Over the past few years, we have made significant improvements to the mortgage journey, making it faster, more digital, and more efficient. Straight-through processing is up 50% since our last Capital Markets Day. Response time is 30% faster, and conversion from mortgage ads has improved by 76%. And all this we have been doing by improving existing technology. But now, we are modernizing the foundation itself. Since the beginning of this year, we have been rebuilding the technology stack from the lending core through the orchestration layer and all the way up to the customer-facing channels.
We have reached two important milestones. First, our lending core is live, giving us a more modern and flexible foundation for future mortgage experiences. Second, we have launched the first customer-facing journey built on this new foundation. It's a fully digital refinancing journey, and it's now been tested with internal DNB customers, and it works. In Q1 next year, we will take the next step and launch it to customers in both DNB and Sbanken. Our ambition is to provide same-day mortgage decisions at scale throughout different mortgage journeys. From here, we can build and scale new mortgage journeys, giving customers faster decisions, more predictability, free up time for our advisors while serving more customer at a lower cost. These are just some examples, because we have moved from testing AI from all the pilots to using it across the customer lifecycle.
AI is now embedded in how we acquire and onboard customers, how we serve our customers, build deeper relationships, and protect both customers and the bank. We have already seen the impact. Better customer experiences, higher employee productivity, and more automation. At the same time, we have reduced FTEs in Personal Banking by 19% since 2024, while customer satisfaction has continued to improve in both brands. We have built a strong foundation, and we expect the value from our technology and AI investment to grow even further in 2027 and beyond. To sum it up, bring it all together, we have clear levers to drive a further profitable growth in Personal Banking. First, we will capture more of our customer financial needs, deepening our relationships and growing capital-light income. Second, we will leverage our scale, serving more customers while continue to lower our cost to serve.
Third, technology and AI will help us to scale faster, driving both sales and efficiency, while, of course, improving the customer experiences. With that, I will leave the floor to Marianne. Thank you.
Thank you, Maria. Good afternoon. Today, I will cover the drivers that support future profitable growth in Corporate Banking Norway. First, our large and diversified customer portfolio in an attractive market. Secondly, our broad product offering and strong customer relationship focus. Finally, how our customer model is becoming more scalable through digital solution, automation, and AI. Let me start with the market and our current position. One in three Norwegian businesses choose DNB as their bank. SMEs account for 99% of all companies in Norway and more than half of private sector value creation in Norway. This is an attractive market for DNB, and we hold a leading position in this important customer segment. As you can see on the right-hand side, we are number one within SMEs and startups, number one within real estate and construction, and we also have a leading position within Norwegian public sector.
DNB's footprint among the SMEs closely mirrors the Norwegian business market, and we follow our customer through their different life cycles. Small and medium-sized businesses are served through digital channels and our customer service center. Together, they account for 94% of our customer base and 40% of corporate customer Norway's income. Larger customers also have dedicated advisors as a part of their service model and account for 60% of the total income. Over generations, we've been building strong and meaningful relationships with our customers, with local advisors all over the country, serving a diverse range of industries with a full-scale offering and gives us a resilient foundation. We are not dependent on any one industry, one region, or one type of customer. We have unique knowledge, competence, and experience of our customer businesses and market, which make it easy for them to continue to choose DNB. That builds loyalty.
In fact, the number of product per customer continues to increase over time. This combination of product breadth and deep customer knowledge and relationships is difficult for others to replicate. Our market-leading position and broad product offering continues to drive profitable growth. We see a steady development in deposit and lending, and our lending growth is above market average. This underlines our attractive customer offering. As our customer's main bank of choice, it is easier for us to diversify our revenue streams as we can see in the growth in other income. As an example, DNB Carnegie's income from this segment has increased by 20.1% year-over-year. We are uniquely positioned with a steady and profitable market over time, consistently achieving a high and steady return of over 20% on allocated capital.
Since 2024, the share of income from products beyond lending and deposit has increased by 3 percentage points. As you can see, we have successfully grown capital-light income within a wide range of product areas. This create customer loyalty and strengthen resilience of our earnings across market cycles. This has been possible due to our strong customer relationship and close internal collaboration across the different business areas in DNB. What have we done to become the mass market within the SME segment? We are increasingly using data, automation, and AI to create customer value, strengthen our competitiveness, and scale our service model. One clear improvement since 2024 is within data-driven credit. We are using data and predefined credit rules to automate decision and documentation. This has enabled our financing team to handle close to 40% more credit cases with the same staffing.
Through successful automation, the customers experience shorter waiting time and a simpler process, and our advisor can spend more time on complex assessments and provide even better quality guidance when needed. We are also proud of the progress within our AI chatbot, now resolving 58% of customer inquiries without human intervention. What is interesting is that we've been able to scale at the same time improving the customer satisfaction to a record high of 72 points. The customers are telling us that they value the availability and responsiveness of our advisor, hand-in-hand with our market-leading digital solutions. We are the number one banking app for SMEs, and we experienced a 41% increase in unique users since 2024. In fact, one in four customer now uses the app daily. Moving on to an example of how we have redesigned a complex and regulated value chain using technology and increasingly AI.
The KYC process is critically important, both in terms of our license to operate and also our ability to scale efficiently in the mass market. This process redesign has secured better data flow and rule-based decision-making. Based on this, we have been able to automate standard cases. Over the last 10 months, we have increased straight-through processing from 26% to 66%. Handling time is reduced, and the customer experience is smoother and faster. For the more complex cases, we have introduced specialized AI agents to gather, structure, and analyze information. Employees validate output and remain accountable for risk assessments and decisions. Since the end of 2024, we have been able to reduce the number of FTEs involved in the KYC process for the DNB Group from 800 down to 400 people. To conclude, a large and diverse customer portfolio and a strong position gives us a clear competitive advantage.
Our broad product offering and strong relationship focus mean that we can deliver more customer value and profitable growth. Finally, through automation and use of AI, we are able to scale efficiently in an attractive SME market. With that, I will hand over to my brilliant colleague, Harald.
Thank you, Marianne. Good afternoon, ladies and gentlemen. In my presentation, I will demonstrate how Large Corporates and International will continue to deliver profitable growth. I hope you will take away three key messages from the next 12 minutes. Firstly, we will use our various geographical and industry platforms to secure continued profitable growth, with a particular emphasis on the Nordics. Secondly, we are further deepening customer relationships, which enables increased cross-selling of non-lending products. Thirdly, in order to serve a broader client base, we will maintain strict capital discipline and an even broader use of the originate and distribute model. I need to move on to this side. Since 2022, LCI has increased total income by more than NOK 6 billion while maintaining attractive returns.
The return on allocated capital over the last 12 months stand at around 18%, supported by strong growth in capital-light income and capital-efficient loan growth. As illustrated by the graph on the left, if you look at the last four years, we have succeeded in growing capital-light incomes 3x quicker than NII. At the same time, if you look at the pie charts, we have continued to broaden our industry exposure, thus making income growth more resilient and reducing concentration risk across market cycles. A key reason for the increase in non-lending income is that we are serving a broader share of our customers' financial needs than we used to. At the Capital Markets Day two years ago, I was proud to show that we had increased non-lending income from 2019 to 2024.
I am pleased to say that this positive development has continued, so that today, 56% of the income on LCI clients stems from non-lending. The DNB Carnegie integration has clearly accelerated this development by strengthening our advisory capabilities and increasing the contribution, in particular from investment banking. As you can see from this slide, it is up from 13% to 18% in only two years. The close cooperation between LCI, DNB Carnegie, and Wealth Management will continue to be a key to our success. DNB is the most international of the Nordic banks, reflecting the international nature of many of our core industries and many of our clients. It is important to emphasize that this international reach is anchored in a very strong home market. As our CEO showed, we enjoy a core bank relationship with 61% of the large corporate segment in Norway.
We act as a bridge, connecting Nordic customers with global capital markets and export opportunities, while at the same time connecting international companies with the Nordics. When it comes to our geographical footprint, we have minimized political and geopolitical risk, as seen by the fact that 99% of our portfolio is in OECD countries. The geographical split that you see on this slide mirrors our industry strategies. That brings me on to the next slide. The strength of our non-Nordic portfolio is closely linked to the industry-led model that we have built over decades. I believe most of you are familiar with our world-leading position in industries like shipping, offshore, seafood, and energy, where we are punching well above our weight thanks to strong capital market capabilities and active use of the originate and distribute model.
This, in turn, leads to faster turnover of capital, enhanced capital efficiency, and increased return potential. In addition to the maritime industries and energy, we have over the last 20 years built a selective international presence also in healthcare and telecom. Let me give you some more background on this. Both of these industries benefit from positive structural trends, while our existing customer relationships and our capabilities position us to capture future growth. We have spent more than two decades building our presence in these industries, creating deep sector expertise and the relevant international network. Teaming up with Carnegie has further strengthened our position in healthcare and telecom, and we now see what I would call a step change in opportunities. An important part of our strategy within these industries is to act as a bridge to the Nordics for our international customers.
As you can see from the tombstones, we have become a core bank for a number of the key players. Most importantly for this audience, these portfolios have combined attractive growth and good returns with strong credit quality and very low historical loan losses. Moving on to the Nordics, where we really see that the strategy is turning into tangible financial results. The first nine months of this year, loan volumes are up by an average of 13% across Sweden, Denmark, and Finland. We have added almost 60 new customers year-to-date in this region. As you will see, we have been growing non-lending income by 45% over the last two years in the Nordics. The profitability stands at 18%, which is basically in line with the returns we have in the Norwegian market, and I believe this bodes well for future profitable growth across the Nordics.
Together with DNB Carnegie, we are increasingly bringing together strong local customer relationships, leading advisory capabilities, balance sheet capacity, and an international network. This allows us to serve customers more comprehensively across Sweden, Denmark, Finland, while creating new income opportunities for us across the combined platform. Alexander will soon elaborate on how we are already winning in the Nordics. I would say that from my point of view, the best news is perhaps that while we are already demonstrating our combined strength, there is still significant room to reap further income synergies between DNB Carnegie and LCI. Going forward, we see great opportunities for further profitable Nordic growth also in the family office segment. In Norway, we already enjoy a relationship with more than 85% of the family offices, and we aim to replicate this achievement in the rest of the Nordics.
The customers tell us that the key to our success in this segment is seamless cooperation between LCI, Wealth Management, and Investment Banking. We have had some early successes in Sweden, but there is still plenty of untapped potential. Our Nordic tour de force will also include transaction banking, as seen on the right-hand side of this slide. Its importance is demonstrated by the fact that 65% of all LCI income stems from customers using DNB for their daily banking services. This success is what we intend to repeat in Sweden. We have, over the last two years, shown a 20% growth in transaction banking income in this market. We have set the rather bold ambition of increasing the share of Swedish customers using DNB as their daily bank from 1/3 to 2/3 by 2030.
We believe this to be realistic, because we have some very good products and services to offer. We have excellent working capital solutions and trade finance products. Actually, on the latter, we were ranked as number one in Sweden on the latest Prospera survey. In order for us to capture the many opportunities for profitable growth effectively, we need to continue transforming the way we work. Over the past two years, we have reduced the number of man-years in LCI, while at the same time supporting strong growth across the industries. We mainly achieved this by standardizing and simplifying our processes. We now see that new technology, and in particular AI, is helping transform how we work by improving customer journeys and increasing productivity. Going forward, I think we see further exciting potential, both for improving efficiency and to drive income growth.
To conclude, today I have endeavored to show you that LCI has evolved into a much broader and much more diversified earnings platform. Our story is not about entering new markets or new industries, because we have ample opportunities to do much, much more where we already enjoy the close relationships, the expertise, and where we have the clear capabilities to win. We are still in an early phase of our Nordic journey, and we see significant profitable opportunities across customers, products, and industries. We and I are therefore confident in our ability to continue delivering profitable growth while maintaining solid risk management and disciplined capital allocation. On that very happy note, I am pleased to introduce the one and only Alexander Opstad.
Thank you very much for that, Harald, and good afternoon, everyone. At our last Capital Markets Day, we had only weeks earlier announced the acquisition of Carnegie, with a plan to merge the two firms' markets and investment banking operations into DNB Carnegie. Two years on, it's my pleasure to update you on our progress. I'm happy to say that we concluded the integration work in our Investment Banking division in the third quarter, and we expect the full integration to be completed during 2027, with remaining work first and foremost being linked to finalizing the integration of technology and operations. Broadly, I want to leave you with three messages today. First, we have built the leading Nordic investment bank with a range of number one positions and a well-diversified business mix. Second, the combination of DNB and Carnegie has created value through stronger client relationships and tangible revenue synergies.
Third, we are translating greater scale into improved efficiency by realizing cost synergies from the integration. Through technology and AI, we believe we can grow with even greater operating leverage going forward, while simultaneously improving the quality and speed of our client delivery. Taken together, these factors provide us with strong prospects for profitable growth. Let me start off by putting the DNB Carnegie platform into perspective. We see our regional investment banking position as attractive. While European investment banks have been losing ground to U.S. competitors for years, regional providers like ourselves have been thriving, as we typically compete for a different subset of clients below the very largest corporates and financial institutions where pricing is the most challenging. We combine strong local franchises across the Nordic countries with the product breadth, balance sheet, and connectivity of an international investment bank.
That combination is the center of our competitive advantage. We enjoy regional scale, exemplified by the platform generating close to NOK 13 billion in revenues last 12 months, with return on allocated capital close to 30%. Growth has been accompanied by improved efficiency, with the number of FTEs down some 4% the two last years. Today, DNB Carnegie is a very different business from what DNB Markets was only a few years ago. The acquisition has not simply made us larger, it's also materially improved the diversification of our business across three important dimensions. First, on products. We have grown capital-light income with investment banking and equities increasing their combined contribution to 54% last five years, making the business less tilted to our somewhat more capital-heavy FICC franchise. Second, geographically, we've created a genuinely stronger Nordic platform with reduced reliance on the Norwegian market.
With strong prospects for further growth, Sweden, Denmark, and Finland now account for 25% of total income, up from only 11% five years ago. Lastly, our sector mix is more diversified. The bars to your far right show that shipping and energy-related industries generated over 1/2 of our investment banking revenues five years ago. Today, income is more evenly distributed. Greater contributions from TMT and industrials and business services complement our established global positions in the capital-intensive industries that Harald covered earlier. The increased diversification provides exposure to a wider range of investment and market cycles, making our business more resilient and increasing the number of ways in which we can continue to grow with our clients. Our business has seen steady growth. Total income increased by 64% last five years, altering the scale of our business and further shifting the earnings mix towards more client-driven revenues.
Part of the growth, of course, reflects the acquisition of Carnegie. Importantly, we have also delivered meaningful organic growth. Pro forma, combining the two legacy businesses' historical numbers, we find that organic growth both last five years and last 10 years amount to a 7% compound annual growth rate. Importantly, with stronger progress seen post-operating as one business. In the last 12 months, client income has grown by 10%, with net commission and fees growing by 11%. The latter now amounts to almost 60% of our client income, supporting our ambition to grow through activities that require comparatively less capital. We believe we have the foundation in place for further profitable growth, not least through the competitive position we have established in investment banking. We have the leading Nordic advisory franchise across M&A, equity capital markets, and debt capital markets.
Our market positions are supported by strong client feedback and a very significant transaction track record. Over the past five years, DNB Carnegie has participated in twice as many ECM transactions in the Nordics as the second-largest bank. We enjoy a similar position in M&A, where we also execute twice as many transactions as the nearest Nordic competitor. Importantly, our equity capital markets capabilities also make us stand out beyond the Nordic region. We have led more Western European IPOs than any other global bank in the past five years. Our transaction volumes matter for more than just top-of-league table recognition. They build client relationships, generate market insight, and create opportunities to deliver additional products around each transaction, including financing and risk management products. Looking ahead, we see particularly attractive growth opportunities in three areas. The first is within debt advisory, as borrowers increasingly consider alternatives to traditional bank lending.
The second is in Nordic high yield, a market that Kjerstin touched upon earlier, where our objective is to improve on our already strong number two position. The third is towards financial sponsors, where deeper relationships will generate additional opportunities across M&A, financing, and capital markets. With moats in our business being built primarily through track record, our market positions are not just evidence of past successes, they are a platform from which we can continue to capture market share and expand on our revenue opportunities. One of the key strategic arguments behind the Carnegie acquisition was the complementarity between our businesses. The transactions highlighted on this slide demonstrate examples on how we are leveraging our combined platform to win broader and more complex mandates, delivering more to the client than either legacy organization could have done independently.
Among many, I can mention DNB Carnegie leading as the only Nordic bank, the largest Swedish IPO in 20 years when listing Verisure, with bank financing being an important door opener to the client relationship. Also worth highlighting is the IPO of BioMar, the largest listing in Denmark since 2018, where combined ECM capabilities and our seafood industry expertise were important factors. Lastly, I want to highlight our growing footprint in healthcare, exemplified by advising and financing Ambea's takeover of Humana in the current quarter in close cooperation with LCI. We see our combined success reflected in our overall market position. According to Dealogic, DNB Carnegie ranked number one in Nordic investment banking fees, both for the full year 2025 and for the first nine months of 2026. The key message is that revenue synergies are no longer an ambition.
They are increasingly visible in client mandates and executed transactions. While we feel we are off to a good start, we believe in significant further potential as collaboration and new ways of working become increasingly embedded across the DNB organization. Our global markets and custody franchise include our FICC, equities, and security services divisions, and account for approximately two-thirds of DNB Carnegie's income. I would like to start by highlighting some of our unique market positions. 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. As with all flow products, a strong market share tends to be self-reinforcing, and it is also opening up new opportunities, including expanding our footprint in SEK-denominated products.
In fixed income and equities, we have the leading distribution platform towards regional institutional investors, with clients, amongst others, ranking us number one in the Nordics across all equity products, high credit, and in NOK investment grade. In addition, I would like to highlight our position with international institutional investors. We have ranked number one in the Nordic Extel Survey consecutively for the past 10 years, commanding more than 40% of the overall vote, twice that of the nearest competitor. The next growth phase will come from using our strengths more systematically. Amongst others, we see opportunities to gain wallet share across a range of clients in FICC and equities. We see strong potential in FICC and equity financing, with a particular focus on developing our prime services offering. Lastly, we see opportunities to expand services for family offices in close cooperation with Wealth Management and Large Corporates.
Revenue growth is only one part of the value creation agenda. We are also simplifying the organization and improving the scalability of our operating model. Integration has allowed us to realize personnel synergies. In equities, for example, the number of FTEs has declined by 14% the last two years. At the same time, we have strengthened our market position and grown revenues in the equities business. We are furthermore consolidating systems and vendors across the two legacy businesses. We have identified NOK 150 million in annual cost savings to be realized as we complete the tech integration through 2027. AI is the next important element. We are applying generative AI across front office, operations, and technology development, expecting considerable efficiency gains. Our approach is disciplined. We pilot solutions, demonstrate value, and then scale the applications that deliver measurable benefits. The objective is not simply to reduce costs.
It is to free up time for client-facing activities, improve the quality of our delivery, and support growth without a corresponding increase in resources. The final growth engine is the opportunity created by systematically connecting DNB Carnegie's capabilities more closely with the rest of DNB. Together with Large Corporates and Wealth Management, we can offer clients a more complete set of solutions. For corporate clients, DNB Carnegie adds capital markets and risk management solutions, and maybe most importantly, we support the combined expertise in our industry strategies through our advisory capabilities. For entrepreneurs and wealthy investors, we provide advice around important ownership decisions. We support family offices with institutional quality research, sales and trading, and security finance capabilities, and we provide investment opportunities through our deal flow. This is the essence of the One DNB opportunity.
By combining our capabilities across Large Corporates, Corporate Banking Norway, Wealth Management, and DNB Carnegie, we're improving client satisfaction and income growth for the group alike. With our Nordic expansion, there are more opportunities than ever before. Bringing it all together, I'd like to close by reiterating that we, over the past couple of years, have fundamentally transformed our business into DNB Carnegie. We've created the leading Nordic investment bank with strong positions across our core markets and products, and we believe we have a very attractive opportunity to translate that position into continued profitable growth. We've diversified our business, and importantly, we're seeing tangible benefits from the combination through stronger client relationships, revenue synergies, and improved efficiency. We are excited to increasingly turn our attention from completing the integration to realizing the full value potential of our platform.
Thank you very much for your attention. As with any good program, we've saved the best area for last, and it's a great pleasure to introduce Håkon Hansen.
Thank you, Alex, and good afternoon, everyone. Wealth management has become one of the most attractive areas of banking globally. That's, of course, due to the strong trends in growing wealth, its expanding pension assets, its capital-light income, and more people in general want to invest in capital market products. These trends are also strong in the Nordic region. DNB starts from a position of leadership in Norway. We have a business with strong structural growth, recurring revenue, and attractive returns. Our focus now is scaling that position into a stronger Nordic growth platform. My story today is actually quite simple. First, the market is growing. Second, we are gaining scale. Third, scale matters increasingly in Wealth Management. Our financial performance reflects that. Since 2022, we have delivered 15% growth in net commission and fees and 24% in pre-tax operating profit annually.
While the story is simple, execution is not. If you remember one thing from my presentation today, remember this: we are not dependent on a single engine. Private banking, asset management, retail savings, and pensions all contribute meaningfully to growth and profitability. That diversification makes the business more resilient. Our position is not a coincidence, and it's not easy to replicate. All these number one positions matters as well. It gives customer access, distribution power, and data advantages that becomes increasingly valuable as investing becomes more digital. The first part of my story is about a strong and attractive market. Across the Nordics, financial wealth continues to grow faster than the broader economy. As Kjerstin pointed out earlier, the Nordics would together rank as the world's 12th largest economy. Pension assets are growing rapidly, supported by rising employment, strong wage growth, and increasing pension contributions.
Participation in capital markets is accelerating as well. We have a growing share of households investing and taking greater responsibility for long-term savings. Together, these trends create a powerful foundation for sustained growth in Wealth Management. These are not cyclical tailwinds. They are structural growth drivers that are likely to support Wealth Management for many years to come. The second part of the story is how DNB is positioned to capture that opportunity. Norway is still underinvested relative to its wealth levels. We see that as an opportunity, not a weakness. That means we are not only participating in market growth, we are also benefiting from structural shifts in customer behavior. Every year, more customers move more of their savings into investments, pension products, and discretionary mandates. For a market leader with strong distribution, trusted advice, and a broad product offering, that creates a powerful growth runway.
As a clear market leader, we are well- positioned to continue to capture more than our relative share of that growth. One of the most attractive features of our business is that growth does not start from zero each year. As already pointed out by Maria, we benefit from a highly attractive and recurring monthly inflow, driven by saving agreements and pension schemes. This together creates a recurring inflow engine of around NOK 29 billion annually, and that engine is growing every month. Over the past five years, the number of saving plans has increased by 37%, while monthly savings per agreement have grown by 32%. That means more people are saving, and they are also saving more money per month. This results in a combined growth in annual saving amounts of more than 80% over the last five years. Once again, these are not market-driven inflows.
They reflect a structural shift in customer behavior towards long-term investing and recurring savings. The same momentum is visible in pensions. Two years ago, we set an ambition to exceed NOK 250 billion in defined contribution assets by the end of 2027. We reached that milestone this summer, well ahead of plan. As a result, we are now raising our ambition to exceed NOK 350 billion in defined contribution assets no later than the end of 2029. Importantly, these are among the most attractive flows in Wealth Management. They are recurring, they are predictable, and they are highly scalable. Technology is not a support function in Wealth Management. It is increasingly the business model. Over the last years, we have moved from multiple systems towards one platform, one core, and one cloud-based infrastructure. This improves the customer experience, but equally important, it improves scalability.
When more customers join the platform, costs don't grow at the same pace. That becomes even more important in an AI-driven future. AI makes our platform more scalable. It helps our advisors work smarter and personalize advice while delivering higher quality. We believe the future of Wealth Management is not human or digital. It is both. The advantage comes from combining the two, digital scale with human expertise. In combination with strong distribution, the growth potential becomes even greater. With the combined distribution power of DNB and DNB Carnegie, complemented by leading European platforms, we have the reach to turn scalability into profitable growth. We often say investing should be easier. Now, we are actually making it easier, and the proof is in the pudding. We have the number one saving app in Norway. It's called Spare. In addition, we have the fastest-growing saving app in Sweden.
It's called Montrose. Customers can now access more insight, better analysis, and more personalized information directly in their digital journey. We are actually moving from digital self-service to intelligent advice, enabling customers to have real-time conversations about their portfolio through AI. We think AI makes good advisors even better and digital customers much more engaged. In private banking, family offices are the most attractive segment. As Harald already mentioned, we have an active relationship to 85% of those in Norway and 65% of those in Sweden. This is where scale and relationship come together. Private banking growth is increasingly driven by discretionary mandates. Clients are telling us something very important. They don't want just products. They want trusted partners, and they want solutions. At the same time, the combination of Wealth Management, DNB Carnegie, and Large Corporates and International creates access to clients and opportunities across the Nordic region.
Family offices are a great example and a targeted segment for us. They rarely think country borders. Increasingly, neither do we. Scale matters enormously in asset management. This business becomes stronger as assets grow. We have increased assets significantly while improving efficiency and expanding the product offering. The illustration on the left-hand side shows our strong net flows in asset management, underpinning DNB's market-leading position. Once again, importantly, this growth is not simply market-driven. We continue to attract significantly stronger net flows than our Norwegian peers, which is a strong validation of both our investment offering and our distribution power. Another important point is asset mix, product mix. Customers are not choosing between active and index. They want both. Our strategy is not active versus index. It is both.
The winning model, we believe, is a scaled platform with strong distribution, broad investment capabilities, and the ability to serve customers across active, index, single line, fixed income, solutions, and discretionary mandates. We have more than doubled assets under management while improving our cost-income ratio, demonstrating the significant scalability and operating leverage in our asset management platform. Three things are driving this scalability. First, our integrated model gives us access to strong captive distribution channels, providing scale, recurring flows, and efficient access to customers. Second, we are broadening our distribution beyond the Nordics, attracting a growing share of assets from international investors. Third, our broad product range allows us to capture growth across asset classes, client segments, and market cycles. Let me finish where I started. The story of Wealth Management is not too complicated, at least.
We have a growing market-leading positions, strong recurring inflows, strong digital and physical distribution, and a platform that becomes more valuable as it scales. We have a proven leadership position in Norway. Now, our ambition is to use that position to create a leading Nordic wealth manager, not by reinventing wealth management, but by scaling what already works. To wrap it all up, I will leave the stage to our brilliant CFO, Rasmus. Thank you for listening.
Thank you, Håkon. Having heard from our CEO and from each of our business and product areas, I will now summarize how this translates into delivery on our ambitious financial targets. We will continue to grow income from our broad and diversified platform. We will unlock further productivity gains with disciplined cost management, and we will maintain capital efficiency, enabling continued delivery on our dividend policy. As you have seen throughout today's presentation, we have a strong track record on delivering on our financial targets. This track record, together with the plans outlined in our business areas today, gives a solid foundation to raise our financial targets. Return on equity remains our overriding target. Our raised ROE is ambitious, yet within reach. We aim to reach the target level towards the end of 2028, with full effect from fiscal year 2029.
There are three main drivers to improve the ROE to above 15%. Firstly, continued profitable volume growth supporting higher net interest income. Secondly, we maintain our ambition to grow net commission and fees income by more than 9% annually, reflecting increased contribution from capital-light income. Third, we will continue to focus on cost discipline and enhanced productivity. The cost-income ratio remains an important KPI to us, and we lift the ambition to below 38% toward the end of 2028, with full effect from fiscal year 2029. These drivers, in addition to foundation of solid portfolio quality reflected in a continuous low cost of risk and a robust capital position, provide the basis for our delivery on the ROE above 15%. This assumes normal market condition towards 2029. For 2027 and 2028, we maintain our targets of ROE above 14% and a cost-income ratio below 40% for the full years.
Through 2027 and 2028, we expect gradual progress toward the raised financial targets. Looking at our income composition, we have developed an increasingly diversified revenue platform with strong contribution across our different income streams. At the same time, net interest income remains the backbone of our revenue base, accounting for close to 70% of our total income. We expect NII to continue to grow and remain an important source of earnings going forward, complemented by continued growth in capital-light customer income and other income streams. This combination gives us a strong and well-diversified revenue platform going forward. Three drivers stand out as we look towards 2027 through 2029. First, we remain a mass- market champion. Market-leading positions in both the personal and corporate customer segments, delivering profitable loan growth, strong deposit momentum, and growth in capital-light products.
Second, our Nordic platform, as a leading Nordic investment bank with global reach, gives us a broad product offering across geographies and industries, and we are further extending our strong Large Corporates platform across the region. This Nordic ambition is one of our strongest arguments for continued growth. Third, we hold a leading position in savings and investments, benefiting from structural growth drivers across the pensions and savings market, with growth fueled by recurring net flows, as Håkon just outlined. As you heard earlier today, we hold the number one position across personal customers, SMEs, and large corporates and international in several industries, and our Nordic ambition, reinforced through the Carnegie acquisition, enables us to enhance growth even further. We continue to deliver consistent and profitable volume growth across both personal and corporate customers.
NII has remained resilient across different interest rate environments, supported by the strength of our customer franchise and balance sheets. With the Norwegian key policy rate expected to remain at favorable levels, we see a solid foundation for NII going forward. I would also like to highlight that 95% of the mortgage loans to personal customers has a floating interest rate that can be repriced with an eight-week notice period. We maintain our ambition of 3%-4% annual loan growth through the cycle, supported by strong market positions and strengthened Nordic presence. At the same time, being a full-service bank allows us to create value beyond traditional lending and deposits, deepening customer relationships and furthering profitable growth, as Maria and Marianne illustrated by their number of products per customers earlier. The diversified product platform broadens our growth drivers beyond lending.
Net commission and fees has grown consistently with an annual average growth of 14.6% over the last five years. Investment banking is our largest capital-light contributor, benefiting from our robust Nordic platform and strong collaboration across the group. Wealth Management holds a strong market position with high shares of recurring revenue and structural tailwind, such as the ongoing shift toward defined contribution pensions and continued growth in savings. Sale of insurance products show growth in both life and non-life insurance, and we continue to see growth opportunities through cross-selling to existing customers, particularly within the mass market segment. In addition to what can be seen on the slide, part of the customer income from life insurance is recorded under other income, while customer income from FICC products in DNB Carnegie is reported under financial instruments. Both continue to be strong contributors to our income base.
This diversified platform strengthens our ability to connect Nordic clients and investors with global capital markets. With broader capabilities across investment banking, asset management, and insurance, we now see a stronger foundation for continued growth in capital-light income. Moving on to the Carnegie acquisition, where we are largely on track to deliver the NOK 800 million synergies communicated earlier. The synergy effects are not linear or evenly distributed across areas, and have sometimes been realized in other areas than originally anticipated. The integration is planned to be completed by the end of 2027, as we heard from Alex, and gives us a strong platform for continued growth and income synergy capture. We continue to believe in long-term growth ambition of more than 9% net commission and fees. This is the testament to the longevity of these synergies, also beyond the initial first couple of years.
The team's ability to deliver on synergies has accelerated in 2026, as underpinned by the development in net commission and fees related to investment banking and asset management, as well as growth in income from securities finance. Estimated synergies for the last 12 months are approximately NOK 460 million, and we expect to realize more than NOK 800 million in annual synergies by the end of 2028. We have also begun realizing additional synergies related to the Nordic Corporate Banking segment. The initially reported NOK 1 billion profit contribution from Carnegie is integrated and distributed across entities, countries, and business lines. As the income from synergies is increasingly integrated into our business, we will not be specific about these elements in future external reporting. The strategic rationale remains strong, with DNB Carnegie serving as a key enabler for our Nordic ambition through intensified collaboration between Wealth Management, DNB Carnegie, and Large Corporates.
The new DNB Carnegie continues to be an important contributor to growth in commission and fees. Now moving on to costs. We remain firmly focused on continuous work with cost efficiency across the group, underpinned by a financial target of a cost-income ratio below 40%, with further ambitions in coming years. Increasing wages and price growth, combined with strategic investments, have put pressure on our cost levels. This has been countered by disciplined cost management. The result of this cost discipline has ensured a cost development at or below inflation, resulting in the positive jaws seen on the left. As you've seen throughout the days, by each area's efficiency focus, it has resulted in a reduction of FTEs, as illustrated on the right, amounting to 8% since our last Capital Markets Day. This, in sum, has more than offset the staff increase from the Carnegie integration.
This strong efficiency focus will be upheld also going forward to increase our competitive strength in the market. This was most recently evidenced by the reductions of 400 FTEs in tech and services. The one-off effect related to this is expected to be approximately NOK 225 million and will be taken in connection with Q4. At our Capital Markets Day in 2024, we announced gross cost reduction initiatives of NOK 3 billion by 2027. These reductions have already been realized and exceeded, yet another testament to our culture of focus on cost. Key measures include FTE reductions in staff and support functions, broader initiatives cover technology and AI-enabled modernization, and process simplification, as presented earlier today. We also reduced costs by continuous work on optimizing and renegotiating rental costs, supplier agreements, and reducing use of external consultants. Cost efficiency remains high on our agenda, and we are lifting our targets further.
We remain committed to our cost leader position in the years to come and have identified further gross cost reductions of approximately NOK 4 billion by year-end 2028. This plan is in line with our new cost-income targets from 2029 and supports continued competitiveness while investing in future revenue growth. We see further potential within AI efficiency, as has been mentioned by many today. One good example was mentioned by Marianne on the KYC process. The capabilities we've built through this redesign process can now be applied and replicated on other value chains. Our procurement optimization initiatives continue focus to reduce external spend. Operational transformation is essential in order to realize value from tech investments and AI. This was exemplified in the reinvented mortgage journey, where we focus on standardization and reducing the complexity of our organization and processes.
In combination, these initiatives set us up with a solid foundation to further scale on our profitable growth. Moving on to asset quality. We have a solid and well-diversified portfolio, with 95% being either low or medium risk. 48% of our portfolio is toward personal customer segment, of which 88% is mortgage lending, with very limited exposure towards unsecured credit. Our cost of risk remains low and has gradually come down over the last 15 years as a result of portfolio rebalancing and prudent risk management. This is consistent with what Harald and Marianne showed you earlier today, a diversified, well, high-quality portfolio across industries and geographies, with no single industry or segment amounting to more than 10% of EAD. As Harald has also showed, our international exposure outside of the Nordics is based on selected industries where we've built strong competence over time.
Our solid capital position and continued strong profitability is further supported by the resilience in our portfolio. Our CET1 ratio was 17.3% at the end of the third quarter, being 100 basis points above the FSA expectations, and provides flexibility for continued growth and shareholder distribution. The last EBA stress test from 2025 once again confirmed our strong resilience. In the adverse scenario, our CET1 ratio decreased by only 33 basis points, far less than our European and Nordic peers. Our credit rating from S&P and Moody's are also a testament to our strength among the best-rated banks in the world, and have also given us access to favorable funding terms. We remain committed to our dividend policy, supported by our strong capital position, built on our proven ability to generate profitability consistently over time.
Since 2017, we've generated NOK 283 billion in capital, and more than 70% of this has been returned to our shareholders, either through dividends or repurchase of shares. The retained profits provides capacity for continued growth and strategic investments. We reiterate our dividend policy of a payout ratio above 50% and an ambition to increase nominal cash dividend per share year-over-year. We also continue to use share buyback as a flexible tool for managing excess capital. DNB Livsforsikring, our life insurance company, is in a solid position with a solvency ratio of 278% and continues to support our group dividend capacity. The combination of the guaranteed portfolio and runoff with reduced interest rate sensitivity and a strengthened position within defined contribution pensions continue to provide a solid base for increased dividends and capital repayment in the coming years.
We are on track to deliver on the NOK 30 billion distribution plan towards 2035, as announced at our last Capital Markets Day. To date, we have distributed NOK 4.3 billion in ordinary dividends, in addition to extraordinary capital repayment of NOK 3 billion. Just last week, we received approval for another NOK 1.5 billion in capital repayment, which will be paid out and have a positive capital impact in the fourth quarter. The robust solvency position supports continued dividends and capital distributions, and DNB Livsforsikring maintains its dividend policy of paying out 100% of net profits when the solvency ratio is above 140%, subject to NFSA approval. Summing up today's Capital Markets Day, we are well-positioned to deliver on our new ambitious financial targets, with ROE above 15% as the overriding target towards the end of 2028 and beyond.
Our strong market-leading positions across personal and corporate customer segments, together with our increasingly and diversified product offering, provides solid foundation for continued income growth. We will remain cost-effective and work diligently on cost management to ensure further productivity gains, as illustrated by our new cost- income target below 38%, which we expect to reach toward the end of 2028. Finally, we will continue to maintain capital efficiency and discipline, and with that, we are well-positioned to deliver on our dividend policy. I thank you for your attention and now open up for Q&A.
[inaudible] Q&A. Just a moment. We are now ready for our Q&A session. We will start with our audience here in London. Please raise your hand, and we will bring you a microphone. Before asking your question, please state your name and affiliation.
Riccardo Rovere. It is Riccardo Rovere here from Mediobanca. Two questions, if I may, then I will leave the floor to my colleagues. The first one is, if you can show slide 11 or the very last one with the targets, can you please clarify if those targets are set for the year 2029 or the year 2028? Because the slide is not very clear. I understand those are for year 2028, and it makes a lot of difference given that 2029 may be seen as a bit far away. 2028, we will start looking at 2028 in six months. So it is a completely different situation. The second question I have is on the ROE target of more than 15%. I imagine that this 15% is calculated as the ROE you show in your fact book. That is my wild assumption.
If you calculate the ROE that you have been delivering, using your numbers in your fact book, since Q3 2024 when you launched this Capital Markets Day, you do a brutal average, and you end up at more than 16%. So I was wondering whether in this more than 15%, there is some room for some degree of cautiousness or prudence or anything like that, because you are already delivering more than 15%. So I was wondering why not setting it at least 16%. Thanks.
S o in terms of our delivery over time, we have been clear on our ROE target above 14%. We have been in a favorable NII environment, and we also foresee that some of these are coming down over time, as our future rates confirm. In terms of what we are building now, we are building a more solid and broader diversified income base in terms of building our net commission and fees while still having the strength of the NII. So, we continue to deliver above 14% within this period and expect to deliver above 15% for the full fiscal year in 2029 and beyond. We aim to reach that level towards the end of 2028. So it will not be for the full year 2028, but we expect to deliver it toward the end, and thus achieving it for the full year 2029.
[inaudible]
We are not—y eah.
It would be toward the end, right? To giving you the acceleration, the power, seeing that we would be able to deliver that in 2029.
I t is not 2029. It is 2028. Toward the end of 2028, but it is 2028. It is not 2029.
Correct. But we are not saying fiscal year 2028.
[inaudible]
Yes.
I think maybe add a little bit of color on our thinking on how we are setting the targets, given your comment that we have already been at higher levels than this. I think we have communicated this earlier also on Capital Markets Day, that we are working towards levels of profitability that can be achieved over time consistently. We have been saying for years, minimum levels. It was minimum 13%, minimum 14%, minimum 15%, then we have had a high cycle of rates that were not necessarily intended to stay on. Competition has acted at the same time as inflationary pressure on cost, making some of these elements of a more temporary nature. When we are now pointing towards above 15%, this is not to do with the macro environment.
This is to do with our long-term effort in terms of growing our capital-light income faster than our volumes, broadening our activity across the Nordics. These are the reasons for why we are lifting the thresholds as such, which is something to be seen as an over-time ambition and a target. This is why we are communicating it. Now, does it mean that it is out of the question that we will be there before? Of course, we will not say no to that. But I think we have proven as well before that we are certainly not looking at the target we are setting towards you and the rest of the market as a minimum, but all the time striving to deliver as best we can while also being competitive and growing our business to its customers.
Yeah, hi. Here is Sofie from Goldman Sachs. My first question would be on net interest income. You guide for 3%-4% loan growth, but maybe you could just talk a little bit more about which parts of the business the loan growth will come from. Where do you see better growth rates, and where do you see maybe slightly softer growth? Also, in one of your slides, you expect rates to come down. How will that impact your NII outlook and also the lending growth? My second question would be on capital. You maintain the over 50% dividend payout, but clearly there is quite a lot of potential to upstream dividends from DNB Livsforsikring. You potentially could do some SRTs. How should we think about the excess capital deployment in DNB?
How do you think about organic growth versus inorganic versus share buybacks and special dividends? Thank you.
Thank you, Sofie. I will do the first, and Rasmus can take the second. Related to our growth target over time of 3%-4%, we are not specifically guiding per customer segment. As I am sure you have seen, in the recent year, more growth has been coming from large corporates than we have seen across personal customers and SMEs. Of course, having leading positions in personal customers and SMEs in Norway, we are somewhat confined by the growth pace in the market, and this has been slower in recent year than previously. But we will always prioritize to grow profitably as much as we can in these segments because of the systemic value of gaining a stronger position.
I would add also, as pointed out by Marianne, that we feel that with the two-brand offering that we now have towards personal customers and the innovation and development that is happening there, that our offer is strengthening alongside what we are doing also in SMEs. But there will always be capacity prioritized to be invested into these markets for profitable growth. Beyond that, Large Corporates is a more volatile growth. It is a large portfolio, or not volatile is not the year, but larger transaction, not the word. But larger transactions where we use the originate-to-distribute model with a rapid turnover of capital. But this is a growth platform across the Nordics, across international industries, as Harald talked about. They are all of them growing, and this growth platform will enable us to deliver on profitable growth longer term, 3%-4%.
With higher rates in Norway, we see signs of the housing market slowing somewhat down in Norway, potentially leading to somewhat slower activity there. In SMEs, we are waiting for the construction activity to come back, which was a meaningful part in the SME growth. We are not guiding specifically, but it would not surprise us if also for the near-term period, more of the growth will actually be coming from Large Corporates and International. You asked for the impact on our NII when and if rates are cut, which is the expectations of economists at the moment. We cannot guide on future impact from rate changes, as this is dependent on how we actually change pricing towards customers. But we can refer to historical impacts, where increasing rates have had a positive impact and lowering rates have had a negative impact.
This is a fair reference for also what is to be expected in the future.
Very good. On the capital side, as mentioned, our dividend policy remains in place. Your question, of course, also related to organic, inorganic growth. Our strategy is founded on organic growth. We have seen some successful bolt-on acquisitions with, for example, the Carnegie acquisition, Fremtind, and others. Beyond that, our primary strategy is organic. Thus, beyond the dividend capacity, we aim to optimize our capital position also through share buybacks, as we have done throughout the year and as recently as announced in our Q3.
Great. Sheel Shah, JP Morgan. I have got two questions, please. First, on the cost outlook. You are targeting NOK 4 billion of cost saves, gross cost saves. Can you talk about the net outlook for costs that we should be thinking of? A lot of these growth opportunities require investment, probably upfront. So the shape of the cost path would be helpful. Then secondly, you have mentioned profitable loan growth several times. Clearly, lending spreads are under pressure at the moment. There is a lot of competition in the market. When you think about profitable loan growth, are you looking at the ROE of, essentially the marginal ROE, i.e., just the lending income, or do you consider the product penetration, i.e., for sets of products per mortgage customer when you are considering the ROE when you are defining this profitable lending growth?
I'll do the second, and you can do the first. Profitable loan growth across segments, of course, you can see that all our customer segments are profitable if you consider them in segments as a whole. I would say the pattern of business and the operating model is slightly different whether you think about the business towards consumers versus large corporate customers. But across the segments, I should say, it's the customer profitability more than the product profitability that we are looking at. Still, for personal customers, it's the systemic value of having a market-leading position across several regions, having a broad product penetration that is important for further scaling. But again, the profitability of the portfolio overall. As we grow into mid-size companies, large companies, the transactions are more capital-consuming. We would look at both the profitability of the transaction itself as well as the customer profitability.
As an example, Harald and his team, they will, on occasion, invest into a new relationship in Sweden, for example, and potentially do a first transaction which is below the targeted level with an ambition to grow the relationship over time in a not too long period of time into a profitable area. As Harald showed you, already the increased business that we've taken on this recent year, even with a lot of new customers, profitability there stands at 18%, which is the same level as the existing portfolio. So the magnitude of having had to invest have not been as big. We did say when we raised the targeted return on equity to 13%, 14%, and now 15%, that we will not move the hurdle for a specific transaction.
We're still looking at 12% for a specific transaction that may be justified either because it is a new relationship we invest into or because there is a broad cross-sell with the client as a whole that makes the relationship in the total a profitable relationship for us.
In association with the gross cost, with the NOK 4 billion cost target by the end of 2028, there's a broad set of areas where we aim to achieve that. Some of those will be associated with investments into technology, redesigning value chains, AI, et cetera. So there will be costs associated with achieving those efficiencies. That being said, we don't guide on net cost levels, and thus we have the ambition. You have to look at our track record, proven track record over time on working diligently on our cost in sum.
Did you have a follow-up—
Sorry.
—on the NII? You need the microphone.
Thank you. Just a follow-up on the broad customer profitability point. Would you be happy for lending margin, that is, lending spreads to continue to decline? Is that what you are assuming in your plan when you are thinking about, for example, mortgage margins?
We have been very clear over time that we are focusing on profitability over growth, and I think we have shown you over the years that we are quite disciplined when it comes to reinvesting our capital into future business with our customers, which is one of the reasons why we have not seen the highest growth in the personal customer area at the moment. Now, we see that there is more than price that matters for a competitive offering. We have competitive pricing across our customers and are able to do profitable business at the levels that we see today. But we are clear on prioritizing profitability.
Hi. Thank you for taking my question. Shrey Srivastava from Citi. The first one is specifically again on Personal Banking, and the picture you've sort of painted is of a very resilient customer franchise, which, if anything, should continue to gain advantage over its peers with some of the tech and AI initiatives you've talked about. Given this, how subject are you to market movements and the movements of some of your competitors on pricing, or do you not necessarily need to follow the market to the same extent that you did historically towards the end of your plan? My second question is on fees, where you've mentioned this 9% through- the- cycle number, but you've obviously done close to a 15% CAGR from 2022.
If we were to look from the point of time starting today, would you be comfortable saying that given normal market conditions, you can do a 9% CAGR for the next three to five years? Or is this something we need to be looking at over a longer time horizon? Thank you.
On the first point on pricing, I think the main thing to look at is the competitive environment in Norway, which is competitive with a large number of banks being active, but it's also a rational market. With a rational market, that means that all of the sizable players have return on equity as their most important target. The price is one important feature that matters to customers, and again, I reiterate, we have competitive pricing towards our customers, and we are not a price setter, which is very good for customer that they benefit from competitive pricing. But there is also a sizable room to maneuver within to manage the profitability and your pricing in a disciplined manner.
I think the team has done a very good job over the past year being somewhat disciplined, but delivering growth in the sector, in particular strengthening our position towards the young customers, because we believe that is a very key position to hold in an environment where customer behavior and expectations are changing at an accelerating pace.
Relating to the 9% NCF ambition, as you have seen today across the presentations, we have a broad range of capital-light income sources, be that from insurance. I mean, you see the breadth of what has been presented. Clearly, important drivers are within the Wealth Management area and Investment Banking, and we see the possibilities of that delivering 9% also going forward with the basis of coming years. Of course, this is assuming normal market conditions and that there are no big downturns in the market, applying actually both to Investment Banking and Wealth Management.
Keep in mind, 14%, 15% CAGR is not pro forma numbers, so it includes the Carnegie acquisition.
Hi, this is Martin Ekstedt from Handelsbanken. We had return on allocated capital numbers for most of the divisions in this presentation, and they range from, say, 18%- 30%, I believe, which is great, but it is also all above the new 15% target, right? This tells me there is some unallocated cost and/or capital somewhere in the group. Could you, say, bridge the 15% return on equity target now into divisional targets for us, just to let us know? You say the 15% target is ambitious but achievable. In which divisions is it more and less ambitious, if you see my question?
I do not think we will be able to help you, Martin, specifying that across each of the segments. I would say that we have high ambitions across all of the customer segments, but their positions vary in nature, if you will, where on the SME side and personal customer side, our anchor and main markets are the Norwegian markets, whereas Large Corporates and Investment Banking, alongside Wealth Management, has a broader geographical scope, and these are areas where we are pointing to the largest growth potential. We have not split out for you where are we expecting the bridge on ROE to be built, actually. For your first question related to the return in each segment compared to the ROE for the group, there is a limited amount of unallocated cost, but there is the life insurance business, which is not a party to a specific segment.
There is also ancillary businesses where we are a part owner in companies like Fremtind and Vipps and Stø, and there are some other sort of smaller bits and pieces and shares that makes up for the difference between the group ROE and the customer segments.
Okay. Thank you.
Thank you. This is Rebecca from Bank of America. Three questions, please. My first question is a follow-up regarding your reply on how you manage competition in Norway. Competitors possibly have been investing in deposit, for example, and conducting deposit campaign, and you have delivered, as you said, a better-managed NIM in Q3. Can you give us some examples of how exactly do you maneuver and deliver that better NIM despite fierce competition? Because as I understand, it is very easy to switch mortgage banks, for example, in Norway. So, yeah. That is the first one.
Well, I think when I say and when we say that there is more than price that matters, we have the value of our offering. We have the quality of our service, our interaction with customers, where we use our distribution network that I talked about, combining the physical interface alongside the most frequently used digital interfaces, and how proactively we talk with our customers and pursue opportunities such as, for example, the journey when you are buying a new apartment or a new home. This is typically a journey where we have a competitive customer journey, where we pursue and follow through with customers when they are in this important position.
Beyond that, I would say this is about the work that is done by our advisors and the team every day in making sure that customers are happy, being proactive with regards to advising them to move their savings around if there are opportunities for better accounts, so on and so forth. It is really about building a level of trust and value that helps them making the choice of staying with us. You are right in saying that it is very easy to move your mortgage in Norway. Loyalty as a larger trend is decreasing, so this is part of the environment we are working within, but still with the results that we have been able to deliver.
Thank you. My second question is regarding capital. You have reduced your CET1 target in 2029 by around 40 basis points to 16.3%, which is roughly in line with the current regulatory environment, meaning you probably are going to run a thinner buffer than where you are now. Is it because in your negotiation with Norway FSA, the trend has been on the positive side for their capital requirement, meaning there could potentially be a capital tailwind from the regulatory perspective?
There is no guiding. We do not guide on buffer above the regulatory expectations. I am not quite sure where the 40 basis points—
The reason why it is a different number, it is because the expected and required level has changed from what was communicated on our previous Capital Markets Days. But 16.3% has been the level that has been communicated by us and the regulator for some time. So we are communicating what is the expected and required level, and we are saying we are likely to hold a buffer above and beyond that, but we are not specifying how large that buffer should be. But there is no change in the lines of our communication around capital.
Sure. Thank you. My third question is regarding your restructuring cost to be booked in Q4. You mentioned in the press release this morning you are booking NOK 225 million restructuring cost, versus previously you were guiding for NOK 200 million for the whole year. Can I ask, is this number included in your cost target already for the whole year, or is it excluded?
The cost target was related to DNB Carnegie integration cost. The NOK 225 million that we announced today are related to specifically to the 400 FTE reduction. This reflects the composition and the position of the FTE reduction within that announcement.
Our target of keeping our costs less than 40% of our revenue, I mean, that is a long-term target. We are not commenting specifically on that when we have one-off or particular elements that impacts our cost.
Thank you.
Hi. Namita Samtani from Barclays. My first question. At the beginning of the presentation, you stated you wanted to grow personal and SME customers. I just wondered on the personal side, what type of customer is it that you actually want to grow? Is it the private banking side, like the top end, or is it the customer just above mass market? I am just interested to know what is the most ROE-accretive customer for you on that side of things. My second question, I was just wondering if you were willing to give us your exposure to data centers. Thank you.
Thank you, Namita. In personal customers and Private Banking, we will grow our customers in all segments. We are a market leader across and are not specifically targeting particular segments other than, I would say, the young generation, because we think they are so important for our future as such. But we are a bank that will bank all different segments and aim to be competitive across. With regards to the exposure in our data centers, we have a limited exposure to technology as such, and we have been cautious and have prioritized exposure to hyperscalers and not neo-clouds.
Thank you.
Hi. Thank you. It is Isobel Hettrick from Autonomous Research. I have two questions, please. First, clearly you have met your DC pension AUM target that you set at the prior CMD a lot earlier than expected. So I was just wondering what worked better, what was more supportive than you had originally planned for, and do you see these as maybe more short-term cyclical supportive factors or longer-term enduring structural factors which you have embedded into your new target going forwards? My second question is around mutual fund cross-selling or penetration to existing personal customers. I think you put on the slide that around 25% of your mortgage customers have mutual fund savings agreements. Where do you think you can realistically increase that penetration to over the next couple of years, and what will be the main levers for doing this?
Is it basically customers are not really aware of the current products you offer, so I do not know if you have a more proactive AI bank, as you were talking about earlier, that will help? Or do you think there is some more product gaps you need to close to help increase penetration? Thank you.
Thank you, Isobel. Very good questions. Yes, we have reached the target on defined contribution ahead of time, and there are several areas that develop faster, I think, than we had expected. Firstly, I would say our leading market share towards corporates and pensions and how many employees they have. That is a consistent provider of net flows into the basket of assets that we hold under defined contribution. Of course, markets have been performing well, so you have two sort of levers/accelerators that contributes to this delivery. With regards to penetration on personal customers for mutual funds, you can relate what Maria showed you to what Håkon also talked about, that the market is underrepresented in terms of savings in capital markets.
This is a trend that is moving long term, both from reforms around development of products where we have a share savings accounts, where they are now including bond products into the portfolio that you can save without being taxed immediately. More importantly for us, I would say, leveraging our distribution capability as well as the innovation on our products in this area is what we believe to be the future for success. Håkon talked about how we are now making it easier to talk to your portfolio using AI technology. Making investment easier is really an area where we are scaling our initiative and efforts with a full commitment from both Maria and Håkon to deliver on this going forward. We do work on literacy. We do work a lot on communicating. We have conferences that we arrange across the country every year.
We even charge a small fee that we pay to charity to arrange it because it is so popular, and they are always sold out. We will just keep leveraging all of our different tools in order to continue to scale on this trend because it is good advice, and we have good products to offer.
Okay. Thanks. Thanks again for taking my question. It is again Riccardo Rovere from Mediobanca. On the cost side, the slide you show, Rasmus, on the NOK 4 billion, there is one bar which is NOK 3.3 billion, the dark bar, and the gray bar, which is NOK 4 billion. Now, the cost savings initiatives, 2027 and 2028, do they amount to NOK 4 billion, or is the delta between the NOK 3.3 billion and the NOK 4 billion?
They amount to NOK 4 billion.
Okay.
This includes also the recent 400 FTE reduction, which will take effect next year.
Perfect. Okay. This is 10%, roughly 10% of the cost base, roughly. This is the starting point. Could you share with us what is the level of inflation that you plugged in all these numbers? Because wage inflation is about 3.7%, 3.8%. What is the level of inflation?
We base ourselves on DNB Carnegie macro outlook inflation on all the respective numbers in terms of growth figures, inflation, et cetera.
What, which—
Wage inflation has been around a little bit higher than you are saying.
No, no. Inflation, not wage.
Oh, general inflation.
Wage inflation is in this slide.
Yeah.
Is in the pack of slides. I am just wondering inflation.
Inflation is also in the pack of slide under my macro Norwegian slides, moving towards 2.6%, I believe, in the forecasting period.
Okay. Okay. Thanks. Very clear. The other question I have is on DNB Liv. Is the overarching target the NOK 30 billion or getting closer and closer to 140% Solvency II? You have been paying NOK 9 billion so far, more or less.
Norwegian kroner.
In Norwegian kroner, yeah. You are at 280% Solvency II, which is the 140% times two. It looks like that the level of capital repatriation from DNB Liv is not allowing to get you anywhere near to the 140%, but not even to 100%. I was wondering, is the number that we should be looking at the NOK 30 billion or getting closer to 140%? If it is NOK 30 billion, why NOK 30 billion and not NOK 25 billion or NOK 35 billion, which in any case will not make any difference because you will not get to nowhere near to 140%? The last question I have is, and the capital, maybe this is a question for Harald or maybe Marianne, is there anything on SRTs, ways to optimize RWA absorption or capital absorption or anything like that plugged into all these numbers? Thanks.
Can I, Liv? Now, with the Liv, it is an important contributor to our ability to upstream in terms of dividend capacity. We continue to work with the Norwegian FSA to have extraordinary dividends paid out, as was recently announced just by the announcement last week, or the information we was given last week, and we will continue to work with that going forward. I mean, the figure in terms of our target is an illustration of what we aim to upstream from Liv in the given period.
[inaudible]
Correct.
[inaudible]
Correct.
Yes. The number you should be looking at is NOK 30 billion.
Let's take a few questions from our online audience. We have quite a few of them. [Ole Alexander] [inaudible] has a few questions, and the first one is, "In its latest annual report, published in March, DNB stated that few companies had achieved significant gains from AI investments. What has changed since March?"
I cannot say I remember the reference in the annual report. I think it was more generally to a market research that was done more broadly. I think for us today, what is important to comment upon is our efforts, and we see that we generate results across our initiative from deploying AI as a technology in several areas like we've talked about it. We see that we are able to grow more efficiently. We see that our customers are more satisfied from using AI. We see that we're able to redefine and substantially increase efficiency in end-to-end processes like we've talked about for KYC. Beyond that, investing in our people and working with our culture is still the key to continue to generate positive results and value from AI.
I think our message is today, and mentioned by several of our colleagues, that we have embarked on that journey. We see promising results so far, but we're still only early in that journey that we look forward to continue.
Thank you. Moving on to the next question from our online audience, Thomas Svendsen in SEB. The first one is, "On asset quality, should we be concerned about the residential property buildings equipment segments, given that some players are struggling here amid the higher interest rates?"
No, you should not be. I mean, there is nothing new from our side in terms of property equipment builders. Of course, it's a known fact that the construction segment of the market, in particular in terms of house building, has been challenging for a while. But structurally, we see no deterioration in any systematic manner across our portfolio, so there are no new signals. But we always remind you of the fact that the company-specific risks are difficult to detect, but we have a broad and robust and well-diversified portfolio across sectors.
Thank you. Thomas' second question, "Could we expect excess capital being used on add-on acquisitions outside Norway in the planning period?
There's no change to our messaging there either. Our primary strategy is organic growth, and we will work to optimize our capital position through dividends and share buybacks.
Thank you. We have a question from Herman Zahl in Pareto. "On the DNB Liv ambition of NOK 30 billion, given the strong results and dividends so far, solvency, higher rates, and the supportive regulatory changes, are you more confident in the target than when you set it, and do you see upside to the amount or the timing? Is there anything that has moved against you since then, in your view?
There is no negative change at all. The change, if anything, is positive. As mentioned, we have a more stable portfolio in terms of interest rate robustness. We have not changed our target for the NOK 30 billion, and we stand strong within that.
Thank you. Back to the room.
Thank you. [Jacob] from Bloomberg Intelligence. I just had two questions, I guess. First, on the asset management and wealth business. You showed some of the screenshots from your apps and your customer metrics there. Can I ask, how do you see yourself against the other platforms, like a Nordnet, Avanza? Does your capability start to overlap, or are you still distinct products, and where customer flows are going? Also, on the wealth side, this comment around the 25% of mortgage clients being in mutual funds, are the other 75% mostly not invested or mostly with competitive providers? Then if I could just confirm, I think the risk-weight floors on RRE and CRE is expiring on the 31st of this year. Have they been extended, or can you just confirm that they are extended? Thank you.
Thank you, [Jacob]. Avanza is primarily an operator in Sweden, but we do follow very keenly what they are doing, and Nordnet is more pan-Nordic. We have overlapping capabilities, but there is a history of us being stronger in the broader mass market and Nordnet having focused more on the active investors. Now, I think for a while, we have been trying to move into each other's areas, and we increasingly see that we have overlapping capabilities. We do have our challenger player in the Swedish market with Montrose, who is growing faster than any and being very ambitious and scaling innovation very fast. Our targeting also with what Håkon showed and deploying AI to make investments easier is increasingly now developing features for what we call wealthy individuals, not necessarily high net worth, but the more active and wealthy individuals.
The other 75%, roughly, I would say they are not invested. We probably have clients who have mutual funds with us and also with competitors, but the under-penetration of the market that Håkon showed you, and I believe I also did in one of my graphs, shows you that a large share of the market is actually not invested and do not save in that part of the market. Risk-weight floors expire. There is nothing new to report beyond saying that the FSA has recommended to the authorities that they remain in place. A decision is yet to be taken.
Yeah. Hi. Thanks a lot for taking my second question. Just one question. On the cost-to-income ratio below 38%, if the revenue environment deteriorates or inflation comes in higher than expected, would you consider additional measures to definitely deliver on your cost-to-income ratio, or is it more just a function of where you see revenues and costs going over the next three years? If that makes sense.
It makes sense. I think we have set ambitious targets for our return on equity and our cost base versus our revenue, and I am sure that you can see that upping the gross results from cost initiatives from NOK 3 billion to NOK 4 billion needs us to take more measures than we have in the past. We will not comment specifically on what-if scenarios. I mean, these are based on an environment which we, I think, qualified as normal markets. I mean, no large hits of any kind. Beyond that, I think we have tried to show you that we have a robust growth platform across various sectors and geographies, that we have a diversified fee platform and several levers to pull, as well as the fact that we are operating in a very attractive market, given everything that is going on in the world.
Having said that, alongside our long track record of actually delivering on our targets, I do not think that we can comment beyond that more specifically, Sofie.
Thank you.
We have another question from an online investor. Please repeat, and sorry, this is from Feyi Awofala in PGIM. "Please repeat plans for excess capital. Are you awaiting any model approvals from Norwegian regulator, and how can we expect capital requirements evolving over the next few quarters?"
Well, what manages our capital situation is really the activity and capital-generating activity in our business alongside the dividend policy, and our dividend policy remains unchanged, where we will upstream and pay more than 50% of our results as cash dividend with an aim to increase the dividend paid per share per year. We optimize share buybacks as a tool to optimize the capital level and to ensure that we pay out excess capital over time. The expected and required level from regulator is 16.3%. That includes 100 basis points Pillar 2 guidance. We have said that we are likely to hold a buffer above that, but not been specific about the amount as such.
Thank you. Are there any further questions in the room here? No? It doesn't seem to be the case. With that, we have reached the end of today's Capital Markets Day. Thank you for joining us, everyone. We very much appreciate your time and interest in DNB. With that, we wish you a pleasant rest of the day.