Welcome to the Enity Q1 2026 report presentation. For the first part of the conference call, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound five on their telephone keypad. Now I will hand the conference over to CEO Björn Lander and CFO Pontus Sardal.
Good morning, everyone, and welcome to Enity and first quarter 2026. This is Björn speaking, and I am here today together with our CFO, Pontus Sardal. It has been a very eventful first quarter, marked by continued geopolitical uncertainty, not least due to the ongoing conflict in the Middle East that escalated at the end of February. When we last met around the Q4 report, market sentiment was quite optimistic. We expected housing markets in Sweden and Finland to recover, supported by further rate cuts, and anticipated that Norway would begin its rate cutting cycle. Since then, the macro environment has shifted materially. Geopolitical uncertainty has pushed up energy prices, financial markets have become more volatile, and market rates have reversed course and moved higher. Consumer confidence across the Nordics regions remains subdued.
In Norway, Norges Bank is now expected to raise rates at one of the upcoming meetings, these factors together risk delaying the recovery of the housing markets. Despite a challenging external environment and continued weak housing markets, our portfolio grew by 9.5% or 8%, adjusted for FX. In the first quarter, we have also completed the acquisition of Uno Finans. Uno is fully consolidated from March, this resulted in a profit of SEK 116 million due to a revaluation of our previous holdings in Uno. Uno delivered circa SEK 10 million in operating profit in March, Uno will contribute with a strong profit for the group moving forward. As previously communicated, the transaction resulted in a temporary shortfall to our CET1 capital targets.
If you look at the net interest income, it was pressured by timing effects from fewer calendar days, hedged related accounting reclassifications, and timing of interest rate changes. Pontus will get back with some more details, but we expect these timing effects to reverse and contribute positively already in the second quarter. The Norwegian krone has strengthened during the quarter, but it started at a very low point in the beginning of the quarter, so there is a lag between volume growth and net interest income, which brought the net interest margin down in the quarter. It is important to keep in mind if Norwegian krone stays at current level, it will have a positive impact on the net interest margin in the second quarter, as well as the net interest income.
Looking at credit losses, they remain elevated, but low, and we expect them to stay elevated this year, reflecting a still subdued housing market. We posted at 24 basis points in the first quarter. Finland, last but not least, continue to deliver a very strong result in the quarter. If you look at the different market and the development, Sweden grew by 5%. It is disappointing, I would say. We did expect a better momentum in Sweden when we entered 2026. We have seen low market activity in the beginning of the year. Activities picked up a little bit towards the end of the quarter.
We saw higher redemptions in Sweden during the quarter, and we believe this is driven by higher activity on the remortgage side ahead of the New Mortgage Rules that came into force 1st of April . At the same time, new transactions slow down as the market awaited higher permitted loan-to-value. Looking at Norway, they continue to deliver a very strong lending, up 10%. It's obviously a very strong start of the year. Prices continue to rise, and time on market is shortening, while transaction volumes on the other hand, are slightly below last year's levels. In Finland, we saw a continued strong growth. The housing market, however, is weak and somewhat tentative. Transaction volumes are clearly below last year's level. Prices are up slightly and time on market remains elevated.
Despite all of that, a very strong internal performance, loan book up 49%. Margins are expected to come down somewhat due to a higher share of low-risk customers. As I mentioned previously, the quarterly pressure is artificially high due to the stronger Norwegian krone. The new mortgage regulation in Sweden came into force first of April, as you know, increasing the maximum loan-to-value ratio for new mortgages from 85% up to 90%. This strengthened the affordability for home buyers and supports Enity core offering. At the same time, the new 80% loan-to-value cap on existing mortgages may restrict customers' ability to renovate or invest in their homes, and we question whether this measure is well aligned with its intended objectives. However, to address this, we launched something we call Home Loan Plus in April.
It's an unsecured loan offered only in combination with the mortgages with a cap of SEK 300,000 per residence. In addition to that, we also launched a second charge product in Sweden to further promote financial inclusion and help more customers to improve their personal finances. This product has already proven successful in Norway and strengthened our second secure lending proposition. By that, I hand over to Pontus.
Oh, okay. Thank you, Björn. Let's go through the financials. Also from the financial point of view or from the P&L and balance sheet point of view, this was an eventful quarter, and there are a lot of moving pieces that I will talk you through. If we start with net profit, it's very strong, SEK 187 million, which is up 135% quarter-on-quarter and 282% year-on-year. This is benefiting again then from a positive revaluation gain on the previous shareholding in Uno Finans of SEK 116 million. If you adjust for that and other items that affect comparability, adjusted operating profit is down 7% quarter-on-quarter, and this is primarily due to higher credit losses.
Operating income and operating expenses are also impacted by the acquisition of Uno Finans, which is consolidated from the month of March. That means a higher commission income and also higher OpEx. On a net basis, Uno, for the month of March, contributes with SEK 10 million in operating result to the group. Also in connection with the acquisition of Uno Finans, we have an allocation of the purchase price, which consists of a number of different intangibles. Part of those will be depreciated over time, over a five-year period, and that also impacts the operating expense line with SEK 3.9 million for the month of March, and that's a contingent item going forward as well.
Net interest income is down 6% quarter- on- quarter, primarily due to adverse timing effects, which I'll come on to on the next slide. Like mentioned by Björn, the net interest margin is also impacted technically, I guess you could say, from the NOK that strengthened a lot at the end of the period. The P&L has had no benefit compared to the fourth quarter in terms of the stronger NOK yet, only the balance sheet. Adjusted OpEx up 3% quarter- on- quarter, which is entirely a function of consolidating Uno. If you adjust for that, OpEx is down quarter- on- quarter and broadly flat to last year. We have a number of items that affect comparability that we adjust for.
In the quarter they are SEK 21 million, which consists of the final payment of retention bonus and then we also adjust for the depreciation of intangible assets stemming from M&A and acquisitions in the past. That's also an ongoing adjustment that we do in the for the key ratios and for the P&L, and that we estimate to be circa SEK 17 million per quarter going forward. Credit losses are up quarter-on-quarter, and they're down year-on-year. Last year included a one-off loss of SEK 12 million, and this period this year includes a one-off loss of SEK 4 million.
Both of these are stemming from stemming from portfolios that came with the acquisition of Bank2 in the past, which have been put in runoff for a long period of time. And we have now reduced that portfolio down to a very low level. Nevertheless, that impacts the number with SEK 4 million for the quarter. The credit loss level remains broadly unchanged compared to the fourth quarter, slightly down from 26 basis points to 24 basis points. Finally, just again, to make everyone aware that we, as communicated in connection with the annual report, we did adjust a tax line, that is also reflected now in the comparison figure for the fourth quarter. Let's go to the next slide.
Talking about the NII pressure in the first quarter and the adverse timing effects that we expect to reverse positively in the second quarter. Firstly, there is a technical element, which is a hedging arrangement that we've had in place for a long, or since the acquisition of Bank2, which is a currency hedge that's been forming part of the so-called other comprehensive income. The element or the cost for that, i.e. the interest rate differential, is now moved up to the net interest income, and that is SEK 4.5 million impacting the net interest income for the first quarter. Looking for full year kind of 2025 numbers, that represents circa 5 basis points on the net interest margin that's been overstated.
During the first quarter, we've had a lot of things going on. We have a period of fewer calendar days that has an impact. We've also built quite a lot of liquidity during the first quarter in anticipation of firstly the acquisition of Uno Finans, but also a bond redemption that happened early in the month of March, which has not been refinanced. That have of course come with a cost. We've seen rates moving up during the quarter where we generally have been rather, I guess you could say, picking up higher rates and we have not yet had any effect of passing these changes on to our customers, neither on the deposit side nor on the lending side.
We have since before announced rate changes by cutting deposit rates in Norway and increasing floating rates in the Swedish back book. Those will come in force during the second quarter. To keep in mind, the Norwegian krone has strengthened a lot during the quarter from 0.91 to 0.98 almost when we close off the quarter. That all else equal should also be positive for Enity going forward as we generate the majority of our profits in Norwegian krone. Let's go to the different segments then. Starting with Sweden, we like mentioned the loan book is flat compared to year-end.
We haven't seen any growth, and we've experienced higher redemption than usual. This of course doesn't contribute to the net interest income, and the combination of fewer calendar days and the timing of range changes as mentioned, also puts pressure on the net interest income for the Swedish business, which is down 7% quarter-on-quarter. Again, these are timing effects that we expect to reverse positively during the second quarter. OpEx increased slightly, and we continue to favor our own channel and thus keep similar spend on marketing as in the fourth quarter, which is good overall for the profitability even if timing is adverse on that spending, but it's preferred to the broker channel currently.
Credit losses remained on similar levels as in Q4. The housing market remains challenging, where we have seen impacts from outcome of sales of properties that's probably been on the negative side compared to what we expected, which in return have generated slightly higher write-offs. We expect this to continue for some time even if the share of NPLs in Sweden is decreasing. Let's go to Norway. Adjusted operating profit decreased slightly quarter on quarter. Again, the strengthening of the NOK doesn't impact the P&L in any way compared to the fourth quarter, but has a substantial impact on the loan book, which distorts then growth figures as well as the net interest margin.
NII is down slightly quarter on quarter, and this is primarily due to fewer calendar days in the first quarter. OpEx is down quarter on quarter, and cost income ratio continues to strengthen, now 33% in Norway. I think it's important to keep in mind that in Norway, we source a lot of business through the broker channel, which is effective, and it's also supported to the cost ratio as the cost for acquiring customers are accrued for over time in comparison to Sweden, where we take a greater share of the cost upfront through the market or our own channel and marketing spend.
Similarly here, net credit losses remain elevated, the share of NPLs has a flattish development to the 4th quarter, which means that we continue to build up provisions which impacts the credit loss line as well. This in addition to write-offs that we record as well. If we go to finally Finland, Finnish platform continues to perform good, showing scalability. Loan book is now just over SEK 2 billion, the operating results are back to profit from a small loss in the fourth quarter. Good growth in net interest income. Costs remain unchanged compared to previous quarter. Finally on the segment side, we have now introduced a fourth segment, which are the loan brokers, which will consist of Uno Finans and Eiendomsfinans.
The figures here are definitely not fully comparable as the companies have been consolidated at different points in time then. None of the entities were consolidated first quarter last year. Eiendomsfinans is consolidated for the fourth quarter fully and Uno Finans is consolidated impacting these numbers for one month during the first quarter. The step up you see in commission income and operating expenses on the slides are driven by consolidating Uno. Then for the second quarter, this will obviously continue to strengthen as we add additionally two months of Uno Finans to the numbers. Then on the EBITDA line, it includes the two months of Uno Finans as a shareholding and an associate of circa SEK 7 million.
Like mentioned before, Uno Finans generated an operating profit of SEK 10 million in the period, which is a good proxy going forward what we expect to add in additional profits from Uno. Eiendomsfinans had a seasonally weak first quarter and actually recorded a small loss of SEK 3 million that we expect to revert back to kind of neutral territory and the guidance we provided before still holds. To credit losses, 24 basis points for the quarter, still in comparison to a net interest margin of 3.7%, very good loss absorption obviously. The credit losses were seasonally high and again, they included a one-off loss of SEK 4 million that stemmed from settlement of the largest case in the Bank2 run-off portfolio.
This run-off portfolio from Bank2 is now reduced from point of acquisition, SEK 177 million, down to a remaining net exposure of SEK 11 million. We believe that this credit loss level will continue to remain elevated on the levels that we're seeing currently, i.e., around the 24 basis points for the year. This is again back to what we're seeing now in terms of increased geopolitical tensions impacting rates probably in the other direction than rate cuts, rather rate hikes and still a bit of a subdued property market. Then in terms of NPL ratios, the trends that we've seen over recent quarters and been communicating, they still hold.
We continue to see the share of NPLs reducing in Sweden and Finland, but remain at similar levels in Norway. On a consolidated basis, the share of stage three loans has increased to 7.1%, which is a factor of a stronger Norwegian krone solely. On the funding side, like I mentioned, I mean, we have been funding growth and acquisitions solely with deposits, and we have also redeemed a bond of SEK 1 billion in early March, which has been an effective way of funding the growth. We have not returned to the market when the senior bond redeemed, primarily because of quite turbulent and volatile markets during the months of March.
Our funding diversification remains important for Enity and bond issuance will be back on the agenda as and when market conditions stabilize and allow for that. Also Moody's has updated the bank rating following the full depositor preference changes, which meant that the long-term depositor rating was upgraded with stable outlook and the issuer rating was affirmed with a negative outlook. These changes were expected for us, and we do not expect to see any material impact from those for the funding strategy going forward. We will continue to aim for a diversified funding, although the depositor share is somewhat elevated in the first quarter 2026.
Finally, on the capital side, as we previously announced in connection with the Q4, the acquisition of Uno puts pressure on the capital ratios and the CET1 ratio. In anticipation of the transaction, we introduced a so-called self-imposed RIA to reflect what we estimated the impact to be at year-end. This is now when consolidating Uno reflected in a different way, where the RIA reduces and the lion part of the consideration paid for Uno will be rather treated as a deduction from the capital base. The CET1 ratio is therefore below, temporarily below our target of 200-300 basis points above the regulatory requirements.
We expect this to be temporary and profit generation going forward to be supportive to bring the ratio back to targeted level. Finally, we did receive the decision on the so-called SREP from SFSA, which reduces the Pillar 2 requirement from 1.2% to 0.96%. In addition, no Pillar 2 guidance is assigned to Enity. Please note that these are not incorporated in the numbers of the slide here as the decision was received two days ago. The guidance for the leverage ratio remains unchanged at 15 basis points. With this, I hand back to Björn.
Thank you, Pontus. Looking a little bit ahead, key focus for Enity short to mid-term, I mean, we remain focused on growing our core business, first of all, Sweden and Norway. We are strengthening brand awareness across key markets, and we continue also to improve internal processes and enhance the end-to-end customer journey. In parallel, we are sharpening our product offering to better meet customer needs and also to adapt to new regulations, specifically then in Sweden, to continue to support financial inclusion. In addition to Sweden and Norway, Finland is a key growth priority. We are focused on gaining market shares by basically building awareness and continue to educate the market customers and partners and actively developing this category in Finland as well.
As previously communicated, we are also evaluating the possibility to enter additional Northern European markets. This work is still ongoing. Last but not least, we will of course continue to capitalize on Uno and Eiendomsfinans. They will continue to support growth and profitability to the group. To wrap up a bit, we continue to deliver solid growth, 9% last 12 months, in line with our financial target. Uno transaction, as mentioned, completed, and that will be a positive contribution to Enity in 2026. Also, there are still uncertainties with regards to macro and rate development, and this risk to delay housing market recovery in Sweden and Finland.
Regulatory trends increasingly favoring secured lending, I would say, although there are a mixed picture of new mortgage regulation in Sweden. Credit losses remain low, although on an elevated level as Pontus just went through. We expect them to gradually decrease over the coming years. Our adjusted return on tangible equity were 19.2% for the last 12 months, so also in line with the target. By that, we open up for questions.
The next question comes from Björn Olsson from SEB. Please go ahead.
Good morning, guys. First, a question on the outlook. You mentioned that the backdrop continues to be somewhat muted in Sweden and Finland. I mean, you're one month into Q2, would you say that this sort of weak sentiment from March has continued despite the change in amortization rules in the Swedish housing market?
I think, I mean, the general kind of sentiment or momentum I would say in Sweden and Finland is still the same. It's weak markets. I mean, unemployment rate still high in both markets and rates are if something moving upwards. I think in Sweden, I think we believe that this the new regulations that came into force first of April will have a positive impact over Enity. It might take some time, but we believe that especially purchase of course would be would benefit from the increased LTV.
Also over time, we believe that the kind of the 80% could in combination with this Home Loan Plus also be a good driver to Swedish kind of business. I think it is a kind of mixed mixed outlook when it comes to the markets and what we foresee.
All right, thanks. Second then on, I mean, you're sort of combining two messages. You're saying that you're increasing your share of near-prime mortgage customers, and in the same time you flag that credit losses will remain elevated somewhat. The sort of is it an active strategy to approach near-prime customers as a, I guess, a part of a de-risking strategy, or is it just that that's where the demand is at the moment? How should we view this sort of mixed shift in your customer base?
No, I think we do see a good growth potential in all customer categories. I think the near-prime, absolutely, there are a potential to continue to grow within in this kind of customer profile then. I wouldn't say I think we are keen to grow both our classic segments as well as near-prime. I think when it comes to credit losses and that we believe they will remain elevated this year is more coming back to, I think, macro geopolitical uncertainties, rate hikes, lack of consumer confidence, rather than us, you know, moving in one or another direction.
More of a model effect.
You're probably right to some extent. It's obviously still a portion of the pre-crisis levels in terms of those vintages where they've been through the rate hikes and also the drop in property prices. We're seeing slightly higher kind of write-offs on some of the sales that are being done in Sweden that has some impact. The other one is like you say, more probably geopolitical and kind of the rate environment where we're not seeing kind of the NPL ratios going down, and that's primarily, like mentioned, Norway.
Okay, thanks. Just finally briefing, you just ended mentioning additional markets. What's the, I don't know, timeline is perhaps a strong word, but, yeah, what's the outlook since you're mentioning it?
No, I think we have mentioned that now for some quarters. I think there is a work ongoing. I mean, we haven't any specific timeline or we're not in a hurry to move into a new market. I mean, key focus continue to grow in the home markets. We are also long-term strategically interesting to see if there are opportunities out there where we can enter a fourth market. We haven't set a specific timeline for it. We will get back when we have more information to share.
Okay. Thanks, guys.
Thank you.
The next question comes from Patrik Brattelius from ABG. Please go ahead.
Hi. Thank you. Can you hear me?
Yes.
Perfect. Yeah, so I would like to turn the attention to slide six, please. So if we could start off by quantifying these effects on the left-hand side because to my understanding then the timing effects should be completely reversed according to your comment in Q2 and how big was the calendar effect here in Q1 and so we can calculate that a little bit more detailed for the coming quarter, please, if we start there.
Yeah. I think, I mean, the net, I mean, the hedge, that was SEK 4.5 million as mentioned, that is a contingent element, the net asset hedge. Calendar days we lost two calendar days, we're gaining one, that is, I mean, let's say circa SEK 4 or 5 million, the adverse timing effect represented in the chart is somewhere SEK 7 million, SEK 8 million. I think that's the way to think about it.
Thank you. The NIM reduces now with 30 basis points and you highlight here the effect from the interest differential move is 5 basis points, so we should take that in mind going forward.
Yeah.
Since you're expecting this reversal effect, what should be the run rate, the expectations now when we look into the coming quarters in 2026 since this was a major drop that they haven't really seen before in the new reporting?
No, I think part of the, you know, part of the drop is, of course also the impact that you had a flattish translation of the Norwegian krone Q4, Q1 whereas you had a balance sheet that inflated a lot at the end of the year. There's a disconnect there. I think you should still think that the I mean, where we were kind of Q4 with the adjustment of the five basis points and then a reversal of the calendar days to some extent going forward. Then in the longer run like we said, I mean, again, on the near-prime we believe that the margin will gradually over time decrease with circa 10 basis points per annum.
Did that answer your question?
Yes, it somewhat did. Thank you. In terms of brokers, which you had a slide on, as it came in at commission income was roughly SEK 50 million here in Q1, and then we have SEK 10 million from Uno but only one month. Run rate is closer to SEK 70 million. Should we expect any meaningful growth when we model this for when we look into 2027, 2028? What is your assumption there?
Yeah, I think, Uno, like mentioned, it contributed SEK 10 million in kind of operating profit for one month which is a good kind of run rate proxy going forward for now. I think generally they've been performing stronger in the second half of the year than the first half of the year. Of course we expect, you know, that business to continue to grow as we go into the future. I think if you look compared to last year, they're in comparison on the average they generated SEK 7 million, SEK 8 million in operating profit compared to where they're running now SEK 10 million.
I think that gives some idea of growth going forward.
Okay. Fair enough. We talked about marketing a lot in connection with the Q4 report. Are there any step up in marketing that will significantly impact the cost line the coming quarter here that we should be aware of? Or how should we think about cost in relation to what we saw here in Q1?
The marketing spend Q1, Q4 is on similar level like mentioned, and I think the kind of the guidance we provided in connection with Q4 in terms of OpEx for the year that still holds. The additional costs are related to the depreciation of intangible assets from the Uno acquisition of SEK 3.9 million per month going forward. That will impact the depreciation line, and that's an item that we will adjust for when we look at the kind of the underlying cost and also for the key ratio calculations. That you should be aware of.
Of course, you know, then of course the translation difference from Norwegian krone, I mean, that can move in different directions, but it's hard for us to predict what that translation rate will be. Clearly, we do have the major share of the profits generated out in Norwegian krone. For the moment that's positive.
Thank you. My, just my last question was that in connection to Q4 I interpreted that you would start communicating or at least show cost income ratio, which is adjusted for this, for this broker so we can compare how the cost income ratio develop compared to the guidance you provided in connection with the IPO of that you aim to reach 40%-42% the coming years. How is that progressing?
I think we have communicated it. We've adjusted for it now in the, in the communication, in the tech. We haven't still, you know, provided an adjusted or APM metric on that. We bring that with us. I think it's progressed mixed for the first quarter. We have continued to improve in Norway, where we're now in the first quarter down to 33%, which is better than the fourth quarter. Also Finland is improving, which obviously came from a kind of a 100% level. They're also continuously improving due to the scalability.
Where we in an adverse development, it also has an impact on the overall cost-income ratio adjusted for the brokers for the first quarter is the Swedish market, where as we've said, there's quite some of the timing effect that sits in the Swedish portfolio. Again, we didn't see any growth also in the first quarter. That short term has developed in an unfavorable direction. I think on the longer term guidance, given growth profile, given the cost guidance that we've provided, we still believe that this will hold, so to say.
Thank you. I just had one more little detailed question for my notes here. You highlighted that you raised the lending rate and lowered the deposit rate. Could you quantify how much you raised the lending rate and the deposit rates? I just have it in my notes.
I think it was, is, circa 20 basis points on both sides. Up 20 basis points and down 20 basis points. That's one is in Sweden and one the other one is in Norway.
Thank you very much. That was all for me.
Thanks.
The next question comes from Emre Prinzell from Nordea. Please go ahead.
Hi, thank you. feels like we have touched this in the Q&A, but just for clarity. Lending growth in Sweden was zero quarter- on- quarter. Households are a little bit on the sidelines still. How should we interpret this in the light of the marketing step up and tailwinds and regulation that just began around the around the corner? How far out is the delay before we can expect a pickup, so to speak? Should we postpone it until, you know, late in the year? Or how close are we to see a revival there? Thank you.
Yeah. Thank you. Good question. First of all, we believe in the Swedish market, of course, and think the market will recover. As we said last time we met, we anticipated a kind of a faster recovery in Sweden. That is obviously delayed for a number of reasons that we have talked about. I think you should think about like this, the second quarter will from a kind of a macro market perspective be quite subdued, we believe that the kind of the new implementation of the new mortgage rules will be supportive. We do expect some growth in Sweden in the second quarter and then gradually increase that during 2026.
That's basically what we, what we foresee, as of today.
All right. Thank you. That's it for me. Thanks.
Thank you.
There are no more phone questions at this time. I hand the conference back to the speakers for any written questions or closing comments.
Okay. Thank you everyone for dialing in, and see you in the second quarter.