Good day, and thank you for standing by. Welcome to the NOBA Year-End Report 2025 conference call and webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star one one on your telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw a question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to a speaker today, Jacob Lundblad, CEO. Please go ahead.
Thank you. Good morning, everyone, and welcome to today's Q4 presentation. I will take you through some introductory slides, and then I'll hand over to Patrick for more financials. Let's dive into it. So key events during Q4 2025. Q4 marks the end to an eventful 2025, where we have managed to deliver attractive financial progress, good business momentum, whilst at the same time delivering all-time high employee and customer satisfaction. In Q4, we also managed to acquire DBT Capital. This is very much in line with our previously communicated ambitions to expand into the SME space. We'll come back and double-click on DBT on our next slide. During the quarter, we saw continued positive NPL disposals above back book value, again, confirming our asset quality.
We improved funding spreads and improved our rating outlook, doing both AT1 and unsecured bonds during the quarter at lower spreads than previous comparable issuances. And we got a confirmation of our BB B rating from NCR, and furthermore, we got an outlook that was raised to positive. Looking at financial development for the quarter, we saw an adjusted core operating profit coming in at SEK 1.3 billion, up 38% year-on-year. Core RoTE at 25%, or actually 27% when you exclude accrued dividends. A significant jump up year-on-year. Growth came in at 10%, reported numbers negatively impacted by FX. Cost income ratio came in at 24%, as expected, and we want to reiterate the outlook communicated last quarter.
In essence, cost growth is expected to remain somewhat above historic trend in coming quarters. Cost of risk continued to develop positively, 2.8% in Q4. Underlying trends continue to be positive, and our capital position is strong. As a consequence, the board of directors is proposing a dividend of SEK 1.6 per share and an extra dividend of SEK 1.5 per share. If we then turn page, we'll give you some more color to our acquisition of DBT. So this is exactly in line with the investment ambitions we have communicated in the past. We see the SME market as very attractive. The market is large and underserved by traditional banks. Specialists are expected to take market share going forward.
We have outlined SME as one of the building blocks to reach SEK 250 billion by 2030. With other new initiatives, we expect this block to amount to some SEK 10 billion by 2030. So DBT offers collateralized term loans to Swedish SMEs. Target loan size is SEK 3 million-SEK 35 million, with an average term of four years. I think DBT is a highly regarded brand in the market, offering speed, flexibility, and I think they've built a strong relationships in the market and a very professional operations. In terms of sourcing, with the cost efficient and multichannel distribution, which is great. And why is this then a good match for NOBA? Well, we see this as a great platform to expand from.
Highly digitalized and automated, built by a strong team that are committed for the future as well. Becoming part of the family, DBT's future growth will obviously benefit from NOBA's strong balance sheet, and also, I would like to think, our experience in terms of scaling up businesses. Short-term impact is, of course, very limited. DBT is less than a percentage point of NOBA by any metric really, but a very nice addition to our business for the future. Let's dive into the segment. So let's flip page and look at private loans. So year-on-year growth of 10% in local currencies. Strong growth continued in Sweden and Denmark, somewhat softer demand in Norway. Some signs of increased competition, we've seen expanded margins earlier. We expect these to be more neutral going forward.
Operating income of SEK 2.1 billion, 10% year-on-year growth, driven by high lending volumes and, and improved NIM. Adjusted cost income ratio coming in flat at 21% year on year. Cost of risk performing well with continued positive outlook, came in at 3.3%, compared with 4.6% prior year. Adjusted RoTE at 22%, also a good pick-up year on year. Then let's flip to credit cards. So the portfolio is now amounting to SEK 19.6 billion, a year-on-year growth of 12% in local currencies. I think good momentum across geographies, however, some obvious FX headwinds. Operating income grew 10% year on year, NIM developing positively, underlying improvements of revolver rates and also seasonally high revolver rates.
Adjusted cost income ratio of 28%, down from 31% in Q4 2024. Cost of risk up at 3.8%. Here we see no underlying deterioration. This is higher due to a one-off model update. And then lastly, just the result at 34%, impacted by temporary and seasonal factors. Underlying, we don't see any real negative shifts in the segment. Then let's flip to mortgages. The segment amounts to SEK 90.2 billion, year-on-year growth of 8% in local currencies. We saw a pickup in H2, especially in Q4. We see that the Swedish and Norwegian mortgages are gradually picking up during the year. We expect that to continue.
Operating income of SEK 179 million, essentially flat year-over-year, and we see that the higher lending volumes was offset by slightly lower NIM. Adjusted cost income ratio, flat year-over-year. Cost of risk came in slightly higher, however, no significant shift there either. The totality takes us to an adjusted result of 39%. So with that flavor of the segments, I'll hand over to Patrick for more financials.
Great. Thank you, Jacob. I'll start going through the overview of the financials. So starting off on the top, we have another quarter of solid loan book growth, with 10% FX-adjusted growth year-over-year in line with our communicated growth target. Underlying growth is however, partially offset by FX, which resulted in 6% reported growth. Moving down to the P&L, we also have another quarter of revenue growth outpacing loan growth. The reported revenue growth of 9% versus the 6% reported loan growth, and this outgrowth is really driven by a continued NIM expansion and also strong growth within fee income. Moving down to cost, when I go through the P&L, we have a flat cost income ratio compared to a year ago at 24%.
This is impacted by SEK 15 million of DBT acquisition costs and would have been 23% otherwise. On credit losses, we continue to see very strong underlying trend with cost of risk reduction, and have 2.8% in the quarter. There's around 0.2% positive impact from NPL sales here, but also excluding this, there is a very strong underlying trend here, given that Q4 is usually a seasonally weak quarter. Tying all of this together, we move on to the RoTE, and we see that we have a 35% RoTE, and excluding the accrued dividend, the return on capital employed was 27%. And lock on capital, we have a strong capital position.
We have a CET1 ratio of 13.7%, where the proposed dividend has been deducted from the capital base. We'll move on to the next page, please. So yeah, breaking down the loan growth by segment, as we outlined on the page, there is some FX impact here due to the appreciating SEK. But overall, we have all segments delivering well towards our growth ambitions. Starting off at the bottom of the table, Secured, which has had a period of weaker growth, is now really starting to pick up and has 8% year-over-year growth and 10% for the quarter. Growth in Equity Release is still a bit weak, but growth in mortgages have really picked up. Credit cards, we continue to see strong growth both in the Nordics and in Germany.
Private loans continuing on its solid growth trajectory with 10% year-over-year growth. Move on to the next page, please. Moving on to NIM. We have a NIM of 8.3% in the quarter, which is more than downwards Q3 and slightly above Q4 last year. We've had a very strong development on NIM through 2024 and 2025, driven by positive effects of base rate reductions and our strong new lending margins in private loans. We however have however largely seen this effect of having been realized now, with the base rate lowering cycle largely expected to have come to an end, and front book margins now largely in line with back book margins in private loans. Move on to fee income. Next page.
We've had a very strong momentum on fee income through 2025, with a growth of 30% compared to 2024. Q4 in isolation, we also have a strong quarter with a fee income of SEK 200 million, continuing the trend we have seen so far in 2025. But I would reiterate that this is a line item where we do expect to see some volatility, as we have variable components in our main agreements here, which gives some quarterly fluctuations. Next page, please. On operating expenses, I think we very much follow the trends we outlined in Q3 here. We do expect to transitionally see a bit higher cost growth than what we have seen in the last two years. In Q4 in isolation, we came in at a cost increase of 24%.
As I mentioned before, this includes the cost of the DBT acquisition, and it's 23%, excluding those costs. And in the quarter, we have very limited transformation costs of SEK 4 million, and that's really related to some cleanup costs from the IPO. I've communicated before, we don't foresee any transformation costs going forward. Moving on to the next page, on capital. We have a very solid capital position with CET1 ratio of 13.7%, which is a 3.5% margin to our requirement of 10.2%. The proposed dividend of SEK 1.55 billion has been deducted, and we also continue to have strong and stable liquidity ratios with LCR 151% and NSFR of 111%.
So I'll hand back to you, Jacob, to cost of risk. Sorry. Cost of risk. We're sorry, we missed a page here. So cost of risk in the quarter, we've had a strong cost of risk development with 2.8% cost of risk per quarter, which is then, as I mentioned before, has a 0.6% positive impact from NPL sales. But here the trend is very clear, it's very clear with a falling cost of risk, with seven straight quarters of falling cost of risk, year-over-year. So we really see a positive trend of cost of risk here. I'm sorry, so I dropped one page here. Capital position will be covered, and then Jacob.
Yeah.
You take that.
Thanks. Let's wrap up with this one. You've seen it before. So briefly looking at performance versus financial targets. Loan book growth came in at 10% on a like-like basis, in line with the financial targets. The addition of DBT is obviously small, but one of many initiatives that will support our long-term target to reach SEK 250 billion by the end of 2030. Cost income ratio came in at 24%. As earlier communicated, we expect the trajectory to be somewhat lumpy, but remain committed to our target of getting below 20% in 2027. RoTE also 25%, a good pick up year-on-year. We expect continued improvements from operational leverage and normalizing cost of risk. CET1 at 13.7%, well in line with our CET1 target of 13%-15%.
And finally, the board of directors proposes a normal dividend of SEK 1.6 per share, in line with the policy, plus the additional SEK 1.5 as an extra dividend. So with that, I think we will open up for Q&A.
Thank you so much. Dear participants, as a reminder, if you wish to ask a question, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star one and one again. Please stand by, we compile the Q&A queue. This will take a few moments. And now we're going to take our first question. Just give us a moment. And it comes from line of Emil Jonsson from DNB Carnegie. Your line is open. Please ask your question.
Good morning. Thanks for taking my questions. Starting off on the private lending competition, could you elaborate a little bit on what it is you're seeing that differs from what you've seen before? Is it lower win rates in external channels? Is there any particular country that sticks out? Any color on this would be helpful.
I mean, I can start with, with sort of the overarching theme here, which I think is, a normalizing macro environment, which triggers more competition, obviously. The industry has been through a tough period, and as life is stabilizing, I think the ambitions are increasing with competition. And then obviously, and perhaps needless to say, I think our success, our IPO has become quite successful, and, I would assume that that triggers more interest for the sectors and the sector and more capital allocation into the sector. That is visible in our new lending, where competition, are tougher on price and more willing to lend money.
Yeah, but we shouldn't. It's not. We're not over dramatizing the effect, what's happening here. We are in a competitive product. We do see some increase in competition. We're not surprised by seeing the increasing competition necessarily. I think everyone sees the same. We have an improving macro. It's clearly improving. We see that in cost of risk. And really, I think most people price across risk-adjusted margins here, and we see cost of risk improving and have a very positive trend. And not surprised to see that resulting in slightly higher competition on the new lending side. And as we mentioned, we have historically had front book margins quite a lot above back book margins, and we're kind of around the neutral area now. So not very dramatic here, but somewhat increased competition.
Okay. So, is it fair to say then, that as far as you can tell, it's, this is not to do with customers becoming, so to speak, more price sensitive? It's more that-
No, no, no. It has to do, It has to do with the fact that macro outlook is good for consumer lending, and I don't think we are the only ones that are seeing that. I think that's driving a bit of increased supply and improved pricing. Because simply, we, as many others, look at this on a risk-adjusted margin. As we see risk clearly coming down, margins. One really needs to look at the combination of credit risk and margins, where we see, you know, credit risk having a very positive trend, and not surprisingly, that also results in some of increased competition on the margin side.
For the avoidance of that, we don't see any shift in consumer behavior.
No.
All right, that's very helpful. Thank you. And, continuing a little bit on growth, as far as I can tell from government statistics, as of right now, most of the Nordic consumer markets are growing at sort of low single-digit percentage rates year-on-year, or in some cases, even declining year-on-year. If market growth were to remain low, let's say, through 2026, do you think your double-digit lending growth target is still a sort of reasonable target for this year?
Yeah. If you look over time, it is we have the market tends to grow at around normal GDP. Individual markets have diverging growth when you look at individual years, but I think we have a very clear consistency of delivering growth across those, across slight differences in underlying market growth. So I think we feel very confident with the growth target at kind of the current and expected market growth rates.
Okay. In terms of your funding, have you noticed any change in competition on either your Nordic or Central European funding channels, you know, to do with the increased sort of growth ambitions among competitors?
I think we see slightly. I think we already communicated earlier, I guess, around Q2, that we saw growth picking up somewhat on deposit competition, and it hasn't changed from that. We saw kind of through H1, we saw somewhat increase in competition with deposits, and that's been stable since then. There's no big shifts here, but we did see some increase in the beginning of the year in competition rates.
Okay. One short question on credit cards, on the higher loan losses and credit cards. Just to be clear, should we expect the loan loss ratio to remain around 3.8% in the next quarter, or should we expect it to drop down to around 3% again?
We're not going to guide on specific loan loss in a specific segment, but we are. Because the increase in Q4 that we saw is really driven by the seasonality aspect, which is Q4 is a seasonally weak quarter. I think on a totality basis, that hasn't really shown thanks to the cyclically very positive trend, but in individual segments can clearly come through. So Q4 is a seasonally weaker quarter, that's number one. And number two, we do model losses regularly. It tends to be overall neutral, but when we come to small segments like credit cards, it can have a negative impact, and that's what we've seen in this quarter.
So what we are clearly saying is that we don't see an underlying trend divergence in credit cards but that the cost of risk is driven by kind of a one-off factor in combination with slightly seasonally weak quarter. But we're not going to guide a specific number in a specific segment.
Okay, that's, that's clear. Thank you. Just one final question, and then I'll, I'll, hand it over to the next speaker. Looking, continuing in credit cards, if we look out, say, two or three years into the future, credit markets are pricing in, but we'll probably start seeing rate hikes by 2027 or 2028 for both the Riksbank and the ECB. Based on this, is it a reasonable assumption that we should expect to eventually see lower net interest margins and higher credit losses in credit cards, or is there some other significant offsetting driver that I'm not considering?
I think we'll need to pick those out of the credit card. Across the credit losses, there's not a lot of correlation with the interest rates there in credit cards. It's the max, I don't think. I mean, if we see. So I wouldn't say credit losses, I don't see any impact of kind of type of rates movement that are expected. And then clearly, I think the rate environment, I think we've kind of, it's been pretty clear that falling rates, that's been quite good for us. Rising rates, that's been, that's kind of going to be negative for us to come, but then keeping in mind that 45% of the credit card portfolio is in Norway, which is a very different rate environment.
So in isolation, credit cards, it's better to be lower rates, but the sensitivity is not very high. And keep in mind, 45% of the portfolio is in Norway, and then the last pointer on credit cards, when we look at, I mean, the base rate is one component. Clearly, the other very big component that we can impact is revolver rates. And I think when we have said clearly before, that we have as a strategy to raise, continue to bring revolver rates up across the credit card portfolio, and that's pretty good for margins. So, I mean, you have to isolate those points and say, with the rate outlook, that could be kind of credit losses, we don't see any sensitivity to it.
In isolation, on a front, on a margin basis, yes, somewhat negative for credit cards with increased rates, but keep in mind that 45% is Norway. And lastly, the offsetting credit cards from a rate perspective, that is clearly to bring revolver rates up, which is something that we continuously work with and continuously have been able to do as the portfolio matures.
All right, that's very clear. Thank you very much for taking my questions.
Thank you. Now we're going to take our next question. It comes to line of Patrik Brattelius from ABG. Your line is open. Please ask your question.
Thank you. Can you hear me?
Yes. Yep.
Ah, perfect. Yeah, so my first question is regarding SME in connection with this acquisition that you have announced. So, can you talk a little bit, as it was a relatively small acquisition, so I have to assume that it's a little bit of a subscale at the moment. Can you elaborate a little bit how you think about the further growth through M&A the coming years in this subsector?
We don't have any immediate plans for further M&A in the SME space. Let's see if that happens anyway in the future. But right now we're focused on the acquisition that we just closed a day or two ago, and which we're very happy about. Yes, I think it's subscale, as most SME players are. I think scale is important, and it's clearly one of the ambitions we have with the platform to ensure that we actually can scale it. One of the constraints that DBT has had in the past is obviously a limited funding opportunity.
And with the bank balances and effective bank balances, I think we can take away much of that constraint, and that will open up for more business, and I feel confident that we can do good business together with DBT and actually reach scale. I mean, we have outlined that SME is one of the building blocks to reach SEK 250 billion. We've said that new initiatives will amount to some SEK 10 billion. DBT will be a good part of that, I believe. We're also looking at organic initiatives when it comes to the SME market. We're not there yet, so let's come back to that in due course.
But I think this is a good playbook, perhaps worth reminding everyone about the acquisition of DBT back in 2018, 2019, where we managed to acquire that business. Simultaneously, we set up our mortgage business in greenfield. I think the benefit of that was huge. We could cross-fertilize those two work streams and cut a lot of time in terms of getting to market and in terms of reaching scale. So we feel very positive about this first baby step. It is small, but it's very good for the future.
Thank you. And to elaborate further on the subject, could you talk about the potential in SME vertical in Sweden versus rolling it out in the other Nordic geographies? Is it Sweden firsthand and over time in the other, or is it gonna be launched bigger? How do you foresee this?
I mean, I'm sure that we will think about other markets in due course. We're very committed to have a first go in Sweden, which we believe is the more mature market, also the market that we know the best. So it makes a lot of sense for us to start out in Sweden. And then obviously also, so we managed to acquire DBT, and as a matter of fact, it is a Swedish company, so that is helpful. Right now, we're not looking into any other markets, but I'm sure we will return to it at some point in time.
I think we've said before that the relevant SME, SME market across the Nordics is that we can target SEK 400+ billion . And clearly, this is a step of getting into that market and going into Sweden first in this specific segment, but clearly, that's a platform for growth, with the platform of growth, and we can also complement that with, organic growth initiatives. I think it's a clear step towards, clear step into the SME segment.
We're quite keen to stay close to home here. I mean, it is, we spent 20 years doing retail lending. We're taking a first step out in the SME market. It's important to do that in a controlled fashion, and being close to the market is quite important.
Sounds good. A last, a little number question from me. I saw the transformational costs were much smaller than I expected. I had expected, given the communication from Q3, that the transformation costs would be closer to SEK 50 million following the IPO, and I thought that we would see some costs of transformational status connected to this acquisition, but it seemed to be only SEK 4 million. What was I missing here?
I think the first point is we guide that we would expect some IPO rollover costs, I think in the range of SEK 10 million-SEK 20 million. We end up with only SEK 4 million IPO rollover costs, which is obviously great, that we kind of managed to keep those costs down during the quarter. So we had SEK 4 million of kind of clean up costs relating to the IPO. We thought we would probably have a little bit more, but great that that wasn't more. And then, DBT, we had SEK 15 million of acquisition costs for DBT. We have not classified that as transformation costs.
We have been very clear, I think, that saying that transformation costs that specifically related to the kind of IPO project and those strategic review projects that we've done historically, the bank system and the Bank Norwegian acquisition, like the typically normal M&A that we go, do going forward, we just take as normal costs and explain it as part of the cost, cost, cost development. So the SEK 4 million, that is pure IPO rollover costs, and then, we have SEK 15 million of DBT acquisition costs, which have not been classified as transformation costs.
I see. Thank you.
Thank you.
Thank you. Now we're going to take our next question. The question comes from the line of Andreas Håkansson from SEB. Your line is open. Please ask your question.
Thanks, and good morning, guys. I'll try to be a bit quicker here. Just looking at slide eight in your presentation pack, it looks like the secured constant currency in Q4 is picking up compared to the full year growth. So probably two segment, private loans and credit cards seem to be slowing and secured picking up growth. And then I see that the difference between reported and constant is also slower in or lower in secured. So it makes me believe most of that acceleration comes from Sweden. Do you here see an impact from the changed, amortization, or not amortization, but tax deduction rules that drives a bit higher growth in secured? That's my question.
And I, kind of, it's absolutely clear that, in Q4, Secured was the fastest growing, segment on a constant currency basis. I think it's, and kind of why is that? Well, credit cards is seasonally a lot of Q3 growth, so not surprised by, surprised by that. Private loans, impacted by, the NPL sales in, Q4, which kept down the growth rate in Q4 isolation. Secured, kind of, we pretty much expect the growth to pick up here. And I wouldn't say that there's one – the main driver here is really the property market in general picking up, kind of product utility and mortgages improving in a low rate, low rate environment. And then your last question, why is there much less difference between, constant and reported on in Secured?
And that's purely because Secured, to a very large extent, is Sweden. So equity release is only Sweden, and the non-equity release part of it is kind of 50% Sweden. A bit more than 50% Sweden, less than 50% in Norway. So kind of 75%+ of the Secured segment is Swedish. Whereas if you look at other segments, the proportion of Sweden is less.
On your question on tax deductibility, that was changing. No, we haven't seen a change customer behavior due to that.
I mean, yeah, we don't expect to see any customer behavior changes due to the tax treatment, and we haven't seen any customer behavior change across any of our products.
Are you advising people to go from one of your secured or from your unsecured loans to secured in order to solve that problem?
I think that tends to be a different use case, so generally, no.
I think you historically said that, what is it? 60% of your clients in the private segment in Sweden, for example, also has a mortgage. So I would assume that it could now with higher LTV ranges and so on be an opportunity.
I mean, the LTV routes actually go the other way around, because the LTV route is obviously basically 90% on new purchases, but it's 80% on refi. So it's kind of, if anything, new regulation there is going the other way. But clearly, but I would take a step back, which is our customers, our customers buy the products they have, they have need for, and clearly, if they feel like the Secured loan is the right thing for them, they will get a Secured loan. Typically, a Secured loan will be cheaper if you have the kind of capacity in your pocket to take it on. And they kind of change the tax treatment, not really making a difference there. And with regards to the LTV changes, clearly, new acquisition, LTV levels are raised, refi, nothing is actually lowered.
Okay. That's good. Thank you.
Thank you. Now we're going to take our next question. The question comes from the line of Shrey Srivastava from Citi. Line is open. Please ask your question.
Hi, and thank you very much for taking my question. Just one from me, please. Looking at, again, the competitive dynamic for private loans in the Nordics, obviously, as you become an increasing percentage of the market, you will sort of find it harder and harder to grow above market. Is the sort of expertise and the underwriting ability that you have translatable to other regions apart from the Nordics? And are there any plans here that you've brought forward in light of this increasing competition? Thanks.
I mean, the first thing, I think. The increase in competition, there are no dramatic shifts here. So it's, there is slight increase in competition in the Nordics. I think a lot of it is driven by the fact that the credit cycle is looking very benign. And so there's no kind of that's the first point. There's no dramatic change in competition. Again, we see a slight increase in it. I think a lot of that is just driven by us and others doing the same calculation, risk-adjusted margins, which look a lot more attractive now than it did one or two years ago. That's kind of first point. And then the second point on, kind of are we looking at non-Nordic markets for private loans? And the answer is no.
No, we're not actively looking at non-Nordic markets for private loans. We still see good and a lot of potential to grow within the Nordic market. Yes, we are the biggest, we are the largest player, but we still have a fairly low kind of a market share that absolutely allows us to continue to grow and outgrow the market.
Your embedded question, whether our capabilities are transferable to other market, I would argue, yes, they are. I think we've built an ecosystem. I think we have a competence that is quite unique, that would clearly be transferable, but then you need to find the appropriate market with the appropriate dynamics, et cetera, et cetera. But yes, our ecosystem is something that is, would be transferable. Not exactly the way we do it in Sweden or Norway. I mean, there's differences between the markets, obviously. It's not a global recipe, but it's a global capability, I would argue.
Understood. Thank you.
Thank you so much. Now we're going to take our next question. The question comes from the line of Johan Ekblom from UBS. Your line is open. Please ask your question.
Thank you very much. Just a few, hopefully, quick questions. So just coming back to the growth side, am I understanding correctly that the 8% quarter-on-quarter annualized private growth in private loans is post the NPL sale, which I guess would be about 1% impact? On that. And then secondly, just in terms of coming back to your comments on an improving macro and risk-adjusted pricing, et cetera, I mean, if we look historically, you've shown cost of risk, I think, is lower, around 150 basis points. I think when people look at macro economists or macro trends across Europe, Sweden is a clear positive outlier in 2026. Why should we not expect a significantly below through-the-cycle cost of risk in 2026?
And then the third point I wanted to just touch on is funding. I mean, we saw a, you know, continuing to see loan growth materially faster than deposits. How do you think about funding your balance sheet in the medium term if deposit competition or deposit growth is not sufficient to fund your loan book?
Yeah, and all very good questions. So let's kind of try to break those up. The first one, the private loan growth. Correct, the kind of 8% growth, constant currency, that is post the NPL sales done during Q4. And I think when you look at NPL sales and growth, it's kind of clearly part of our business to sell NPLs. Gonna sell the back book of loans, we will continuously sell. So when you look at the year-over-year growth, I mean, it's not—it's kind of always going to impact the NPL sales, so it's not something that we, you should kind of take into account there. But when you look at individual quarters, NPL sales matter, because we don't sell NPLs every quarter, we tend to sell in kind of lump.
So when we look at Q4 2025, the growth in private loans in isolation, that 8% is impacted by the NPL sales, and it's closer to two percent impact rather than 1% you said, Johan. So kind of adjust. If we adding that back, we would actually be at 10% in private loans on growth. That's the first point. Your second question was cost of risk trending at SEK 1.5, but I think that's in a very different context going back at Nordax. Obviously, following the acquisition and merger with Bank Norwegian, I think our profile has shifted. So we believe that 2.5%-3% is where we should be in a normalized cycle.
With that said, yes, we do see good underlying trends here. Yeah, and that's. We see very good underlying trends, kind of, let's not take out victories in advance, but clearly, this is a year, this is a year, where we would not be able to kind of expect-
It must, it must be fair to say that on a forward-looking basis, it's hard to find things aligning so much for the, you know, slightly weaker than average consumer as much as they are in 2026, right?
In Sweden, I would say it's.
Yeah.
In Sweden, it's obviously clear to close the perfect match of positive factors, I would say. Yeah. Yeah, correct. You have the bad one, and quite easy to see the positive ones. You have a appreciating currency, you have reduced capitalization requirements, you have expanding fiscal budget, and you have lower rates. It's a little bit difficult to see what would, what's the bad thing here. It's all positive. Okay, we are across four markets, and then that is not clear, same across everywhere, but the external macro factors in Sweden are clearly positive as far as we can tell them. So, I mean, credit losses, there are a lot of positive factors going on in 2026, in particular in Sweden.
But yeah, we've said 2.5%-3% is a normalized level, and currently, on an LTM basis, we're at the top of that range. Hopefully, we should move at least toward downwards within that range during the year. And then the last question about deposits. Yeah, I think deposits. I mean, we don't foresee changing our strategy here on deposits, which is to grow around on the funding side. So we will grow deposits pretty much at the same rate as we grow the loan portfolio. Last 12 months, if you look at it on a constant currency basis, I think we've been around flat. We've obviously been growing faster on the loan side than on the deposit side.
I think partially that's driven by replacing the amount of deposits with various different funds, sources of funding, both deposits and other sources of funding. I mean, the amount is now 4% of our total deposit base, it's SEK 4 billion, SEK 4 billion. We have one migration left to do, so it's kind of right now a small part of the portfolio. And I really see that the aim for 2026 and the expectation is to have similar growth across deposits and loans on a kind of underlying current basis.
Thank you. And maybe just one quick unrelated question. I mean, following Swedbank taking out the remainder of Entercard, they've talked about, you know, looking at strategic options again around the private loans portfolio there. So I'm not asking for comments on a specific hypothetical transaction, but in the private loan market, does it make sense to buy a portfolio for you? Or is it like you need, you know, the whole legal entity, right? I'm assuming there'll be a lot of customer overlap, et cetera, but does it financially make sense?
It financially makes sense, too. It, in principle, it financially makes sense to buy portfolios. Really, it's, it's the equivalent, in essence, of originating out a new loan. But it also everything has to stack up with regards to the kind of, friction cost of doing it, the acquisition price, and the total economics. And when looking at portfolio acquisitions, it's clearly something that we do consider, and... It has the potential to be accretive to do it. So far, we haven't done any standalone, portfolio acquisitions, not because we are against it in principle, but simply because we haven't viewed the business cases as attractive enough.
I mean, size matters.
Yeah.
And credit quality.
Yeah.
Asset quality matters.
Yeah.
But is it a strategic thing to say, "I get access to new customers," or does it make sense financially to buy it as a run-off portfolio? I guess I'm thinking just how do you look at the financial metrics of such a potential transaction?
I think, if you get access to new customers, which is great. On the other hand, if you buy a portfolio, you typically don't get the kind of a new distribution side outside those existing customers.
Yeah.
It's, it's a run-off plus scenario, I would say.
Excellent.
Yeah.
Thank you very much.
Thanks.
Thank you. Now we're going to take our next question. And it comes from the line of Sofie Peterzens from Goldman Sachs. Your line is open. Please ask your question.
Yeah, hi, here is Sofie from Goldman Sachs. So, just going back to the deposit growth, it was deposits were down 5% year-on-year and 3% quarter-on-quarter. Could you just kind of walk us through what drove this decline? Was it any specific countries where you saw bigger deposit declines or was it more in the term deposit and savings side? Like, if you could just give us a little bit of details around the deposit decline that you saw in Q4.
Yeah, I think, I mean, I'll comment on it, Q4 and year. So year, if we look at the deposit growth over the last 12 months and also Q4, we kind of have a pretty good on an underlying currency basis. Deposits are flat Q4 2025 with the Q4 2024, and it's slightly down compared to Q3 2025. And I think the down in Q4 2025 is very much kind of as expected. We planned, we obviously migrating the Avanza deposits. As you know, we do it through two migrations. The first one we did in Q3. The second one we're doing now in Q4, or in now, one we did in Q. Sorry, one we did in Q4 last year.
The second one we're doing, now in Q1 2026. The reduction there is really kind of as expected. We lost around 50% of deposits when we moved that book, in Q4. That's driving the deposits.
Okay.
Slightly, kind of looking slightly weak in Q4, but kind of very much as expected evolution there.
Okay. Okay, okay, that's clear. Then my second question would be around the.
Yeah.
Cost, cost growth. Do you.
Okay, just make it clear for them. So yes, on a constant currency basis, deposits are flat year-over-year.
Okay. And then cost growth. You had very good delivery and costs this quarter. How should we think about the cost growth and wage inflation and IT investments in 2026?
Well, I think what we communicated is that, I mean, we should, you should expect temporarily higher cost growth next few kind of the coming quarters. But on the other hand, we do continue to see, we don't expect costs growth to outgrow loan growth. That's kind of the logic that we have. So we'll have higher cost growth, but not higher cost growth than loan growth is kind of the expectation. On a constant currency basis, then clearly what we can. The other aspect there is that, costs is heavier towards SEK, but the loan portfolio is heavier towards other currencies. So we expect higher growth than we'll be seeing historically, but growth rate on a constant currency basis below the loan growth.
Okay, that's very clear. And then my final question, just on Entercard, Swedbank has said that they want to de-risk the portfolio quite significantly. I know you mentioned on the previous question that you could potentially also buy the portfolio, but kind of do you think there is also scope to just organically get some of the customers from Entercard, given that Swedbank will kind of de-risk the book quite significantly?
Yeah, I mean, first of all, I don't think we're commenting on specific portfolios. It was kind of a general comment on how we view kind of portfolio, kind of, private loan portfolios. And clearly, it's Swedbank's decision what Swedbank does. We've noticed what they've said, and yeah.
But generally, we take market share. So yes, Entercard customers are likely to become NOBA customers.
Yeah.
Okay, that's very clear. Thank you.
Thank you so much. Dear participants, as a reminder, if you wish to ask a question, please press star one one on your telephone keypad. Now we're going to take our next question. Just give us a moment. The next question comes from the line of Ulrik Zülke from Nordea. Your line is open. Please ask your question.
Yeah, thank you. Just two, one on the small signs of increased competition, is this broadly based across all types of lenders, so including specialists and traditional banks? And second question is, I'm just wondering what kind of return on tangible equity you are seeing in the SME segment once you have scaled it, and if you have any thoughts about how big the loan book needs to be at scale? Thank you.
I mean, the first point, I don't think we're in a position to split up exactly where. But overall, it's kind of that we see some signs of increased competition on private loans, but it's not going to be common, and it is with specific drive, specific institutions driving that. That's the starting point. The second point around SME, I think that on a marginal basis, we expect to be able to deploy capital in the SME at similar tight rates as we do in our overall business, and for it not to be negative to our return on tangible equity goals.
I think, we would clearly need to scale up from where we are today on SME to make it, to make it kind of on a total cost basis, attractive. But it's again, I don't think we're going to give an exact number on it, but it's, I think it's maybe a couple of years out before we have the full scale in SME. But it's not. You don't need SEK 20 billion for it to be a scalable platform, but you clearly need a bit more than the SEK 1 billion that we start off with.
Okay, that's helpful. Thank you.
Thank you so much. Now we're going to take our final question for today. It comes from the line of Sheel Shah from JP Morgan. Your line is open. Please ask your question.
Great, thank you for the questions. I've just got two, please. Firstly, coming back to the competition in private loans, thank you for the color. Can I ask, what are the implications for NOBA? What is your strategy around this? Would you still be looking to hold market shares on the front book at around that 28% and then maybe see a bit of a margin impact come through? Or are you more focused on maintaining the margin and maybe giving up some of that front book market share, and therefore maybe a lower level of lending in this business going forward? And then secondly, on capital, I can see that you've paid down to 13.7%.
Can I ask, what were the decisions, or that sort of, you know, resulted in paying down to 13.7%? What would give you more comfort in paying down to maybe 13%? Thanks.
I'll start off with the first one, which is growth and margins. And if we look back, we've been growing at 10%+ in private loans, while having expanding margins. So we've had front book margins above back book margins. I think we are now in a position where we are growing private loans 10%, 10%, while having flat front book margins versus back book margins. And it's our expectation to pretty much be able to continue in that position. So growing at our target rate around 10%, which implies holding kind of high twenties new lending margin, new lending market share, while keeping front book margins at a similar level, kind of pretty much the same level as we have the back book margin.
So, which I hope answers your question, that we think we can keep our growth rate and maintain our margins in private loans. So that's question number one. And question number two, Jacob, will you come start off on that? Sorry, what, how did the board reason around the dividend, the dividend?
Yeah, so clearly the 13%-15% CET1 target was set in a slightly different environment. And I think the board is very confident about giving the extra dividend to take us down to 13.7%, which is, I mean, it's not the lower end of the range, but it's lower than the midpoint. It's like a good step and a reasonable position to be in right now.
Yeah, I think we clearly know it's the board will always, I think the board will always assess all considerations, and yeah, and then assess that this is currently a good level. Clearly, we generate a lot of organic capital every quarter, so this, the board will continuously need to assess exactly where we are in this range of 13%-15%. We, they think we should be keeping in mind that the 13%-15% was clearly set before the, before we had an actual P2G decision, which we now have with a SFSA P2G. Yeah, I don't think we can add much more color to it.
Excuse me, Sheel, any further questions?
No, that's it. Thank you.
Thank you so much. There are no further questions for today. I would now like to hand the conference over to your speaker, Jacob Lundblad, for any closing remarks.
Okay, very good. Thank you so much for listening in and then for the questions, and have a good day.
This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.