Good day, and thank you for standing by. Welcome to the NOBA Q1 Report 2026 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a questions and answer session. To ask a question during the session, you will need to press star one, one on your telephone. You will hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jacob Lundblad, CEO. Please go ahead.
Thank you. Welcome to the presentation of our Q1 report. My name is Jacob Lundblad. I am the CEO, and with me today, I have Patrick MacArthur, our CFO. Four overarching bullets about key events in the quarter. If we start with the financials, we see another good quarter with stable underlying financial development. Adjusted core operating profit of SEK 1.4 billion, up 21% year-on-year. We have a portfolio growth of 11%, and I'm happy to see that all segments are contributing, really showing the breadth of our growth strategy. We see stable underlying NIM at 8.2%. We have an adjusted cost-income ratio of 22%. As earlier communicated, cost growth is expected to remain somewhat above historic trend in coming quarters, however, without impact on the interim outlook.
We continue to see positive development of cost of risk coming in at 2.7% in the quarter. We now have eight consecutive quarters with year-on-year improvements. Core ROTE of 24% and actually 27% if you look at capital employed. We'll come back to financials. Patrick will give you more details in short while. If we go back to the overarching bullets, we see that we are well-positioned to navigate the ongoing geopolitical and market volatility. While macro outlook has become more uncertain, our outlook on credit losses remains solid with an expected high resilience in our customer base to potential worsening of the macro environment. We have completed the acquisition of Digital Capital. Integration is ongoing, where the first obvious step has been to eliminate Digital's former funding constraint with NOBA's scalable funding platform.
Obviously, a key enabler to scale up. We continue to deliver best-in-class customer service, and we are much appreciated by our customers, which is evident in the benchmarking we continuously do. If we flip page and head into the segments, we start with private loans. Given the uncertainty in the world and also alluding to the strength of our portfolio mentioned on the previous slide, I think it's worth mentioning who our customers are. On average, they are 49 years of age. 67% are homeowners. They earn in line with the national averages, and they are typically married. The patterns we see here are a result of our approach to underwriting, where stability factors are key. Also worth noting that the portfolio we have on our books today is originated over the last couple of years.
Partly, it has sustained recent years' macro shock, macro turmoil, and partly it has been originated in an environment with more normalized base rates. Very different from 2022, where the entry point was 10 years or so of 0% base rates. I think it's fair to assume that the portfolio is quite resilient, and this is obviously the first defense towards adverse macro. In terms of the key takeaways, private loan portfolio now amounts to SEK 97 billion, 70% of our total lending, year-on-year growth of 11% in local currency. We continue to see strong demand in Sweden and Denmark, while Norway continues to be somewhat softer. Underlying quarter-on-quarter NIM is stable, and cost of risk continues to develop positively despite some seasonal headwinds. Let's flip over to credit cards.
The credit card portfolio now exceeds SEK 20 billion, which is a mini landmark, of course. This is 50% of our total lending portfolio. Year-on-year growth of 11% in local currencies. Quarter-on-quarter growth is seasonally softer, much as expected. We see solid growth across all markets. Underlying NIM trend is slightly positive. Cost of risk is stable and as expected, a clear tick down quarter-on-quarter, given the one-off model update in Q4 that we talked about last time. Let's flip over to Secured. Also the Secured segment is now above SEK 20 billion worth of lending, also 15% of our total lending, year-on-year growth of 11% in local currencies. Quarter-on-quarter growth is stronger at 14% if you analyze it.
We have seen a pickup in our mortgage offering both in Sweden and Norway over the last six to nine months. Strong growth in both Sweden and Norway, primarily driven by high demand from near prime. If we look at NIM, this is partly impacted by near prime customers with lower NIM and lower risk, but also some temporary factors. Cost of risk at 0% quarter-to-quarter development very much in line with what we expect and obviously there might be fluctuations, but it is good to see the number we have. Lastly, we are working on expanding our equity release offering into Norway, and we are on track to launch next year. With that, I will hand over to you, Patrick, for financials.
Thank you, Jacob Lundblad. I will start off with a financial overview, and then I will move through the key line items in more detail on the following pages. I will start off by saying that this has been a quarter with quite significant FX movements, which does have an impact on some of the reported headline ratios, and therefore we are also providing some additional constant currency information in this quarter. We will also provide some specific bridges as we go into the more detailed slides. Now moving into the actual financials, and starting off on the top with the loan book. We have another quarter of good loan book growth with year-over-year growth of 11% in constant currency and 12% reported. Positively, all our segments are contributing well and delivering about 10% growth.
Moving on to P&L. In the quarter, we have a reported NIM of 8.0% and NII growth of 8%. These are however both impacted by FX movements and in the case of NIM, also day count as Q1 is a short quarter. The NIM adjusted for FX and day count was 8.2%, which is at the same level as Q4 on a like basis. Year-over-year NII growth, we have a reported growth of 8%. In constant currency, this was 11%, very much in line with loan book growth. Moving on to net commission income, we continue to see positive development. Individual quarters have some fluctuations as there are some variable components in our key contracts.
In Q1, we saw a slight growth versus Q4, while it was slightly down year-over-year Q1. Year-over-year Q1 2025, however, had some benefits from strong variable components, which has a high base for comparison. Summarizing the top line, we have total operating income of SEK 2.9 billion, which was reported growth of 8%. However, there is a negative FX impact here, and in constant currency growth rate was 11%, so in line with NII growth. Moving on to OpEx, we had a reported cost income of 23% and cost growth of 12% in the quarter. This is however impacted by the addition of DBT and ex-DBT because the information was flat year-over-year at 22% and had growth of 10%.
Credit losses, we continue to see a very strong trend here as we continue to see the risk of the portfolio coming down and at a cost of risk of 2.7% in the quarter, which is now the eighth straight quarter of falling cost of risk year-over-year. All in all, this gives us a core operating profit of SEK 1.4 billion, which is up 21% year-over-year. When we move down to profit after tax, we have an impact from the usually high tax rate in the quarter, where we had a tax rate of 25% versus 22% in 2025.
The background for this, we describe it in more detail on page seven of the interim report, is the tax account of currency translation effects of intra-group funding to the branch, which can lead to some volatility between P&L and OCI tax. This has no impact on actual taxes paid, capital, or cash, but given significant NOK appreciation in the quarter, it led to some volatility in the reported tax rate in P&L. The impact of this translation effect on P&L tax in Q1 was SEK 40 million, which was fully offset by reverse booking an OCI tax. Excluding this, the tax rate would have been 21.6%. The core profit for shareholders was SEK 970 million, which was a growth of 34%. Return on capital employed, excluding accrued dividends, was 27%.
These were both negatively impacted by three to one percentage points by the unusually high taxes rate in the quarter, 25% and 28% at normal tax rates. On CET1, we have a ratio of 13.3%, which is well within our communicated target range of 13%-15%. This is down versus Q4, which is driven by the acquisition of DBT and the FX appreciation in the quarter. I will now move on to loan book. As mentioned, all our segments contribute well to our growth rate of 11% or 11.5% year-over-year, with all delivering 11% growth. Looking at the quarter growth rate, these are a bit lower, and this is expected as growth in Q1 is seasonally slower, in particular in the credit card segment. I'll co-comment briefly on the segment.
In private loans, we are seeing very solid growth in Sweden and Denmark, while Norway, similarly as in the last few quarters, is growing more slowly. We are in the process of implementing actions here which we think can impact the growth levels positively. Credit card, strong growth across all markets. Clearly, Germany is growing the fastest, but from a low base. In Secured, growth is mainly driven by the mortgage segment and in particular demand from near prime, while the growth in equity release is slower. I'll now move on to the next page, NIM or net interest income. As mentioned in the summary page, we have some impact on reported headline numbers here. Starting off with NIM, in the bottom corner we provide a bridge for underlying NIM ex FX and day count impact.
Where our reported NIM was 8.02%, day count with Q1 being 90 days versus 91.25 average. Okay. In addition, we have the effect of actual average FX rates being lower than the two-point average, with EUR actual average being 1.7% lower than the two-point average and NOK 3.6% lower than the two-point average. This takes us an underlying NIM of 8.22%. If we do Q4 on the same basis, so adjust for FX and for day count, that it is 8.25%. Very much a stable NIM quarter-over-quarter.
I will also mention that the quarter NIM had some minor negative impact of delayed pass-through from increased rates as they came so late in the quarter, there wasn't any pass-through to customers on the asset side, but it had some minor impact on the funding cost. Commenting on the NII. The actual NII for the quarter was SEK 2.7 billion, which was a reported year-over-year growth of 8%. This was however also impacted by FX with a constant currency growth of 11%. While period end FX rates were slightly up year-over-year, the average for the period was meaningfully down versus Q1 2025, with average EUR rate down by 5% and NOK down by 2%. Now I'll move on to operating expenses.
As mentioned, we had a cost-income ratio of 23% in the quarter and 12% cost growth. These are however impacted by the acquisition of DNB and adjust for that cost-income ratio of 22% and growth of 10%. As previously communicated, we continue to see growth a bit above our historic trend level in the near term. Having said that, we expect to be able to accelerate cost take out towards the later part of the year and remain committed to our set target of below 12% in the medium term. We move on to credit office please. As communicated, we continue to see very positive development here with falling credit risk levels throughout the portfolio and positive underlying portfolio trends. Since we presented our Q4 report, the macro outlook has become more uncertain.
As you look outside, we believe that our customer base is very well positioned to sustain potential negative effects here. We continue to see potential for further cost of risk reductions in the medium term. However, given macro volatility, we may see some quarterly volatility given forward-looking nature of ECL. Move on to capital please. We maintain a strong CET1 position of 13.3%, which is well within our set target range of 13%-15%, and we will continue to be disciplined with capital allocation and distribution of excess capital.
Wrapping up by looking at performance versus financial targets. Loan book growing at 11% in local currencies, 12% reported versus the 10% target. Positive to see again that all segments are contributing and further the supplement of DBT of course. Cost income ratio of 23% or 22% when adjusting for DBT, we remain committed to our 20% target medium term. Core ROTE of 24% or 27% when adjusting for accrued dividend. Additionally, we have the negative effect of the unusual high tax rate of 1%. That takes us to 28%. Lastly, capital positions remains strong. With that, I think we close the presentation and open up for Q&A.
Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Our first question comes from the line of Patrick Badeles of ABG. Please go ahead. Your line is open.
Hi. Good morning. Can you hear me?
Yes.
Perfect. Yes, a few questions from my side. Let's start off on credit quality. It has continued to improve. What did you show? Eight straight quarters in a row. Now you flag for potentially even lower credit loss levels in the medium term. To what extent do you believe this is driven by structurally better underwriting versus a more supportive macro environment, if I start off there?
I mean, a more supportive macro environment, I think it's difficult to talk about that. Obviously, even though we see clouds on the horizon in the macro, and it's very difficult to foresee what will happen, I think the overarching message from us is that we are at a very different turning point today versus 2022, when we saw a very rapid shock with base rates increasing four percentage points over 16 months period, and we had a decade of 0% interest rates. In terms of healthy financials out there, I think the individuals, the society as whole is a lot more healthier today.
And again, I mean, our book, to an extent, it has lived through that stress test, which was tough, where people had to adjust their economies, their financials, and sort them, and to an extent, they have been originated, more recently, but also in a different scenario where money costs money. I think that's quite, helpful actually, which makes the portfolio a lot more resilient obviously and partially tested already. Even though we would see base rates or inflation and base rates increase going forward, we don't foresee that that will have a big impact. I mean, have we improved our underwriting? Well, for sure, I hope so. That's essentially what we do here, every day.
Yes, I think our underwriting standards are better and we evolve and we learn, of course.
Thank you. On the same topic and in the connection to the same message with this increased volatility potentially the coming quarters, could you elaborate a little bit what would be considered a normal swing effect in terms of basis points in quarter?
That is, I would say clearly, I mean, ECL is forward-looking, in particularly in Stage one. It's absolutely possible for ECL to Stage one ECL to switch 0.1%, 0.2% due to kind of just macro updates on it and outlook updates. I would say that if we have a stable macro and a clear, very clear trend, Stage 1 has very clear trend. I think, next two quarters, we may see a little bit more volatility in Stage one. I mean, we have Stage one around 1.5% now, so kind of a 0.1 type % movement in the direction can probably happen on Stage one.
Thank you. My last question is on the Secured segment, which showed, it looked like the strongest growth, FX adjusted year-over-year. Can you talk about any impact from the new mortgage regulation in Sweden, if this has had any effect? We have now seen this regulation coming to force. Are you expecting this to impact the growth rate the coming quarters? Do you believe that you can sustain a level above 10% in this segment? Because in connection to the IPO, I got the feeling that that segment is expected to grow slightly slower than private loans and credit cards.
I think we've had a catch-up effect here where we had very low growth 2024 and so early 2025, and then kind of a catch-up effect through 2025 and now early into 2026. I mean, it's 14% growth individually Q1. I mean, our message is that we expect all three products to contribute to our 10% growth target at around that level. Secured, we don't expect it to be the standout growth driver, but we also don't expect it to be a drag on growth.
Any impact from the regulation?
On secured, no, not at all, I would say. I mean, on the totality, clearly, it clearly helps affordability. It's positive on private loans, clearly, as we communicated. Amortization requirements have gone down by 1%, which is all else equal. On the private loan side or on the Secured side, I mean, LTV has gone to 90% on purchase, 80% on refinance. Our business is around 1/2 and 1/2, it's kind of neutral.
Okay. Thank you so much. That was all for me.
Thank you. We will now take our next question. Our next question comes from the line of Emil Jonsson of DNB Carnegie. Please go ahead.
Thank you and good morning. I'll start off by asking the lower net interest margin and Secured from going towards more near-prime customers. Could you explain the reasoning behind this? I mean, in my mind, it shouldn't lead to that much lower cost of risk since cost of risk is already pretty close to zero, right? Is there a lack of sort of more profitable, less prime customers to lend to? Any color on that would be helpful.
Well, if you look at prime, you would see 0% credit losses. If you look at more tailored mortgages, you would see some credit losses. In the near-prime segment, yes, of course, credit losses are expected to be lower. I mean, it's not binary. That means, I mean, we serve It's not gonna we select one specific segment. We serve the whole market, there are slightly different margins across the markets, they are in a sense that even risk-adjusted margins that a lower risk segment have slightly lower risk-adjusted margins. It's about we service a wide segment in the Secured with our Secured products, that is our intention to continue.
Clearly, I think the near-prime market, that is very much a purchase market, and the purchase market has picked up. We can see that natural that we have seen a higher proportion of near-prime recently.
All right. Thank you very much. On the net commissions, you mentioned volatility between the quarters. If we assume that the underlying growth is continuing about as it has historically, and with volatility presumably being a tailwind going into Q2 along with some positive seasonality, would you say it's a reasonable expectation then to expect net commissions to hit a new record high in Q2? Or how should we think about this line item going forward in the sort of near to midterm?
I think, I mean, clearly, we had extremely strong growth in 25. I think it was around 30%. That's kinda we obviously not gonna see the same type of growth in 26. I think what we want to see in the NCI is that it grows a bit faster than the loan book. That's, that is what we want to see in NCI going forward. That will be individual quarters growing 2%, 3% in individual quarters, more the high teens. That's kind of that is the way it's going to look because we have these variable components, which means that if we look at it over longer term, we see these clear trends. Individual quarters, we will see this type of, this type of, fluctuations.
All right. Thanks. I would also like to ask, NOBA sticks out among peers when it comes to the size of the FX driven revaluation effects in other comprehensive income. In Q2, it happened to be positive, but since the start of 2023, this has sort of eaten up about 20% of net profits. This seems to me like an exposure that you would prefer not to have given the choice. Are there any plans to bring down this exposure effects, FX effects?
No. It's the Bank Norwegian acquisition. The translation effect comes from the Bank Norwegian acquisition. The way it works is that we hedge the CET1 in Bank Norwegian, whereas the goodwill is unhedged. It's reevaluations of the goodwill on Bank Norwegian that drives that effect. That's not something that we are going to in OCI. It doesn't impact capital, it doesn't impact cash. It will continue going up and down depending on how NOK/SEK moves.
All right. Okay. That makes sense. Just one final question on the 30% return on tangible target. Could you maybe elaborate on what levers you expect to drive return on tangible from the current 24% to 30%? I can see it going there on, in individual quarters, with some seasonality tailwinds. On a full year basis, in my mind it would require either an unreal level of cost efficiency or other factors that are sort of outside of your control, like higher risk-adjusted margins in the market or capital requirements coming down. Which levers do you expect to be most relevant here in order to reach the 30% target?
We start off with a kind of simple 24%, that's impacted by the unusual tax rate in the quarter. We have 25% with a normal tax rate. I would also say that it's an unusually high proportion of capital that is allocated dividend this quarter because it's we're paying out dividends for the full we didn't do an interim dividend in 2025, so we have quite a sizable dividend relating to 2025 to pay out now in Q2. For 2026 onwards, we're going to pay interim dividends in November as we communicated. That's it. First part, tax is impacting return on tangible equity in the quarter.
Second impact is we have an unusually high proportion of accrued dividends in equity in the second quarter. That's two factors. The other factors are going to come from kind of risk-adjusted margins continue to improve, cost increment clearly coming down and ensuring an efficient capital structure across CET1 and Tier one.
All right. Those were all my questions. Thank you very much.
Thank you.
Thank you. We will now take our next question. Our next question comes from the line of Björn Olsson of SEB. Please go ahead.
Good morning, guys. First, just to follow up on Patrick's question on credit losses and the sort of the modeling effects. I mean, you write it in several places in the report and the presentation. You know, you lower credit losses on model effect on macro outlook. If anything, the macro outlook for 2026 is weakening rather than improving since the start of the year. Should we expect this? I understand that there can be a lag in these types of models. Should we expect this trend to revert in Q2?
I mean, sort of the reduction in the positive trend that we're seeing in credit losses, that's very much driven by reduced actual defaults. It's not model parameters being changed, that's actual defaults reducing. That's the driver that we see on reducing cost of risk. The big driver here is if you look at the stages, the big driver here is Stage three losses reducing. As you can see also the coverage ratios are the same. That's really just actual defaults going down. If you look at that trend, we've continuously been reducing cost of risk quarter by quarter. We're currently at an LTM level of 2.8%.
That has been reducing the you look at the LTM on page 10 of the presentation, that's reducing 10, 20 basis points per quarter. We've guided that we think a normalized level is 2.5% to 3%. Clearly so that we've had this very clear trend where we've been moving towards the lower end of possibly even below our normalized target range. With the dynamics we see in the book, we expect our positive trend on credit losses to continue the medium term.
What we will may also see is that, we update forward-looking estimates in our models during Q2 and Q3, and that could have, in those individual quarters, that could have some negative impact because it's trend changes the exact direction of the trend, Or the exact position of the trend, even if it doesn't change the direction of the trend.
Okay. Gotcha. Thanks. Second, just to follow up as well on the Secured side. I mean, you have a strong lending growth, while you also mentioned that the margin is somewhat under pressure, both from seasonality and mix effect. You know, you have another listed peer that reported one week ago or so that also reports a similar trend. Are you experiencing a margin pressure in that market as well because you're competing with price, or how should we view the dynamic?
I mean, clearly helped with competition in the market and we noted that development.
I mean, we said it before, we see the near prime segment being quite active, and that clearly means that prices are slightly lower. The effect that you see here in the quarter is, I mean, 1/2 of it is probably due to the near prime market, and half of it is due to technical effects such as day count, et cetera. I don't think we're driving the market down. I mean, this is, I mean, we seem to be a long-term player here. We need to ensure that we have good profitability. Obviously we are also a different animal compared to most others, given the size we have. Our Secured portfolio is 15% of our total lending, so it is a smaller segment.
I mean, we're going after volume that we think is profitable for us.
Yeah. We have a 37% return on tangible equity in the segment. That's a level that we are very happy to deploy capital at. We deploy capital where we think we have the right returns, and we certainly do think we have in Secured, including the near prime segment.
Fair enough. Just a final follow-up then. As Jacob, you're saying that half of the margin effect is because of the mix effect shifting. Given how April has developed so far, and your outlook, should we expect the margin to continue to be somewhat declining then if the mix effect continues, or how should we view the margin development ahead?
I think we'll see fairly stable margins here.
All right. Thanks.
Thank you. We will take our next question. Our next question comes from the line of Sheel Shah of JP Morgan. Please go ahead.
Great. Thanks, guys. two questions from me on the margin, please. First, in terms of private loans, I can see that the margins declined there, some of it due to seasonality, and then you've also said you're implementing actions in Norway to grow the private loans book there. Is this going to have a margin impact, or should we expect a stabilizing margin in the private loans business going forward? Secondly, just on a wider question on the margins, on the funding side, in that deposits have been relatively flat, across the last year, partly because of the Avanza deposits rolling off, and at the same time, you've probably grown funding from other sources such as bonds and repos and whatever else.
Would you expect deposits to grow from here, and should that have a positive effect on the margins and the liability costs going forward? Thanks.
Yeah. We'll start off with the question around private loan margins. I think you have a little bit the same mind speak in private loans as in the overall NIM, that the private loan NIM is impacted negatively. I mean, private loan is 10% of our business, it's clearly the same dynamics there. It negatively impacted by this, by the FX, that the Actual average FX during the quarter deviated from two point average. There's that impact. There's also the day count impact. If I compare private loans, constant currency, and the day count, we're actually slightly up in Q1 versus Q4.
We don't see any margin pressure in private loans. It's simply the kind of optics of day count and the FX. That's the first point. Second point, Norway, it's not about It's not the margin side we're going to be working on there. It's about doing product change. We need to do A number of kind of product changes to make our That we identify with our segments that we could do better. It's not about pricing differently, it's more about how we do the product. The third question was around the liability side. I don't think the liability side will drive us either way.
I will expect that to be kind of a stable contributor to NIM, also going forward.
Great. Thank you.
Thank you. We'll now take our next question. Please stand by. Our next question comes from the line of Ulrik Zurcher of Nordea. Please go ahead.
Yeah. Thank you. Just wanted to check because if we forget about funding costs, so we just look at the income yield in the private loan segment, is the story still the same? That it's like underlying stable yield, quarter-on-quarter?
Sorry, can you repeat that, Ulrik?
Yeah. I was just In the private loan segment, I was just wondering if we take out funding costs, like we don't look at the NIM, we just look at the yield you get on the private loans. I was just wondering if the story is the same. Like, is the yields you get on the loan stable quarter-on-quarter?
Yeah. If I do the same trick there, I'm positive. It's the same.
Yeah
If you adjust for FX and you do adjust for day count, you get the same positive development. I mean, it's kind of you can do it yourself. You have the split of the loan book.
Yeah
We gave the information. The call is also on our web page from the pre-closing transcript that average FX deviates from two-point averages. Also, if you look at the gross margin, it is all day count and FX.
Yeah, 'cause then it's the next question because you did mention competitive situation last quarter. To me it seems like the credit quality, the risk-adjusted and they miss improving and you're taking market shares. Would you say that the competitive environment is like unchanged, relatively benign or?
I think what we said last quarter was that after a period of expanding net interest margins, we probably expect it to be flat-ish going forward while we should grow at our target rate. I think that's actually exactly what we've done in the quarter, and that's what we can expect to continue to see. That we will see relatively stable margins.
We always have a few moving pieces here and there but underlying stable margins and growing at our target growth rate.
Yeah. Yeah, it's just your competitive position seem to be very strong. That's a leading question.
Yeah, indeed.
I'll move on to the next one. Yeah. Just last one, I was just on the model losses, could you remind us what is the primary driver there? Is it like unemployment interest rates or?
Yeah, GDP unemployment interest rates.
Okay, great. Thank you.
There are no further questions. Speakers, please continue.
Thank you so much for listening in and for the questions. That wraps up this session. Have a great Thursday.
This concludes today's conference call. Thank you for participating. You may now disconnect.