Earnings Call: Q2 2020

Jul 15, 2020

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the SEB's Q2 2020 Results Call. And I would now like to hand the conference over to your first speaker, Mr. Johan Sorgebi. Thank you. Please go ahead. Thank you very much, and good morning, and welcome to SCB's 2nd quarter results call for 2020. A little bit just formal instruction, if you want to follow the presentation that myself and Marci will refer to, you can find the presentations on sebgroup.com and there is a link for the Q results and there we will have the slideshow that we will refer to during this presentation. Starting just with some comments about the macro on Page 2, the financial markets development. I don't think anyone has missed that we've seen a very strong reversal from the Q1 weakness that we saw in the financial markets. So we note that year to date, the Stockholm broader index is actually up and it's significantly up compared to a year ago and not too far off the recent peak that we saw on the 19th February. This has clearly had a positive effect on our Q2 when it comes to market valuations and also AUM. Looking at credit spreads, they've also continued to tighten during the quarter. We can see that both the high yield and investment grade index has a little bit left to go to come to the previous lows, a little bit less recovery, but still a meaningful improvement compared to Q1. We've also included SEB's credit spread, which is marginally higher than we saw before the corona started to affect the credit mark pricing. This has also had a very strong reversal effect, particularly on NFI, where the CVA, the credit value adjustment particularly is driven by the perceived EUR 4,000,000,000 to default implied by the credit spreads in the markets. On the interest rate side, it's been remained very low and we've seen a sideline movement. So nothing no large impact coming from them. Flicking to the next page, Page 3, the economic effects of COVID-nineteen lockdown. We've included this slide as it has become quite topical around the Swedish model. We're not going to comment on the health impact, what it might or might not mean for Sweden, but we thought it would be useful in the context of future credit loss assessments and also economic activity assessment to share a few points on how it looks in Sweden. Sweden is, of course, our largest market where the largest exposure on credits exists. If we start with just looking at some public data from Google data on people mobility, we've included 2 data points just to show how much less Sweden has been affected. First, when it comes to the geographical position in retail or recreation sites, we see a 20% drop and meaningfully less than you've seen in those countries. Also tracking the transit stations, this is really where you go to school and you go to the office or what you do. Also here, we can see less of a reduction in activity for people mobility at 36%. These two soft factors are a, we think, a good representation of how it felt. We have been affected in this country, but not as much as many others. Looking at the more harder data, there is a picture being clearly showing that the domestic economy seems to have done quite well. If you're not exposed to business travel or you're not affected by the restrictions of travel, such as retail consumption and domestic services, we see a clear difference in economic activity both in retail consumption and in PMI services compared to Europe at large. Looking at industrial production, it looks much more in line with Europe as such. As Sweden is a small, open, export oriented economy, we are clearly dependent on global supply chains working and, of course, demand outside Sweden to be able to meet that demand and we see a much more similar picture on the industrial side. And then lastly, just sharing our own economists' projection on GDP and unemployment, we also see here that it looks like the recession will be less deep than is expected for Europe at large and unemployment levels marginally lower. Going to the next page, Page 4, COVID-nineteen related credit requests. We have here from the Q1 again put in a picture for large corporate and financial institutions. This is the division which has had and which we are seeing the largest demand, increased demand for credit coming through. And just pointing to this graph and end of Q1 2020, we had a credit exposure in this division of NOK 925,000,000,000. Looking at Q2 2020, that had gone up to NOK 996, So this is an 8% increase in 1 quarter of credit exposure to the large corporates and financial institutions in SEB. In Q1, we also included a more recent updated data point as of 17th April, which we also put in here for comparison with today. And one can clearly see that the increased demand that we saw in Q1 has fallen down a bit. So at that point in time, we had SEK83 1,000,000,000 in a pipeline that we thought was likely to be converted into real exposure that has gone down to 63. And just to be clear, there is still an increased demand, but less so than we saw previously. We've also seen the on balance sheet exposure, the dark green proportion of the total exposure gone down. And this means that the propensity to use these credit facilities as an insurance for a rainy day in the future, as we pointed out in Q1, has increased. So many of these are there for a rainy day rather than being drawn here and now. That can also be interpreted in a positive way given the economic impact amongst the large corporates, As they have not drawn, their cash flow estimates for the next 2 or 3 quarters seems to be intact that they have not really needed to use the money for now. However, I would point out that visibility is low, although there is a trajectory we are sensing to a more normalized situation where we have less discussion with clients around COVID-nineteen and a more normalized discussion with clients on how to proceed. Going to the next page, we then look at the actual development for the whole corporate and credit exposure in the bank, and we can note a slight acceleration from elevated level in Q1, where corporate exposure grew by 10% FX adjusted year on year in the second quarter and also a slight acceleration in Swedish mortgages that grew 7% during the Q2 compared to last year, both indicating a very healthy activity level going into the rest of the year. Next page, Page 6, I would like to put in context. In April 2019, the FSA in Sweden announced that they would conduct a larger supervisory review of SCB's governance and control of its Baltics subsidiary from 2,007 up until 2019. On the 25th June, the FSA published its findings and I'd like to just go through some of the decisions that they have made, our comments to those decision and how we plan to respond. The Swedish FSA has decided to give SEB a remark, which is the lower degree of an administrative sanction, coupled with an administrative fine of SEK 1,000,000,000, which represent 14% of the new sanction scale the FSA have at its disposal to impose on a bank. We can also say that given this decision, we have now heard from all the Baltic and the Swedish FSA and the ongoing supervisory reviews have now been concluded in the AML area. This morning, we have commented on the FSA's decision, and I'll just give you 3 summary points on what we think. First, SEB question some of FSA's conclusions and therefore subsequently also the proportionality how those conclusions can lead to SEK1 1,000,000,000 in an administrative fine. This is really based on a question that we have about what has actually been a deficiency and when should that have been addressed. It is unclear to us. Secondly, FSA's observations have already in the past largely been identified, reported and addressed by SEV, and that's good for the future that we are on track to improve. And also for the avoidance of doubt, SEB does take full responsibility for all its subsidiaries, not at least the Baltic subsidiaries, despite some comments made by the FSA in conjunction with the published report. SAB has now decided not to appeal this decision. We think after careful analysis that we create more value for shareholders and other stakeholders by focusing on developing the bank and our offering, including spending the time and energy it would take to look at this kind of report and spend that time and money on invest for fighting financial crime in the future. We've also done a careful assessment of the initiatives and investment, and we conclude that we can fit all those initiatives in under our previously communicated cost target for 20 21,000,000,000. Going to a summary page on what we're now doing on the area of regulatory compliance and AML on Page 7. We of course would always strive to adhere to current regulation and our own internal high requirements and we seek to have the highest standards for corporate governance in the bank. There are 2 important initiatives that are currently ongoing. The first one is part of our business plan that was launched in December 2008, where we have a significant program to enhance our capabilities, a program we call Financial Crime Prevention Program. Part of this includes investing in new technology and reviewing several different areas of the bank to improve. Secondly, we initiated a cooperation between banks to share information to become more effective finding financial crime. It's also a cooperation between banks and the Financial Intelligence Unit, the Financial Police, so we can start working together actually addressing the core of the problem. This has now been launched and it's called Samlit and we are very hopeful that this will lead to a much more effective way of fighting financial crime in the future. Next page, Page 8, continued business development. Thought I'd just summarize some notable events to us during the Q2. First, when we come to advisory leadership, we have been selected to be the advisor to Daimler for financial issues relating to electrification of the automotive side in Germany. We've also issued a health bond for Region Stockholm. This is a local municipality. And this health bond is an innovation in itself as it's targeting diabetes and potentially limiting also obesity for the future. We've also been selected together with Toronto Dominion to be IFFM's arranger of an immunization bond, particularly financing the corona situation. We got awarded the most ESG Responsible Banking Group in the Nordics by Capital Finance International. And we've also launched in the wake of corona an initiative together with a few very reputable financial institutions in Sweden, a corona solvency company. This is a company with SEK 5,000,000,000 at its disposal to put in equity like capital for medium sized, predominantly non listed company that need equity type of capital to weather the storm. This is an area of the capital markets that we in the private space for those companies that are well functioning and just in the private space for those companies that are well functioning and just need not liquidity, but they need equity like capital. On operational excellence, we're very pleased as part of our initiative to improve our digital savings capability that we've launched digital trading in the app for funds. So now both buying and selling funds of different natures can be done in the mobile channel as well on the desktop channels. And we have launched also secure messaging, which is really a secure digital dialogue tool in the mobile channels. And given what we have learned in how important this is going forward following corona, this is also a good step forward. We have another initiative around extending our presence. This is reaching customers in new ways and in new areas where we previously didn't. And here is verified a validation of identity tool, which is cloud based for e signing. This is contract and also verification of identity for mid, medium sized and large corporates. In Sweden, we have something called the bank ID that works very well for private individuals, and this is almost like an extension into the corporate space. Under the open banking initiative, we also launched a cooperation with Fitech in the Baltics, which is enabling integration of eVoicing into the through the API structures in the bank. So both those are also very interesting to us developments for the future. Page 9, we now go into the financial results during the Q2. The highlights we conclude are that we've seen encouraging client activity and a very resilient underlying business during Q2. We've seen the positive turnaround, the strong reversal in financial markets, which has had a positive effect in several areas of the bank. Return on equity increased to 8.7%, including taking a provision for the SEK 1,000,000,000 administrative fine as well as increasing expected credit loss provisioning to a level that we think is appropriate. And we just conclude that we have a strong and liquidity position well placed to continue supporting and developing the bank supporting the clients and developing the bank. Next page is just looking at the 1st 6 months and then I will ask Matti to go through Q2 in more detail. But it's interesting to see what these two quarters actually sum up to. It's the same income roughly as we had the first half last year. It's the same cost as we had last year and it's the same profit before credit losses. The large difference compared to last year is, of course, the increased ECLs of SEK 4,200,000,000 and so far year to date and the item affecting comparability of SEK 1,000,000,000, which is directly linked to the administrative fine. Net ECL level is at 35 basis points. Cost income at 0.47 percent, core equity Tier 1 of 17.8 percent and return on equity of 7.4 up roughly 1% from the Q1 isolated. And if you adjust for the SEK 1,000,000,000 administrative fine, return on equity increased to 8.6%. With those remarks, I will now hand over to Masi, who will go through the Q2 financials in more detail. Thank you, Johan, and good morning, everyone. So I'm on Slide 12 now, the financial summary for Q2 2020. And as you can see, year on year, we've seen 15% revenue growth and with 0 cost inflation that leads up to 28% pre provision profit growth versus Q2 2019. And as Johan said, the elevated loan losses means that the profit post credit losses is down 8% versus the same quarter last year. In the quarter, the net ECL level is 46 basis points. The cost income ratio is low at 0.41 and return on equity, excluding items affecting comparability, is 11.2% in the quarter. Next slide, Page 13, net interest income. It's up 11% year on year, year to date so far this year. And there are mainly three factors that has led to this improvement. The first one is increased volumes. The second one is the lower resolution fund fee that we pay this year. And the third one is improved deposit margins driven by the repo rate hike we saw in December last year. Partly offsetting this is some margin pressure on lending, especially for mortgages. Now I thought I'd comment a couple of minutes on the NII in Q2, which is down versus the Q1 level. And I would say there are mainly three factors that have led to this. The first one is related to treasury and our short term funding. We issue commercial papers in U. S. Dollars, and we did this at elevated levels around year end 2019 early 2020. We do this at fixed rates at the prevailing rates at that point in time, which was around 1.5%. Most of this is swapped to other currencies, but some of it is placed in Federal Reserve as a liquidity reserve. Now when we had the rate cuts from the Federal Reserve, this means that the yield on the liquidity that we have at Federal Reserve comes down and that this has led to a pressure on net interest income. On the other hand, what we've swapped to other currencies goes up in value and has a positive offsetting effect on net financial income. When we look at these papers, as I said, it was elevated year end. And if you look at it by end of Q2, it has come down to more normalized levels. And so this should be a temporary effect and going forward, we don't expect this to continue. The second factor, which has had a negative effect on NII is margins within CMTC, so corporate and private customers. Most of the lending we do in this bank is related to a reference rate at some point, but then we have a few products where we have a more centralized pricing for the lending we do. And this is mainly for mortgages, consumer loans and SMEs, some parts of our SME book. In Q2, funding costs went up in the bank, and we decided not to increase pricing to these customers, which means that we had margin pressure for these products. Now if you look at end of Q2, funding costs have come down, and we have also slightly adjusted prices, both for mortgages, for consumer loans and SMEs. So again, if you look at our disclosure, you can see that the net income within CMPC is down around SEK 100,000,000 in Q2, but this should reverse going forward given the lower funding costs and the increased pricing. The last part is within the Baltics. In the Baltics, we've seen now for some period of time that deposits have outgrown lending. And now in the Baltics, we have a loanDepot ratio below 1. Now in Q2, when this continues, it means that we cannot use the deposits to increase our lending, so we place it at central banks, mainly the ECB, at minus 60 basis points. And this has led to margin pressure within the Baltic business. This part, I would say, is likely to be more structural. So if I sum this up, the three factors I have mentioned, I think, has had a negative effect on this bank in Q2 of around SEK 250,000,000 to SEK 300,000,000 in this quarter. And we believe that a big proportion of this is temporary and should reverse going forward. So if I look at the NII line, we had 14% growth in Q1 year on year. We have 6% growth in Q2 year on year, and the average year to date is 11%. And it feels like the average year to date is more representative for this year's development. If I move to the next slide, fee and commission income, it's flat year on year. If you look at this quarter, it's down 6 percent from Q1, and that's mainly related to card fees. And for us, it's mainly related to transactions on corporate cards that have come down mainly due to the travel restrictions as these cards are mainly used for those kind of purposes. If you look at Q2 and specific months in Q2, we can see that the bottom came in April. We saw an improvement in May and a further improvement in June, but June is still a bit below a normal level. We continue to expect that this will be a bit depressed going forward and maybe by year end this year, it will have reached a more normalized level. I'll also comment here on net fee and commissions that lending fees see a 10% growth year on year, obviously related to the credit request that we have seen from large corporates. I move to net financial income on Page 15. You can see that we've had this big recovery in Q2 versus the negative numbers in Q1. And I conclude, when you look at this slide, the last 9 quarters, the average level for this line is around SEK 1.7 billion, SEK 1.8 billion. On the next slide, to explain what's happened in Q2, we're comparing this to what we had in Q1. As you can see in Q2, we have an underlying level on this line that is above the level of Q1, And then we've had reversals relative to Q1 for several different factors. CVA, BVA is one of them. We covered almost half of what we lost in Q1. But as you can see, we still have reserves here for the future, around SEK 700,000,000 net reserves on CVADVA. This will come back eventually unless we see defaults in the counterparts we have derivative exposures to. So physics shares is up actually more in Q2 than we saw the loss in Q1. It's mainly driven by Enenso or what we used to call Atia Castietto as the share price is higher now than it was at year end. And then you see recoveries in Life and then the treasury improvements, part of that is by what I mentioned on the short term funding that is swapped to other currencies where the value has gone up after the rate hikes in the U. S. Next slide, our favorite slide, operating leverage. As you can see, it looks pretty good, pre provision losses. We haven't added the bar here for H1 'nineteen, but had we done that, you would have seen that so far this year is in line with the same period last year on both revenues as well as costs. Moving to Slide 18 and a few comments on credit provisioning. Here to the left, you can see what we did in Q1. So in Q1, we had underlying losses or provisions based on individual names of around SEK 400,000,000 and we did a model overlay of SEK 1,100,000,000. In Q2, we have updated the bank's macro models according to the view we have in Nordic Outlook by Our Economists, and this has led to increased provisioning of around SEK 600,000,000 this quarter. On top of that, we've done another model overlay of SEK 500,000,000, of which the majority is related to oil and gas exposures made within the offshore sector. And then in this quarter, we have individually identified companies that we've done provisioning for summing up to SEK 1,600,000,000, of which most of it is coming within the LC and SI division. And to the right, you can see that the total model overlay we've done in the 1st 2 quarters this year, SEK 1 point 6,000,000,000 and the distribution of that to different sectors. And as you can see, half of it is to the oil and gas sector. If I move to the next slide, Slide 19. Here, this is a way for us to show you the sensitivity we have in our models to different macro assumptions. What you see on this slide is what we've used to come up with the almost SEK 600,000,000 higher provisions this quarter. We have a base case scenario where we add a 60% probability and then we have a positive and negative scenario with a 20% probability each. And you can see what we assume here in terms of global GDP growth as well as Swedish GDP growth. And obviously, we have asset prices, real estate prices backing this up as other important factors when you do this provisioning. To the right, you can see what would happen to these provisioning macro provisions if the probability of either the positive or negative scenario would increase to 100%. So in a situation where the probability for the positive scenario goes up to 100%, our provisioning would be reduced by SEK 760,000,000. And on the contrary then, if the negative scenario would materialize, the provisioning would increase by SEK 1,250,000,000. If you look at it right now and look at our economists' forecasts, they believe that it's more tilted towards the positive scenario. But obviously, we have a couple of more months to go before we update this again for Q3. Summarizing on the next slide, Slide 20. What I would mention here is, firstly, the customer deposits. It's up SEK 270,000,000,000 year to date or 23%, which is a massive growth. It's linked to some conservatism when it comes to corporates as well as households, but also likely linked to the increased liquidity in the system with a lot of central banks doing QE. The second thing I would mention here is the capital. We have a buffer of 4 10 basis points this quarter. It's up 100 basis points. And the driving factors here are FX, 40 basis points. We have almost 30 basis points from the change requirements on SMEs and infrastructure lending, and then 20 basis points is a net effect from risk migration. Now the reason this is a positive effect is that we've had more migration to risk class 16 than which is the default risk class then within the non default risk classes. And for risk class 16 or default risk class, you don't hold capital against that, you hold reserves, which we have done this quarter. And also the new lending in the banks during the quarter has been to a lower risk rate lower risk rate corporate, so investment grade corporates than the average back book of the bank. The buffer you see here, around 10 basis points, is excluding the dividend that was previously proposed for 2019. If you add that back, the buffer would be 5.90 basis points. That was my last comment. I think we open up for Q and A. Thank you. Thank you. Ladies and gentlemen, we will now begin the question and answer session. And your first question comes from the line of Chris Hartley. Your line is now open. Hi there. Thanks everyone. I've got a couple of questions, please. Just firstly on kind of capital returns. You've also got a very strong capital buffer right now. Can you maybe update us on your thoughts about how and when and how much of that might come back to shareholders? Maybe remind us of what the regulator is saying and any sort of capital drags that are coming down the line? And I guess sort of related to that is you just mentioned risk migration. You've kind of set out a sort of SEK 6,000,000,000 as being a sort of a maybe sensible provision number for the year. How does the credit migration pattern sort of fit into that? Would we see sort of the situation in that as time goes by and so it's a bit of a drag on capital? Or is that sort of all in now? And then just just to follow-up on your NII that you mentioned. You just mentioned 11% as being sort of a sensible sort of number for kind of development for the year. Is that is that everything included in there? Or is there any kind of margin pressure to think about? Or yes, just a little bit to elaborate a little bit more about what's in that 11% now? Thanks. Okay. Thank you. I can start with the capital returns, and then I'll just step back a few months. The last thing we formally heard was really the EBA ECB guideline that we should be very cautious as an industry in repatriating capital to shareholders. And there was a date signaled, namely the 1st October, just to say that visibility on loan demand and visibility on future credit losses would be very welcome to have before we take any firm decisions on capital repatriation. That has meant in my book that most banks have followed this recommendation and therefore canceled or postponed dividends for 2019 until further notice. Currently, there is, of course, a little bit of a debate, should that be extended from the 1st October for the rest of the year in order to create some clarity and unison around banks, and that's where we are. So there have been some statements and they're calling for it to be extended. Some say that there's no reason to because why don't we just wait for the visibility to be improved and then we'll make a decision. And whenever that comes, that would be the appropriate time to bring the question up. So the door is, of course, in that sense, open. However, in this bank, we have said until the front of note that we don't pay dividend for 20,000,000,000, but there is no estimate that needs to be done as appropriate when that time comes. We've also said that the capital structure targets of the bank are not being changed. So if you look at a medium to long term perspective, we want to run this bank with an adequate buffer and have a progressive dividend over the years, but we repatriate similar to the past as a percentage on payout ratio, etcetera. Then how that de facto will materialize is up to the Board and the shareholders, but there's no permanent change in switching into a buffer that is not in line with how we previously liked to run the bank, which is very prudent conservatively but also shareholder friendly. Okay. I'll take your second two questions. So when it comes to risk migration, obviously, if you look at what we've done so far this year, we've taken SEK 4,200,000,000 out of the SEK 6,000,000,000 we expect. And this is partly driven by the fact that we've had migration to Stage 3, which we do reserves for. Now obviously, this means that we don't expect as much provisions for the remaining 2 quarters, I. E, not as much migration to Stage 3, so therefore, we don't need as much reserves for the coming two quarters. But we do expect that we will see in this kind of a scenario, macro scenario that we have that there should be negative risk migration going forward, maybe not to Stage 3, but within the non default risk classes. So I think a conservative and a likely scenario is that the risk exposure amount in the bank should go up because of negative risk migration in the coming couple of quarters. I think that should be a base case scenario. On NII, I mean, I think the point here is to say that we've had a very strong quarter in Q1 on a year on year comparison of 14%. Maybe that's not representative for the development this year and neither is the 6% we have in Q2. And maybe an average of those 2 is more representative for the full year. If you look at what's happening in the bank this year, we have a reduced resolution fund fee of SEK 800,000,000. That's obviously positive for NII. We had a REIT rate hike by year end last year, which is positive for deposit margins, and we're growing the balance sheet of around 5%. If you add all this up, it leads to around a 10% NII growth. There could be margin pressure on top of that, and there could be other temporary effects coming in the coming quarters. We don't know about yet. But if you do a sort of a likely outcome, you should add these 3 together and you come up with these kind of numbers. So that's the message. Okay, great. Yes, it's very clear. Thank you. Thank you. And your next question comes from the line of Magnus Anderson. Your line is now open. Yes. Good morning. I think I should start with NII and just if you can say something more about lending margins since that's what you mentioned in your report as a negative quarter on quarter and you were touching upon it. I saw during the quarter on the mortgage side, you, for example, raised your list price by 8 bps on the 1st June, then you lowered it by 10 bps on the 13th July. So just what's going on in the mortgage market, what you're seeing there? And secondly, on the corporate lending, there were expectations that margins potentially could come up if why that's not happening? Is it mainly pre negotiated credit lines being drawn? Or how should we think about lending margins generally? Okay. I'll do that, Magnus. So yes, we've had margin pressure in the quarter. It's mainly related to what I mentioned on consumer loans, on mortgages and on some SME loans. And that's driven by higher funding costs. So that has been the case. But as I also mentioned, we did raise the prices on mortgages, as you said, 8 basis points in June, and we also raised prices on consumer loans and SMEs by 20 to 25 basis points in June. It is correct that we did reduce the price by, I think, 9 basis points yesterday on mortgages, but that is very much in line with what has happened to funding costs since we raised prices by 8 basis points. I don't think that stand alone should lead to any margin pressure. On corporate lending, it's a bit complicated. I mean, first of all, many of the requests that we have approved have not been drawn. So it's not leading to any NII at the point in time. But if you look at the rates that we have approved this request on, the margins are up compared to what these margins would have been hadn't this pandemic happened. But then the average quality of the corporates we're doing new credits to is higher than the back book. So it's on a like for like basis that margins are up, not necessarily compared to the back book. So I think it's on a sort of return on equity basis, it is higher, but it's not the same thing as it's going to be enhancing for the bank as a whole. So I think it's a bit complicated, but you have to keep both those two thoughts in your mind at the same time. Yes. Okay. Thank you. And then just on net commission income, I think you broke up, at least on my line there, on payments commission. Did you say that you expected them to be back to normal in Q4? We talked to our CNPC division that followed this more closely. They expect that by year end, I'm not saying Q4, maybe it's going to be December, this should start to reach a more normalized level. So basically, also saying that Q3 should not be a quarter where you're going to see this as a normalized level. But we do see a recovery if you look at the different months within Q2. June is much better than April, but still a bit below a normalized level. Okay. And then on capital, you had a positive impact from the increased SME supporting factor here in Q2. Is there and I say that on Page 23 in your fact book. Is there any more coming in into Q3? Or did you take everything in Q2? There's nothing more coming on SME's reporting factor. There is one outstanding issue when it comes to the regulatory changes that are discussed in EU and that's on software deductions or intangible deductions on your capital base. They said that they can include that in Q3. If they do that, that's potentially a positive impact. So you don't have to deduct as much intangibles on your capital base that could have a marginal positive impact on our capitalization as well in Q3. We'll see what happens with that. Okay. And finally then, just on TLTRO and the rig's bank facility of SEK 500,000,000,000. Did you take any money from that during Q2, any of those? We took I think in Q1, I don't think we took that much in Q2 or any, to be honest. And we have to take yes, so I don't recall exactly how much it was, but maybe SEK 15,000,000,000 or so in Q1 as a way of supporting the Swiss economy. Okay. Thank you very much. Thank you. And your next question comes from the line of Nicolas Macbeth. Your line is now open. Hi, thank you. So a question on the AML. I was wondering if you've had any renewed interest from any U. S. Authorities to look into your AML history after the FSA sanction decision? And also if there's anything on the FSA's action list that you expect to bring significant additional cost inflation on top of what you have budgeted for 2021, 2024? Thanks, Nicolas. We start with the U. S. There is, to our knowledge, no ongoing investigation with a sanctions case against SEB in the U. S. That is not to be mixed up. You never know the relationship with the U. S. Regulators is slightly different because they might do something on a desktop, but there is nothing there for us. And also, as we pointed out in Q1, we have now taken away from our risk factors in the Q1 report the things that we think of a significant nature. We did add the FSA or in the Swedish investigation as it is a factor one should consider, and we've not added any in this quarter. I hope that serves as a good comment trying to weigh the different interests in commenting on this. When it comes to the action plan, as we have concluded, most of the areas that we need to improve has been already identified by the bank and is part of the plan. We also need to remind ourselves that this ended in Q1 'nineteen. So it's a year and a quarter ago, these findings were fine the last point and a lot of things have happened in the last year, including resources, investments in the current business plan, etcetera. So there will be investments going forward. We will continue to accelerate. You might remember we had pointed to a €200,000,000 over and beyond investment last year in the full year result, but we are convinced that we can fit that in the current cost framework, reallocating and prioritizing in the best way we can. Okay. And then a more general follow-up on costs. I think in Q1, you mentioned that there are some positives and some negatives impacting the cost base from the COVID-nineteen downturn. If you could just please update on your view on that, I guess, less traveling and entertainment expenses, but maybe higher IT expenses. What's your view on the net impact from this dynamic list? Yes. Hi, Nikolas. You can see in our disclosure in our fact book that travel expenses this quarter were SEK 20,000,000 compared to SEK 120,000,000 the same quarter last year. So obviously, we do see that positive effect. Whether that's temporary or permanent, I think we'll have to wait and see. I'm pretty sure that it's going to come back to closer to a historical level, but a permanent reduction of some sort is likely. And so we see that happening. And on the digital part, yes, I think that will lead to higher cost. But what the net effect of these 2 will be, I think it's a bit too early to say. So we basically have the same comment as we had in Q1 that there are both positives and negative. And it's difficult to conclude that whether the net effect is going to be positive or negative in the long term. Okay. Thank you. Thank you. And your next question comes from the line of Andreas Skahensen. Your line is now open. Hi. I hope it was my name, Andreas Hokanson from Danske Bank. Two questions. 1, coming back to your capital distribution. Johan, you said that you're going to see and that the Board has stated that they might distribute if this is appropriate by the end of the year. I mean, if I look at the old capital requirement, I guess the new one is not going to be a good measurement. But if I take the old one, you have a 2 70 bps buffer to that one and you have a management buffer target of 150 bps. And you have been lending quite significantly to the economy and you keep a strong profitability. On that, what do you consider to be appropriate? What are you really looking at? That's the first question. Okay. I mean I should be careful here. So let's state what is formally decided right now, and this is a Board decision. It is not to pay out anything for 2,009. Just so everyone is it, the Board can anytime they want, of course, ask us in management to do a different proposal, but there is no such ask right now. So there needs to be some type of trigger change in the environment for this to change. When it comes to the buffer, you adjust it for the dividend that we actually still continue to reserve just so you don't overestimate the capital strengths of the bank. We have no difference in our medium and long term target as we have today, which is a call it an around 150 basis point buffer to the minimum capital requirement. Of course, one needs to take into account in the medium term if the countercyclical buffer is likely or not beyond 2021, 2022 to be reversed. You don't sit in a tight position then. But for now, the Board has not assigned any other than that type of management buffer at our disposal. So that is intact. And that's, of course, the question then what time and how will that one normalize. If this goes well, this needs to be normalization next year. If it doesn't, we probably need to spend these for the benefit of our clients, and that's a good thing. But we also need to have a significant buffer for potential losses if there is a second wave, which we are not assuming right now. Okay, fine enough. We'll wait and see with that one. And then a question on your loan loss per share side. Apart from the general overlay and macro provisions, it seems like almost all your underlying provisions are oil driven. Two questions on that. First, why didn't you take more oil in Q1, given that we already saw where we're heading? And then 2, could you tell us the underlying apart from oil? It seems to be exceptionally strong. Could you tell us a bit about how you see that area? Yes, Andreas. I'll try to do that. If you look at Q1, I think I mean, there are a lot of things that happened just in a couple of weeks when we closed the books in Q1. I think the oil price reduction actually came in the 1st few weeks of April. So I think it was very difficult at that point to conclude exactly what would happen. What we've done in Q2 is to go through many, many of the large corporates that we have on individual name basis and see whether we think that some of them might have problems in the future. So I think now we've had more time to do that exercise, and therefore, we've been able to more closely identify the companies we believe that we need to do reserves for. So I think that's the explanation for why the reserves on individual names on the oil sector more comes in Q2 rather than Q1. It is correct that the underlying quality is very good. It is very difficult to see corporates with problems outside of oil. And within oil, it's also not just one picture. It's mainly offshore driven, I would say. And within leverage finance, within leverage finance, it could be different sectors, but it's mainly related to retail, for example, or health care, but it's not very widespread. So it is correct that we don't see that large effect in the book as a whole. And as you can see in our disclosure, the average risk rate is coming down, and we haven't seen that much risk migration across the book. It's mainly related to oil and gas and especially offshore. So for now and it's difficult to see say whether these are temporary effects and how much government support is helping us here. But yes, I think we're seeing basically what everyone else is seeing that so far there's no real broad based deterioration of asset quality. Thanks. And to follow-up on that, which should I then assume that the couple of 1,000,000,000 that you expect in loan losses for the second half, what's left for the SEK 6,000,000,000, that's then going to be more in the broad economy rather than oil again? And then could you tell us how much is actually oil because you group it together with mining and I guess mining could quite big for you. Could you tell us what is really oil? I can't give you the number. But as you can see, 50% of the model overlay, so SEK 800,000,000 is related to OLS. So we do expect that the future provisionings on individual names will also be related to OLS to a large degree. It's difficult to say exactly what will happen in Q3 and Q4. I mean, we have a model overlay that's based on an assumption of future problems we could have. If problems arise outside of those assumptions, then it could be different. If it's within those assumptions, then we can use some of the reserves we've done on a portfolio level. So I mean, it's too early to say, but we feel fairly confident that given the outlook we have in Nordic outlook, around the SEK 6,000,000,000 number will be the actual outcome for this year. Okay. Thank you. Thank you. And your next question comes from the line of Robin Rainey. Your line is now open. Hi, good morning. Thank you for the presentations and thank you for taking the questions. So starting up with the trading line, the underlying trading in Q2 were about SEK 2,000,000,000. And I think you've said previously that you would expect underlying trading to be around 1.4 or something. How do you see this go forward? Is there something structured that we might see a higher level going forward? Or is Q1 more of a one off in your view? Thank you for that question. I think one need to recognize that there has been highly volatile markets in Q1 and Q2. So we only had SEK 950,000,000 or so of underlying. So we were somewhere between SEK200,000,000 and SEK400,000,000 short. That's more or less compensated for Q2. So I personally just urge anyone to be a little bit more kind to the analysis than intra quarter because this is moving around a lot. We have not seen any reason to change our guidance that over time on average we expect the underlying to be 1.2 to 1.4. And then on top of that, of course, we've always talked about plus minus 2,300. That has, of course, changed as we saw how much impact we had on following the corona. That's just pointing to that this is a volatile line, but it tends to be reversing. I would say recovering all the time, but it will be reversing over time subject to market prices. So same guidance. Okay. Thank you. And then a follow-up on payments, in particular card corporate card revenues. So you said that you think that by year end, this should be back to normal level. But what are you assuming there in terms of, I guess, corporate card revenues is very much driven by traveling, business traveling. So are you expecting business traveling to come back? I think you said that you didn't do that when you talk about costs. So what assumptions are you making there, If you could shed some light on that. Yes. I mean, I think that's the conclusion you have to draw. We basically base what we say on the forecast we have in our Nordic outlook. And in that forecast, they don't expect that there will be a second wave of lockdown. So we are on a path of normalization, and the question is how fast that will happen. And based on that path, we believe that by year end, at some point, this will be back on a normalized level or at least the level it was a year before that. You should also obviously remember that we've had a structural growth when it comes our payment fees over time for many, many years. So even if we're back to last year's level by year end this year, it still means that we're missing a few percent that we normally have in terms of growth. So part issuance goes up all the time and transactions go up all the time. So you should have that in mind as well. But I mean, yes, it is based on the view that at some point in time, travel will go back to closer to a normal level. Okay. And then lastly, just if you could remind us on the cost target for 2020 adjusted for FX, what where would that stand now? Yes. There's no cost target for 2020. For 2021, it's SEK 23,000,000,000 right now. With the current FX, it will be SEK 23,200,000,000. Okay, Adrian. Thank you very much. Thank you. And your next question comes from the line of Nick Davy. Your line is now open. Good morning, everyone. Three questions, please. The first one on following up on that cost point. Is there anything you've learned from the last 3 months which changes your view of the sort of medium term cost efficiency measures you can take in the bank outside this discussion of travel costs? The second question would be around Slide 4, the same slide about pipelines in the large corporate business. It's, I guess, somewhat surprising how different the last quarter has been relative to 'eight where you just had the pipeline showing up in credit facilities, but actually loan book shrinking. I just wondered whether you thought that dynamic would change in the second half or whether this is really the shape of large corporate activity at the moment, just setting up these safety nets but not using them? And then the third question, I just wanted to come back to your comments about putting up SME lending rates by 20 to 25 bps in June. Could you just talk a bit more about that? Specifically, maybe the size of the SME book, if you could remind us and also how quickly it filters in to lending rates? And any comments about have you seen peers doing similar? Just trying to understand that move in a bit more detail. Okay. First question was around cost efficiency. I think I mean, we don't have any further comments on that at this point in time. We are doing extensive work internally on lessons learned from what's happened in the last few months. And when we update our business plan by year end, we will have concluded on how we see the future given what's happened in terms of both the outlook on the revenues and costs, but also what we think will permanently change when it comes to our customers' behavior. So I think we haven't finalized that work yet, and we've done that. We can disclose that to you and the market as a whole. On Slide 4, on the credit facilities and the difference to 2,008, I think a big part of the difference is the actions by central banks. They've been much more forceful this time around, much faster, much quicker, much more in terms of support to the financial markets. And this support has had very significant effect. So what we saw in March was that the very professional investment grade large corporates were really quick on setting up new facilities. But as the financial markets recovered very quickly because of this support, these facilities have so far not been needed. They are there as some kind of insurance, but I think it's very much driven by that financial markets have recovered much quicker this time around than they did in 'eight. So I think that explains the difference between what we're seeing so far this time. We haven't concluded this yet. We'll have to see what happens, but so far compared to 'eight. On SME lending, we can't disclose the nominal. It's not a massive impact. I'm just referring to the fact that we have had margin pressure here and then we've revised prices in June. And obviously, this runs through the books quite quickly. So the extent that we had margin pressure in Q2 here, it should reverse in Q3. Okay. Thank you. Thank you. And your next question comes from the line of Sophie Peter Zans. Your line is now open. Yes, hi. Here is Sophie from JPMorgan. Just one question on the costs. The Estonian FSA, when they published their report, the fine was very small at only €1,000,000 there was a quite long list of system improvements that needed for Estonia. And if you didn't meet these improvements within 6 months, you're going to be fined €32,000 per day per bridge. And if it's rectified, but not satisfactory, the fine goes to €100,000 per day. I was just wondering if you could give an update on where you are within these improvements. Have you already made all the necessary improvements? Or do you need to do more improvement in Estonia on the system side? Thank you, David. There were 2 main areas in Estonia, and both of those areas of improvements were identified prior to the results being public. However, our plan is longer term, so we have decided within the plan to accelerate those areas that are mentioned by the Estonian FSA. And our aim is to conclude them in time. And they will it will not change the cost and the target. We can do it within it, so to speak. So you can do it within 6 months. So basically, as of today, do you think would your systems be at the minimum level that Estonian FSA is requiring? Or as of today, would you potentially if the deadline was today, would you potentially see the €32,000 fine per day? Or do you have the systems already in place? No, we need to do some work. So we have a deadline about a year away or so, and then we need to just do that work. And our ambition is to comply with that in time. Okay. And that's on all the due basis of the different things that need to be fixed? Yes. Okay. Okay. And then my second question would be, you mentioned that you take advantage of the U. S. Fed rates. Could you just give the magnitude of net interest income that you typically generate from these Fed placements? Hi, Sophie. I didn't say we take advantage of it. I think the rate cuts in the U. S. Has had a negative effect on the Q2 net interest income as we place some money with in the Fed as a liquidity reserve. And this is very much driven by the fact that we to hold dollars as reserves because of the LCR commons in dollars, which now has been abolished. But by year end, when we did this funding, we need to we needed to hold very large liquid facilities at the Fed. If I look at the impact here, I think the negative impact in Q2 from the rate that you've seen there is around SEK 100,000,000 to SEK 150,000,000 on NII. And does SEK 100,000,000 to SEK 150,000,000 will fully reverse? Or will it be a negative drag going forward as well? It will reverse going forward. Okay. And then on the SEK 1,700,000,000 of single name loan losses that you took in the LC and I or large corporate and financial institutions. Could you give a little bit more details around the nature of these companies? How many companies you had and kind of what size companies these were? Or was it just a few single name companies? Yes. It's SEK 1,600,000,000. They are mainly within offshore, and some of them are within leveraged finance. I would say that about 10 companies sum up to this amount. So those 2 sectors or business lines for us and the largest 10, they make up for a very large portion of the SEK 1,600,000,000. Okay. And then just a clarification. On Slide 19, you say 100% negative weighting the negative scenario between €1,200,000,000 of additional provisions. Does this mean then if the negative adverse scenario materialize, EBITDA debt provision of SEK 7,200,000,000? I'm not sorry if I caught that. So we have today allowances of SEK 10,400,000,000. If the negative scenario would materialize or the probability would increase to 100%, we have to increase that SEK 10,400,000,000 by SEK 1,250,000,000. So everything else equal, yet provisioning would go up by SEK 1,250,000,000 in that kind of a scenario. This is very model driven. It has not that much to do with reality and actually what happens in terms of corporates going into default. But I would guess there is some correlation. But the SEK 1,200,000,000 is not in relation to your guidance on SEK 6,000,000,000 of loan losses that you're guiding for 2020. So if you have the negative scenario materializing, It doesn't mean that EBIT is SEK 6,000,000,000 plus SEK 1,200,000,000? Yes, if you allow me to answer. The guidance is in line with what we have in Nordic outlook, which is the base case scenario here. So obviously, if our economies were changed their views to a more negative macro outlook, then our guidance will not hold because it's contingent on their current outlook. But in a negative scenario, 100%, what would your loan loss guidance then be, more than SEK 7,200,000,000? We haven't given the guidance on that. So I don't know. Then we would have to do a work based on that scenario. I mean, we have done that internally. We looked at more severe scenarios than our base case scenario. But for now, we only guide on this base case scenario. But as I said before, if it's tilting on any direction right now, it's tilting slightly to a more positive scenario than the base case scenario. Okay, great. That's very clear. Thank you. Thank you. Thank you. And your next question comes from the line of Geoff Stoss. Your line is now open. Yes. Hi, good morning, everyone. I'm going back to Slide 18, I'm afraid. I know we've given this slide a good old workout, but just a couple of quick questions. You give the split by industry of the model overlays on the right hand side. If you took the underlying loan losses that you've actually booked, the provisions you've booked, does the split by industry look substantially different to that model overlay split? Or is it different sectors and so on? And then related to that, 2 specific areas. First of all, commercial real estate hasn't really seemed to give you any problems. Can you just give us some commentary around that if that's an area that you see developing in risk terms over the next few quarters? And second of all, the Baltics you had and the underlying quite a step up compared to some of the Swedish retail operations. Can you just give us a little bit of color around that? Is that to do with the macro scenario in the Baltics, the composition of your book or anything specific there that we can get a handle on? That's it. Thank you. Thank you. Generally, the underlying is when we look through the book, we start with looking at the exposure that we feel are larger and potentially more risky or could have a bigger nominal effect on the bank. So by definition, when you go through that go through the big exposures and when we look at the riskier ones, those are more related to the oil and offshore sectors. So I would say that when it comes to the underlying level and if you compare that to the model overlays, it's even more tilted towards oil and gas. So the model overlays are more broad based than the underlying level. And this is by definition because when you look at smaller companies, it's very difficult to go through all the several 100,000 smaller companies we have as customers. So therefore, in a very early stage of a recession or negative scenario, you make an assessment on portfolio level for these companies because it's too cumbersome to go through each and every one of them. I think by default in the early part of this kind of scenario, you have this tilt where you can identify the larger corporates on individual name basis, but you do model overlays for smaller companies. And that's why you see a bigger tilt when it comes to model overlay for both CMTC as well as the Baltics as the porpoise there are smaller. On the Baltic, I mean, I think that we do see a more negative outlook on macro so far in the Baltics than we see in Sweden. And we have smaller corporates there in general, and therefore, we have some model overlay there this quarter. It is too early to say. It's difficult to say what's going to happen. I think what the Baltics went through 10 years ago will be very supportive for both those economies, but also people living in those countries because they learned a lot 10 years ago. I don't think they have over leveraged in the last 10 years. So I think you're going to have a generation here now that are very cautious in terms of taking on risk. And I think that's going to benefit us through this kind of a downturn scenario. And then you had a question on CRE. I think our view on CRE is very much in line with what you've seen so far when the biggest Swedish companies have reported their Q2. We don't see much yet. We don't see any real effect, to be honest. I mean, they've given them some leeway in terms of rents, but it's a very, very small proportion of their income. So, so far, basically no effect. But again, we don't know what's happen in the next few quarters. But so far, so good. Great. That's really clear. Thank you very much. Thank you. And your next question comes from the line of Riccardo Rovere. Your line is now open. Thanks for taking my question. I want to get back one second again on the model overlay. Correct me if I'm wrong. Those €1,600,000,000 are not allocated to any specific name, And correct me if I'm wrong on that. If that is the case, considering the comment you made before where you stated it is difficult to see troubled firms outside the oil and gas exposure and there is no broad beta for quality deterioration, at some point, I think you will have to decide what to do with this €1,600,000,000 a model of OLED because that should not theoretically exist in the purest version of IFRS 9. So one day, all you allocate these to specific names where you see deteriorated PDs, LGDs, blah, blah, blah, or what is going to happen to that in the future? And when should it happen? Because you cannot keep this model of LA forever, I would imagine. But again, correct me if I'm wrong in thinking about that. The second question I have is on the just a curiosity basically. If you didn't have €3,500,000,000 of trading revenues, mark to market revenues, the €3,700,000,000 credit losses would have been the same? Or did you cite the opportunity of such a big jump, a big rebound in financial income to add a little bit more than you were maybe thinking 2, 3 months ago? And the very last question I have, based on the €2,000,000,000 credit losses you expect in the second half of the year, so EUR 1,000,000,000 per quarter, that would remain, roughly speaking, 2x larger than the pre COVID-nineteen situation where you were charging €400,000,000 €500,000,000 per quarter. If the situation does not change materially, in 2021, you see €1,000,000,000 as a run rate or maybe closer to SEK 500, SEK 400,000,000 as it was before after 2020? Thank you, Ricardo. On your first question, I mean, you're absolutely right in the sense that we've done our model overlay. If we, in the coming quarters, do not identify individual households or companies where we need this SEK 1,600,000,000 for, then we don't need it anymore. It will be reversed. At some point, we wouldn't have it as a reserve on the balance sheet forever. So we have made an assumption that we will identify companies and households in the future that we haven't yet, and therefore, we need these reserves. But obviously, we cannot guarantee if this will be the case. And if that's not the case, then it will go back. Another way of answering that, if you look at our disclosure, you can see that the provisions for stage 1 and stage 2 loans have gone up. The coverage ratio for those kind of loans have gone up, whereas the Stage 3 loans, which are the ones what we individually identify, it's pretty much flat. So if there is no migration from the Stage 1 and Stage 2 to Stage 3, then the provision rate for Stage 1 and Stage 2 is higher now than is normally the case. And there is no other reason it's there's no structural reason to have a higher coverage ratio for those. So we have an underlying assumption that there will be more migration to Stage 3 when we do these model overlays. On your second question, I'm not sure if I fully caught that, but you asked about whether there's been any tactical view on the fact that the NFI is strong and we've taken more provisions now. I don't really have a comment on that. We've done the provisions we think are necessary given the outlook we have. And we do yes, we acknowledge that we've front loaded it since we've taken 70% of the expected level this year in the 1st two quarters. Okay. And on the third one, on the SEK 1,000,000,000 versus the previous SEK 500,000,000, SEK 400,000,000? Ricardo, it's I can just elaborate on this. We this is how I just want to clarify. This is difficult for anyone who tries to assess. Now we do not have failures to pay or real bankruptcies in the 1st 6 months of this year. So when you don't have that, but you're still asked to put aside a prudent reserve for the future, you need to make proxies. These are all statistical estimates, and there are 3 ways of doing them. 1 is to look name by name and assessing a probability. That's what we call the underlying. In no shape or form are we going to be 100% accurate. We will overestimate and underestimate, but we do our best. Then you have a macro correlation assessment, which is just saying, hey, GDP goes down by x, house prices goes down, credit should do something. You add that. And then you use more or less your experience and what you think is appropriate as an expert judgment on top, call it a model overlay. What really will happen is that the first real bankruptcies and failures to pay, they will come in 2021. If you look at any of the large corporates that really drive this, should we have a problem, I would say very rule of thumb, it takes a year from the day you have a problem because before you even know if you're going to be able to solve it or not, but you reserve immediately. And in a year, maybe in the beginning mid-twenty 21, you know if it's unsolvable or not. And most times, if you look back the last 20 years, we solved more than we initially think. We tend to be when we're pessimistic, we're over pessimistic. And here we just try to be accurate. So what is happening right now is that we're front loading the reserves in 2020, 70% of this year's current assessment is done. That means stabilization with what we know now. I cannot say if it's SEK 1,000,000,000 or if it's less, but it's clear that 2022, we are the opinion that when this thing normalizes, we should not be too far off where we previously were. But remember, we have had exceptionally low losses over time. So even though we had the 6 and the 8 and the 10 basis point cost of risk, We always indicated for the medium and long run, you should have something higher. Those are exceptionally low numbers. But that's all I can say right now. So we'll see what actually materializes in 2021, and that will dictate if we will then when we recalibrate the resources that we put on right now are sufficient or not. Is that going to be reversals or are we going to increase them? So just to understand correctly, the overlay, whatever the number is going to be at the end of 2020, will be reassessed over the course of 2021, and then we will see. We get it right? Yes. I mean, let's assume we are very accurate and it happens like we think. The model the overlays right now will be consumed by individual names and as we see them. But right now, you cannot foresee every single name that will come in mid-twenty 21. So this is a judgment call and an expert judgment and where credit in the bank, of course, is spending an enormous amount of quantitative resources to try to get accurate. Right. Okay. Got it. Thank you very much. Thank you. And your next question comes from the line of Jacob Kruse. Your line is now open. Hi. Thank you. I guess I'm running low questions. Just wanted to ask, in the Baltics, you talk about this recycling into negative Central Bank rates. Are you or any of the other banks or are you seeing any kind of discussion on introducing negative deposit rates in those countries at this point? And my second question was just have you in your review of the coronavirus and the impacts, are you seeing yourself or are you seeing your clients shifting the amount of real estate that they feel that operations require? Thank you. Thank you, Jakob. There is no debate about introducing or discussion around introducing negative rates as of now in the Baltics. On Corona, there is a lively debate about the required square footage for commercial real estate and office space after Corona. I don't have a view. The bank has no view. We are actually doing the work ourselves. What would happen to the required square meter or square footage? Should we allow large portions of the bank to work more remotely or have a more flexible definition of geographical space. As just reciting some of the larger real estate CEOs that I've met and heard about, there are many kind of gathering around the number that maybe 10% of office space will be freed up. But I have no clue if that's going to happen or not. So there is, of course, a tendency in that direction that we will work a little bit more from home and other. But on the other hand, there might be other things that consume the space. Thank you. Thank you. And your next question comes from the line of Martin Leitgeb. Martin Leitgeb here from Goldman Sachs. Could I just have two questions, just being mindful of time? And the first one, I was just wondering on your earlier NII comments, you obviously cautioned on what might happen to competition and margin pressure from there. What is your expectation currently for the second half this year and maybe for next year? How the competitive landscape will change? Because just looking at capital ratios, looking at loan loss provisions, it seems like banks are running at a much higher capital buffer compared to before. And equally, your risk cost guidance implies that risk cost step down in the second half. Could this lead to a scenario where you would see more competition in mortgages in the corporate segment? Or do you expect pricing discipline to continue? And then just a quick follow-up on the question on capital return and the dividend resumption from here. Is the discussion from here mainly to switch dividends back on and they would then resume in a similar way and similar structures to before? Or do you think could there also be some discussion to changing the dividend structure in a way that if certain uncertainty were to prevail or couldn't be excluded going forward that one could move either to a quarterly dividend or to some element of CREP. Is that any consideration? Or is it purely a switch back on to full annual cash dividend? Thank you. Thank you, Martin. On the competitive landscape, I think it's difficult, I mean, to set the future here. I think you're right that if you compare it to the financial crisis, it's a different situation in the banking sector, at least up here that most banks do have a lot of capital. So you shouldn't see the same kind of squeeze in terms of less competition. At the same time, if you look at Q2, we've seen somewhat less competition on mortgages. At least we've seen as an incumbent bank that we have less customers leaving us to smaller banks in this kind of environment at least. So in the short term, we've seen a bit less competition on mortgages. I think for us as a bank, we are seeing a different competitive landscape outside of the Nordics. We can see that many banks and other parts of Europe where other banks have been more operational and that they're withdrawing. So from that angle, when it comes to our wholesale business, I think the competitive landscape is has turned a bit to our advantage. On capital returns, I think for now, you should expect that at some point in time, we're just going to go back to what we were used to. We pay dividends. And if there's any change to that and we're going to do that on card level or do buybacks, then we'll disclose that at that point in time. But for now, I think just back to dividend would be a good help. Perfect. Thank you very much. Thank you. There are no further questions at this time. Please continue. Then I'd like to thank everyone for participating in this 1 hour and 23 minute call And just wish everyone a very good summer. And some of you, we will see after the summer, and I hope we can have these in physical form soon. Thank you. Thank you. That does conclude our conference for today. Thank you all for participating. You may now disconnect. Speaker, please stand by.