Okay, I believe we've reached some kind of critical mass, so I'll kick off. Welcome to SEB's Q1 2026 pre-close call. My name is Pawel Wyszynski, and I work in the Investor Relations team here at SEB. This call is being recorded. The script used will be published on SEB's website after the call. First, I would like to remind you of the information we released last week regarding new comparative figures for the years 2024 and 2025 to reflect restated segment information following the move of Mid Corporate clients from the Business & Retail Banking division to the Corporate & Investment Banking division. There was also a change in the income statement for the year 2025 related to net financial income and net interest income. This change is to improve risk management in the banking book.
With this change, the reporting of our net interest income and net financial income is further aligned with our Nordic peers. The restatements do not affect SEB's net profit or equity for these years. The files are available at our website. Please have a look at these and update your models accordingly. I will address the rate movements, profit and loss lines, Risk Exposure Amount, and capital. Following this, there will be a Q&A session. We will only answer questions related to already disclosed information as well as publicly available data. To ask a question, please raise a hand. Starting with rates. Average three-month STIBOR is up 8 basis points quarter to date as of March 23rd compared to Q4. During the quarter, SEB changed some of the bank's lending rates in Sweden. Most of our rates are available on seb.se.
Average three-month Euribor rates is rather unchanged compared to Q4. This mostly affect our Baltic operations and mostly the deposit side. You can find the relevant deposit rates and changes on the domestic SEB websites for each of the three Baltic countries. Before into the P&L, I just have some FX remarks. The P&L is affected by the average FX rate during the quarter. All else equal, a stronger average SEK leads to lower income and lower costs. The opposite applies for a weaker average SEK. Compared to the fourth quarter of 2025, on average, the SEK has strengthened marginally versus the euro. This would imply a headwind on the P&L from FX. The balance sheet is affected by ultimo FX rate, where a stronger SEK reduces assets and the Risk Exposure Amount.
As our equity is SEK denominated and is not hedged, a stronger SEK affects the Common Equity Tier 1 capital ratio positively. The opposite applies for a weaker SEK. Ultimo SEK is largely unchanged versus euro, but weaker versus the dollar so far in the quarter. This would imply a small increase on REA from FX. In the Q4 2025 investor presentation, which you can find on sebgroup.com, the currency split on Risk Exposure Amount was 47% in SEK, 33% in euro, and 8% in U.S. dollars. A ±5% change in SEK versus other currencies affect the CET1 capital ratio by around 14 basis points. I will now turn to the profit and loss lines. Net interest income. On volumes, I can just recognize that there is lending and deposit growth in Sweden and in the Baltics.
Let's see how much of that we captured during the quarter. Regarding sensitivity to rate changes, we would point out the simplistic approach to look at our equity, roughly SEK 230 billion. The private and corporate transaction account and savings account within Business & Retail Banking, roughly SEK 360 billion . Lastly, the Baltic private and corporate transaction accounts, roughly SEK 240 billion. For us to recognize a positive net interest income impact on these volumes from the uptick in rates that we have seen in the last few weeks, we need to reprice our lending side. That typically takes some time. Hence, the effect of the higher short-term rates should be very limited in Q1. The restatements that I mentioned at the beginning of the call has increased NII. Please make sure to include these changes in your models.
Regarding the moving parts on NII, I would point to the Q4 2025 transcript from the results call where our CFO went through the effects in the fourth quarter. Things I would like to highlight. One, he stated that the first quarter has some technical headwinds. For example, a two-day lower count, and we will also expect a slight increase in our cost of the deposit insurance guarantee for seasonality. For reference, two days less means some SEK 200 million headwind and the deposit guarantee scheme that would imply an increase of SEK 50 million quarter- on- quarter. In total, these two give a headwind of some SEK 250 million versus Q4 2025. Two, the contribution from our Treasury operations, including some of the benefits that we enjoyed from short-term funding during Q3, remained largely unchanged and supported NII in Q4 as well.
For reference, this has, if anything, declined somewhat during the quarter. Turning to net fee and commission income. A large part of the net fee and commission income derives from assets under management and assets under custody and is hence correlated to general stock market development. Please note that Q1 is two days less compared to Q4. This affects us negatively. Also note that some foreign stock markets on average are down during the quarter. The Ultimo numbers are rather flat, hence not supportive for performance fees. Since a lot of our card business is corporate-driven, a slowdown in corporate travel and corporate activity can affect us. Something that we experience during the first quarter of the year compared to the same period last year.
Also, when comparing the same period last year, keep in mind we have exited a number of markets in connection with this restructuring of AirPlus, which reduces fee income by SEK 50 million. Generally, for the net fee and commission income, the fourth quarter is the strongest from a seasonal perspective, while Q1 and Q3 are typically slower. This quarter has been volatile and has lacked larger deals, as you will have seen in the public data. To sum up, together with some FX headwinds, fee and commissions in Q1 should be well below the record level seen in Q1 2025. Moving on to net financial income. As you have seen, we have made some changes to our accounting principles during the quarter. Given the announced change in presentation between NFI and NII, the historical average NFI that we have been referring to is lower.
We will come back with an updated forward guidance when we report the Q1 numbers. However, looking isolated at the four quarters of historical data provided, the impact of the restatement implies a reduction on NFI of some SEK 250 million per quarter, which has been moved to NII. Customer activity has been lower during the volatile quarter, and as you know, our NFI is customer-driven. With this in mind and including the restatements, the NFI in Q1 should be towards the lower end of the 16 quarters historical average that we presented in Q4 2025. For reference, the lower end of the range in Q4 was SEK 1.9 billion. This does not include any XVA effects or revaluation of strategic shares as they are determined at the end of the quarter. Net other income.
We have earlier stated that this row should normally be between SEK 0 and SEK 100 million. Moving on to total expenses. For 2026, we have a cost target of SEK 33.4 billion, ±SEK 250 million, assuming average 2025 FX rates. Looking at the quarter, the share price is down. Hence, there should be no additional drag from this referring to cost of outstanding incentive schemes that lead to higher cost when the share price moves higher. Moving on to net expected credit losses. Some negative effects on IFRS 9 could be expected during the first quarter, given what is happening with the economy. I will not quantify these further. Moving on to imposed levies. At the Q4 results call, we said that for 2026, we expect levies to decline slightly to around SEK 3.4 billion. Moving on to tax.
In conjunction with the Q4 report, we said that going forward, a tax rate of 21% is a good proxy for forecasting. Moving on to capital and risk exposure amount. SEB's current share buyback program amounting to SEK 1.25 billion ended last week, as stated in a press release on March 24. Risk exposure amount is affected by, among other things, FX movements, which I addressed in the beginning. You also need to think about the fact that lending volumes on a system level are growing. Regarding the work on our Baltic IRB models, since the third quarter 2025, the Article 3 add-on has increased by SEK 21 billion from the Baltic IRB models.
We stated that the impact on REA would roughly be SEK 50 billion in total, and we stated that we expect to book this or to phase this over the coming two quarters, i.e. Q1 2026 and Q2 2026. This concludes our prepared remark for this pre-close call. Please monitor how the FX rates close at the end of the quarter for the most up-to-date data. Before we move on to the Q&A session, I would like to highlight that we enter our silent period on April 1 and that our Q1 2026 interim report will be published on April 29 at 6:30 CET. With this, we wish you all a good day and open up the Q&A. Magnus?
Yes. Just one question. You took a quite significant redundancy charge in Q4 2025, as you did in Q4 2024, and the result of the latter was that your headcount came down throughout the year. If I remember correctly, you guided for flat headcount development in 2026. Is that correct then, and that this will be used for layoffs that will be replaced by investments?
Not sure we guided that specifically, that FTEs would be flat during the year. I think we had a longer answer to it. Maybe that was your takeaway. But we did say that we still have a hiring- freeze ongoing. Of course, we took a large restructuring charge, as you say, mainly related to AirPlus International. Of course, with a redundancy package with AirPlus International, with a hiring freeze, seeing FTEs moving up, I think that's what we said, is difficult to see. I think, you know, they should be flat to down. I don't think we've, you know, given an official statement where that will land. Anything from flat to down, I think is fair to assume.
Yeah. Okay. Thank you very much.
Thanks. Namita?
Hi, Pawel. Just on the fees, you said that 1Q 2026 is gonna be significantly lower than 1Q 2025. We're talking about EUR 6.7 versus EUR 125, right?
Yes.
Okay, fine. Just on the lending book repricing?
Maybe, you know, depends what you put into the word significantly, but given how Q1 last year looked like compared to how it looks this year, it should be down. You know, the word significantly can be maybe discussed what that actually means. I think the main point is Q1 last year was a very, very strong Q1, the strongest on record for this bank, and we had stronger, obviously, underlying activity, stronger markets, et cetera. We haven't seen the same trend, and AirPlus International should contribute less. I think that's what I'm trying to say.
Okay. Got it. That's clear. On the lending book, you said that it takes time to reprice. You haven't changed, like, the three-month variable rate on Swedish mortgages, so, like, what's repricing? Like, the fixed book?
I mean, you have the fixed book, and then, I think to some extent, we are a little bit more dependent than our peers, but I won't fully answer for them. I think we have somewhat larger repricings at fewer dates than our peers. We're more dependent on some dates compared to maybe some other peers that roll the majority of the book more frequently. We typically roll a bit more towards the end of every quarter.
Okay.
We don't roll everything kind of. If we assume that everything would be 100% on three-month mortgages, we wouldn't roll things every day. There are specific dates during the quarter where we roll the majority of that three months, i.e., that typically happens towards the end of the quarter. Hence, you haven't really rolled a large part of the book, and you will start rolling that going forward.
We should see it next quarter, for example?
Yeah. I think it should start to come in gradually, but I'm just saying that Q1 is too early to see any meaningful impact. I do believe that we will talk extensively about this at the Q1 call, what's gonna happen in Q2. Again, what I would like to stress for this call is it hasn't rolled over that much during this quarter, hence the Q1 numbers shouldn't be that impacted by higher short-term rates.
Okay, that makes sense. Just final question. You know how Handelsbanken and Swedbank, they have all these VAT tax refunds on their expenses line? Do you guys have that?
No.
Is there a reason why you don't?
Let me come back. I don't know. We haven't had this issue or as they've had with the VAT parts of that. I'll have to check it.
Okay. Thank you.
Thanks. Riccardo?
Thanks. Thanks, Pawel. If I understood it correctly, when you were talking about credit losses, IFRS 9, you stated That we should or the market should expect some bumps. On the back of the macro, are you referring to updating the macro parameters on the back of what is happening? Is that what you were referring to?
Yes. This is not a large thing for us, but obviously this should not be positive for us, no.
Okay.
It's not a huge thing, but it's definitely not positive.
All right. How does this square with the overlays that you still have on your balance? SEK 1.2 billion, if I remember correctly. Are the two things completely detached or you update one parameters and then you recover on the other way?
It's a very good question. I would say sometimes they are dependent, some they're not. I think they should be independent, so I think I'm gonna go with independent. But it all depends, right? It depends where we have those overlays, if there are any stress in those sectors or companies, then you do need to re-release some of them. So they could be correlated and they don't need to be correlated. I know I'm not answering your questions, but I think it's a
It's all right.
It's a tricky one to answer. Sorry.
No, no worries. No worries at all. Thanks, thanks, Pawel.
Sophie?
Yeah. Hi, thanks a lot for taking my question. I was wondering about the share buyback. In 2024, you did a large share buyback with the Q4 numbers, and this year, it was only a quarterly share buyback deduction. Is it fair to assume that if you do a share buyback, it's probably just going to be a quarterly one? Given that you had the AGM, could we potentially expect a bigger share buyback deduction? How should we think about it?
Anything is possible, but I think it's above my pay grade, and I don't think I can really answer that here anyway, and it's a Board decision. I think that our CFO has stated that, you know, we have SEK 1.25 billion. You should expect us to change pace at the end of the year, typically. You know, that's what you kind of should be expecting. But again, it's up to the Board, so I can't rule anything out. But at least that's what we have said publicly, that typically you should not expect us to change the pace during the year.
Okay. Okay, that's clear. Then I know in the past you have said that we should not look too much on the Statistics Sweden data for SEB when it comes to the volumes. But if we look at the Statistics Sweden data for February, it looks like corporate lending was quite strong, while household lending still remains relatively soft for Sweden. Is that a fair kind of way of thinking about the quarter as well, or you would not look at the data at all?
I think it's an okay view at least for the February data. Let's see how, you know, March looks like.
Okay. That was all. Thank you.
Thanks. Jacob?
Hi. Sorry. Thank you. Just a question on your rate sensitivity that you set out with the savings accounts and the transaction accounts in equity. I think just adding up the numbers, you're looking at something like SEK 700 billion or thereabout of rate sensitive volumes. In a very simplistic world, are you basically saying 100 basis points across the curves could be SEK 7 billion of rate sensitivity on, I guess, the short term across currencies?
I mean, we haven't been guiding on interest income sensitivity for quite a long time. I guess what you say assume everything being passed on. I think let us come back in Q1. You know, I guess there will be a lot of NII sensitivity questions. Let's take all the forward-looking statements on NII sensitivity, et cetera, in connection with the Q1 numbers.
Maybe I can ask, is there anything structurally on the asset side that doesn't. All of the liabilities you mentioned are kind of structurally not passed through. Are there structural assets in the same way or portfolios or loans that needs to be, you know, considered?
I will turn this around. I don't think we haven't changed anything in our balance sheet or hedging or anything like that compared to what we did the last time interest rates start to move up. I think you have quite a good visibility of what happened then and should be able to extrapolate roughly what should happen and when it should happen going forward.
Yeah, fair enough. Thank you.
Thanks. Emre?
Hi. Thank you, Pawel. There is, one could say, a large spread between three-month STIBOR and Sveriges Riksbank policy rate even before the turmoil in the Middle East began. My question is, would you say you have more net, more assets referenced to three-month STIBOR than you have liabilities referenced to three-month STIBOR?
Good question. I mean, a lot of our I think put it like this, the majority of our large and Mid Corporate lending would be linked to reference rates. What is not linked, as was the last time, is to a large extent the retail parts, so mortgages and deposits. Then I think you can have a look in our fact book and see roughly how large they are.
Thank you.
Again, I will not try to quantify any possible positive or negative timing effects that might have arisen, you know, during Q1. I think that's quite tricky to do even inside the bank. I'm not jealous of you who need to do it without the visibility that we have inside. Okay, there appears to be no more questions. Again, we go silent on the first of April. We're still here today and tomorrow, so give us a shout if there are any follow-ups. With this, thank you for calling. Bye.