Ladies and gentlemen, welcome to Honda's Bank and Interim Report, January to September 2014. Today, I'm pleased to present Mr. Ulf Riese, CFO. For the first part of this call, all participants will be in listen only mode and afterwards there will be a question and answer session. I will now hand over to Ulfriesen.
Please begin.
Good morning, everyone and welcome to this conference call for the Q3 2014. And joining me today, I have Lars Hoglund, Head of Debt IR and Jurgen Ullander, Group Head of Accounting. The slides used for my presentation are as usual available at handersbanken.com. Will start as so many times before to show you the value creation of the bank on slide number 2. Again, equity per share including dividends has continued to grow by 15% on an annual basis.
And the more exact number is now 15.2%. The bank has continued to build capital with core capital now reaching 20.7% at the end of the 3rd quarter, up from 20.1 percent 1 quarter earlier. Return on equity for the 1st 9 months was 14.1%. Then on slide number 5, we have the profit and loss account for the Q3 compared with the Q3 2013. Operating profit rose by 7% and in the U.
K. The increase was 53% and in Finland earnings rose by 60 8%. Net interest income increased by 5% for the group, but 12% in the home outside Sweden. Higher business volumes, but also higher lending margins in most markets including Sweden drove this growth. Sequentially Q3 compared to Q2 net interest income rose by 4% for the group, 2% in Sweden and 7% in home markets outside Sweden.
Net commission income rose by 13% compared to Q3 2013 and was flat compared to the seasonally stronger Q2. The good development in asset management and card fees continued and compensated for seasonally weaker brokerage and advisory fees in the Q3. Then net gains and losses on financial transactions, which increased by 10% versus the Q3 last year. Here is the improvement in the customer business within Capital Markets is one of the main explanations. And in total revenue increased by 2%.
And adjusted for currency effects costs were unchanged. Low losses increased in the 3rd quarter entirely due to one exposure in Sweden and one in Denmark. Loan losses amounted to 8 basis points of total lending in the 9 months period. Credit quality remains stable and the bank had no impact from negative rating migration in the quarter. Then on slide number 12, this shows the continued good cost development of the bank.
For 5 consecutive quarters, costs in the Nordic markets including Sweden have decreased and by almost SEK 500,000,000 on a rolling 12 month basis. This comes natural for all the units where revenue growth is muted. Costs are then adjusted by local daily fine tuning to increase cost efficiency. And as you can see in the slide, when you add up the effect of all these local fine tuning decisions, they are balancing the investment costs we incur when expanding in the U. K.
And the Netherlands where of course business volumes and revenues show good growth. From a group cost perspective, this means that all this expansion is almost entirely financed by higher efficiency in the Nordic home markets. Cost income ratio in the group also improved in the 3rd quarter decreasing to 43.9% down from 44.6% in the 2nd quarter and from 46.1% in the 3rd quarter the profitability for each home market for the 1st 9 months of the year. And here I think it's important to remember that all capital of the group is allocated to the units and no part of the capital is kept centrally. Here you can see that Sweden, Norway and U.
K. Are at 16% ROE despite this was 12% in the first half of this year and this is achieved in an economy which is still of course quite weak. And in the Netherlands where we opened 2 new branches and appointed another branch manager during the Q3 profitability is already at 10 percent. But still, of course, it goes without saying that we see room for improvements in all our own markets from these levels of profitability. Then to the sequential development of net interest income, which is shown on slide number 20.
Here you can see that in Sweden deposit margins decreased another SEK 155,000,000 due to lower nominal interest rates. Lending margins, however, improved and together with higher lending volumes this added SEK 1 131,000,000. The margin on Swedish mortgage stock increased by 4 basis points to 90 6 basis points in the quarter. In the whole markets outside Sweden, deposits gave a very marginal impact on the change quarter on quarter. Higher lending volumes added SEK 42,000,000 while lower lending margins primarily in Norway gave a negative impact of SEK 31,000,000.
In the U. K. However, corporate lending margins improved somewhat further. Effects like currency effects, state fees, benchmark and different number of days in the quarter in total contributed SEK 187,000,000. The strong inflow of deposits together with the fact that our liquidity reserves are very high, means that we have had a structurally lower need to replace bond funding that has matured this year.
This is the main explanation behind the item marked other in the slide, which had a positive impact on net interest income of SEK 123,000,000 in the 3rd quarter. We expect the benefit from this slightly changed funding mix to remain in the profit and loss statement going forward. Then going back to slide number 10, we show how our balance sheet has developed from a funding perspective since the Q2 of 2013. The bank has now seen strong inflow of deposits and that is for quite a long time. For example, we are the only large bank that has increased our market share of household deposits in Sweden since 2006 and also in 2014.
But the strong inflows are also seen in our other markets. We take a very conservative view on how to use deposits from a liquidity standpoint. Volatile large corporate deposits are not used to fund lending. However, a part of the total deposits that are proven to be sticky can be used for fund lending. Even if we take a more conservative view, this is also in line with how regulators view different types of deposits.
The strong growth of deposits in combination with a very large and stable unused liquidity reserve of more than SEK 800,000,000,000 means that the need to refinance maturing bonds has structurally decreased over time. Still as you can see in the slide, market funding plus deposits have grown more than lending since 2013 and the result is a higher liquidity reserve. So our need for market funding is currently lower than in the earlier years. In the 1st 9 months of 2014, we have issued long term bonds including the Tier 2 bonds and staff convertible of NOK 141,000,000,000 and that compares to NOK 235,000,000,000 of bonds and extendable notes in 2013. In the 3rd quarter, we issued SEK6 billion worth of senior Japanese samurai bonds at the tightest level and a European bank has done since the start of the financial crisis.
Then on slide number 7, we show how the financial position of the bank again has developed and become stronger than last quarter. Core Equity Tier 1 ratio improved to 20 point 7%, up from 20.1% at the end of the second quarter. And here earnings in the 3rd quarter contributed 0.3 percentage points. Total capital adequacy rose to 25.6 percent, up from 25% in Q2. And for the real capital experts out there, I think it's worth noticing that cash flow hedges in the OCI other comprehensive income, which due to current accounting rules are fairly volatile are adjusted for in the capital base and thereby has not at all contributed to the capital adequacy ratios.
On the 8th September this year, the Swedish FSA published another report on capital requirements for Swedish banks. And here there were only marginal changes compared to the major court, but now also including a risk weight floor for mortgages in Norway. The countercyclical buffer in Sweden has been decided at 1% to be implemented on the 13th September 2015. And for Handelsbanken, the Swedish FSA now estimates that the core Equity Tier 1 requirement in Pillar 1 and 2 all in all is at 17.5 percent. This estimate from the Swedish FSA is however still based standardized assumption for the individual Pillar 2 add ons.
And we hope to get clarification about the models to be used for calculating the add ons during this fall. We believe the group to be well capitalized also with coming new capital routes. Then to slide number 14 and an update on our U. K. Operation.
As you can see here, the development continues to be strong with operating profit in local currency increasing by 36% year on year. In total, we have opened 18 new branches so far this year, including the 6 branch managers already on board for new branch openings. At the same time mathematically the proportion of growth coming from existing branches is increasing over time. At birth, a branch typically has 4 persons. Then when the branch reaches its 3rd or 4th birthday, typically one more senior person is recruited increasing the time for clients by 20 5%, but at the cost increase that is far less than that since all the basic costs as furniture, etcetera are already paid for.
This means that over time the growth becomes more and more cost efficient. And to this, we can add the increasing scale effects and include efficiency coming from gradually climbing the learning curve and accumulating experience, which in turn lead to possibility to grow efficiently and fast without compromising the high quality. This can clearly be seen in the slide where the dotted lines show the cost income development 5 years ago compared to the already improved situation today. The development per branch is already much stronger today than 5 years ago and this development continues over time. In U.
K, our wealth manager Hartwood shows good progress. Assets under management have grown by almost 50% since the acquisition in the summer of 2013 And Heartwood is a significant contributor to the 77% growth in fee income in U. K. Year on year. So to summarize, equity per share including dividends continued to grow steadily by 15% per year since 2007 also when the Q3 was added.
Operating profit increased by 9% during the 9 months of 2014. And in the home markets outside Sweden, the growth was 14%. Revenues grew by 6%, but costs only by 2%. And adjusted for currency effects, costs were unchanged. In the Nordic markets including Sweden costs continued to decline and balancing the expansion costs in the U.
K. And the Netherlands. Cost income ratio for the group improved to 43.9% for the 3rd quarter. The bank has continued to see strong deposit inflows resulting in structurally lower need to re finance maturing bond volumes in the market. And this is in spite of keeping the liquidity reserves well over SEK 800 billion.
Return on equity for the group was 14.1 percent for the 1st 9 months and the bank continues to build capital. Core equity ratio improved to 20.7%. And with that, I conclude my presentation and open up for questions. Thank you.
We have the first question from Mr. Omar Kinen from Deutsche Bank. Please go ahead sir.
Good morning. Thanks very much for taking the questions. Just on net interest income and then just a quick question on capital. If I look at the NII in the quarter, kind of you've helpfully indicated that most of the €120,000,000 was from lower liability cost on mix between wholesale funding and deposits. I'm just wondering, is this some an ongoing tailwind that you expect to come through for margins going forward?
Or was this a kind of one off benefits in the quarter that we shouldn't expect to see repeated going forward? And then just on mortgage margin, one of your peers indicated that 2 thirds of the repricing on the variable book was complete. Is that kind of a trend that you recognize? And then I've got a question on capital. Thanks.
Thank you very much for those questions. First of the SEK 123,000,000 item other this is an effect that we see as a structured effect. So this would be also prevailing in the coming quarters. Whether the effect will increase or not that has to do of course with the inflow of the combination of development in lending and deposits. But it's not a one off effect.
But I think even more importantly maybe is to go look beyond this and see how well bank's whole structure is developing. And you can see also that our overfunding has increased. You can see that in one slide from 110% to 119% in spite of this fact. So the balance sheet structure of the bank is as you can see very good with a very high kept unused liquid reserve. On the mortgage margins, we are price takers.
We don't have any view on really on the mortgage market margins going forward. As you can see, we saw an uptick when we sum up the numbers in the quarter going up by 4 basis points. You can say that a little bit more than 50% of the stock is at variable rates. That means that you can say that about 40% of the stock is fixed more than 3 months fixed. And of course, the repricing takes place over time.
But we cannot do some mathematical so you can exactly expect this number to come through in the coming quarters, because you have also the development of course going forward in new pricing on new deals.
Okay. Thank you. That's very clear. Just the wholesale funding, I was just wondering, could you potentially tie in what it means for your issuance plan? So kind of what issuance in the 1st 9 months of wholesale funding has been compared to redemption.
So Just to kind of put in that context to add a bit more color. And then just a question on capital. Risk weighted assets fell by €15,000,000,000 in the quarter and 40 bps of that was due to model changes. Just wondering if you could give some helpful color there. Thanks.
[SPEAKER LARS CHRISTIAN BACHER:]
Yes. I think that when you talk about the RWA or the RIA, the most important thing there is of course the ongoing work that our branches are doing in terms of making sure that new deals that is coming in is of a better quality than the old ones. So there's you can see consistently each quarter there's a rather large effect of that. So that is the important effect. And then Lars, you had an answer on the first question here.
The first question on our funding plan and the funding compared to maturities. I mean the issued bonds we have done so far this year is slightly smaller than the volumes that have matured. And going forward, I mean, we never project exactly what issuance we plan to do. But if you look at our maturity profile, you will see that we have, of course some domestic capital bonds maturing next year. They will be replaced in the domestic market to a large degree.
And then we also have senior maturities in the neighborhood of SEK 50,000,000,000 sort of SEK 9,000,000,000 And to what extent we will replace them again will be a reflection of the volume development of deposits and lending.
It has been stable. And of course, we have, as you can see, a very large inflow of deposits. So the inflows have been an increase of 21% if you take the accumulated figures. So that means, of course, that the need to issue senior has gone down. Having said that, of course, there's also, as you know, NSFR and LCR and other ratios and so on.
So this is something that you cannot drive into infinity so to say. But it's a positive effect. It's a structural effect. And it means all those things being equal that we have a lower need of replacing senior bonds going forward.
That's very clear. Thank you very much.
We have the next question from Mr. Eduardo Serrano from Morgan Stanley. Please go ahead, sir.
Hi. Thank you for taking my questions. I had a question first of all on a follow-up on the Swedish NII outlook. You've mentioned that there's still some repricing to go in mortgages, but I'm not sure what the margin outlook might look like over the next few quarters if you take into account the repricing that still hasn't flowed through the P and L? And potentially, if you might be able to give us any color on if there's a rate cut, what the updated sensitivity might be?
Because in general, it sounds from the outlook from the different banks that reported is a lot of the cutting plans that have reported seems to be sort of running to standstill I. E. The revenue outlook looks pretty challenging in Sweden and a lot of them have to caucus to maintain pre provision profit. So just some color on what your revenue outlook for Sweden might be in this context.
2nd, obviously, there's been the proposal of
mortgage amortizations. There's been a lot of repricing, obviously, during the Q2. But can you give us your views on what do you think the repricing could go from here if you start asking clients to amortize? Could that potentially interrupt the repricing trend? Or what are your general views about the impact of amortizing by clients?
And the third and last, there's been some talk of the introduction of the leverage ratio, even a hike of the leverage ratio requirements. You shared in the past your views about that ratio, but I'm more interested in your views of how plausible you think it is that that introduction might happen in the short term And what kind of constraints that might cause Hambelsbanken from a lending perspective? And generally what's the visibility on capital for you at this stage? Thank you.
Thank you very much. Well, on the first question, you went through the sort of revenues in lines in Sweden and top line growth as I interpret your question on various items. When it comes to mortgages, we don't have any forecast as you know. We have implemented the 25% risk weight for capital coverage that you nowadays need as of the date when the Swedish FSA came out with that decision. So that is now of course taken at the self cost to our branches.
Our branches are price takers. So how the margin moves or the price of the client moves is really a matter of how the market moves. But of course, logically banks should in the market economy increase the price in equivalent to this. Having said that, there is always one of the other participants that seems to take some sort of strategic decision that they want to be big in mortgages. It has been that throughout the years.
So you never really know how this will play out. So actually, we don't want to be larger in Sweden in terms of lending. We have about the kind of market share that we want because of quality reasons. And the reasons we are not growing right now is that the segment that is growing in Sweden is around the risky segment where for instance real estate newly formed real estate entities can get full financing from banks and in combination with issuing bonds and virtually no extremely small equity. And that kind of things we are not doing.
But we are not losing our customers. We are taking in new good customers. But when you look at the total market, you will see that there is some volumes that our some of our competitors like that we don't like and that we don't see in our figures. So the revenue growth for us in Sweden that will come from commissions. And as you can see from the figures, we have healthy growth when it comes to mutual funds, insurance, also cards, debit cards and credit cards.
And that is taking out our product range to our own clients and that is developing very well. Also the development you see in the investment banking area looks very good. And as you also see we have as of Q4 also included Handelsbanken International into Handelsbanken Capital Markets. And I think that is an interesting thing going forward, because over this financial crisis we have really focused the abilities in Handelsbanken International to excel in our core clientele in our home markets. Volume has gone down as you've seen over the years.
Now that restructuring is finished and we put Handelsbanken International into the very active context of capital markets. I think that could also be hopefully a very good driver for us. Mortgage amortization, yes, I think it's likely to come. We have implemented since a long time in our advice to our clients. But there will probably be more general rules about this in the market.
And I think there are for structural reasons, if you look at the whole market, it's a good thing that the growth does not continue here. It has been maybe a little bit too high of a growth. From a credit perspective, we are of course extremely happy with what we have got and there's no threat whatsoever from that perspective. But from an economic basic economic view when you look at the whole of macro in Sweden, I think it's good that it will not continue to grow. It has nothing to do with the ability to reprice.
The affordability is very good. So you can't say that you cannot reprice because now more amortization. I don't personally think that there's any correlation at these very low interest rate levels. Leverage ratio, we know that the Swedish authorities, the Swedish FSA and also the government in the Middle East is not in favor of leverage ratio as a binding ratio. As you know Sweden has gone along the road where we have quite a lot of extra capital charges in the risk weight framework.
And that is the way Swedish authorities want to address model risks and those kind of things. And leverage ratio should from the Swedish point of view only be implemented as a backstop.
Is weak close to having that visibility that might sort of allow you to review your capital position? Or where would you say we are? We still is it still very early days?
More specifically on the leverage ratio, it's a bit early days. On other things, it's pretty clear. Right now when it comes to some Pillar 2 models, the Swedish FSA is supposedly to come out at towards the end of the year with the models for interest rate risk in the banking book, pension risk and concentration risk in Q2 terms. But on leverage ratio, it's a longer journey.
Great. Thank you very much.
We have the next question from Mr. Nick David from UBS. Please go ahead, sir.
Yes. Good morning, everybody. A few questions please from my side. One follow-up I think from Q2 as well. Just as the risk weights on your advanced IRB book on the corporate side continue to tick lower, I'm just wondering, your thoughts from a top down level really of overall now that the 25% mortgage risk weight floor in Sweden has been reconfirmed in which the cost of capital on the SME side or on the corporate side is lower than on the mortgage side and whether that makes you consider when you're setting your target capital ratio whether it's right to do it on the Basel III terms or whether you'll also be thinking along Basel I terms as well?
2nd question on Swedish retail costs. Obviously, some of your peers getting excited about the potential for digitalization to bring down the cost to serve over time. Now I know you don't budget centrally and I know you don't guide on a forward looking basis overall, but I just wondered if you could spend a little bit of time talking about cost efficiency in the Swedish branch network. I know you have a long standing idea of the 30 percent cost income and clearly you'll get there over time from the revenue side. I just wondered whether you can imagine a world of declining absolute costs in Swedish retail?
And thirdly and finally, just back on this amortization point, please. Thanks for the color so far. I just wondered if you could give us a flavor at your mortgage book of the amount of your borrowers above 50% loan to value that currently amortized. Do you have a sense of that number? I understand as you say that affordability currently is very strong.
I'm just wondering at the margin as we go into 2015, how many Swedish households will likely be waking up with a slightly different cash flow situation in 2015 versus 2014?
Thank you for those questions. On the first question, when it comes to RWA risk rates going down for corporates, it's not rocket science. It's that we have, of course, better clients and better quality there. So it's a very easy explanation why it goes down. And then to your point to one look more into minimum risk weight kind of thinking when it comes to corporates or leverage ratio and so on.
I think that to us when we look at the bank ourselves we do our stress testing for our own sake. We look of course at the risk weighted numbers, the real numbers. Then the 25% risk floor until the 2 terms when it comes to mortgages that is an artificial creature. The regulation that you have to obey of course when you calculate the capital need, but it has the benefit then when you do that that in the stress test it cannot move from that point even if you stress it very, very badly. I mean it's extremely hard for anyone that I met that even contemplate the situation where you would lose so much money on mortgages so that you will end up with a statistical risk weight of 25%.
That is just not possible in any scenario. The world has gone under before that. So we will come back to the capital goal when we have all the input we think is sufficient from the regulatory authorities. We know ourselves of course our portfolio react and so on, but we need the input if on the details of all regulation. On digitalization, we can talk quite a long time on that.
It's a very interesting subject. As you've probably seen, we are starting now from 1st October a new branch in Lund in Sweden and we are very proud and happy of that. We are absolutely sure that the best way to be cost efficient is to do banking by branches. And of course combine it with the best digital services there are. And as you know in Handelsbanken we provide them for free for our clients.
And we have very, very happy clients with the combination of these two things. And I think that is something that is to us always been very obvious that you have to have the combination and with the core capability at the branch, but then adding up other digitalization possibilities. Yes, this of course we can say can improve cost per transaction in a way because the clients do things themselves. On the other hand, the number of transactions goes up very much because the clients want to look more on their account and so on. So we don't think you should see this as a cost driver.
It's a way of making the client more happy with the services to combine services. But I think those that do it only for cost purposes, they will end up with less satisfied clients and not such a happy business in the long run. Then talking about cost efficiency, we are now at 33.9% costincome ratio in the Swedish operation. So it's not bad, but we keep on working on that. And as you know, we are now slowly changing the backbone systems in the branches to the same kind of platform that we have for our clients and that also helped this over time.
Then to amortizations, you have you can say that if you take the new loans in our mortgage company Stad Supertech and you look at the number of clients between 50% 70%, you can say that nearly half of these were amortizing. Again, I mean from a credit standpoint, of course, how you amortize in terms of credit worthiness for us and our clients should never be a question because then it's the wrong client. But from the client's perspective, it's good to in the longer term amortize to make sure that the cash flow you have when you go into pension also match the kind of loans you have. But that is the kind of numbers that we have. I haven't seen statistics in the whole of the market, but my feeling is that the risk appetite with our competitors is much higher than in Handelsbank and that is usually the way when we talk about any sort of credit.
Very clear. And yes, 34% costing from Swedish Retail, I think not bad is probably a polite way of putting it.
Our next question comes from Mr. Jeff Dorsey. Please go ahead sir.
Yeah. Good morning, everyone. Jeff Dorsey here from SocGen. A couple of questions perhaps related to the same point. The first one is on non performing loan stock and the second one is on your corporate lending book in Sweden.
On the NPLs, there's been quite a lot of volatility over the last few quarters. We've seen it go from driving up to €7,200,000,000 this quarter. Can you just explain what's driving that quarter on quarter volatility? I know we're at quite low levels, but it'd be interesting to know what the inputs of that are. The second question is if I look at the Swedish corporate lending book and particularly if I take out the mortgage component, there's been quite a significant quarter on quarter decline of about 4% or 5 percent in that book.
Is that anything we should be concerned about? Is that reflecting weak lending demand in Sweden? Or is it just quarter on quarter volatility? So those are the 2 questions. Thank you very much.
Thank you very much. When talking about impairment, of course, as you know, net impaired loans is not taken into account the kind of collateral that you have sheltering this. So this number can go up and it can go down over time. It has been as you said about 18, 17 basis points. It went down to 13 basis points and now it's up to 18 basis points again.
But when you look at our book, we have no negative migration in the quarter and the credit quality in all measures are very stable and so on. So and the credit losses that we have in the quarters and the increase we are now at 8 basis points accumulated is explained totally by 2 cases 1 in Sweden and 1 in Denmark. And those are not relating to any macro or specific industry or portfolio or like that. It's really single event. So the answer to your question is that we see a very stable quality in the credit book.
Demand in Sweden loan demand in Sweden is, as you say sluggish and that has to do with that companies are not really investing because of the outlook general outlook for export companies being the most important factor. Also that the kind of clients that we have are at good standing. They have good cash positions and good working capital generation and so on. So there is really not any increased demand. If you look at the total numbers and the statistical numbers for the whole loss region, you would see that there or from time to time some increase.
And that is coming from high risk deals where you put for instance property in a special purpose vehicle or entity and you get bank financing and you can also issue bonds to get nearly 100% financing of this without any equity. There have been a couple of those cases recently and they are quite fairly large in numbers. So they affect the statistics. Those are of course not the deal that fits our credit policy. So we never participate in those kind of deals.
And that's why you can see the figures you see in Sweden. But we're not losing out any clients. On the contrary, we are taking on clients. So the underlying business is developing good, but the demand on the learning side is very sluggish. We've seen an increase in commitments and usually that is an early good sign for the lending demand to come on.
But in this business cycle, this is rather special because that has not happened. And I think it has to do with the fact that we have a rather low economic activity in Sweden, but combined with so much money around and risk willingness with some of our competitors. So this is a bit of a strange combination. And as I said from stable good companies no real loan demand.
Okay. That's very clear. So just on credit quality, you're happy to see this as just volatility seasonal quarterly volatility rather than any kind of deterioration or start of a trend?
Yes. From a financial standpoint, it's no question and no worries. From Handelsbanken standpoint, we want the credit losses to be 0. So don't misunderstand. I mean, we look very seriously at every credit loss, because it's not only the financial numbers, but you will end up with a client that is not happy.
So we are not happy with any sort of credit loss number or impaired number unless it's 0. Very hard to get to 0. But we are constantly of course looking can we improve.
Got it. Thank you very much.
Our next question comes from Mr. Riccardo Rovere from Mediobanca. Please go ahead, sir.
Good morning to everybody. I had a couple of questions. 1 on leverage, the other one on corporate risk weights that have already been asked. Just a curiosity, if I may. Given that your corporate risk at group level is now 24.6%, if I remember correctly, and it is down from 28% in less than 9 months.
I would suppose that the corporate risk rates in Sweden must be lower than the one in Denmark, in the Netherlands, in the U. K. And so on. Would it be possible for you to give us an idea what is the corporate risk weight just in Sweden? Thank you.
Thank you. No, but I want to refer you to our Pillar 3 report that comes out each year at the beginning of the year where we provide a lot of statistical information on each of these markets. But as a general remark, as you know, we are even more restrictive in, for instance, Great Britain and Holland than we are in Sweden. So mathematically over time, you will expect as the numbers feed us through the statistical material in the different risk classes that risk weights over time actually get less in those markets than in Sweden. As you can see from the credit loss numbers over time, credit losses have seemed to be fairly the same regardless of if you look in Sweden or Finland or Denmark and so on over if you look over a business cycle.
But it's also a fact that kind of extra attention we are giving this in the U. K. Actually could mean that we will end up with even lower risk weight. In the longer perspective, this is not something that will come in next quarter or so on, but from a philosophical point of view.
Okay. Thanks. Thank you.
There are no further questions registered at this time. Please go ahead Mr. Ritter.
Okay. Then I thank you very much for participating. And as usually if you have any more questions we will be happy to answer them over the phone. So don't hesitate to give us a call. Thank you very much for participating.
Goodbye.