For those of you who want to follow the presentation simultaneously translated into English, please choose English in the top-right menu. [Foreign language] Välkommen till presentationen av Handelsbanken.
Welcome to the Q1 report for Handelsbanken. Michael Green, President and CEO, will present the results. The presentation is broadcast live and will then be published on the company website at 8:45 A.M. A Q&A session in English with the CFO, Hampus Engellau, and Head of IR, Peter Grabe, also participating. Information on how you connect can be found under the IR section on the bank website. A warm welcome to this presentation of Q1 2024. During the past few years, we've seen a very strong performance development. However, this trend, unfortunately, was broken during the first quarter. Operating profit amounting to SEK 8.3 billion is at a lower level than a couple of years it's a much higher level, should I say, than a couple of years ago, but it's down compared to Q4 and the first quarter of last year as well.
Income is down, expenses are up, and we are far from satisfied. We are never satisfied when development goes in that direction. Return on equity in the quarter amounted to 14%, which is somewhat down from the previous quarter and just below the average of the past 10 quarters. Net interest income was generally impacted by continued reduced credit demand and a high rate of amortizations in our home markets. But we also see quite a significant increase in pressures on the margins, especially on deposits, in all of our home markets. Net fee and commission is holding up well. We see a continued good trend in savings, in particular in private banking, and occupational pensions. These are areas, of course, which are very significant for our growth, which is to be balanced both against lending growth and fees and commission business.
We have a cost increase of 6% in the quarter. Some parts of this were non-recurring nature, such as a major component to the profit-sharing system, Oktogonen, and mostly from 2023. What's pleasing to note, however, in terms of the cost increases, is that our branches are hiring more people. There is a demand for services out in the country, and this is met by a somewhat increased level of employees. C/I ratio amounted to 42%, and credit quality is, as expected, continued very stable. We report net reversals of SEK 95 million, yet again a sign of the fact that the bank's model with lending to strong, resilient customers and our proximity to our customers is a way for us to manage, for example, balancing credit losses.
Credit losses are all about how you manage credits over time, and our branches do this in a very, very good way with a strongly entrenched organization locally. The proximity to our customers is not only building our customer satisfaction, but we can also operate close to the bank's customers, make necessary adjustments, and reduce the risk as a result. The Common Equity Tier 1 ratio was 18.8%, 4 percentage points above the regulatory requirement. In-house, in the bank where we are right now, there's very determined work of change ongoing to improve efficiency and strength around organization. As of the 1st of April, we have a new organization in place. We've moved central business supporting units and components closer to our business. And you know that we want to keep costs and expenses as close to income as possible.
Business support operation costs are transferred closer to business decision, and we strengthen and expand the decentralized responsibility for the implementation of efficiency improvement to improve our abilities. In 15 years, our corporate objective has been to have a higher return on equity than our competitors in our competitive and comparable home markets. We have five main areas where we work in a very focused manner right now. The first one is the fact that we need to find an efficient operation. We require a good balance between business-generating and business-supporting units. We're now reviewing in a very focused manner how we can improve efficiency, mainly in the business-supporting component, and deliver everything that we need to drive our business forward, but no more than that.
IT development expenses have been at a high level for a number of years, and as a result, we have a number of new tools for our people to use, such as a CRM system. We've worked with Microsoft 365 that we've implemented, among many other things. We've worked a lot with regulatory-based requirements to be in line with compliance. All of this is obviously reflected in our development costs. Intense work is ongoing to make our IT development work more efficient. We're reviewing what to develop further. I look forward to a situation, and I expect that we will reduce the pace of IT development to some extent. This is part of the bank, which moves back and forth depending on competitors, requirements on a regulatory basis, what the customers are asking of us, etc.
But we've been at a very high level, and we will probably reduce the pace and focus on what we really need to deliver upon, in particular. We are not like any other bank, and our business model stands out. We're always using as our point of departure our customers. We have a strong belief. We're convinced that we have this decentralized business model for reason: strong power to make decisions locally. We're personal. We value long-term relations with our customers. We also value our financial stability and low-risk tolerance. And in a word, we're more and more banks are becoming more and more alike. It's very important that we communicate our special nature for this bank ever more clearly in all the communications channels in the bank, externally, internally.
I will continue to work to make sure that we clearly stand out in showing what the core of Handelsbanken really is. Savings business is a very important part in our bank, and there's more to gain here when it comes to our home markets. If we look at the U.K., Norway, and the Netherlands, we see that there's more that we can wish for. It's very important when we build this bank that we do this in a balanced way, with a balance between deposits, lending, net fees, and commission, mainly in savings but also in payments. We have real opportunities to see increases in all our markets. We have excellent customer satisfaction and very skilled people. We're close to our customers in all our home markets.
So we have opportunities to improve our situation in net fees and commissions, not least in all of these home markets. And as I mentioned already for Q4, we've had a focus on the Norwegian operations. They saw a Q4 which was on the weak side, and in Q1 as well. We can see that the poor performance development in the Norwegian business has continued. And we need, therefore, to be focused and have a new strategic refocus. I'm going to get back to that in more detail. But it is really about having even clearer focus on the fees and commissions and savings and deposits, stepping down potentially a little bit on lending.
If we look a little bit closer at our result development for the first quarter, we see that ROE amounted to 14% approximately in net interest income, down by 5% mainly due to lower interest rate margins. The net fees and commission was also down somewhat. Increased savings and advisory services fees and commissions counteracted by seasonally lower payment commissions. Total income down, therefore, by 3%. Expenses up by 6% but adjusted for the Oktogonen by 4%. It is, in particular, the annual salary adjustment and a somewhat increased number of employees which are the reason for this. C/I ratio up to 42%. Credit losses were net reversals, and credit loss ratio was negative by 0.01%. All in all, underlying operating profit reduced by 7%. Let's have a look at our results compared to the previous period. Last year, income was up by 2%.
Costs increased by 12%. The cost increase was, in addition to it being a year with unusually high cost inflation in all home markets, mainly due to the salary adjustments, an increase in the payroll, and in particular in our IT department and also in other markets, not just Sweden, where the work to combat financial crime is gaining in importance. We're hiring more people, in fact, to strengthen our business in that respect. We also see that in the branch operations, they're also hiring more people. Credit losses were low also last year. All in all, operating profit down by 3%. Net interest income during the quarter, as I mentioned, is down by 5%. This reduction is mainly explained by lower interest rate margins as a result of an increased competition in our markets. Competition, as you know, is something we face every single day.
We have very skilled people and heads of branches, and they're always focusing on the local situation, local competition, ensuring that we don't lose business with our excellent customers. We know that this, of course, is going to cost us a little bit on the interest rate. We have a long-term focus on our customers, and it goes up and down. We adapt to competition, and our branches have tackled this issue head-on, working with pricing and offering customers the right options at any given point in time. We're also seeing a transfer where our customers are moving from low-interest-rate accounts to accounts with higher interest rates. It's a perfectly rational move, and it's building long-term customer satisfaction, of course.
All in all, we saw an impact from the net effective margins and funding costs to the tune of minus SEK 392 million or 3 percentage points of reduction in net interest income. A change in business volume also had an impact of SEK 87 million or 1% on net interest income. Credit demand generally seems still modest in most of our home markets. And there's a high rate of amortization we see in our customers in Sweden and in the U.K. as well, in particular. That is a good thing at the end of the day because we have customers who are able to pay off on their mortgages and their debts. It's a rational decision, and it's good for our customers underlying. There's a better tone with somewhat stronger demand for both mortgage and real estate funding and other factors. That's what we're sort of perceiving under the surface right now.
We also have a day effect between the quarters, which means that we have SEK 105 million lower. The government deposit guarantee scheme fees up by SEK 72 million -SEK 61 million when the comparison quarter was impacted by the final fee for 2023, which was, in fact, lower than had been anticipated during the beginning of the year. Liquidity portfolio, foreign currency effects, and other effects, so a smaller effect than in previous years. The net fees and commissions, with the exception of the pandemic period, have been stable and growing. Savings commissions, 2/3 of the net, and stable trend in spite of volatile stock exchanges and not on reasonable explanations and stable net inflow in our funds. Net payment commissions also going gradually.
For the first quarter, we saw the normal seasonal pattern, and it was down a little bit from the fourth quarter where our customers spent a little bit more.
We've seen a long positive trend when it comes to net savings in Sweden, and this continues. The Handelsbanken market share of accumulated net inflows in mutual funds, that's 12% of the market. But since 2010, we've had a market share of 25% of net inflows in mutual funds, new savings. And we see that net inflows are significantly higher than the market share, outstanding volumes. And savings is important when building long-term growth. And of course, this is something that builds profitable growth over time. An important explanation to these nice flows, of course, is our way to meet customers in our branches where we reach customers in a very efficient manner.
We have a good combination with digital services that customers like. That is also where we have savings as a very important part of the business. Oftentimes, this is where we have the first conversations with our customers within savings. We also see, and I've said that before, that we have a positive trend within private banking and the occupational pension business. For a few years back now, our advisors have been working out in the branches together with the coworkers in the branches. This has proven to be very successful. We have a nice growth compared to last year. We have an increase in the customer base with 16% in the private banking business. We see occupational pension plans up 20%. Looking at expenses, they're up 6% in the quarter, but underlying, it's significantly lower.
We can see that we have staff costs to the left where we have provisions to the profit-sharing system, Oktogonen, with SEK 233 million. 170 of that was an adjustment from the year 2023. Pension expenses were up SEK 76 million, and this is due to costs for pensions earned that are up with a lower discount rate compared to the previous year. Charges to expenses for IT were up SEK 55 million. This is a result of us having replaced consultants with employees but also the fact that we charged this to expenses to a higher degree compared to activating it in the balance sheet. Other expenses, roughly around 3%. That increase is explained by the annual salary review and the fact that we have more employees. Overall, staff costs were up 2%. More employees is part of the explanation.
We also have more preventive work combating financial crime, and we're developing our business and IT. We see an increase, 4%, between quarters. Development costs were down to a certain extent because of the switch from consultants to employees. But we also see seasonal effects. Credit losses, and I've mentioned this before, we have reversals of SEK 95 million. And you see down to the right that we have a credit loss level that has been around zero for the last few years. In this quarter, we had SEK 75 million reversal, the so-called management add-on. And this was something, a reserve that we started with the pandemic, but we haven't had to use it to meet losses. And that was why we could reverse SEK 75 million. And the end of the quarter, the remaining reserve was SEK 529 million.
Historically speaking, we have seen that in economic downturns, we have lower credit losses than other banks. This is not by coincidence. It's a result of our lending portfolio and the strict view we have on risk where we take responsibility locally. We can early on identify risky situations, and we can act early and thereby limit risks. We feel that we're very safe and secure when it comes to the credit quality in our lending portfolio. Then looking at the capital situation, we have CET1 ratio. That is 18.8%, 4 percentage points above the regulatory requirements that we have from the Financial Supervisory Authority. In the previous quarter, we communicated that we look at the world around us and feel that these are troubled times, and we want an extra capital buffer of 1 percentage point long-term, 1.3% above the target range.
We want to be a first-class partner in uncertain times. That is what we also see in the ratings we get from rating institutes. We have an extra buffer, and that means that we have capacity notwithstanding what happens in the world around us. We can take responsibility for credit supplies, and we can grow our business. The bank will, at year end, look at what is necessary in terms of a buffer for next year, looking at the world around us. To calibrate the level in the quarter to 18.8%, well, we anticipate a dividend of SEK 1.3 per share, which corresponds to around 40% of the result for Q1.
But as always, this anticipation should not be seen as guidance for what a dividend will be but rather this anticipation was negatively impacted in Q1 because of the risk exposure amount and what we see in operational risks and the structural currency position. These, to a certain extent, are of temporary nature. Then our home markets, starting with the U.K., representing 17% of the operating profit of the group. The C/I ratio was 53% and return on allocated capital, 17%. We see falling volumes within consumer and corporate lending alike. This has an impact, of course, of the market development. We see a higher degree of amortization, but we have a low demand that we've seen when it comes to new loans. At the same time, the U.K. is where we have the highest level of customer satisfaction and stands out in the local market.
We have local decision-making, and we have easy access to advisory experts, which is unusual in the U.K. And that is why we stand out. Looking into the future, we want to upgrade our digital channels in the U.K., and we want to strengthen the local competences that we have in the branches. We have a small market share as of today, and we have great potential to grow. Looking at Norway, Norway represents 6% of operating profit, and C/I ratio is up to 52%. And the return on allocated capital is down to 7%. And as I have stated, we have stated before, we are not happy with the results and profitability in Norway. We've seen weak development, and this is partly linked to major investments to strengthen our offerings for our customers. And we continue working on that.
What we could say being positive this quarter is that we have volume growth in consumer side, and we see growth in mortgages as well, which is promising. As I said, in Q4, analyzing the Norwegian businesses, well, that is something that we have done. We have decided to look at the strategy that we have in Norway, and we're going to become more of Handelsbanken, focus on the branches. We're going to focus more on our savings business and perhaps slow down a bit when it comes to the growth ambitions so that we can grow but not too fast. So we will become more of Handelsbanken. We have developed a business to a certain extent in new ways. We have a new manager as of May 2nd, and work will begin with evaluating changes that need to be done.
This will be done together with the strong branch business that we have in Norway. We should not forget that Norway underlying has a strong business with satisfied customers, skilled coworkers. This is a country where we want to be and where we are to grow and become more of Handelsbanken. Netherlands, representing 3% of operating profit of the group, C/I ratio of 53%, return on allocated capital, 12%. As you know, this is a more narrow activity where we focus on mortgages, property financing. We're going to continue to deliver when it comes to the Netherlands. Here as well, we have seen that costs have increased, number of employees have increased. We're also working with the combating financial crime. Sweden represents close to 80% of the operating profit of the group, C/I ratio 31%, and return on allocated capital, 16%.
Here, well, we have to do what we promised Q4. I've mentioned this. We have in the bank to either do business or help those who do the business. Other administrative costs should be reduced as much as possible. As of April 1st, we have a new organization where we have brought together different administrative functions. We are trying to eliminate overlaps and unnecessary bureaucracy. This is work that is being done now to make the bank more efficient and remedy these shortcomings. We also have an ambition to continue this focus. A lot of work is being done with intensifying what we do to make sure that we become even more competitive and help our branches by keeping costs down when it comes to the administration. This work will continue throughout the year.
My ambition is that this way we'll have more focus on customers, good corporate offerings with good business support. That will also have IT developments that's closer to the businesses so that we overall become more efficient and have more of a business focus in the entire bank. We're moving towards becoming even more of a Handelsbanken. We have challenges, things that we're not happy with. We know what these things are, and we're taking action. We're also very proud when it comes to other aspects. We're working on becoming even stronger here. We are in a position of strength. We are working with changes operationally, and that creates a foundation for future profitable growth. Thank you.
[Foreign language] Och då öppnar vi upp för frågor.
We're going to open up for questions.
[Foreign language] Var micken på? Okej, då stänger vi där. Fick du?
Okay, you were holding the microphone by yourself. We will round off there then. Thank you very much to all.