Good afternoon everyone, welcome to this call ahead of our silent period that starts on July 6th. This is Peter Grabe, Head of Investor Relations speaking, and with me today I have my colleagues in the Investor Relations team. We would like to remind you that this call will be recorded. This call is intended for sell-side analysts and will not include any communication of new information that is not publicly known or any new guidance. The aim of this call is rather to remind about publicly communicated matters for housekeeping purposes of estimates and expectations ahead of the interim report. In this call, we are not aiming at steering you towards any specific numbers, and the outcome of the quarterly results will occasionally deviate more or less from the trends we comment on in this call.
We will only answer questions relating to public information. If you have any question, please raise the hand in the Teams app. To start off, in terms of one-offs to bear in mind, in Q1 2026, a reversal of VAT of SEK 1.1 billion was booked in other income. Let's go through the respective lines and start with NII. First, in terms of volume development, we always refer to official statistics. Our communication in the Q1 report was that the Swedish mortgages saw a slight pickup in volumes, which also goes in lines with the latest official statistics, including April in Sweden. Corporate lending growth in Sweden was, however, slow in Q1, and official April statistics confirmed that picture.
In Q1, we also highlighted that lending growth in Norway was subdued, although the picture looked better in the U.K. and the Netherlands, where volumes were gradually increasing step by step. Second, which we always remind about in Q2 each year, the annual dividend to the bank's shareholders is paid out in late March or early April each year, meaning a subsequent reduction of interest generating cash balances in the second quarter compared to the first quarter. This year, as you all know, we paid out a fairly large dividend totaling SEK 35 billion. Third, in terms of margin development and net interest margin sensitivity to changed short-term rates, we don't guide as you are well aware of. The reason being the abundance of moving factors affecting, such as funding, competition, mix effects, et cetera.
Fourth, Q2 has one more day than Q1. The net day count effect over the past quarters in the bank has been around SEK 20 million to SEK 30 million per day. Finally, on NII, in terms of FX, the average rate of the Swedish krona in the quarter has weakened so far against all relevant currencies. This should mean a slight tailwind to the sequential NII development. As always, when assessing the FX impact on our P&L lines, look at the average FX level in the quarter compared to that in the previous quarter and take that times the P&L line in local currency in the respective segments. Over to fee and commissions, starting with savings-related fees, which account for around two-thirds of the commissions. The development of the daily average stock market indices during the quarter usually tends to be somewhat of a leading indicator for savings-related fees.
There are, however, of course, several other factors affecting the savings-related fees such as level of inflows, mix effects, et cetera. We can note that the daily average of the stock market indices are up slightly in Q2 compared to Q1. In terms of the development of other fee lines, we can only refer to the historical seasonal patterns. Bear in mind, in case you go into real details in your estimates, that we did some reclassifications in Q1 resulting in some fees that were previously in other fees and commissions, that category, that they were moved to the category payment fees. Moving on to NFT. The NFT is a minor income line, as you know, and has averaged around SEK 500 million to SEK 600 million per quarter over the past few years.
However, as seen in the past, it can vary by a few hundreds of millions in some specific quarters when credit spreads, interest rates, and/or currencies have been particularly volatile. Over a few quarters, these swings tend to even out. The base component of the NFT line is, however, the customer-driven NFT, which tends to be fairly consistent at around SEK 400 million to SEK 500 million per quarter. The cost lines. Just like on the income side, it's fairly easy to get a sense of the FX impact also on the cost side. As previously mentioned, the Swedish krona has weakened, which should mean higher costs in our foreign home markets in Swedish krona terms, all else equal.
In terms of your potential Oktogonen provisions in your estimates, well, we don't guide as you know, but we always appreciate when you're transparent about your Oktogonen estimates in order for us and the market to get an assessment of your underlying expectations for staff costs. Apart from that, we can only refer to the historical patterns of the costs in Q2 versus Q1. On to credit losses. The only thing we can say is that there have been no public disclosures that you might have missed for Q2. Regulatory fees. In Q4 2025, around SEK 100 million was booked as regulatory fees regarding the cost of mandatory interest-free deposits at the Central Bank, covering the period between October 31st, 2025 and the end of June 2026. Now, in Q2, you should expect us to book this fee again, but this time covering 12 months.
We can't guide for the exact amount, of course, you can make your own assessments based on the previous booking in Q4, and also the info from the Central Bank on May 8th, where they told us that the total amount that the banks that are affected by this has come down by SEK 5 billion to SEK 35 billion on total. A slight reduction in the overall volumes, but covering a longer time period, 12 months instead of eight months. Finally, on capital, the reported CET1 ratio in Q1 was 17.2%, which was 250 basis points above the SREP. This means that the bank was back within the target range of 100 to 300 basis points above the SREP. You should not expect that we will guide on an exact targeted level within the target range, since the target range is a range, not a specific point within the range.
Just a minor reminder that the SEK 6 billion AT1 issue that we did in the end of March had a settlement date on April 1st, meaning that it will be included in the capital base as of Q2. The effect on the Tier 1 capital ratio is around 70 basis points. With those final words, we open up for any questions you might have. Please raise your hands if you have any question. Sofie, you're first up, please go ahead. Sofie, I'm afraid we cannot hear you. I can only see your raised hand.
Can you hear me now?
Loud and clear.
Thanks a lot for taking my question, and sorry about that. My first question was on the AT1. Could you just remind us what the coupon was and how we should think about the impact in Q2 from the AT1? The second question would be on the VAT refunds. Should we expect any additional VAT refunds this quarter? The third question would be, I know it was a while ago, but I think end of March, there was some news around some AML investigation into Handelsbanken. Is there any update on this? Anything you can say on this topic? Thank you.
Sure. Well, in terms of the AT1, it was split in between two instruments. It was a variable part of the SEK 6 billion, SEK 4.6 billion was a variable component where the coupon was STIBOR plus 235 basis points. There was a fixed leg for SEK 1.4 billion with a rate of 5.3%. The cost of that will not show up in the NII. The continuous coupon payments will be recorded under retained earnings. It will go directly towards equity. In terms of the VAT, you should not expect us to make any new similar kind of bookings like was on Q1. That should not be expected in Q2. In terms of AML, well, the investigation should be seen as a standard procedure from the FSA.
We have this occasionally, every now and then you have these kind of, if you want to call it, investigations by the FSA. Nothing that stands out out of ordinary practice, I would argue.
That's very clear. Thank you.
Thank you. Does anyone else have a question? Namita, please go ahead.
Hi, Peter. Thanks for taking my question. Can I just ask on Norway and in terms of the rate rises, just qualitatively, how should I be thinking about it, as in three-month NIBOR has gone up quite sharply, is it kind of a headwind, and then you see the effect of the rate rise, I guess, two months later, or how does it work?
Normally, as you know, there's a notice period in Norway. You can't worsen the rates for the customers without noticing them a few months in ahead. In terms of the net impact, I'm afraid I'm going to have to refrain from providing any color apart from that. Obviously, it's a matter of when you adjust both your deposit rates and your lending rates. I'm just looking at
Unchanged.
Okay. I'm just hearing here from my colleague that the deposit rates have been kept unchanged. This is public, we're just referring to public information. Overall, I'm afraid I'm going to have to refrain from providing any more color as to the impact for the bank.
Okay. Just in terms of the deposit and lending rates, aren't you increasing them on the 12th of July or something like that?
In Sweden?
No, in Norway.
I have to come back to that. I don't have Norwegian mortgage prices.
Okay
I'm afraid.
Okay, that's fine. Thank you.
All right. Thank you. Magnus, please go ahead.
Yes. Just a question. As you beat on the cost again in Q1 2026, we had IT-related expenses and purchased services being down quite significantly once again, both year-on-year and quarter-on-quarter, despite the fact that you even capitalized less in Q1 2026 than in Q1 2025. Did you give any color about the outlook there in conjunction with the Q1 call? I don't recall what you said.
No, if you adjust for temporary effects such as Oktogonen and what we have said for a number of quarters is that the bank is now running at a lower cost level than we did a few years ago. If your question is whether we suggested that there were any temporary effects in Q1, no, there are no such that I can think of that we mentioned.
Okay, thank you.
Okay. I don't see any more raised hands. We'll wait just a few more seconds to see if anyone has Here we go. Namita, please go ahead again.
Thanks. Just one question. Remember last quarter on the RWAs, it was a bit lumpy. I can't remember the reason why, but I think there was a technicality. What actually happens in the second quarter? Does that reverse or it's in the base or just any color on that would be helpful.
I'm going to have to go back and double-check. I don't have that off the top of my head. Let me come back to that one.
You know the increase I'm talking about, right?
Yes. There was an increase of some parameters that increased the RWA. Let me come back on that. There's nothing that we have commented on would be materially different in Q2.
Yeah.
We can have a discussion about the various components behind that maybe after this call.
Sure. That's helpful. Thank you.
All right. Thanks. Okay. I'm afraid I don't see any more hands being raised. All right. Well, in that case, if you have any follow-up questions, you of course know where to find us in the IR team. Thank you all for listening in and have a nice afternoon. Thank you.