Good morning, and thank you for joining our presentation of Swedbank's Q1 2021 results. With me is our CEO, Jens Henriksson and our CFO, Anders Karlsson and our CRO, Rolf Marc Vatt. We will begin as usual with our And thereafter, you will be invited to participate in Q and A, where we would like to keep to 2 questions per person at a to give everyone an opportunity. And with that, I'll hand over to you, Jens.
Well, thank you, Annie, and good morning to everyone, and welcome to the presentation of Swedbank's Q1 The report with an increased profitability during a quarter where the bank has moved forward despite the Challenging time. It has been a tough quarter for many people, businesses and the economy. And the most important issue for the global We have continued to deliver a strong result. Swedbank continues to be one of the strongest performers among Large banks in Europe with a return of equity of 12.8%. We are also efficient with a cost to income ratio of 0 point 44%.
But the ratio is higher compared to what it used to be due to with a reassuring buffer of 560 basis points to the Swedish FSA's requirement. Profit after taxes 50%. NII net interest income was stable and mortgage lending grew, but not in line with the Good. NCI net commission income was stable as well. Our Capital Management business had a positive impact on SEI during Q1, whereas income from our card business was negatively affected by both seasonal effects and pandemic restrictions.
Costs for 2021 are in line As planned, our cost cap remains unchanged, SEK20.5 billion and an additional SEK 500,000,000 For investigations related to Swedbank historical shortcomings. All in all, a strong result in tough times. But we have also faced challenges, especially in mortgages in IT. In Sweden, home prices have continued to rise and the dynamics in the When it comes to pricing, but we are too slow in responding to our customers' needs. We simply haven't kept up.
And This is an area where we need to improve. Every day Swedbank and the Savings Banks Meet the customers through 6,000,000 digital interactions. And the pandemic has accelerated Our customers are banking online more frequently and at higher expectations on our services to work smoothly. That has not always been the case. We've had incidents and disruptions with Our services.
And the accessibility so far this year has been below our target. And the disturbance in our equity trading platform have unfortunately been extensive. This does not live up to our customer They must be able to carry out the business and access the bank in the way they need to, 24 7 days a week, 365 and sometimes 366 days a year. We are working hard to address the challenges we are facing. Our share in new mortgage lending needs to increase.
That's why we're increasingly focusing on meeting our customers' needs. And our strength, as you know, is Broad base of customers across the country together with the savings banks. And we have made the loan approval process quicker to meet expectations during the quarter and have now cut the response time by 50%. We have reallocated Resources and provide faster feedback to customers, both digitally and in person. And we proactively Advise customers with an emphasis on creating deeper relationships and highlighting our full service For financial health, with savings playing a key role.
And we are working actively to shorten our queues and wait times in the customer centers. The collaboration with our real estate broker subsidiary, Fastiersperon, has recently channels. The activities in Swedbank and the Savings Bank's IT platforms are record high. And the interest in equity trading is Also historically high among Swedbank's and the Savings Bank's many customers. In order to future proof the bank's IT platforms, we run a comprehensive program with a number of measures.
It contains long term plans to meet stability and availability requirements, but also here and now to minimize and manage incidents. We are investing in simplicity, As you know, we strive to be a low risk bank and we have addressed the historical shortcomings identified by the IDA Fortis and the CLIFO Chance report. But in the wake of such historic events, there are still Investigations yet to be concluded. NASDAQ Stockholm, I. E, the Stockholm Stock Exchange in March, They concluded that the bank during the period 2016 to 2019 did not fully follow The market abuse regulation properly and the rules for the stock exchange.
And the bank mainly and amount to a maximum of NOK 60,000,000. In September 2020, we informed that the Swedish FSA is carrying out an investigation around issues that are parallel in time and matters with the Stockholm Stock Exchange statement. And The SFSA, the Swedish Financial Supervisory Authorities, can decide on a sanction even if the Stockholm Stock Exchange give us a Fine. The investigation by the U. S.
Authorities are ongoing
and the bank doesn't
Historical issues, 1 after 1 as the investigations are finished. And in order to do our part in the fight against financial crime going forward, The focus is now to have the bank on a low risk level. And we know risk through continued Structured work with KYC measures. And at the same time, we're becoming more precise in monitoring suspicious transactions We have during the quarter also decided to stop international payments via the Internet bank to several countries with a high risk profiles. For Swiss Services, we have tightened the rules to put a stop to new fraud patterns we are seeing emerging.
And it is also reassuring for me as CEO that Significant credit losses so far has not materialized. Credit quality is very strong and credit loss decreased by 50% during the quarter. As of today, we made provisions of more than To adjust the bank to the needs of customers during the pandemic, both in how we work internally and how we support The capital markets are attractive in this new landscape for financing, both ECM and DCM. We assist corporate customers with issuance of both traditional and green bonds and have strengthened our position considerably on the Corporate customers can now easily connect their accounting with our service in a digital onboarding Which saves times both for the customer and us. And Robour, which is the largest fund manager in Sweden, Our roots.
It is satisfying to see that we continue to make our customers' financial life Easier during the pandemic. And now, Andres, it's your time to go through the numbers and the quarterly development. So the floor is yours.
Thank you, Jens. Good morning, everyone. We achieved a return on equity of 12 point 8% in this quarter through improved profitability. Core income lines were stable and a more normalized NGL decreased. The costincome ratio ended up at 0.44.
Compared to last quarter, The total loan portfolio increased by SEK 5,000,000,000 including a positive FX impact of SEK 7,000,000,000. Banking remains muted. And in LC and I, total lending volumes decreased by SEK 4,500,000,000 including a positive FX Of SEK 2,500,000,000 While direct lending to clients was stable, there was a large reduction Increasing by SEK43 1,000,000,000 of which SEK16 1,000,000,000 stands from households and SEK10 1,000,000,000 That is of a temporary effect stemming from 1 corporate client's pension premiums that will be Interest income, which overall is stable. In Q1, we saw lower average lending volumes and In Sweden choosing to fix their mortgages in longer tenors continuing to weigh somewhat on the margins. FX and day count effects impacted NII negatively.
And the deposit For 2021, we'll be around SEK550 1,000,000 taking the Q1 net Previous years of $100,000,000 that was booked in the quarter. Over to net commission And we saw net inflows of SEK7 1,000,000,000 during the quarter. Income was higher even compared to a strong previous quarter that by quarter over quarter seasonality and more restrictions due to the pandemic, reminding you that there was a one off Finance decreased from a high level in the 4th quarter, which also benefited from a €40,000,000 market making Turning to net gains and losses. The NGL result was lower with good client Activity. Last quarter included large positive valuation effects and favorable FX Let's look at expenses before I hand over to Rolfs.
This quarter expenses were seasonally lower quarter over quarter and in line with our I will now hand over to Rolf to talk about asset quality and the credit provisions that were made in the quarter.
Thank you, Anders. And now please on to asset quality, which remains strong and stable and was largely unchanged during the 1st quarter. The outcome from the macro forecast for Q1 2021 was positive and only minor changes Late payment statistics, watch list exposures or other early warning indicators, the picture is very much the same as in Q4 2020. No visible impact yet. The key Tremaine to be oil and offshore, hotels and restaurants, retail and transportation.
The The total credit impairment for the Q1 decreased to SEK 246,000,000. This is mainly explained by a management Macroeconomic forecasts have improved for all home markets, resulting in a modeled expected credit losses decreasing by SEK 200,000,000 However, as you know, Sweden and the Baltic countries, especially Estonia, have been hit by a severe third COVID wave. While the vaccine rollout is well underway, the Recently introduced restrictions in the Baltic countries can be expected to stay in place for a longer period than previously anticipated. As before, the viability of many businesses will depend The uncertainties on potential impact does remain. Therefore, we retain the post Model adjustment made in Q2 and Q3 2020 in Sweden, while we increased the adjustment In Baltic Banking, bringing the total post model adjustments for COVID-nineteen to EUR 1,852,000,000
with
For individual assessments of SEK 194,000,000 was mainly related to a few oil and offshore counter to €38,000,000 while other items reduced provisions by €169,000,000 A main part of our Oil and Offshore Business is in runoff. Since Q1 2020, the gross exposure has reduced from SEK 12,900,000,000 to SEK 7,300,000,000. During the Q1, 3 large exposures were sold and written off with only a minor impact on provisions. We now have SEK 3,600,000,000 in
Thank you, Roel. Let me now turn to capital. We report a strong capital position With the buffer to the minimum regulatory requirements of around 5.60 basis points. The CET1 capital ratio increased to 18%, The remaining crude dividend from profits generated in 2019 2020 is still deducted from the CET1 capital. In terms of implementation of future capital We expect higher risk weights from the IRB model overhaul exercise relating to probability of default to potentially start being phased in from the second quarter, while the loss given default The component relating to the Baltics will be implemented later.
The Pillar 2 guidance of the Swedish package will likely be set and implemented in Q3, and it is expected to be around 1% on the buffer. If we look further into the future, we expect the Swedish FSA to reintroduce the Exactly the impact from all these regulatory initiatives. But once we are through all these changes, we expect our CET1 capital buffer to end up within our capital range of 100 to 300 basis points. We are comments, including some EPS drivers before I hand back to Jens. Mortgage volume growth And lower funding costs will continue to support NII.
With regards to margins, if the trend of Margins in the floating part of the mortgage book are expected to continue to move in tandem with Expect DCM activity to be strong, which will support MCI. The headwind from deposits and Excess liquidity will persist if inflows continue to outpace lending. Net commission income is well positioned to benefit from an economic uplift. GDP is forecasted to recover 3% to 4% in all our home markets already this year. And the revival of household consumption is predicted to In the summer, if current vaccination plans hold.
Around 75% of the assets under management in our asset management Businesses invested in equities, which will, generally speaking, naturally follow market performance. As the Certainty from the pandemic is reduced, we could see a willingness for private customers to invest cash held in Fixed income funds continue to outperform benchmarks. Payments and cards. Payments processing, I. The income from transactions made through the bank has been fairly stable since the onset of the pandemic, while core income has Insignificantly impacted.
We expect card activity to recover by at least 10% as the Economy reopens and travel restrictions around the world are lifted. Regarding expenses, we are Keeping up the investment pace, primarily within AML and IT in order to future proof our bank and fortify IT Resilience. Cost discipline is a strategic priority during this phase. We therefore reiterate our 2021 2022 cost guidance of DKK20.5 billion of underlying expenses Plus $500,000,000 is our best estimate on AML investigation costs.
To
And we are doing our utmost to stay close to customers and are making changes to capture Lending opportunities, especially in mortgages, as Jens has outlined. For clients who are looking Alternatives to bank lending, our capital market exports are on hand, and we continue to focus on our savings business. We recognize that cost has outpaced income growth in recent quarters. We are therefore working hard To grow our key income lines, while keeping to flat cost development for this year and the next in order to improve the cost income ratio, earnings per share and return on equity. With that, I hand over to Jens to conclude.
Thank you, Anders.
Let me say a few words more about the economic development before I wrap this up. So first, IMF in its April said that it expects a vaccine driven recovery and IMF has raised its global economic forecast to 6% this year And 4.4% next year. And the upward revision is mainly due to higher levels of fiscal Support in a few large economies. And we have to go back 40 years in time to find Such strong growth numbers. But let us remind us that the pandemic is still affecting all of our home markets Nations have started.
Restrictions are expected to be eased gradually from the summer and all 4 home markets We are about to enter a considerable upturn where we are counting on households' consumption to be in the driving seat in Sweden. The economic growth will return to healthy levels in the Baltic markets during 2021 and the forecast So 2022 show good growth. Now looking at where the bank stands today, I see The work we did within the whole bank with our strategic direction is underway and that important In order to contribute to a financially sound and sustainable society, we have clarified the corporate governance and Accountability within the group. We have addressed the authorities' requirements regarding AML related standards and Sustainability is a core when we now assess climate related risks. Because of this, we are talking with customers about how they can adapt their business.
And we are a part of the transformation. We are improving availability for customers and And we have the ability and competence to empower the many people and businesses to create a better future Sweden, Estonia, Latvia and Lithuania, I feel confident that we are well positioned for When it picks up speed. Now we are all 3 ready for your questions. And then I give the floor back to you, Anne
Great. Thank you very much. Operator, could you please open the lines for the first question? Thank
Our first question comes from Magnus Anderson from ABG. Please go ahead.
Yes, good morning. Just Starting off with mortgages and NII. When I look at your market shares, it's gradually and steadily come down from 35 17.98% to around 33% today and it's still continuing down. You're Obviously taking action. But out of the measures you mentioned, more focus on larger cities, faster loan decisions and special offerings together with Fastiers Perion, I think focus on larger cities.
I've probably heard that for more than 15 years. And special offers together with Fatiels Biron, I buy that, although I think you've had Some already. But then increasing accessibility and short response times, I think that's probably the most important Here. But my question is, do you think that what you are saying today will be enough to take you back To your back book market share was in terms of front book? Or do you think that you will still continue To gradually lose market share within mortgages?
Well, thank you, Magnus. I agree that sort of us Being available and being fast is the most important issue we have to face. We haven't been good enough and we are open about that. So We need to be more accessible. And we want to get back to our market share.
I'm not going to give you a specific date, but there is Full focus on that.
And just to add Magnus, I think I missed some of your numbers there, but I mean the market has changed quite dramatically since 1998 that you're referring to. As you know, there are so many more players in the market today than it At that point in time, but so I don't think it's a fair comparison from that sense. But we will definitely do Whatever we can to come back to normalized backlog market share.
Okay. So and what's a normalized share? Because yes, of course, the market has changed, but the other banks haven't lost even close To what you have lost, actually, they've been quite stable. Of course, Handelsbanken has also lost, which was the other large player, but Not to the same extent as you. So I'm just what I'm just after is, do you think that you will be able to stop this trend because it's also been going on during the last I mean, it doesn't matter whether you look at the last 3, 5, 7, 10 years.
It's a steady decline.
Well, if you look at our market share, it's 2 parts. 1 is sort of the part we sell ourselves and the other one is the part where the savings banks sell. And when you look at the savings banks, it goes up and down. And in the last periods, it's gone down. And that is because they have good access to capital markets and it's a tremendous inflow of deposits.
When you look in our core market share, it's around 18%. And I cannot give you under information that we See the problem? We are not good enough. We're not fast enough in this market, and we have to be better. And our ambition is very clear.
We want to get back to our back book market share. The good thing though is that we haven't seen any problem with our For pricing, we think that we are with the right prices, but it's about us being available.
Okay. And secondly, just on costs where you are running now on an annualized Level below SEK 20,000,000,000, I. E. Significantly below your SEK 20,500,000,000 cap plus potentially around SEK 500,000,000 AML investigation costs. Can you give us some feeling on where you are seeing costs increasing in what areas during The rest of the years and how we should think about cost allocation over the year, I.
E. In H2 2 versus 81. I would perhaps have thought that you would start to front load some of this already in Q1, which obviously
I'll start off before I get sort of let Andres get into the details. If you look on Q1, it's seasonally a bit lower. Our target of sort of keeping below the 20.5% still stands. And we have, As I mentioned, we are looking at IT investments. And in some places, we also need to hire some more people so we can meet the customers Fast enough.
But with that, I give the floor Anders.
No. But Magnus, if you look at Q1 as a percentage of the total Over the last 3, 4 years, I would argue that it stands around 23%, 24% and the same goes for this Q1 this year. So seasonally Q1 is lower. What we have been talking about For quite some time now Magnus is the fact that we have been gradually hiring people during previous year And to a certain extent, during the beginning of this year, it has been necessary in order to primarily Work with the shortcomings on AML. That will have a full year effect 2021.
And if you look back, you see that H2 is typically even though Q3 is a seasonally lower cost quarter, Q4 tends be a high one. So it's not a linear relationship. And the conclusion I make is That we are on plan.
Okay. And just I noted that your headcount increase, the rate is actually coming down Now in Q1 compared to the growth rate we saw quarterly in 2020. And I think you mentioned after the Q4 Call that you expected headcount to be roughly flat in 2021. Is that still what you think? I have staff turnover Change to picked up, which was a problem for you last year?
It has not picked up, although I can foresee that If the restrictions are lifted and vaccination plans are coming through, you will most likely get back To normal turnover and maybe even higher turnover than you have seen previously Magnus. The way we are managing costs are by 2 Different levers. One is that we have put an FTE cap onto And the second one is the cost frame that we have talked to you about. The one that is binding is the
Our next question Comes from Johan Ekblom from UBS. Please go ahead.
Thank you. Maybe to continue a
bit on the volume side. On the corporate side, I guess for some time, you've been it's not only in the is where we've seen underperformance on volumes. Can you talk a little bit about you said there are some signs that corporate credit demand is picking up, But what is needed for you to kind of take your natural market share there? Are there perception issues of you in the market? Is it Active decision of on the risk side?
Or why have we seen as weak corporate volumes as we have? And then secondly, just a very quick, is there any update you can provide in terms of timing of the payments review? I know you probably don't want to go into details, but Is there any kind of deadline for that to conclude?
Okay. Thank you. First of all, I I think that we are not standing out in particular when it comes to lending to corporates. I think it is a systemic issue. One reason is that corporates are hesitant during a period of such large uncertainty To invest in new capacity and on the back of that you see that they are cash rich.
You see it in Deposit accounts around in the banks, but you also see it on the tax account with the tax authorities. So they have money to invest. Secondly, As you know, we are heavy in real estate. And real estate is capital intensive, but it also is A fair number of large real estate companies that has access to the capital markets. And if you take a combination of risk weight floors coming from the Swedish FSA on commercial Real estate and extremely benign capital markets.
Some of them are sort of using the capital markets rather than Bank lending. So I think that is one part of it or the most important part of We see a, as we said, some positive signs. But again, until you see any meaningful pickup, We continue to say that it's subdued.
And let me just follow-up on sort of the payments business. We have no new information to give At this time, as you know, we came out a while ago and said that we are doing a strategic review in this area, which is an area is sort of a lot of technical development and we are Continue to that and we'll get back to you on that.
Thank you.
Our next question comes from Andreas Hakansson from Bancke Bank. Please go ahead.
Yes, good morning, everyone. Sorry, I'm going to have to come back to Magnus' questions about the mortgage market because I mean, when I look at it, you're bleeding clients Every quarter, I think you lost around 5,000 clients this quarter. And I assume they bring with them other forms of revenues from the bank as well. So it's a very serious problem. And When I look at your exposure to the Stockholm region, it seems like you're not it's not that you underweight Stockholm, you're losing market share quite rapidly in And you're telling me that, yes, you're not being available and fast and all of that, but you're increasing your staff numbers by 1,000 people over the year And costs are going up rapidly.
I mean, what are you going to do about this?
Well, I think the key point is that We are not losing customers. We're losing a part of their business. They have gone to other places, but they're still sort of Customers of us. And we have their contact details and now we are pushing even more on this and we have not been available. If you look on sort of How fast we've been?
We've not been fast enough. So we are doing things here and I am confident we can get back to market share.
But Jens, it's no rocket science. If the clients call you, you have to pick up the phone. I mean, You spent I don't know how long talking about AML. Is the organization overall still in AML limbo and forgot about the client? I mean, you're hiring people, you're increasing costs, but they don't pick up the phone when clients call.
There must be a problem somewhere.
Well, put it like this, of course, the sort of AML problems have affected us. And we are sort of spending a lot of time and a lot of effort And we're hiring people here. And as you know, I know a lot of you was disappointed when we said that we have Roughly 1500 people in the bank working full time against financial crime. So I agree that there's been a weakness. But when we reach the customers, we do business.
And we have not been fast enough. That's the only Answer I can give and it's the only brutal answer. We think we're rightly priced, but in this fast market, we have not been good enough.
And I assume then that every KPI in the organization is now based on this? Is that
Not every KPI. We need to think about sort of Earnings per share, return on equity, sort of AML issues, compliance issues, sort of customer and things like that. But it's an important step. And I'm pushing this, and I've said that we will get back to our market share.
Okay. I'll come back to that in next quarter. Next question, on your deposit growth, And you increased deposit by EUR 43,000,000,000 even if you adjusted a bit and your loans by EUR 5,000,000,000. And I mean, why? Why don't you introduce negative rates like the Danes do, especially in the Baltics where you had a massive increase in deposits in the quarter?
We have increased the charging in all three Baltic countries. So we have increased, I think, The number of clients charged with 50%. So we are doing that. It's not as easy as it sounds, Andreas, since we have introduced floors on our lending side, as you are aware of. And you cannot charge someone on deposits and have a floor on the lending side.
So part of the Customers, it's very difficult to do that. In Sweden, we are charging. I think it is in LC and I 20% Of the clients, but we are very hesitant to charge Swedish small sized corporates and private individuals.
So as you probably
saw that in Denmark, Nordea introduced now a positive deposit margin of 50 basis points by going down to minus 125 bps. That's quite aggressive.
I agree. But you have to talk about that bit in Denmark.
I will. And we have no plans to put in sort of negative rates on private individuals as we.
Okay. Thanks.
Our next question comes from Adrian Chigi from Credit Suisse. Please go ahead.
Hi there. Adrian Tucki from Credit Suisse. Thank you very much for taking my questions. 2 from my side. We've seen one of your Nordic peers By purchasing an online mortgage bank, put it simply, could M and A help you bridge the gap versus your previous market share?
And the second one is a clarification on capital. You mentioned that you expect to remain within your target range post the regulatory capital reviews. Does that mean that you're expecting at least 260 basis points of headwinds? Or have I misunderstood that point? Thank you.
Of course, we're always looking at different opportunities to do sort of M and A business. But I think the key point here is that I'm getting back to what I've been saying all over is that we need to be better on sort of on faster and sort of meeting our customers' needs. And this has been a period where we think we're right on price, but we are not fast enough in this fast moving market where Sort of the objects are taking on the time they have been shown or done just before they come to the market. In that We've sort of in this time, we've been too short from the loan promise to be a real deal. On the other, I'll let you answer that.
On the I mean one of the reasons why we are increasing the buffer in the quarter is that we have not increased our lending volumes, which is A real driver. There is a lot of uncertainty, especially with the IRB overhaul. But It's the only thing we have any visibility on, we think, is the Pillar 2 guidance of 1%. Reinstigation of the Not at this
point. Thank you very much.
Thank you. Our next question comes from Nick Davy from Exane BNP Paribas. Please go ahead.
Good morning, everyone. Two questions, please. The first one, If I can just focus on the large corporate and institutions business, which is doing a 9% return on capital And what's typically quite a good quarter, I just wondered whether you had a plan for the unit itself. I think you talked about sort of thematic plans. But for the division itself, how do you bridge the gap to a sensible level of returns?
Is it just the cost And hope for better activity? Or is there anything more focused on the division itself? And the second question, Just coming back to this question of high deposit growth and what you can do about it, I think you made some comments about less Wholesale funding issuance, in general, it looks like you've actually issued a fair amount in Q1. So If you have any comments about the opportunity from high deposit growth, if you're not willing to charge negative rates, maybe you can flesh Shall the comments about AUM or less wholesale debt? Thank you.
Well, thank you. First on sort of we do not have specific targets For different divisions. We have an overall target and that is to reach the 15% of return on equity. And I think that this quarter is a good quarter of 12 And I think if you would withdraw the sort of capital that we put aside for accrued dividend paid outs, then we'd end up with Return on equity of 13.5%. The other question is, of course, of this deposit.
You have to think about 2 things when you look on How we act on the bond debt market then. So the first one is that we have some regulatory demands that we need to fulfill with Specific kind of instruments. And the other thing is that we need to keep an activity ongoing here in order to sort of keep the market But of course, we'll take the opportunity to use the deposits in a good way. Andres, do you have anything to add on that?
No, not really. So presence in covered bonds and seniors unsecured and non preferred We are limiting it to the extent possible, but we have to be present there.
So can I ask a quick question on a follow-up on the no divisional targets? I mean, if you're running them with a 9% ROE In the large corporate unit, obviously, you can have a cost cap and hope for better activity. But is there any point at which you would say this division needs To become much more capital efficient in and of itself? And where what would it take to bring in divisional targets?
Well, we always look on sort of follow-up our sort of heads of business how they are doing and we're always pushing them On that side. But I think the key point here is that we need to be sort of more active and we need to be there for our customers and we have no sort of plans on putting in the extra targets on each of them. We have we are sort of Bank that are for the many people and businesses. And these are Sort of product offerings that we need to give from everything all but from the big companies to the small companies. And I think we've Acted in many ways in a very good way in LC and I.
Okay. Thank you.
Our next Question comes from Richard Stran from Nordea. Please go ahead.
Hi, good morning. I have 2 follow ups. On the staff expense and FTEs, We see that the number of FCA continue to be up sequentially though at a slowing pace. But I was just I'm going to ask if you could give any flavor on how you see the progression there going forward. And you talked about potential natural attrition Coming up in the later part of the year, but what if that doesn't happen?
And also on the AML capability, do you see that you have recruited The staff you need there or is there additional needs there?
No, but it's as I said, the I mean, as you know, When you hire someone, they're not immediately starting. So when you see increasing FTEs In this quarter, it's most likely people we have hired at the end of last year. We have put in FTE caps Together with cost frames. And you're right, we underestimated the attrition rate coming So dramatically last year, we sort of planned for a sort of normal turnover and that did not appear. We expect to have a slower development on the FTE side this year, absolutely so.
And what was your second question? I think we forgot about I forgot what you asked for.
The AML Capabilities there and staff, is it I mean, do you see that you have the staff you need in the AML side? Or do you see further It's there in some areas.
Well, we hire some people in this area. And but the sort of key number and the key metrics Was the one I gave you last quarter and that is that we expect almost a tenth of every person in the bank working with the fighting as financial Right. And of course, in the long run, this is something we want much more automized and things like that. But In a time like this, we are working with 3 different perspectives. 1st, cleaning up our historical shortcoming second, Following the flow as we speak and the third, investing for the future.
So in the long run, I do not expect so many people to work with this.
And then a question on your IT spending. You raised both that you're a little bit slow on Responding to mortgage applications and also then the problems that we read about in the newspapers regarding your equity trading platform. Overall, how do you see your sort of IT spending from your current level? And then going forward, do you see it I mean, is there a risk that you need to improve it to stay up with competition? Or how do you see that?
Well, the only thing we know about IT is that, That is an area where we'll continue to invest. And I think if you look on the investments this year, I think it's the highest ever on investments. But we've had problems, and I was extremely open about that. And we are having a stability resilience program. And I think we've been under vested a bit in the sort of in the sort of sewage systems of the IT part.
And but we are a heavy focus both on the short term actions and on the long term remedies.
Okay. Thanks.
Our next question comes from Matsy Hidal from SEB.
Sorry to come back to the mortgage business again, but we consider it all your bread and butter. When could we expect you To come back with more details because when I read this more focus on larger cities, to my knowledge, That is not where Fastus and Biron have their strength. It's more out in the countryside. We see that you need To invest and obviously, you need to convince us here that you are doing something rational that will change the negative trend. Will you come back to us with more details on how you intend to proceed with this?
That's the first question. And then the second is more of curiosity. I think Swiss, you mentioned actions there to offend Hostile behavior, could you mention what has happened? Thanks.
Well, first, don't be sorry about asking about mortgages. We love to talk about the And we have a strong business there and don't forget that. First on Fastiersperon, I actually thought that as well. If you look at the numbers, we are strong in sort of in a few parts of Stockholm, but we can always be stronger there. When regarding the action, I think the key point is that we need to sort of show that in the numbers.
I don't think it's about us sort of saying we're doing A, B, Z and D. It's about us showing strength here. And as you know, I'm putting my sort of I'm going out here Saying this very clearly that we haven't been good enough. I'm communicating that and I think we have a good potential for getting back. On the Swiss Transactions, if I remember correctly, it's the number of times you can switch Your phone numbers linked to an account.
And what we are seeing is that some individuals are changing their phone numbers Aggressively. And what we're now saying is you're only allowed to change your phone number 3 times during a year. Things can You can change job and things like that. But when you start to seeing big changes, well then that's a warning flag In our AML systems.
Okay. Thank you. But all the initiatives here on mortgages and also In IT Systems, etcetera, everything should go under the cost cap as you see it?
Of course. We have a cost cap of 20.5 percent and we are doing this. But I think the key point is that look for look in the numbers and that's where we need to deliver there.
Yes. Okay. Thank you. Thank you.
Thank you very much. We currently have just under 3 minutes to go. So I'm going to allow the last question, Which is from Sophie Peterson from JPMorgan. Please go ahead.
Yes. Hi. Here is Sophie from JPMorgan. So I was wondering if you could just give an update on the banking tax in Sweden. What's your view here?
Do you To go ahead next year or do you think it will be delayed? Do you think that you can offset the potentially impact by Pricing and how you think about the resolution fund fee. And then my second question would be around the resolution fund fee. You say it's €550,000,000 in 2021, but it's not really clear how much it actually was in The Q1, because if I look in your fact book, it says that it was €229,000,000 in the Q1, which just Doesn't seem right given that it was €120,000,000 in the Q1 according to the fact book. So if you could just kind of Go ahead, how much the Q1 resolution fund fee was and how do you think about the resolution fund fee going forward?
And then the last question would be on the dividend. You still accrued a dividend from 2019 and 2020. How should we think about a potential payment of this dividend? And if the dividend restrictions For whatever reason or extended, what will you do with those funds? Thank you.
Thank you. First on the tax, I got no new information that you have to ask the sort of Government and parliament and the politicians. And here in Sweden, we've let the Swedish Bank Association be the one that taking the discussion And I think there are good arguments against this tax because it's I'm not sure it really lives up to the EU rules. And I think the way It treats large banks compared to small banks is not fair. And I think the very idea that if somebody deposits on the bank that we should pay a tax For that, it's not fair.
But so I have new information on that. The third issue you Talked about was the dividend. The dividend is that we paid out, as you know, SEK7.25 earlier during sort of this year for 20 In 2020 within sort of the cap provided by the Swedish FSA. They've said that that is a cap that We disappear the 30th September. And what we are doing, of course, we're following the development, both in terms of how the economy develops and What happened with the vaccines and what the FSA is saying.
But of course, we want to pay out dividends. We are proud to give out dividends. And we see that as a contract between the very people you advise and are the owners of us and the profits. So we hope to get back on that.
And Sophie, on your question around the resolution fund fee, I think there are 2 fees. We talked about the deposit guarantee Fee fee, which will be approximately SEK550 1,000,000 this year. As you know, it's finally decided in Q3, I think, or beginning of Q4. So that's an estimation. As far as the resolution fund fee comes, It will increase most likely from SEK855 1,000,000 last year to SEK915 1,000,000 this year.
So I think you mix the different fees up a bit there.
Okay. Thanks for that. Sorry. So how much was the deposit Please see then in the Q1.
There are a couple of deltas in the Q1 that makes The comparison is difficult for you, but the underlying deposit guarantee fee will be Around SEK550 1,000,000 for the full year. That means that the underlying deposit guarantee fee for Q1 is around SEK 100 and SEK35 1,000,000. But then you had deltas from Q4 and we have this retroactive repayment Coming in for 2019 2020, that is disturbing the numbers a bit for you.
Thank you very much, everybody. Take good care