Thank you. Good morning, everyone, and thank you for joining us on this presentation of Swedbank's Q2 financial results. With me in the room, I have our CEO, Jan Sanderson our CFO, Anders Karlsson and our Chief Credit Officer, Lars Erik Danielson. Following on their introductory remarks, we will open up for questions. Jens, please?
Thank you, Gregori, and welcome to this presentation of our Q2 results. And it is a strong result in uncertain times. The second quarter was completely dominated by the pandemic that has affected individuals, societies, economies and Swedbank. And when I met you here 3 months ago, I stated that the economies and the economic policy would go through 3 phases: mitigation, restart and the inevitable budget consolidation. And we are somewhere between the mitigation and the restart phase in Sweden.
And the big question now is how quickly will we recover from the pandemic? Will the recovery graph look like EU, V, an L or Nike swoosh. My favorite is the Victorian bathtub. And according to economic research, financial crisis tend to be more severe and to have more long term effects compared to other crisis. But what happens when there is a pandemic?
One difference compared to financial crisis is that the credit channel crisis with increased lending, primarily in demand from large enterprises. But social distancing has a negative impact on both supply and demand. A restaurant can suffer from both reduced demand when guests don't want to come and reduced supply as a consequence of more space between the table. Another issue to consider is how global value chains will be affected by the fact that some countries have shut down completely. And we do know that the pandemic will have an enormous global impact.
On June 20, the IMF updated its April or as they call it, a crisis like no other. The global growth rate is revised from minus 3% percent to minus 5 percent and the recovery in 2021 will be slower. The IMF expects deeper and more protracted crisis. The full year eurozone growth is estimated at minus 10% this year, and in the U. S, we're talking -8%.
France, Spain and Italy are all expected to have over 12 percent negative growth. Sweden is affected as well and the crisis will be deeper and last longer than we previously thought. Our economists at the banks, they believe in a negative growth of around 5% during 2020, and this is 1% lower compared to their outlook in April, and the recovery in 2021 is estimated to be 2% weaker than projected in April. As a result, unemployment rate will grow by 0.7% between 'twenty 20 21 instead of being reduced with the same number as previously predicted. And this naturally affects provisions for future credit impairments.
At the same time, there are clear signs of a turnaround. In our home markets, Estonia, Latvia, Lithuania and Sweden, the forecast predicts that the decline in retail sales will be leveled out or turned around in the next quarter and the real estate values are resilient. And looking at the rest of the year, it's very hard to predict the development in Sweden with the summer of historically low revenues in many the bank for the many households and businesses, we have offered advice about various governmental measures in response to COVID 19. We've given individual advice to both private customer and enterprises. We've also supported lending and liquidity to business.
I'll give you some examples. In Sweden and the Baltics, we have approved together some 56,000 applications for amortization grace periods and close to 10,000 applications from enterprises. Our web corona page has had 1,000,000 visits and the social media Ask Swedbank program has had more than 6,000,000 views. And the crisis accelerates development trends in our society that would have taken place without corona. Now they happen at a faster pace.
The use of our digital financial service is increasing, and we are focusing on the fact that our customers' digital customers. Another area is financial advice, where demand is growing. However, we have identified
a
quarter. As I said, it's a strong result in uncertain times. Revenues amounted to DKK 12,000,000,000 and we had a strong net interest income, which increased by DKK 200,000,000 compared to the Q1. And this was due both to higher average lending volumes in the quarter and deposit growth. Net commission income was $300,000,000 lower compared to last quarter as a result of reduced income from card payments, lower values on assets under management, especially during the beginning of the corona crisis, resulted in lower commissions.
Net gains and losses were unusually strong due to valuation effects from Visa and Asiakastieto, and we also recovered our losses in the trading portfolio from the Q1. And other income, which is getting more and more important for us, for example, insurance operations and our Savings Bank's holdings, were than last quarter. Our costs were lower compared to Q1 and mainly because then, well, you know, we were fined SEK 4,000,000,000 by the Swedish FSA. But also because of the pandemic and as we understand it, that has led to fewer requests for information from the relevant U. S.
Authorities. On the other hand, the underlying cost for developing and operating the bank were according to plan, and we see no reason to adjust the cost guidance of $21,500,000,000 for 2020. Now this quarter, we made credit provisions of SEK 1,200,000,000. Last quarter, we made credit impairments of SEK 2,200,000,000, and this was because we adhere to the revised IFRS rules both in letter and in spirit. But let me also remind you that $30,000,000 and actual credit losses during this quarter has only been DKK 107,000,000.
So we made credit provisions for future credit loss. In the quarter, Swedbank had a 13.5% return on equity, and the cost income ratio amounted to 0.40. And this means that our common 4 to regulatory requirements of 3 40 basis points. On May 28, Swedbank held its Annual General Meeting and a new Board of Directors was elected. The AGM refrained from deciding on the dividends of 2019 upon the recommendation from the Board of Directors.
And the Board will revisit the dividend matter the consequences of the pandemic can be properly assessed. Swedbank's position with strong earnings and stable capital liquidity buffers of $21,000,000,000 $600,000,000,000 respectively, is comforting in the midst of this crisis. And this means that we can continue to be there for our customers and support the economy in the future. And I could not have a call like this without talking to about our AML and anti money laundering shortcoming. My belief is that during Q2, we entered the beginning of the end of Swedbank's money
money
Channels has been published, and it is available for those who want to read it. The Estonian FSA gave us a precept, which we had until November to remedy, but there are still U. S. Authorities that continue their investigation and our U. S.
Legal advisor assist us. Now we know what the shortcomings the bank has. We know how to remedy them and we know what we want to achieve, an industry leading AML standard. And as I know, you all know, we have an action plan, and I promise to keep on talking this and report on its progress on each quarterly briefing. And when I started, we had 132 action points.
It has now grown to 245. This is primarily because investigations by FSAs and Clifford Chance have generated new actions. And you know the slides I've shown now shows the summary of the actions we implement divided into the different areas and the major areas of monitoring, international, internal regulation and customer knowledge. And of the 245 action points, 117 are completed, 87 are ongoing and 41 have not yet been started. And according to plan, 100 action points will be completed during the rest of the year and 28 are planned to continue in 2021.
Now one of the questions I've struggled with since I took office is our corporate culture. And this is what I decided to appoint the matters. Now they've talked to more than 8,000 employees that have participated. And let me start with the positive. Swedbank fundamentally has a sound culture and strong values, having roots that are 200 years old is a strength.
When our employees are asked to talk about what characterizes the bank, it is a very positive picture that emerges. But that doesn't mean that everything is good. We have problem areas that we need to deal with. Things have not always been organized as they should have been. And during the year, we are assessing the group's governance.
We need to strengthen governance and control and our subsidiaries must be given proper prerequisites to comply with legal and regulatory requirements. We're also in the process of assessing our ability to manage risk. And we aim to have an updated enterprise risk management system for all type of risks during the year. And we need to have an atmosphere where all employees feel welcome to raise issues, shortcomings ambiguities. And finally, we need to be clear about our wanted position and how to reach it.
This is why I recently launched an initiative with the purpose of clarifying our strategic direction. All 15,000 employees in the bank will be towards having a more open and inclusive culture. It will be easier to set long term goals and to reward good and sustainable performance as we clarify the way forward for the bank. The corporate culture is fundamentally positive and gives strength. And our values, open, simple and caring, are deeply rooted in the bank and all its employees.
What we need to improve is internal governance and control, which is exactly, of course, Swedish Financial Supervisory Authority to finance. Now the past quarter was unlike anything any of us have ever seen. It is deeply satisfying to see how Swedbank and our customers work to alleviate the effects of the COVID-nineteen pandemic. Together with our customers, we create the prerequisite for a strong recovery. Now Anders, now you have the luxury to present this strong result.
Thank you, Jens. And as Jens already mentioned, we are presenting a strong result in the quarter, in many regards quite a contrast to last quarter. I will first walk you through the P and L in detail and then ask our Chief Credit Officer, Doshi Efthorn, to talk about asset quality and credit provisioning before I sum things up with a few comments on capital and forward looking drivers. In contrast to last quarter, the loan portfolio declined somewhat. The main reason was that Swedish krona strengthened against the euro and U.
S. Dollars. But when we look through the FX impact, there are a couple of interesting developments in the quarter. Firstly, we are again capturing new lending in Swedish mortgages close to our back book market share and I'm very happy with this development. Secondly, we saw large in in the future.
We saw an increase of $20,000,000,000 in committed revolving credit facilities ending at 2 $220,000,000,000 in the quarter. At the same time, utilization decreased by $10,000,000,000 $1,000,000,000 and stands currently around 30%, which is back to average levels. Thirdly, lending in our Baltic subsidiaries is stable in euro terms. And customer deposit inflows continued this quarter, increasing by 39,000,000,000 dollars Now let us look at the result in more detail, starting off with net interest income, which is higher quarter over quarter. Higher average lending volumes and deposit volumes contributed to the increase.
As mentioned last quarter, the loan growth in March April generated income in Q2. Margins overall were stable. Market rates were again quite volatile during the quarter with expanding and mortgage margins in Sweden declining. Corporate lending margins were stable. We received the final fee level for the resolution fund.
We have to pay slightly more than anticipated, resulting in a negative delta in NII of $73,000,000 this quarter, as we also adjusted for the fee booked in Q1. In total, we will pay $842,000,000 $1,000,000 in 2020, which is roughly $275,000,000 lower than last year. Group Treasury supported NII this quarter as maturing debt securities were primarily replaced by deposit inflows and funds from Central Bank's liquidity programs, resulting in lower funding cost. Over to net commission income, which was weaker this quarter. As expected and mentioned last quarter, the lower card transaction activity due to COVID-nineteen resulted in lower income in Q2.
It is primarily the absence of foreign transactions that hurt income. The asset management business was also negatively impacted following the sharp stock market declines in March, leading to significantly lower assets under management entering into Q2. On the positive note, we did see strong private customer inflows in our mutual funds during the quarter, mostly in equity and mixed funds. Turning to net gains and losses. Most of the negative valuation effects from were reversed this past quarter.
Tighter CDS and credit spreads in the quarter led to positive valuation effects in derivatives and in corporate bond inventories. In addition, the share price development in the Visa and Asia Kastri Epto Holdings resulted in around $470,000,000 of positive effects. But as importantly, the volatility in the quarter triggered higher client trading activity in primarily FX and fixed income. Other income was also better. Insurance saw lower claims than anticipated and income from the partly owned savings banks was higher as their business performed better.
Entercard had a stable quarter. Lastly, before I hand over to Lars Erik, let's look at the expenses. Underlying expenses are developing according to plan, both the investment agenda and the measures taken to address the AML shortcomings are making progress in line with our schedule. On the other hand, the COVID-nineteen situation, as we understand it, has led to lower activity in our interactions with the U. S.
Authorities and delayed AML investigation expenses. We maintain our full year guidance as we expect activity to pick up again after the summer. Having said that, forecast the expenses related to investigations. Let us now look at asset quality and the credit provisions that were made in the quarter. Lars Erik, please.
Thank you, Anders. The COVID-nineteen situation and the effects in society have been from a risk perspective the most important topic to handle together with our clients during the quarter. There have been considerable interactions between our staff and our customers to get a better understanding on how and to what extent the current situation impacts their specific business and how Swedbank can help out. Based on our decentralized business model, all of the assessments as rerating and watchlist exposures has been initiated by our local case managers. Our assessment is that our overall asset quality remains strong despite COVID-nineteen.
However, some of our customers are facing challenges. On this next slide, I just wanted to remind you that over 90% of our total exposures are in sectors that are not significantly impacted by COVID-nineteen. In addition, our lending is cash flow based and we see good repayment We still expect the main part of our lending in sectors such as mortgages, agriculture, commercial real estate to be insignificantly or slightly impacted. The major impact so far is seen in the oil related sectors, which I will talk more about in a few minutes. Let us take a moment and look at the specific sectors classified as considerably impacted.
I think it's important to say a few words since there is a varied degree of impact even within these sectors. Sectors such as hotels, restaurants, retailers, and manufacturing are sectors where consumption behavior has a huge and important impact on the risk. However, there are subsector that are less negatively impacted. Some are even not impacted at all or even positively impacted such as food, home electronics and do it yourself. Sectors where the impact is negatively are clothing, hotels, restaurants, sports and leisure and travel.
The impact is however not yet seen in terms of overdue loans or payment delays to the bank. I would also like to remind you that our shipping and offshore exposures remain limited and that half of them are in runoff. The gross exposure stood at SEK 21,000,000,000. The oil related part SEK 9,000,000,000 as per Q2 are in runoff and the provisioning level for the Stage 3 exposures are 50%. Let me now walk you through in more detail the credit provisions we took in the quarter.
Firstly, as I mentioned last quarter, we have during Q2 conducted a thorough individual assessment a subsequent analysis by our client manager and sector analysts. This exercise led to rating migrations equaling to SEK 950 1,000,000 of provision. As you probably remember, we had already for close to SEK700 1,000,000 in Q1. When utilizing the Q1 expect overlay, the net additional provisioning in Q2 became around SEK 270,000,000. In addition, we still see very limited inflows to Stage III loans as bankruptcies, restructuring cases and overdues are at low numbers.
In Q2, only SEK 210,000,000 individually assessed provisioning was needed. This is still mainly oil related counterparties where we see minor add ons on to already impaired clients. The macroeconomic outlook has worsened compared to Q1 and we have added decline to be somewhat decline to be somewhat higher and also that unemployment figures will raise compared to our Q1 forecast. This, in conjunction with that expected recovery, will be somewhat postponed in time. To summarize, the SEK1.2 billion credit impairments in Q2.
Macroeconomic update, SEK557,000,000 individual assessments, 210 rating migrations 271 and other minor changes in total SEK197 1,000,000. And finally, as Jens mentioned, in the quarter, we have made write offs at only million. Thank you and I hand over back to you, Anders.
Thank you, Let's take a look. Let me now turn to capital. The CET1 capital ratio increased to 16.4% and the buffer to the Swedish FPS minimum requirements stands around 3.40 basis points. The profit in the quarter impacted the capital base positively, but the pension liability valuation following higher inflation expectations and lower discount rates impacted negatively. The risk exposure amount increased by $1,300,000,000 this crisis with.
The robust liquidity, funding and capital position that FedBanc has built over the past 10 years is allowing us to both support our customers and protect our P and L. We discussed our asset quality a few moments ago. Swedbank's loan portfolio mainly consists of well collateralized exposures with collateral primarily in real estate, but also in other types of assets. As you all know, Swedbank's stable earnings from retail banking intact and plays an important role in anti crisis. These are strong fundamentals, both from an income and balance sheet perspective and provide us with the ability to continue to support our customers.
Let us now look ahead and provide you with some forward looking comments. With the Q2 behind us, we all have a better that, the uncertainty is still very high, which makes any predictions of trends difficult. When we look at the income trends, we still see loan and deposit volumes as the main drivers going forward. The corporate lending volume growth outlook looks somewhat weaker compared to last quarter. On the other hand, we should expect some compensation from fee income stemming from committed RCFs and recovering debt capital markets activity.
Corporate demand for long term investment loans are still not taking off, but that could change later in the year if confidence comes back. Lending and deposit margins are combined stable and will develop more or less in tandem with market rates. Looking into next quarter, for example, Swedish mortgage margins should expand while deposit margins will decline. The lower funding costs seen in Q2 should also provide some benefit for the remainder of the year, everything else being equal. Furthermore, we have seen card transaction volumes recovering in June, but the mix of type of transactions international stock markets Q3.
Reminding you that Swedbankenrube has about 75% of its assets in equities. So if the markets increase by 10%, the assets under management will increase by 7.5%. As you all know, our Visa shareholding has been causing some volatility in NGL as the share price has been experienced hefty ups and downs. We have now hedged this position and should therefore not see the same swings going forward. As discussed earlier in the call, with regards to asset quality, we are closely monitoring the development.
But here, I ask Lars Erik to give you further insights.
The overwhelming majority of our customers are so far from a financial point limited affected by the Some of them helped by the government support packages. We will continue to closely monitor individual customers that are significantly exposed to the crisis and have utilized external support, especially as the support measures will be approaching and end the outcome. This is standard procedure and will most likely lead to additional provisions, either based on rating migration or that risks are materializing with individual provisioning as a result. A positive development in the quarter was that the capital markets are open again for companies that for a few months couldn't accept funding on their own merits. The macroeconomic outlook is still unusually uncertain, but where we stand now, I feel we have captured this in our assessment and the largest part of our asset quality remains robust.
Back to you, Anders.
Thank you, Norst, and now we are
at the end of
the monologue. The Swedish mortgage and housing markets are performing well despite the circumstances. Housing crisis almost back to pre crisis levels and transaction volumes are even increasing. 1 should, however, remain humble about this development as sentiment can shift very quickly. When it comes to capital, as mentioned earlier, negative PD migrations in the quarter increased risk exposure amounts.
The net effect was, however, quite a bit smaller than anticipated. We can, therefore, not exclude additional negative migrations dividend for 2019 in May. Meanwhile, the bank's financial performance is strong, capital buffers are comfortable, and we are able to continue supporting our customers. It is prudent, however, to have a clear review of the COVID-nineteen consequences before the Board receives the question. I believe we are now ready to take any questions you might have.
Thank you. Our first question comes from the line of Manoj Anderson from ABG. Please go ahead.
Yes. Hi. Good morning, guys. If I start off with costs, we all see that your SEK10,200,000,000 in cost in the first half is way below your full year guidance of SEK21,500,000,000 So just on that note, obviously, the second half will be then very heavy. Do you think is there reason to believe that you might not be able to invest everything you thought you would and that some would spill over into 2021?
That's the first cost question. Secondly, if I look at your Slide 14, where you provide your cost underlying cost rate versus Q3 'nineteen, if I take the 4.8x4, I end up at 19.2 and with some kind of cost inflation, you
would still be below €20,000,000,000
versus the current deal from consensus number goes into 2021.
I know that you will not guide for
cost in 2021 until the second half this year, but am I missing anything in that analysis?
Okay. Thank you, Magnus. To start with the first one, I think that as we alluded to, we're quite clear about $1,600,000,000 of the cost guidance is related to investigations. I think it is extremely difficult to forecast that. We tried that a couple of times, as you know.
Then we came out with a forecast that was much lower than the actual outcome, which was disappointing to everyone including us. So I'll refrain from changing that guidance at this point. When it comes to your second question, which I think is much more important going forward, namely the underlying run rate, I agree with you at the first glance, but what you have to have in the back of your mind is that a significant part of
the run rate is
based on us hiring people. So run rate will gradually creep into the second half of the quarter. As I stated, Magnus, underlying costs are developing according to plan. So my best estimate is that it will end up close to the SEK 20,000,000,000 that we have indicated before.
Okay. And then just on NII, which was quite strong in the quarter, and you mentioned yourself your inflows of household mortgages. Can you say, has the behavior of the independent savings banks had an important role in this? I remember that was one reason for your weak inflows in the Q1, if that has been an important contributor to your flows? And secondly, is there anything in the NII in Q2 except for the SEK 7,000,000,000
that is not sustainable looking into the second half?
Yes, Magnus. The savings time
are providing larger flows in this
quarter compared to Q1, But also on our own merits, the business is performing quite good. As far as your second question, on the if there is more than the 73 or one off nature in the NII, the answer is no. Okay.
Excellent. And then just on capital, you mentioned several factors filling up your RWAs quarter. Did you say anything about the SME supporting factor, which the other banks have taken in, in the Q2. I guess you have not. Can you tell us will that come in Q3?
And if so, what kind of magnitude are we talking about?
Yes. Thank you, Magnus. We have not implemented the SME supporting factor, as you rightly point out. We will most likely implement that during Q4, not Q3.
Okay.
The best estimate of the impact on the buffer is around 30 basis points as planned.
Okay. Thank you very much. And then finally, I'll just, since I'm the first guy on the line, take the opportunity to thank you, Gregori, for all the support over many, many years to several CEOs, CFOs, etcetera, and welcome you on board in your new role, Annie. Thanks. That's all.
You have to say something to your question.
Thank you, Magnus. Thanks. We'll for sure stay in touch going ahead as well.
And I would like to remind all of you that Gregory is not disappearing. He's changing to group treasury. So I will hold him accountable for the quarters coming as well. Okay, good.
And the next question comes from the line of Andreas Hoganson from Danske Bank. Please go ahead.
Yes. Good morning, everyone. Two questions. If we start with your loan loss provisions, they were still relatively high in the quarter, but you take of course a lot of more general type provisions. And then, yes, you said that you are really acting in the spirit and in ORBIA4S9.
That means you should take things upfront, of course. But when I look at consensus, consensus seem to believe that you're going to have roughly the same amount of loan loss provisions in Q3 and Q4 compared to Q2. But if you are really following the spirit of IFRS 9, shouldn't you really be at much lower level in the second half? That's my first question.
Thank you, Andreas. And I think we will ask But before he does that, we are not guiding, as you are aware, of any
cost of risk. No. And the dull answer to the question will be that it's very unusual times. It's low visibility out there. So to try to guide the second half of the year.
We don't do that. We
will go continue
to be close to our clients. We will follow their development. And I will come back to the topic in Q3, but now it's too uncertain out there.
Okay. Fair enough. Then next question, when it comes to capital distribution, you have, of course, a healthy capitalization today, both above the current capital requirement, but also the one before when we had the buffers in place. Do you have a high profitability in capital as well? So could you see any reason why you shouldn't pay the 2019 dividend unless it's that the regulator basically tells banks that you can't do it?
Well, as we said, the this is a Board decision, and they've said that they want to see sort of clear visibility before they revisit the question. But you're right, we have a strong position.
Okay. And then finally, there was a reprice in the mortgages done in June.
Was those changes
included in the guidance under about your net rate and mortgages up a bit mortgages and down on deposits more than in cyber? Yes. Okay. That's it. Thank you.
Thanks, Andreas.
Our next question comes from the line of Sofia Peterson from JPMorgan. Please go ahead.
Yes. Hi. Good morning. Here is Sophie from JPMorgan. I was just wondering, you sound quite cautious on the macro outlook outlook in Sweden and globally as well.
When do you expect a growth stage 3 loan and NPLs and bankruptcies to be in Sweden and the both How should we think about this?
During the quarter, the Stage 3
migration
we don't see yet in our system and the signs of overdue increases, we don't see the bankruptcies increasing. We don't see the official restructuring deals taking place. So during the quarter, we did not have an increase in Stage 2.
In Stage 3, the
increase was in Stage 1 and in Stage 2.
Could potentially start to see some stress or maybe not stress, but a little bit more stress among your customers? And maybe related to that, how should we think about the 50 6,000 of paid and holiday that you have when do these expire? And do you expect some of these clients to see increased financial pressure once they have to start amortizing again? Amortizing again?
Yes. I'm a little bit unwilling to give forecasts on the impairment levels in the future, your question is a be going forward. And still, the visibility is expected to be a little bit more clearer in Q3 than what it is today. So I have not really a specific answer to your question when we will see this and if we will see this materialized.
Okay. Okay. That's clear then. And just following up on the previous question on the dividend. So you mentioned it's a Board decision and we fully understand that.
But are there any regulatory approvals? Do you need to ask any approval from the Swedish FFA or the Swedish Finance Ministry in order to be able to pay a 2019 dividend? Or is it a purely Board decision?
No. There are no if I understand you correctly, there are no formal rules. But of course, you can hear the voice what they're saying, but no formal sort of decision is taken on this. So there is more discretion on what to sort of give solutions to the sort of give advice to the AGM because the AGM take the decision. Sorry.
Okay. And then my final question. A few weeks ago, there was an article, I think, in one of the newspapers where the Swedish Finance Minister was still alluding to that we could get a banking tax and that they want to move ahead with this. Have you heard anything? And how should we think about other than Shell Swedish Banking tax?
No, we haven't heard anything more of that in the news. So please contact the Ministry of Finance and they will let you know what their plans are.
Okay, great. Thank you.
And the next question comes from the line of Martin Leitgeb from Goldman Sachs. Please
I just had a question on your merchant payments business, given the disclosure from this morning. But I was wondering if you could comment on what the kind of merchant volumes processed are and what kind of EBITDA margin this
Thank you. You're referring to the specific section or paragraph in the interim report. I think we have been talking about this being an important part of our business. And as you are aware of, we acquired Pex a couple of years ago in order to complement what we had in ourselves. We have also been very clear that this is an issue of strategic importance, and we are looking through that as it's what you should read into it.
And then on dividend, just broader, would you normally because obviously, the dividend discussion is broader across the European bank space at the moment, would you expect Sweden essentially to broadly follow what the EBA might do in terms of dividends going forward? So when there's more clarity on the continent, you'd also expect to have similar improved visibility in Sweden and obviously, given the capital position and the capital buffer, the ability to recommence in way or shape?
I'm sorry, but that's a question we cannot answer. I mean, you have to ask the regulators and the politicians
and the central bank for this and
then it's a question for
them. And the
last question comes from the line of Nick Davies from Exane.
Just two quick questions, The first one, I think I heard the comments earlier that it's anticipated that lower funding costs should provide a benefit for the rest of the year. Can I just ask for clarification as to whether you mean the funding costs you've seen in Q2 stick around? Or you're saying that this overall trend of lower funding costs will help in the second half incrementally? And the second one, do you see any SME lending repricing going on at the moment?
Thank you, Nick. On your first question, since the funding mix has shifted during primarily Q2, we will benefit from that for the remainder of the year, but then again, all other things being equal. On your second question, the answer is no.
Okay. All else we call before Gregory gets in there and ekes out a bit of value maybe.
I have high expectations on group pressure. It's a little bit severe. I can promise you that.
So it seems like
question. Yes. The last question comes from the line of Riccardo Rovere from Mediobanca. Please go ahead.
Good morning to everybody. I have to connect a little bit of delay, so sorry, this question has already been answered. Is this more and more of a curiosity? When it comes to your provisioning approach in the quarter or actually in the first half, can you share with us if there has been a sort or a kind of supervision by regulators on approach used? Or has this been only your, let's say, your judgment with no, let's say, with no kind of I don't know how to call it, maybe coordination from someone outside each bank?
Just a curiosity from
me. Thank you, Ricardo. The answer to your both in outcome and, I would suspect, in approach, I would expect regulators to look into the issue and try to understand how the different banks have applied and understood the IFRS 9 rules, both from a rule perspective, but also from a spirit perspective. But the answer to your question is no.
With that, it seems like not that many questions left. I just want to say thank you all for covering Swedbank. It's been quite a tough year, but it feels good to go to summer vacation with such a strong result as today in very uncertain times. Thank you very much. And you know we are there, so call us.
Otherwise, I wish you, everyone, a nice summer and looking forward to the autumn, and then it's time to roll up the sleeves that work even harder. So thank you very much. Bye bye.