Hello and welcome to the DNB Q2 conference call. My name is George and I'll be your coordinator for today's event. Please note, this conference is being recorded and for the duration of the call, the lines will be in the listen only mode. However, you will have the opportunity to ask questions towards the end of the presentation and this will be done by pressing star 1 on your telephone keypad to answer your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. Asa Sp Asa Sp Asa Sp Asa Sp Asa Sp Asa Sp Asa Sp

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All of the business areas with also CNB Carnegie and wealth management as the strong drivers on the fee side. The backdrop of all of this is a very resilient and robust Norwegian economy that continues to demonstrate the same even though there are still turbulences in the world economy and the Middle East around us. We continue to see a sound development, continue to expect the GDP growth in the mainland economy As you probably already have noticed, there was an increase in the key policy rate by the central bank during the second quarter and expectations of one more most likely in the third quarter of this year before the key policy rate again is expected to come down in the second half of 2027. Asa Sp-Adr Asa Sp-Adr growth in both fee-related and interest-related activities are the drivers for the results. You may have noted that our net interest income is down by 1.1%. So the growth is offset by some elements of competition and product mix effect. To be more specific, if you look at the spread development net of revenue related to interest on equity and treasury elements, it's a reduction of 264 million kroner, which is evenly spread among product mixed effects as well as competitive pressure. It's also worth noting that the volume growth that comes primarily in Corporate Customers Norway and LCR comes towards the end of the quarter and as such the average volumes are down or stable I would say in the quarter whereas the end of quarter numbers shows a growth of 1.4% for the group as a whole. Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr

Asa Sp Asa Sp Asa Sp Asa Sp Asa Sp Asa Sp Asa Sp Ladies and gentlemen, this is the operator. We're still waiting for speakers to rejoin. Please do stay connected. Thank you. Ladies and gentlemen, once again, just please stay connected. Ladies and gentlemen, please stay connected Ladies and gentlemen, please stay connected. The speaker should be rejoining shortly. Thank you. Ladies and gentlemen, we are still waiting for speakers to reconnect. Please stay connected. Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Sorry for the interruption. I believe the speakers have rejoined. Yes, we can hear you now. Okay, could you please proceed to your line did drop. Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr

Okay. Approximately at which point would you be able to share that so I don't do a repeat of the whole thing?

I'll say you're safe about three, four minutes into it. Let's go direct to the Q&A. It's all available anyway.

Let's go just direct to the Q&A.

Okay, perfect. Thank you very much. Ladies and gentlemen, just as a quick reminder, If you have any questions, please press star one on your tupper keypad. Thank you. Our very first question today is coming from Shrey Srivastava of Citi. Please go ahead.

Hi, and thank you for taking my question. This point has come a bit earlier than I expected. My first question is on the competitive dynamic in the large corporate segment. I understand it's the margin to find this course has to do with the mix of the business Asa Sp-Adr Asa Sp-Adr You obviously have this pressure of margins in personal customers, but you also have this very, very strong flow dynamic as well. But obviously that's margin diluted since you learn a lot more on deposits, certainly current accounts. So I just wanted just an update sort of from a sector perspective on how the customer is thinking about their decision between.

Thank you for your questions. As a general statement I would just reiterate that we do see and live with competitive pressure across all the parts of our business. At the same time, my assessment is that all of the areas is managing this competitive pressure in a very rational manner and we can confirm that the growth that we take on our books also in this quarter represents the profitable volumes to the bank. And just to reiterate the movements in NII, when you consider the movements on spreads You have to look at the movement net of increased interest on equity and treasury, which leads 284 as a movement, and approximately half of this is related to competitive pressure, so approximately one and a half basis points across the entire book. For large corporates in particular, when asked, and Harold, he can develop if he feels like it, We are winning transactions not purely on price. We are winning transactions on areas where we have industry expertise, where we combine this with products and services on the advisory side from BNB Carnegie or in other areas such as commodity derivatives or trade finance or value chain, supply chain. Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr through then a positive migration and a lower share of high risk exposures in the LCI book. Secondly, through the fact that the growth is capital efficient this quarter, a 3% growth in large corporates, but only a 20% sort of consumption of capital net of migration and other instruments applied to increase efficiency of the growth. So again, these are lower margins Asa Sp-Adr Asa Sp-Adr There was an announcement of a repricing towards customers, but this will start taking effect from mid-July only. We are, as a group, more or less NIBOR neutral, so this will have different impact if you look at the different segments as such, and personal customers is really the area that gets Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Great, thank you very much.

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Could the higher rates help to ease the competitive pressure, or do you think the pressure and the customer switching will continue to intensify around the periods of change in the interest rates? And what needs to change, in your view, what spreads to begin recovering? And do you think the net interest margins have now bottomed, or is there still further downside to come? Can you further elaborate how D&B is responding to more competitive environment across the different areas and divisions of D&B Group and what actions can the bank take to mitigate the ongoing margin pressure? Thank you.

Thank you for your question that revolves around competitive pressure and margins. I would start by highlighting that we are very clear in prioritizing profitability over growth as a starting point. Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr but we are more selective on the business we decide to write as we do focus on profitability. Another testament to this is talking about the record number of new customers in the large corporate area in the Nordics outside of Norway. We already see that these customers use our products more broadly and all on average have a return that is above Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Rational market and all the major players being active in this market is targeting return on equity as their most important financial metric and of course competitive pressure will vary somewhat from quarter to quarter but over time we still definitely continue to expect this to be a rational market.

Thank you. And can you follow up with the second question? With the Capital Market Day coming up later this year, could you give us an early sense of the key strategic themes and priorities you expect to address? Should we anticipate an update to your financial ambitions or is the focus likely to be more on reaffirming the current strategy? Thank you.

I think there's nothing new to provide at this point in time with regards to our Capital Markets Day. We do them every second year. Every Capital Markets Day we review and look at our financial ambitions for the coming period and we try to give you a more detailed guidance as to the outlook. So I think you can expect us to address Good afternoon and thank you for taking my questions.

My first question, you commented on corporate customers Norway and commercial real estate growing strongly there. I just wanted to understand the rationale for that and do you see good pricing there or what attracts you to that segment as I would have thought it's quite a competitive space to be in. My second question, I understand growing in large corporates is low margin business and it's impacting NII but the rationale is that it's high ROE business. Is this a strategy that you expect to persist for some quarters? I'm just wondering how you think about this strategy and whether it's a long-term strategy or are you being opportunistic here? My last question, when you think about rate sensitivity to 25 bps, and I think just previously over the past few years, it's been in the range of 0.8 billion to 1.2 billion. Do you include interest on equity and the Treasury impact in that? And what are the factors in the past that have made it $0.8 billion or $1.2 billion? Is it just purely competition I need to think about there? Thank you.

Thank you. I'll ask Marianne to comment a little bit more in detail. Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr

And I think on the large corporate side, I think you correct, Namita, because we focus on total risk-adjusted return on the client over time. So as you point out, the margin is slightly down, but you will see that the cross-selling or the non-lending income is up in the quarter. So that means although the average margin is down, Our return on equity is up on the north corporate side in the quarter, and that is really what is our primary ambition.

A short comment on rate sensitivity that we do not comment specifically as such, but we have said that the historical movements should be a good reference, and I think you're correctly referring to what the movements have been. With regards to the various moving bits and pieces in the P&L, we've said that we are more or less neutral to Nibiru movements. And in order to achieve that neutrality over time, it impacts also interest on equity and treasury, which means that the net impact to us as a bank stems from the actual repricing towards customers. and only that and that will be the combined impact from repricing loans and deposits to personal customers where still 90 and more than 90 percent of the lending book is floating and a large part of the deposits and in corporate customers Norway also a portion a larger portion of the deposits and a small portion of the loans are floating based priced but these are Asa Sp Asa Sp Asa Sp Asa Sp Asa Sp Asa Sp

A question around margins, but not so much for the quarter, but more big picture. So, I mean, margins in Norway has always been much higher than in Sweden and Denmark, for example. And I guess it's totally that you have much higher rates, but nevertheless, the margin seems to be much higher regardless of what the level is. So how is your thinking about when competition is picking up and you have several gathered big banks in the Nordics that wants to go into Norway? And they can apparently live with much lower margins in the other countries. What do you expect that to bring to the competitive situation in Norway longer term, that is, not for the next quarter? That's my first question.

Okay. I'm not sure what data points you are referring to. To my knowledge, we've had periods where margins in Norway have been more competitive than Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr having that and we've dealt with that for years. Beyond that, there's a harmonization of risk weights being applied. So we are confident that we are able to compete in this market at rational levels. Again, we understand that this market is attractive because it is a rational market. And I think the closest comparison would be Sweden because Finland and Denmark are a bit atypical Asa Sp-Adr Asa Sp-Adr What many of you probably also saw after the release of the first quarter earnings a narrative from some of these players that they were seeing the competition in the Norwegian market as fierce and indicating maybe an increased focus on profitability.

Okay, thanks. And then, secondly, on capital. So now you, with the new buyback program, you're coming down to 1% in Z1 Buffer. Is that what we should use as Buffer going forward, or are you heading somewhere else?

We continuously work to optimize our capital position to return excess capital to our shareholders. We do not provide or have a spoken buffer on top of the CAPTA requirements from the SSA. But when you see that we are initiating share buyback programs, it is a signal that we are more than comfortable with the buffer that we do have.

Yeah, okay, and there's no known head or tailwinds on CAPTA requirements?

We see no headwinds or tailwinds to know of in the future, correct.

Okay, thanks a lot and good luck in your new endeavours.

Thank you, Markus. Thank you.

Thank you very much, sir. Our next question will be coming from Sophie Petersens of Goldman Sachs. Please go ahead, Sophie. Your line is open. Thank you.

Yeah, hi. Thanks a lot for taking my question. Here is Sophie from Goldman Sachs. So I was just going back to the competition. When I looked in your fact book, On your market shares, it seems that you have been quite consistently losing some market share in Norway, both on the lending and deposit side and retail customers and corporate customers. How should we think about the market shares going forward? Do you expect market shares to stabilise or is it fair to assume that you will continue to give up some market share to ensure that you just capture the profitable growth? That would be my first question. And then my second question would be on the press conference earlier today, you mentioned that 50% of your corporate loan growth comes from outside of Norway. Could you just elaborate why you wanted to grow LCI Asa Sp-Adr Asa Sp-Adr

With relation to growth, our focus number one is really on profitable growth and of course we are also focused on keeping the relative value of our position which is a leading position across all of the markets we are active in. within Norway. And from that perspective, there has been no material weakening of our position. On the contrary, we are able to deliver growth, and we capitalize on the diversity of our growth platform in order to deliver on that throughout different cycles, I would say, with varying competitive pressure. Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp Asa Sp Asa Sp Asa Sp Asa Sp Asa Sp

We have a lot of success stories also in Denmark and Finland, and there will be more to come. When it comes to the rest of our international platform, we aim to maximize returns over time and to support our clients. So it will vary. If you look at 2024, we had a very strong growth in North America. If you look at 2025, we had a strong growth in the UK and Asa Sp-Adr Asa Sp-Adr

As you all know, we are a 20% owner in Luminor, where Blackstone owns the other 80%. We still believe that there is strategic attractiveness in those markets, but have no comment beyond that as to future plans for that investment.

Thank you.

Thank you for your question, Sam. Thank you very much.

Just two quick questions. First on asset quality, we're clearly seeing lower than expected credit losses in the income statement. But if we look at this development in stage two loans, there was a very big increase in the quarter that looks to be broadly spread on kind of everything except for personal customers. Is there any methodological change or anything that's driving that or is this just kind of quarterly volatility? I think it's a 20% increase in overall and 40% increase in corporate stage two. So that's the first question and then maybe super quick on margins and I was talking a lot about it but if I look at the waterfall you provide in your tax book and add together the margin on lending and margin on deposit, It used to be kind of 100 million headwind a quarter. It's been 500 million a quarter the last three quarters. And if you and I were neutral, I guess we can kind of ignore what happened to market rates there. Is it only a step up in competition that has driven that change over the last three quarters? Or is there anything else we should bear in mind when we think about the kind of walk forward on an AI?

Thank you, Johan. I will look further into stage two, but I can't say I recognize the numbers. It seems a very large increase compared to the fact that we have a positive migration for the portfolio overall that is visible through our development and capital. But they will look into that and come back to you. I think for margins, again, Newborn neutrality over time is the key message. I'm not saying that it's 100% that, but given the combination of our assets and liability mix, the broad part of our margin-based funded loans goes to fund our margin-based customer loans. Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Sp-Adr Stage 2, I think we need to come back to you on the migration there, but if you look at the numbers for this quarter, the impairments are linked to the Polish legacy portfolio mainly. We will come back to the migration.

Yeah, I'm just looking at Table 1.5.1, and Stage 2 went from 130 billion in March to 154 billion, while personal customers went down. Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr

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Ladies and gentlemen, as a reminder, if you have any questions or follow-up questions, please press star 1 on the top of the keypad at this time. We'll now go to Riccardo Rovere of Mediobanca. Please go ahead.

Thanks. Thanks a lot for taking my question, good afternoon to everybody. A couple, if I may. The first one is the loan book is at least the one on the balance sheet is down, first half versus the end of the year. And you stated that you are prioritizing profitability versus growth. I was wondering what should we do with the 3-4% loan growth that you have already had in mind? Is that still kind of valid? This is the first question. The second question I have is something somehow related to that. The loan book is down a bit in the semester. As far as I understand You have executed another SRP, as you stated, if I'm not mistaken, during the press conference this morning. Then you stated that you prioritize profitability versus growth, and you stated that the product mix in the margins also is due to the fact that in large corporations Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr How do I square the circle here?

The book is not down. Average volumes are flat, but the group as a whole, Altimo quarter, grows by 1.4%. There is a 3% growth in large corporates this quarter. There is 1.5% growth in corporate customers in Norway, if you look at the volumes at the end of the quarter, and a 0.6% growth in personal customers. We still maintain our ambition to grow 3-4% a year. If you look at our growth in the last 12 months, we have delivered 4.3% growth in lending and 5% growth in deposits. So I think that what we show in this quarter is that we are Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr It's the repo.

It's down 70 billion. Okay, okay, fine. Exactly.

I apologize. That was where the delta is. If you're looking at the outright balance sheet numbers, it's the reduced activities in repos this quarter. Oh, I see.

Okay, fair enough. But the three to four percent, that's unchanged. That stays.

That's unchanged and that has been delivered upon and a little more in the previous 12 months period. I would say so far this year as well we are on track to delivering on that and we continue to see opportunities for profitable growth across all of the customer segments. So we think that we have a pretty positive message on growth this quarter. And it's more meaningful for you to look at the Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr

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Well, we do not have any perspective on the value of our share when we initiate our buyback programs. What we have is a strong track record on delivering on our dividend policy, betting more than 50% of annual net profits and year-over-year increase in dividend per share. And that remains our key priority. When it comes to opportunities beyond the 3% to 4% Asa Sp-Adr Asa Sp-Adr The share buyback that you're referring to, we see that as an efficient tool on returning excess capital to our shareholders. Okay, okay.

Efficient, you said.

Efficient, yes, correct.

Okay, okay, okay, got it. All right, okay, thanks.

Ricardo, just maybe one more thing, just reconfirming that we're very committed to the Originate Distribute model. that puts a high focus on turning the capital quickly around and generating a higher growth in fee-related advisory and other type business rather than maximizing credit growth. We have, we believe, made the experience that this is the best way to optimize on return on capital over time Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr

You had this target back in 2014 of 9% over the cycle. Could you just update on how you think about that in light of the current environment and in light of what you're seeing in your business? And then secondly, on the margin and, I guess, commissioning side, you have this market pressure here that, as I understood it, you talk about some of the Pressure on the margin being offset by debt and fee revenues, but they seem to be tracking below your ambitions. I guess my question is, when you do that kind of fee business for cheaper lending, do you risk ending up with a lower long-term profitability book on the lending side in exchange for professional and less sustainable fee revenues? Thank you.

Thank you, Jacob. The answer to the second question would be no, and it's not that we compromise and do non-profitable lending business on the back of increased fee business, but nominally the margins can be lower while the return as attractive for low-risk exposure, and this has been one of the characteristics of the growth in the large corporate area in the two previous quarters, but this is not the strategy as such. This has just been where we have seen the most profitable opportunities in the two recent quarters. We do try, regardless of which level of risk the exposure is at, to maximize the cross-sell and the pocket of revenue on each and every client, also finding that they are more satisfied the more they use Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr A very good quarter that brings testament to the potential and the value from the merger between Carnegie and D&B Markets. We also see that driving attractive business on the large corporate side in the Nordics across all of the three Nordic countries outside of Norway. So we think it's a very promising development and we are just in the Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr

yeah thank you um hi again everyone um maybe more of a housekeeping question um on the corporate customer away deposit margins uh i had expected some temporary benefit from the from the increase in either on the non-maiver linked deposits before before the customer rates reprice um yet the reported margin was stable yeah basically yeah quarter and quarter is there anything special of something that expected tailings should we Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr

Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr So, these are the two elements that leads to a stable deposit margin. As for the repricing, it has taken effect in corporate customers, but only for two weeks in the second quarter. So, the majority of the repricing impact also in corporate customers in Norway is coming in the third quarter.

Okay. Understood. Thank you very much. Have a great summer.

Thank you very much, sir. Ladies and gentlemen, as a final reminder, if you have any questions or follow-up questions, please press star 1 at this time. We do have one follow-up question coming from Markus Stenvaren of Capital Sugar. Please go ahead, sir.

Hi, thanks. Just a quick follow-up on tax. It seems like it's bouncing up again. Is it 23% still, what you expect going forward?

We expect 23% for the year and also in future years, correct.

Okay, and what was the reason for the higher tax rate this quarter?

This quarter was due to Globe Tax, which is a fairly new regulation here in Europe coined to address the big tech companies, but also hitting across industries, and it's relating to a one-time cost tax effect that actually dates back Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr Asa Sp-Adr

Thanks. Thanks. Just a quick one on SRTs. Could you please shed a little bit of color on the risk-weighted assets saving that you achieved with VAT in the second quarter? And in general terms, do you still see a fairly large room to utilize this tool to kind of mitigate RWA growth on top of the loan growth? Thanks.

The impact of the SRT this quarter is roughly 10 basis clients. We will consider deploying this tool further, but have no sort of concrete plans. We will do this in a sort of gradual and careful manner.

But you can still do something. I mean, you have not used all the available resources to do this.

No. We have done a couple of transactions, but we're taking a pretty competitive approach on this.

Okay. Fair enough. Thank you.

Thank you much, sir. We do not appear to have any further questions at this time. We're going to call back with the speakers for the additional or closing remarks. Thank you.

If there are no further questions, I would like to take the opportunity to hope and wish you all a great summer. Thank you so much.