Nordea Bank Abp (NRDBY) Q3 2026 Earnings Call Transcript

Ilkka Ottoila: Good morning, and welcome to Nordea's Third Quarter 26 Results. Ilkka Ottoila, Head of Investor Relations. As usual, we will start with the presentation by Group CEO, Frank Vang-Jensen, followed by a Q&A session with Frank and Group CFO, Ian Stuart Smith. Please remember to dial into the teleconference to ask questions. With that, Frank, please go ahead.

Frank Vang-Jensen: Good morning. Today, we have published our results for the third quarter of 26. Nordea performed well again, this quarter. We grew total income year on year, we further expanded our customer base, delivered strong growth in savings and investments. Fee and other ancillary income were strong, Net interest income rose both year on year and quarter on quarter despite lower mortgage margins and foreign exchange effects. This was a solid performance in a seasonally slower quarter. The result underlines the strength of our business and the good progress we are making with our strategy execution across all key initiatives. Geopolitical uncertainty and volatility remain high. However, European countries in general and The Nordics in particular are navigating higher energy costs and other challenges well. Growth expectations for our 4 home markets have improved, structural changes are on the way in Europe's economy are creating significant opportunities. And Nordic corporates are well positioned to capture them. Growth is being driven by substantial investment in areas including artificial intelligence, defense, infrastructure and energy transition. We expect continued economic growth for corporate and gradually improving household consumption across the Nordics. It is encouraging to see growth now also picking up in Finland. At the same time, we are mindful of the recent sharp increase in forward rates and the potential for higher rates to affect consumer confidence in the months to come. In this environment, Nordea is uniquely placed to serve our customers with our sector expertise, enhanced customer offering including digital services and our strong balance sheet. In short, by leveraging our Nordic scale. And we continued to do just that. In the third quarter, supporting our customers and driving business growth. Let's take a look at the highlights. Beginning with our return on equity, which was solid at 15.1%, amid seasonally more subdued activity levels. Earnings per share were €0.35 broadly stable year on year Total income was up 2%, driven by a 9% increase in net fee and commission income. We continued to see high demand for our savings and investment products, together with strong investment performance, increased our assets under management by 13% to a record high of €590 billion Net interest income continued to steadily improve in line with our expectations and was up 1% both quarter on quarter and year on year. Strong volume development was the main driver with corporate lending up by 8% and deposits by 7%. In households, mortgage volumes increased by 2% year on year, and deposits were up 4%. Net fair value was down 19% due to the extraordinary interest rate volatility late in the quarter, while customer activity was solid during the seasonally slower period. Our cost performance is strong, with costs flat year on year excluding FX effects. Our credit quality is also strong. Net loan losses and similar net result corresponded to 7 basis points. Well within our long-term expectation of around 10 basis points. The losses were driven mainly by a limited number of individual provisions on corporate customers. Our CET1 ratio was 15.8%, at the end of the quarter, 1.9 percentage points above the current regulatory requirement. This reflects Nordea's strong capital position and capital generation, and supports our strategic priority to deploy capital for profitable growth. Nordea's strong balance sheet and Nordic scale play an important role in the growth of its customers and Nordic societies. Our performance is reflected in the full-year 2026 guidance which is unchanged. We continue to expect a return on equity of greater than 15%, and a cost to income ratio of 44-45%. Let's now look at the results in more detail, starting with the income lines. As mentioned, net interest income increased in Q3, despite lower lending margins, During Q3, lending and deposit growth continued to be strong among our corporate customers, up 8% and 7%, respectively. This demonstrates the close relationship we have with our customers and means that we are at the table when opportunities arise. The development also reflects higher activity and confidence among Nordic businesses, and the progress we are making in implementing our strategy. Household customers are also increasing their activity, as they have experienced real wage increases and a more moderate inflation rate. This combination has increased their willingness to consume and invest. The impact of the conflict in the Middle East and the resulting higher energy prices has so far been rather mild on Nordic consumer confidence. Across the region, households strengthened their savings and investments, which contributed to higher retail deposits were up 4%. Mortgage volumes in Q3 were up 2%, This was driven especially by Sweden and Norway. Finland is performing well in a slower market and we are seeing early signs of improvement in Denmark. Our net interest margin for the quarter was 1.53% compared to 1.59% in Q3, last year and 1.54% in Q3 Net fee and commission income was up 9% year on year driven by 14% growth in savings income This is encouraging as higher cross sales and savings in particular are a key priority area of our 2030 strategy. Demand for our savings and investment products remains strong, and our expanded advisory coverage is delivering good results. We welcomed a significant number of new private banking customers across all 4 markets, driving strong net flows. Assets under Management were up 13% to a record €590 billion which was driven by the strong net flows as well as good market performance. Activity remained high during the quarter in debt capital markets, and we helped customers raise capital and execute strategic transactions amid signs of improving sentiment in equity capital markets and M&A. Turning to net fair value. Our result was down 19% year on year in Q3. Customer hedging activity was solid during the seasonally slower period, in FX and rate products. The lower market making result was due to the extraordinary interest rate volatility late in the quarter, which negatively impacted the asset values in our market making. Cost management was strong, with costs flat year on year excluding FX effects despite heavy strategic investments in growth, resilience, technology and AI. This would not have been possible without our structural improvements to support productivity and efficiency across the group. Under our 2030 strategy, we are continuing to simplify processes, improve productivity and drive our Nordic scale agenda. Our particular focus is expanding the use of AI to redesign our core processes and improve the customer experience. The realized savings give us the capacity to absorb inflation, and continue making focused investments towards our strategic growth priorities while keeping overall cost growth under control. We are in a strong position to continue delivering positive jaws. The Q3 cost to income ratio was 45%, and we are on track to meet our full year guidance of 44-45%. Our credit quality continues to be strong. The resilience of the Nordic economies is clearly reflected in our customer base and our underwriting and credit management approach has remained consistent and prudent. Household finances remain strong, while corporates are generally well positioned, funded and capitalized. Net loan losses and similar net result corresponded to 7 basis points for the quarter. This was driven by a handful of provisions for individual corporate customers and a small increase in collective provisions. The quality of our credit portfolio remains strong. And loan losses are well within the Group's long term guidance of 10 basis points. Our capital position and capital generation is strong, Supports our strategic priority, to deploy capital for profitable growth. Given we are the largest and services group in the Nordic Region, we play an important role in supporting the growth of the Nordic economies. At the end of the quarter, our CET1 ratio was 15.8%, 1.9 percentage points above the current regulatory requirement. As we have communicated previously, in 2025, Nordea submitted an application to the European Central Bank for approval of new IRB capital models for corporate lending portfolios. Nordea has been in active dialogue with the ECB on the application and the most recent discussions have indicated that additional conservatism in our model outputs will be required. This would increase Nordea's REA. This is an update to our earlier expectation of a neutral outcome. The timing and impact of any supervisory decisions related to this matter remain subject to our ongoing discussions and we understand that no decisions will be taken before 2027. In the meantime, we think it is sensible to pause share buybacks pending clarification of the REA impact. Importantly, there is no change in the risk or credit quality of the loan portfolios concerned. Nordea's business model and performance is robust and resilient and our portfolio is very well diversified across the strong and growing Nordic economies. Our credit quality is strong, as evidenced by the very low loan losses over Nordea's 25 year history. And now, let's turn to our business areas. In Personal Banking, we delivered solid lending growth and generated strong fee income Customer savings and investment activity remained at high levels across the Nordics. Mortgage volumes were up 2% year on year. This was driven by Sweden and Norway, In Sweden, we took 21% of the market growth year to date in August and we continued to grow our market share. Finland is performing well in a slower market, and Denmark is showing early signs of improvement. Continue to manage the competition for mortgages carefully while capturing opportunities to grow. Deposits were up 4%, driven by growth in Norway, Denmark and Finland. Investment products AUM increased by 15%, reflecting the high levels of customer savings and investment activity. The share of customers with recurring savings has been increasing over the past 3 years, and during the quarter, recurring savings were up 14% year-on-year. In Norway, we delivered a 20% year-on-year increase in savings fee income. This was supported by a stronger integration of savings and daily banking into the onboarding journey for new mortgage customers. This is a good example of Nordea's strength. As customers choose us for a broader range of financial needs, it creates opportunities to offer them a deeper range of products from across the group. Net fee and commission income increased by 4% year on year, mainly driven by a 12% increase in savings income. Total income in the third quarter was broadly stable year on year, as growth in the fee and commission income offset lower net interest income. Return on allocated equity was 15%, and the cost to income ratio was 51%. In assets and wealth management, we continue to drive robust growth in income, and assets under management. In private banking, strategic growth area, we made strong progress across the region in the quarter, with net flows amounting to €900 million We delivered a 14% year on year increase in net fee and commission income with clear growth in all 4 countries. This was driven by strong assets under management growth supported by continued high customer inflow and positive net flows. We continue to progress with our strategic ambition to deliver leading digital savings and investment experiences further strengthening our digital offering to make investing more straightforward for customers. In Life and Pension, another strategic growth area for us, we made further strong progress in the quarter across our home markets. We are supporting customers with the long-term savings, pension and protection needs, while making these solutions a natural part of the broader Nordea relationship. Life and pension assets under management increased 20% year on year, while gross written premiums in the quarter amounted to €3.3 billion up from €2.9 billion a year ago. Wholesale distribution net flows returned to positive at €500 million supported by inflows each month of the quarter. In Business Banking, we continued our strong momentum and delivered solid business volume growth across our home markets. Customer growth accelerated in the quarter, and we further invested in our digital capabilities to make Nordea the leading digital bank for small and mid-sized businesses in the Nordics. Lending volumes increased by 6% in local currencies year on year led by Denmark, Norway and Sweden, while growth also picked up in Finland. Deposit volumes grew by 2% and were also up in all markets. We made good progress in our focus on entrepreneurs and small businesses with the number of new customers joining Nordea increasing by 58% year-on-year. Our focus is on making the onboarding process more user friendly, leaner, and more automated, harmonizing our offering across the region so entrepreneurs and small businesses get up and running more quickly. During the quarter, Nordea business and the mobile app won Global Finances Award for Best Corporate Digital Bank and Best Mobile Banking App in each of our 4 home markets. This is the fourth consecutive year we have gained this recognition. Total income in the third quarter increased by 5% year on year driven by volume growth and higher ancillary income while assets under management were up 18%. Return on allocated equity was 15%. The cost to income ratio improved to 44% from 46% a year ago. In large corporates and institutions, customer engagement remained high, and we drove further progress in our strategic growth areas. We strengthened our customer offering in investment banking and payments streamlined processes and scale AI adoption across the businesses. Lending growth remained strong across all 4 countries, increasing by 30% year on year reflecting higher investment activity among large corporates in the Nordics. Deposits were also up 13%. Net interest income increased by 7%, driven by higher lending and deposit volumes. Net fee and commission income increased by 6%, with particularly strong performance in lending and asset management fees. In debt capital markets, we arranged more than 150 market transactions in the quarter, significantly higher versus a year ago. Activity also showed signs of picking up in equity capital markets and M&A. Where we continue to help customers raise capital and execute strategic transactions. Secondary equities continue to deliver year on year growth. Total income was down 6% year on year despite solid customer activity as the extraordinary interest rate volatility late in the quarter adversely affected our market making business. These type of large moves have a negative effect on the inventory of the bonds we hold to facilitate our customers' businesses. Return on allocated equity with amortized resolution fees was 11%. The cost-to-income ratio of 43%. To sum up, Nordea performed well in the quarter. We grew total income year on year with high lending and deposit activity in both Corporate and Household segments, and delivered strong growth in new customers and across our products and services. The results underline the strength of our business, and we are progressing well with our strategy execution across all key initiatives. We go into the fourth quarter with good business momentum We continue to expect a return on equity of greater than 15% and a cost to income ratio of 44-45%. The Nordic economies are showing their strength and resilience, and Nordea with its unique presence across the region, is well equipped to support our customers and the societies in which we operate. Our 2030 ambition is to become the undisputed best performing financial services group in the Nordics. We are moving in the right direction. Thank you. And operator, we are now ready to take questions. And if I could remind everyone, please, to restrict yourself to 2 questions so we get through the queue as well. Thank you.

Operator: If you wish to ask a question, please dial 5 on your telephone keypad to enter the queue The next question comes from Gulnara Saitkulova from Morgan Stanley. Please go ahead.

Gulnara Saitkulova: Hi, good morning. Thank you for taking my questions. Could you confirm the current average risk weight on the corporate portfolio, which is subject to the ECB review? And also, what proportion of the nonretail book is covered by the review, and which or exposure classes are affected? Should we assume that the entire corporate portfolio is potentially impacted or is the review limited to certain portfolios? The reason for asking is that if we. For illustrative purposes, we were to apply the average corporate risk weights of European peers to Nordea's entire corporate lending book the resulting increase in REA and capital impact could be quite material. that is why understanding the precise scope of the ECB review, including the proportion of the portfolio affected and its current risk weight density, could be very useful. And what are the mitigating actions you are considering to manage the potential capital impact? In particular, are you planning further SRT's And can you potentially change your risk appetite when it comes to lending? Thank you.

Ian Stuart Smith: Good morning, Gulnara, and thank you for the question. I think the first thing is, we are not going to speculate on the outcome. We are reporting today 2 things. The first is that recent discussions with ECB indicate that they want to see more conservatism in the output from our risk models for corporates. And as a result, we think it is sensible and prudent to pause buybacks. that is the key information you should take from today. The scope of the ECB review is amongst our. It covers our most important portfolios, but we are not going to talk about details of the review or any other related matters today. In terms of the average corporate risk weights, I will get IR to get back to you on that 1 because I want to ensure that you get it precisely. But the main message from today is, you know, we cannot talk about outcomes. And the main thing to note is that we have paused buybacks pending clarity of the REA impact. Thank you.

Gulnara Saitkulova: And what about the mitigating impacts potentially apart from the buybacks? Do you think you can potentially do further SRT's? And do you expect any potential impact on the risk appetite and the capital allocation towards lending growth in the near term? I should expect a more selective approach to new lending or potentially some moderation in loan growth until there is a greater visibility on the capital from the model review. Thank you.

Ian Stuart Smith: So again, Gulnara, I will take you back to what we have said today. The action that we are taking is to pause buybacks. it is a prudent decision on discretionary capital distributions. And it is not a signal that we intend to constrain business growth. The business plan includes profitable growth, and our capital planning always takes that into account. We are there for our customers, and we have not changed our business plans. Thank you.

Operator: The next question comes from Shrey Srivastava from Citi. Please go ahead. Are you there, Shrey? The next question comes from Martin Ekstedt From Handelsbanken. Please go ahead.

Martin Ekstedt: Hi. Can you hear me?

Ian Stuart Smith: Yes. We can, Martin. Good morning.

Martin Ekstedt: Good morning, Ian. So you said in response to the previous question, and I am sorry to come back to the IRB model, you say you will not speculate on the outcome, right? But we, as analysts, we kind of have to speculate on the outcome. As I think the previous question highlights quite well. I mean, is there any guidance you can give us to hollow this down a little bit for us? At this point, it is an open ended unquantified regulatory risk. So any guidance you can provide us would be quite helpful. And just to double check, is it the specifically probability of defaults or loss given default model methodology that is driving this. Is it related to any particular sector? Anything you can give us to clarify would be super helpful.

Ian Stuart Smith: Yeah. Thank you, Martin. And I understand that what. what is behind the question, but please then also understand we are we are in active discussions with ECB. We have got different views on some key issues and we accept their position on others. And that is why we are in active dialogue. But, you know, the timing and impact of any supervisory decisions is subject to those. And I do not think we should speculate any further at the moment. But I can understand I can understand your frustration. I bring you back to what we said today. Which is to flag the way that we had previously guided that the outcome would be capital neutral. We now expect to re increase. And as a result of that, we are pausing buybacks. And that is the critical message to take away from today. Okay.

Martin Ekstedt: Then if I if I may pivot to a business question then, So Finnish NII was up 6% in business banking and 7% in personal banking quarter on quarter. But with very little actual lending growth, which implies quite good net margin improvement. But what drove this, and is it sustainable? And Finnish fee income was down 6% in business banking and 11% in large corps. It would be probably partially down to seasonality, but it does not point to, for example, a surge in corporate activity. Could you just talk a bit about the Finnish markets and what you are seeing there currently on the trends?

Ian Stuart Smith: Yes, of course, Martin. So as you point out, a good performance in both of those divisions in Finland. The key driver has been deposit margins, which have been positive. Particularly on the retail side. So I think it is good to see that. So both volumes and margins contributing on the deposit side, and steady margins, I guess, on the asset side of the balance sheet. And then in terms of fee income in our corporate businesses, It was a slightly slower quarter activity wise. Particularly in relation to corporate transactions and things like that. I think it was seasonal. Certainly no indication of corporates taking a step back or something like that. So I would take it as seasonal. So, you know, good progress in Finland. Deposit margins helping very much on PEP and business banking. And then activity levels a little bit slower coming out of the summer. Okay.

Martin Ekstedt: And then quickly, if I may end with a quick confirmatory question. So on your Danish AML court case, the Danish court scheduled the verdict for November 9, but they just not named the defendant, just saying it is a bank, end of quote. Could you confirm if this relates to your case? Please?

Ian Stuart Smith: Yes. It does, Martin. So that. that is the date that we expect to get an outcome. Of the initial court case. So you are correct.

Martin Ekstedt: Excellent. that is all from me. Thank you.

Operator: The next question comes from Jacob Hesslevik from SEB. Please go ahead.

Jacob Hesslevik: Good morning. Your CMD plan for more than €20 billion of distributions in 2026-2030 assumed €4 billion to €6 billion of retail model Ria relief and nothing from non retail with only 40 points above your 150 bps buffer. And now non-retail now a headwind Does that ambition still hold? And is the retail release still on track for end of 27?

Ian Stuart Smith: Hi, Jacob. Thank you for the question. So you will see from today, there is no change to our guidance. Our short term outlook for so for the rest of 26, we continue to expect greater than 15% ROE a cost to income 44-45%. We have also reiterated the 2030 targets which I guess is the key message at the moment. No change to our guidance or targets at this stage.

Jacob Hesslevik: Got it. Thanks. And looking at LC&I Denmark, it has taken €99 million of loan losses year to date. Is this a legacy customer case? The same name each quarter? And if so, how much exposure is left?

Ian Stuart Smith: So it. it is it is not the same story. So in each of our quarters, where we have seen these instances, it is been different positions. So it is not a I guess, a cumulative position and it. The. These things fall where they fall. So Yeah. it is well known.

Frank Vang-Jensen: Hi. it is Frank. it is well-known names, and they are Danish, but resides within 1 of our specialist areas. Well known names and increasing provisions according to the performance. And but there is no-- but just to be certain, we get it clear. there is no deterioration of the credit quality in the Danish business. it is super strong. But there are a couple of customers that struggle, and we have followed them closely for quite some time.

Jacob Hesslevik: Sounds good. Thank you. Thank you.

Operator: The next question comes from Shrey Srivastava Citi. Please go ahead.

Shrey Srivastava: Hi. I am sorry about previously, I do not know what happened to my line. It just cut off. I have 1 question, which is that we saw a ruling yesterday on 1 of your peers saying that their REA add-on to reduce the risk again an undue competitive advantage versus other market participants. Now with the knowledge that you cannot comment on specific players, just in terms of general market dynamics, the players that have been winning market share in this market over the last year or 2 what exactly have they been winning on? What have you been winning on? Is it quality of service? Or has there been certain sort of products that you have cut pricing on? In order to gain the broader relationship and so on? I would be really interested, in hearing that. Thank you very much.

Frank Vang-Jensen: Thank you for the question. Frank speaking. I would say it is it is very dependent on which segment and which country. And thereby, due to the competition, Prices for a very large part of the broader market, I. E, households, SMEs, especially the small segment, and then, to some extent, small corporates as well. As the market is super transparent. Across the board in the Nordics. And that means that the prices are not what of course, you can win on price, but if we win on price, it is usually is usually not sustainable. So it is about using your entire size, using your capabilities and expertise and then speed is important. So ensure that you are there when the customer needs you and want a response. That goes especially on mortgages. On smaller and midsized business, of course, it is more relationship-based. What can you offer? How can you do it? How sharp are you? What is the accretive services and so on? So that is the totality. Our view has always been that we are a relationship bank and when we enter a deal, it is to be the main partner across all needs. Then the dynamic in each country is, of course, unique in each country, so depending on which competitor it is. That could be in some countries, mutual ones that are super aggressive. That could be some in other countries, some that has a growth strategy, and to win and so on and use price or whatever it might be. So I guess that is the overall answer. And if you want to hear more, then help me to be more precise on which segment, in which segment and which country you want to discuss. Thank you.

Shrey Srivastava: Understood. Thank you very much for that. Thank you.

Operator: The next question comes from Magnus Andersson from ABGSC. Please go ahead.

Magnus Andersson: Yes. Good morning. Just a short follow-up on the capital thing. I understand you are not going to say much more, but just and you said your business you do not expect your business plan to be impacted, and you changed your communication around buybacks in conjunction with the Q2 report. From in Q1, the expectations were reasonable. Q2, you said that you are prioritizing growth, both organic and inorganic growth. I mean, the way things are right now, I guess, you have suspended buybacks until further notice. Does this also go for potential M&A? Or is that part of the business plan that will not change due to this? that is the first question.

Ian Stuart Smith: Yes. Thank you, Magnus. I again, just to be clear, the main decision related to this or the only decision we are communicating is the pause in buybacks. And for us, that is about a sensible decision on discretionary capital distribution, so excess capital. Where the way we think about growth or possible M&A, those are part of sort of business as usual for us. And so this is about saying we are going to hang on to excess capital. And, you know, pending clarity on the impact of REA. So I just want to be really clear. Business as usual continues as before for Nordea.

Magnus Andersson: Okay. But you do not really know whether there will be excess or not in the end, I guess? Until you get the outcome.

Ian Stuart Smith: Yeah. But the. You know you know our philosophy well, Magnus, which is deploy capital into growth. Both sort of organic, inorganic, and excess for distribution and when we have talked about our long term plans, I think we have been fairly clear around what our growth expectations are and therefore what excess might be. So I think it is important to think about our decisions in that context.

Magnus Andersson: The second 1 is just on your 2030 plan 2030 financial targets. I mean you keep it the fact that we have a completely different short term rate scenario now than on the sixth of November last year when you presented the plan. So do I mean, all else equal, that should have a positive impact on your on your NII. If you could tell us, do you will you utilize this to invest more than you previously expected to do? Or how do you look at various components here? And related to that, I saw you updated your hedge guidance, interest rate scenario you have used. Please? Please?

Ian Stuart Smith: Yeah. So thanks, Magnus. And it is a it is a critical question. So back at CMD, we did anticipate around about 50 basis points of rate increases, but further out the curve. And of course, what we have seen in the short term is that those 50 or so basis points have come probably sooner than expected. Now does that mean that the endpoint is higher? I think it is too soon to say. So right now, I think it is it is positive for deposit margins and NII, that we have got rate hikes a little earlier than expected. We are, of course, as we say in the report today, mindful that if central banks go much further than this, there is a risk to, confidence and consumption. But at today's levels, I think it is constructive for NII. And I. We really cannot say whether this is. Those 50 basis points coming now and what we might expect a little bit later. So that is why we are sticking to our guns on 2030 guidance But I think in the short term and I would say the outlook for 2027, a little bit higher rates is certainly helpful for deposit NII. On the sensitivity, and our hedge disclosures, we recast these at the end of every quarter. So essentially, what we have done is apply our sort of Q3 position in terms of just where our balance sheet is and the hedges thereon and then the outlook as of that date. Which moves around a little bit. But I think the I think the slides. Shrey. I keep forgetting now. Which page it is. Slide 18 gives a good representation of what we expect based on coming out of Q3. Okay.

Magnus Andersson: Thank you very much.

Operator: The next question comes from Namita Samtani from Barclays. Please go ahead.

Namita Samtani: Morning and thanks for taking my questions. My first 1, sorry to go back to the corporate model, ECB review, but I just wanted to know, is this a review specific to Nordea? Or is this an exercise that the ECB is doing across European banks? And my second question, can you just explain to us where the lending margin pressure on net interest income is from aside from the Danish mortgage book being repriced? Geographies? What segments? Like, what subcategories is it coming from? Thank you.

Ian Stuart Smith: So thanks, Namita. So we know our position. And so, you know, our comments today are report today is in relation to the Nordea position. I have no knowledge of whether this is something broader across the industry. We are very focused on the Nordea specifics. And then your second question on lending margin pressure. I mean, Q3 is a similar story to what we have seen over the last few quarters in the mortgage market, where there has been you know, fairly intense competition in Sweden and Norway. On mortgages, and that continues. And I would say possibly intensified a little bit in Norway in Q3. But overall, I think we are managing it pretty well. And with a strong focus on the liability side of the balance sheet as well. So I think that is as best as we can say there. In Denmark, on the retail side, we had a specific price reduction that came into effect in July. And that is impacted net interest income in our personal banking business in Denmark. So that is really what we see on the household side. On the corporate side, margins are pretty tight and pretty competitive. But still relatively stable. And it is it is also possible to compete on terms and other things, and that is what we see some of some of what is happening in the market. Nothing egregious, but it is a. You know, it is a pretty tough market out there. And I think we are doing well to deliver in that.

Namita Samtani: that is helpful. Thanks very much, Ian.

Operator: The next question comes from Sofie Caroline Peterzens from GS. Please go ahead.

Sofie Caroline Peterzens: Yeah. Good morning. Here is Sofie from Goldman Sachs. Thanks a lot for taking my question. So, I am really sorry to go back to this pausing of the share buyback and the corporate IRB models. But I think there is quite a lot of confusion in the market around your corporate IRB models. So maybe I think it would be help if you could just remind us all what the background please is? And related to that, I know you did not want to give any details around like, additional details, but how long should we expect the share buyback pause to be? just 2026, or should we also think that it could be extended to 2027? And also, how should we think about the dividends? Is there any risk to your 60% to 70% dividend payout? And are there any other regulatory headwinds we should be aware of?

Ian Stuart Smith: Yes. Thanks, Sophie. And I do understand why you guys are focused on this, so no need to apologize. I guess I. I am not sure why there should be confusion. We were pretty clear in our Capital Markets Day that we were submitting applications to replace our corporate models and that we would expect to hear something towards the end of this year, early next. In terms of feedback on that. And so that is what we are reporting on today. And we had previously guided for a neutral capital impact. And based on recent feedback, we now see that there will be an REA increase. So those are the facts. And then as we have said, we are pausing share buybacks pending clarity on the REA impact. We have also said that we will not speculate on outcomes, and that no decision is expected before 2027. So it will be sometime in 2027, but we do not have any clarity from the ECB on that yet. Now just your last point on dividends and other regulatory headwinds. We are not changing anything in relation to our capital policy today. And so focus on I think it is important to focus on what we have said and what we have not. So pausing share buybacks, we are not changing financial guidance or targets We reported solid Q3 results and no changes to our capital policy. Okay. that is very clear. I hope clear to everyone else as well.

Sofie Caroline Peterzens: And then maybe just second question in terms of also, I mean, loan growth has been very strong, and you already commented that you are, like, getting some market share here and there. But how should we think about the loan growth outlook? It slowed down a little bit, it looks like, this quarter. Was that just seasonal impact? Or is there anything that is changing in the Nordics? So if you could talk a little bit about the loan growth outlook. By kind of retail corporates and across countries. Thank you.

Frank Vang-Jensen: I can take this 1, Ian. So hi. it is Frank speaking. Remember, Q3 is a summer season of quite a big part of it of the Nordics. And it starts in the in June, and then it runs into a little bit differently, but in the start of August. So that has an impact. So Q3 is always seasonally slower. But if we start with the retail side, would say that we do not see any signs of a slowdown. There are a little bit of difference between the markets, but when we look at the total portfolio, I would say the same speed, likely a little bit better. I will come back to the risk, and the risk, of course, is how will the rate outlook be. And I think the market is resilient enough to capture or to cover or cope with some increases. But of course, there is a limitation. Denmark is slowing a bit down. But had a significant pickup and a bit of fast increasing house prices that is more normalizing, I would say, now. On the other hand, Finland is starting to get a little bit speedier than it was previously. Sweden is picking up. Norway is having okay speed. So no big change, I would say. On the corporate side, we do see a lot of activity in the Nordics. It was really high in first couple of quarters. there is no indication that it will be much slower But of course, which deals we end up getting, when they will happen, at what price do we want to bring them on. And so that is up to be seen But the momentum is good. And no big change. Then when you think about our lending growth, 8% right now across the board, that is a bit of high number. So I would be cautious to forecast 8% forever. That will be a bit too optimistic, of course. But let's see how it plays out.

Sofie Caroline Peterzens: that is very helpful. Thank you so much. Thank you.

Operator: The next question comes from Isabelle Heffernan from Bernstein Autonomous. Please go ahead.

Analyst: Hi. it is Isabelle Heffernan from Autonomous Research. Thanks for taking my questions this morning. I have 2, please. So first, net inflows into Nordea's asset management AUM remained well below levels we saw last year. Despite your recent success of the Empower Europe Fund, What color can you provide on your product pipeline to potentially help reengage clients? And what other factors do you think are keeping clients on the sidelines, and are any levers you can pull to help address these? Then second, within private banking, in the last week, we have seen yet another peer announce plans for growth in the Nordic with a particular focus on Sweden. What do you see as Nordea's right to win business in this area? Noting your success attracting new clients? To the platform over the last year. Thank you.

Ian Stuart Smith: Yeah. Hi, Isabelle. Ian here. Shall I will tackle net flows and then Yes. You might talk private banking, Frank. So it was a quieter quarter for sure. We did well in key areas, which was very strong in life and pensions and private banking flows. And then pretty much flat on the wholesale side. And I think that is the you know, the more difficult part of the business, I guess, where we. We have seen some choppiness over the quarters. We think our product sets are performing well. And, you know, we have plenty of plans to enhance those Empower Europe has gone really well. And those thematic fund groups do seem to catch people's attention. But then we see lumps and bumps particularly on the wholesale side where customers will make larger withdrawals and things like that. Nothing untoward in it. No particular concerns. But it is a it is a tougher part of the market for us. But our Nordic customer base it. it is around 85, 86% of our assets under management. And performing extremely well on particularly life and pensions and private banking.

Frank Vang-Jensen: Good. In regards to the private banking franchise, and the competition, it is I think, most countries, but at least in The Nordics, where we are operating, it is crowded. Many new entrants, many boutiques-- and that is not really anything that surprises. But what perhaps is obvious too, I think, is that there are. 1 thing is to establish yourself as a private banking business. Another thing is to get scale. that is not easy. I think there are too many players now I think the landscape will be different over time. When we start with where how we are positioned I would say we have a very broad based strong private banking platform covering all 4 Nordic countries. We have 2 very mature strong, very profitable well run businesses in Denmark and in Finland. They are growing despite the size, and they do that. Due to their capabilities. And, of course, being a part of the Nordea family helps as we remember, 1 of our strengths is that we can grow with the customers from when they are born to when they are not here anymore. And that is really strength. And it is very difficult for boutiques to just start from scratch and then get scale. And then we have Norway and Sweden, where we have our strong franchises, strong momentum. But sub market share within Private Banking. And we are growing very nicely in Sweden. It is a very integrated part of our franchise there. Connects very well with both our corporate business, our small business and mid-corps, and our personal banking business. The same goes for Norway. So I would say that this market is crowded, but it is about being sharp, intense, is about having the right offering, ensuring that you are close to your customers and have this hunger to win. If you have that, we will keep winning. And that is our clear ambition. And there is nothing that indicates that we are not doing that. Q3 brought a net inflow of, I recall, €900 million so slightly south of €1 billion in the quarter, super strong inflow. Both from new customers and asset under management. So that is where we are right now.

Ian Stuart Smith: And maybe if I just add to that. 1 of the things that I think Nordea has a very strong advantage compared to niche players is our internal market, if you like. So when we work with, for example, business banking customers and there are liquidity events, there is a very strong relationship. Those customers become private banking customers if they are not already. And so that internal market works very well.

Analyst: Great. Very clear. Thank you.

Ilkka Ottoila: Thanks, everyone. And operator, we will take the last question now. Thank you.

Operator: The next question comes from Johan Ekblom from UBS. Please go ahead.

Johan Ekblom: Thank you. Just 2 quick follow-ups on capital please. I guess, I guess, the outcome of the retail model was worse than I think most people had expected originally. And now there is negative changes to expectations here. Are there any other outstanding model updates of meaningful magnitude that we should be. Be aware of that are in the pipeline, or is this the last major 1? And then and then secondly, you keep growing your corporate business very well. Now there is some uncertainty around the capital consumption of that. So can you give us some color how you think about the profitability of the corporate growth that you have delivered over the last year and what you intend to do in the near future?

Ian Stuart Smith: Thanks, Johan. So today, as a repeat, but it is important, we are flagging that we had previously guided for a neutral impact. we expect an REA increase. But we cannot say any more than that. Because discussions are ongoing. And to your question, this is the most important model or sort of aspect of our model program that we are focused on. So if we had other things to report, we would have done so. So this is our clear focus And then in terms of corporate growth, we are as you know us well, Johan, we are very disciplined around our profitability in general. But particularly in corporate, we have a hard won position in terms of having improved the profitability of our corporate businesses, business banking, in particular, LC&I over the last 6 or 7 years. And so we are we are very focused on that. And the business that we have done so far we are pretty confident it is going to deliver the all around profitability that you would expect from us. In terms of going forward, I will go back to again I have said several times today, focus on what we have said and that is what is important. We are we are we are not changing our guidance. So Thank you.

Ilkka Ottoila: All right. Thank you, everyone, for participating in the call. Ian, before we end, anything to round up. On, please?

Ian Stuart Smith: Yes, thanks, and thank you for all your questions today. We very much understand all of the questions on the model situation. We are trying to be as helpful as possible. But it is clear that you would like more information, and we do not have that to share at the moment. So that. that is how it is. And we have we have we have been clear about decisions. In terms of business, we did cover some business questions, so thank you for that. I guess in terms of how we might expect to finish the year, we would guided before on sort of flat to slightly up for net interest income for 2026. I think the lending margin pressure we have seen all year probably means that we are more at the flat to the slightly up end of that. But I thought Q3 was still encouraging in that we have seen, you know, for the first time, combination of volumes and deposit margins exceed the lending margin pressure. But also remember that FX turned into a headwind in Q3 versus the first half Costs, I think we are in great shape. We did not talk about costs much on the call. And, you know, we think that we are around you know, we would expect to land around €5.5 billion for the for the year because we have always a bit of a seasonal pickup in Q4. Point to our cost income ratio guidance, Frank reiterated, we expect between 44-45% And then my last point was just on net fair value. Net fair value was down in Q3. Following the sharp increase in interest rate expectations at the ECB meeting. And that was a considerable shock on interest rates. I think we saw the largest movement in. Single day movement for 20 years following that ECB meeting. And I think given what we saw in Q1 with the Frank conflict and the rates up in September, we should expect a lower than normal result in net fair value for the full year. So I just wanted to make sure that we captured a good roundup of the business because I appreciate there was quite a lot of focus on capital and the ECB today. So thank you.

Ilkka Ottoila: Thank you so much. And as always, feel free to always reach out we can help with anything. Thank you.