Hello, and welcome to the DNB Quarter Four Conference Call. My name is Caroline, and I will be your coordinator for today's event. Please note, this call is being recorded and for the duration of the call, your lines will be on listen-only mode. However, you'll have an opportunity to ask questions at the end of the call. [Operator Instructions] I will now hand over the call to your host, Rune Helland, to begin today's conference. Thank you.

Thank you so much, and a very welcome to all of you to the fourth quarter's analyst call. A round table here in Oslo, we have in addition to Kjerstin and Ida, we have the Head of Personal Banking, Maria Løvold, and of course, Head of Large Corporate, Harald Serck-Hanssen, and Head of Corporate Banking, Norway, Rasmus Figenschou. We also have Head of DNB Market, Alexander Opstad; and also, of course, the Head of Wealth Management, Håkon Hansen. Before we open up for questions, Ida will take you through some of the highlights for the quarter. Ida?

Hello, and thank you all for taking the time to participate in this quarter. I'll start with a bit of a brief update on the Norwegian macro, which continues to be robust. Full year Mainland GDP growth is projected to be 0.9% in 2024. In 2025, we actually expect an uptick in growth to 15% and further line increases in the coming years. Household consumption increased towards the end of the year and was clearly up from the first quarter last year. This is supported by the increase in real wages and, of course, low unemployment levels that remains at around 2%. The housing market increased in activity levels during the second half in 2024, and we continue to see a good activity level also moving into 2025. Inflation levels have come down, but remains higher than the Central Bank's long-term target of around 2%. Wage growth was around 5.3% in 2024 and is expected to be around 4.4% in 2025 and 3.5% in 2026. As you know, the Norwegian Central Bank has kept a key policy rate at 4.5% and is expected to start to decrease it by 25 basis points in March. Our macro economists in DNB markets expect to further cuts from there to end at the term rate of 3.75%. I would, however, also like to add to the fact that Norway is a small economy and, of course, also dependent on the overall macroeconomic development load. If we move on to the results from DNB in the fourth quarter, there was a strong performance in all customer segments, as well as in all product areas. The return on equity of 19% in the quarter showed the strong growth momentum and activity across the board. If we adjust for an extraordinary low tax rate, the return on equity for the quarter was 16.1%, also well-above our long-term target of being above 14%. Net interest income was up 3.7% from the third quarter 2024, driven by profitable lending in the public work in all segments where we saw loan growth of 2.5% and deposit growth of 4.7%, higher financing activity and a solid income from treasury related impact. Net commission and fees was up 12.3% from a strong quarter, fourth quarter 2023. We saw an all-time high fourth quarter, driven by strong results across product areas, but I would, in particular, like to point to debt capital markets as well as asset management that continues to deliver strong results in this period. We have a robust and well-diversified credit portfolio, 99.3% of the portfolio is in Stage 1 and 2, and we have impairment provisions of SEK 157 million in the quarter. The Board is proposing a dividend of SEK 16.75 per share, an increase from SEK 16 last year, also well in line with our dividend policy of focusing on an increased nominal cash dividend year-on-year and utilizing share buybacks as a flexibility to optimize the capital position. Ending the year with a capital ratio of 19.4% also provides a solid foundation to also meet regulatory headwinds as well as absorb the capital effect from the Carnegie acquisition, but also continue to deliver on our dividend policy in the years to come. And with that, we would like to open up for questions.

Thank you. [Operator Instructions] We will take the first question from the line of Gulnara Saitkulova from Morgan Stanley. The line is open now. Please go ahead.

Hello. We can't hear you.

Hi. Can you hear me now?

Yes.

So I have a question on the spreads. So the contribution from the lending spreads on NII this quarter was positive. Can you touch on the outlook for lending and deposit spreads into the coming quarters? And would it be fair to say that NII has reached its peak in Q4? Or do you think the peak is still yet to come? And another question on the competition. What are you seeing in terms of competitive behavior in Norway? How did it evolve so far in Q4? And do you see that there is less pressure on the competitive front? Thank you.

Thank you so much for your question. I think it's fair to say that it is to be expected that when rates start to move downwards, there will be a negative impact on NII, and you might see an impact also on the NIM, whereas the volume-weighted spreads towards customers should stay more stable. This is more a general comment than a guiding as what the actual development will be depends on the decisions that are to be made at some point in the future. But what we are seeing now from a macro and estimated rate path going forward is an aggregate of three rate reductions as opposed to 14 increases. So we will still be at a level that is very attractive in terms of running our business. With regards to the competitive behavior, the Norwegian banking market is a very competitive, but also a very rational market. We continue to see the banks targeting return on equity as their most important target. The competition is fierce. There is capital that needs to be deployed in the market. But what we are seeing in the macro revisions is also for the expectations towards credit growth to go somewhat upwards. So we do expect the outlook to be beneficial for future profitable growth and for competition overall to stay rational.

Thank you.

We will take the next question from the line Shrey Srivastava from Citi. The line is open now. Please go ahead.

Hi. And thank you very much for taking my question. One on capital for me, please. So you mentioned the 210 basis points of overall headwinds. But then you also have the capital paid out from the insurance company, not only in Q4 but in Q1, and you still have the benefit of Sbanken to come with no significant restructuring charges expected of the Carnegie acquisition. So my question is this, what stops you from having a costumer buybacks similar to last year? And could you provide some color on your thinking around this? Thanks.

Well, I think – I mean, first of all, you're right in all the different elements that you point to, which is important. In addition to that, of course, we have a strong profitability in the group, and that is also something that supports the core Tier 1 capital ratio over time during the year as well. I think what we're pointing to, and what I would be happy to reiterate as well is that we save firm in terms of our dividend policy. We will prioritize nominal cash dividend increase year-over-year and then utilize here buybacks as the flexibility tool. We are also pointing to the fact that we expect the Board of Directors to request the similar authorization from the Annual General Assembly as they've done over the previous years. And that also means that if they get that authorization, we could potentially, depending on the capital situation and the outlook, look to seek approvals for further buybacks later on this year.

Understood. Thank you very much. And my second one is if we could just get an upgrade – an update on how the Sbanken portfolio is performing relative to the rest of the group? Thanks.

The Sbanken portfolio is performing well. I would say it's part of a growing activity, and we have done – the team has done a lot of the initiatives to improve the offering, and we see that customers are increasingly happy with the services that are provided. But beyond that, we do not split – I mean, it's part of the same overall portfolio now. So we do not split growth and activity numbers on the two brands.

Understood. Thank you very much.

Thank you. We will take the next question from line Namita Samtani from Barclays. The line is open now. Please go ahead.

Okay. And thanks for taking my question. Just lastly, do I understand correctly on Carnegie that the acquisition will be closed in March or April and when you integrate the Carnegie numbers into the DNB numbers?

Yes. Well, we are still waiting for an approval from the NFSA. Apart from that, we've received approvals from all the regulatory authorities. And then in addition to that, we will also need an approval from the US authorities, but that is more of a shorter process, which we expect could be able to conclude shortly after the receivable from the NFSA. We haven't got a timing from the NFSA, but if we get the approval from them before mid-February, we're saying that we expect to have a legal closing of the Carnegie transaction in the beginning of March, which means that Carnegie will be incorporated as from that moment, legally and also from a reporting perspective. Then, of course, onward from that, we will work even closer together with the team on Carnegie, which we have been prohibited from due to competitive reasons. And that gives us an opportunity to work even faster together with the team to really see what will be the offering when we are combining the two strong entities together.

Okay, that's helpful. And could you also speak about some of the moving parts of costs, we should think about to 2025, such as wage inflation and IT piece?

Yes. We haven't quantified the IT expenses or the differentiators. But what I think I can just point to, as I mentioned it briefly initially, was also that inflationary pressure has come down, but it's still the core inflation was at 2.7%, still well above the long-term target of the Norwegian Central Bank. And then we also expect wage growth to continue to be higher in 2025, around 4.4%. And of course, that also affects our cost base and also one of the reasons why we also are continuously focusing on cost efficiency. We will continue to -- we will continue to invest in our digital offering towards our customers. We operate in a very digital society and our customers expect digital solutions that are topnotch. And therefore, we will continue to invest in that. But there are no, bigger investments kind of massive changes in terms of the ongoing investments compared to what you've seen in the past year.

Okay. Thanks. And just quickly, finally, the large corporate lending by country was that mostly in Norway? Or is it mostly in the U.S.? Just any color by geography would be helpful. Thank you.

The growth in fourth quarter is approximately half in Norway and half outside of Norway and the industry where we see the most growth is the Energy sector, more specifically renewable.

That’s helpful. Thanks very much.

Thank you. We will take the next question from line Johan Ekblom from UBS. The line is open now. Please go ahead.

Thank you very much. Just two areas, I mean on the, Sbanken model kind of into a move to IRB, can you remind us if you have said anything on timing and quantum of that? And then secondly, if we can just dig a bit deeper into the NII trend, I think you said this morning that there were activity-driven boosts to NII in the quarter? And I guess one thing we see is this very large increase in large corporate lending. So when we think about the trend into kind of a 25% run rate or potential moving parts. How much of the Q4? And would you say is this kind of temporary activity-driven boost that I guess, may or may not recur, but just to get us a sense of what quantum is these volatile items.

Yes. If I start with Sbanken, what we said when we made the acquisition was that it would have a positive impact on the core Tier 1 capital ratio of 30 basis points. And what we are now saying is that, we haven't moved the portfolio over to IRB. But on the other hand, every time we refinance a facility in the Sbanken portfolio that is automatically moved over to IRB, which means that we are kind of gradually moving Sbanken portfolio over to IRB, independent of the approval from the NFSA. And I just want to correct what I said in terms of the effect, we said that the effect would be 20 basis points when we made the announcement of the acquisition of 30 basis points. But gradually, this portfolio is being moved over to IRB models, and due to the fact that this portfolio is also a portfolio that has a higher turnover in terms of refinancing activities, and that also moves that we are slowly and gradually moving over to IRB on Sbanken, but we haven't quantified how much of the effect will still remain. And, of course, as you know, with the change in regulatory requirements in terms of the required floors, there is a smaller impact compared to between the standard models and IRB models than what it was when we made the acquisition.

Thank you, Ida. Johan, I'll try to shed some light on the NII, and I would like to start by saying that, of course, the attractive growth that we have seen in the fourth quarter leads to a higher pace of run rate into the year. That's important to note. And secondly, there are activity related elements in the numbers, but there are no large one-offs that might not happen again. So we are talking about numbers and the development that will depend on the future and how that develops. But there are a couple of moving parts that we've talked about that were positively impacted in the fourth quarter, one of them was the activity related NII on refinancing and new business activity that provided an effect of NOK182 million. Fourth quarter is usually a quarter with high activity on transactions. There is also the treasury results that gives a positive delta of NOK173 million. There are some beneficial effects on treasury also on interest rates that might go -- that are likely to go a bit lower once rates turn in the other direction. And I think the last item that I would like to mention now that we have key policy rates of -- at a meaningful level 4.5. There is also some temporary funding elements from the return on the positive account to customers that is paid towards the end of the year. So all of these three elements, you really have to assess and make a view on the first two, we provide you the numbers. The third one is not as large a number, but it still accounts. Beyond that, I would like to just remind you to keep in mind, as I know you all are aware of that there is a couple less interest rate base in the first quarter compared to the fourth quarter.

Thank you for that. But when I look at your interest rate bridge in the fact book, I guess those effects will be in the other NII, is correct?

Yes.

And I mean, the other line that the amortization effects and fees has kind of been zero over time, but it's been a strong tailwind for the last three quarters. Is there anything structural there? Or is that just also in the activity bucket?

It's nothing structural. It really depends on the number of refinancings that are happening, the number of new transactions that we underwrite and/or syndicate where you're booking and accounting for the fees at the closing of the transaction. And if there are restructurings that leads to refinancing, but it really belongs back into the first bucket. And, I mean, there are no other elements that impact the amortization and refinancing. So high activity leads to higher fees.

Perfect. Thank you very much.

We will take the next question from line Patrik Nilsson from Goldman Sachs. Your line is open now. Please go ahead.

Q – Patrik Nilsson: Yes. Thanks a lot. And thanks for taking my questions. I just had two -- the first one was just I wanted to come back to the fee growth target that you outlined at your Investor Day about 9% per year. And also now, today, given the strong development we saw in Q4. So I was wondering if you could provide some color on how you believe DNB can perform in the coming years more on a stand-alone basis, so more like a number that we can like-for-like compared to your previous 4% to 5% growth target in terms of fees, if that's higher than before? Or if it's the same? Because I appreciate that there are some cyclical elements and some other things related to M&A also affecting comparability there. And the second question was just, in terms of the structural rate sensitivity in your large corporate division. Is there something that we should consider there when we compare it to the rate sensitivity in personal customers? Or is there anything to flag there just on -- so less related to specific guidance, but more the structure of the business. Thank you very much.

Thank you for your questions, Patrik. Well, we did indeed say, as you're mentioning that we expect a higher pace of growth in fees and commissions compared to previous year as we outlined the target of above 9% per year through the cycle for the coming three-year period at our Capital Markets Day. We have been delivering consistently above the 4% to 5% -- sorry, in what we are more ultimately referring to the growth engines in the fee and commission group, which is investment banking and DNB markets as well as wealth management. In the time ahead, we continue to expect these to be the main contributors to a higher growth pace. IBD, I mean, there are elements of market volatility that impacts the number that we have in this quarter, particularly refer to the debt capital markets being exceptionally strong. EPM has not been that strong. So I think this also proves that there is a robustness and an increased diversity in the products that we are offering in assets under management. We are gradually building a stronger base of assets where we have consistently been delivering positive flow throughout the year and building the base systematically with assets under management from defined contribution as well as from saving agreements. And we continue to see these volumes picking in on a monthly basis, providing a very attractive floor, if you will, to the volumes. Beyond that, there is, obviously, a dependency on market valuations and how the market develops. But there is a robustness there in terms of the net flow in particular, from retail customers. We have seen very positive development on banking services. We have seen on guarantees. They are reflecting a broader customer base and increased activity and an increased attractive offering from our side. I think that goes without saying as well. And above and beyond this, of course, we do expect that we will see a positive result from the merged entity DNB markets and Carnegie both related to our investment banking activity related to Private Banking, which is also in big part the management of assets as well as asset management in total. And these are the foundation for the ambition that we have outlined to growth is more than 9% annually.

And when assessing the NII sensitivity, I think our rate sensitivity, it's important to think about a few elements here. 90% -- more than 90% of our mortgage loan book is fully floating. Around 30% of our loan book in war small and medium-sized enterprises are fully floating. So, they are core as an element in terms of when -- if and when we reprice and if and when that happens, that will have an effect within lag effect is low. In large corporates, the absolute majority of all our lines are margin based on top of the reference rate. So, therefore, you have a different dynamics than what you would have in the personal customer set.

Q – Patrik Nilsson: Great. Thank you very much.

Thank you. We will take the next question from the line Riccardo Rovere from Mediobanca. Your line is open now, please go ahead.

Thanks and good afternoon to everybody. Thanks for taking my question. Three or four, if I may. The first one is when rates will start going down and we know the rate cuts will not be or should not be that base. Do you think it's going to have any impact on the loan growth in the country for D&V in general or too small to have only have any impacts on leasing financial condition? This is the first question. The second question I have is on DNB [indiscernible] moved anything go against accelerating the repatriation of capital to the parent company, given that the Solvency II ratio is still in the -- if I'm not mistaken 250%. And if correct wrong, the number you have in mind is much -- is kind of 150%, 140%. It's really possible to accelerate it? The third question maybe is for RRW [ph] I would say. With the pretty significant shift that we are seeing on the other side of the Atlantic toward, let's say, brown energy because this is what's happening. It is an opportunity for Norway and DNB or not? Or this -- would this wipe out opportunities in the green transition in this kind of phase? And the other thing I wanted to ask you is if there is anything that we should consider as one-off in investment banking fees? And why trading in the course trading revenues were so low, there is -- which is something that you call other mark-to-market, which was significantly negative this quarter? I don't know what this referred to. Thanks.

Thank you for your questions, Riccardo, very good as always. I will leave the second one to Ida and I'll leave the tail of the third one to Harald, and I'll try to do the first and the fourth one and the start the third. But the activity in the housing market in Norway is very high and already incentivized, we believe, by or stimulated, if you will, by expectations of a rate cut and what we need now to stimulate activity further is increased construction activity of new houses and apartments and the government just issued a statement earlier today that they will look into this because they see that it's necessary to do something about the supply side. And the latest forecast from our macro companies is also for a higher credit growth than we believe previously, and now we are expecting north for 3.5% for 2025. So slightly benign environment for our business. The movement in market-to-market values in other financial income is related to short-term hedging of shorter-term funding where there is a revalue accounting of the swaps, but the nominal accounting of the short-term funding. So these are really financial elements that provide some volatility. There was a positive element in the third quarter, but nothing that alters the bottom-line over time. With regards to what we often refer to as trading, which is the very, sort of, smaller positions that we take on the interest rate and currency in Norwegian kroner, the results were actually quite positive in the fourth quarter. With regard to the third and any further opportunity for us related to more upside related energy. I think I prefer to use often. I can say that overall, we remain very committed to our strategy of being a positive force into the sustainable transition. I mean there's a lot of opportunity in that for us, but we also continue to do cost on maybe how we can develop a little bit on these opportunities.

Yes. Thank you, Riccardo. I think you asked similar questions in the past. And I think it's -- if you look at our fact book, you will see there's a 10% increase in oil and gas and offshore exposure in the fourth quarter. So I think that to some extent, answers your question. We do take advantage of the opportunities that we see and we can use our balance sheet as a facilitator. But most importantly, I think, we will use our competence and our capital markets capabilities in order to -- and our client base to do a lot of cross-selling, and that is why this segment is has been so attractive to us is that we've been able to combine the use of balance sheet and brand to a large extent. Having said that, it's also a balancing act, and we will continue to also monitor this against our transition plan. So, yes.

Yes. And turning to DNB Life. You're right in saying the solvency ratio is very strong at 262%. The long-term target is 140%. So of course, you could say that there is a very strong solvency ratio at the moment that we also pointed to at the Capital Markets Day. When looking at distributing excess capital or upstreaming excess capital, there are a few things that we need to look into. First of all, there is a guaranteed portfolio that is in runoff. And this will need to be done in connection with the runoff of that portfolio in order to make sure that we do it in a good and structured way. In addition to that, there is -- it requires an approval from the NFSA. So we will kind of from an ongoing perspective for approval from the NFSA for the upstream of cap. So while the ordinary dividend is not. I also think, I would like to point to what we have done and what we work with in DNB Life Insurance portfolio as we are now seeing that the guarantee portfolio is coming into a run-up is that we've also taken down the interest rate sensitivity, which historically have a large it towards interest rate movement. That has now been taken down and moved far more to hold to maturity portfolio, which, of course, also gives a stabilizing effect in terms of the opportunities to continue to upstream capital to the parent as well as deliver on a strong ordinary dividend in the years to come in connection with also the growth that we're seeing in the defined contribution.

Thank you, Ida. Just a quick follow-up on this. This exercise is something that can be done once a year? Or can it be done an or maybe month a quarter, something like the NOK 1.5 billion extra dividend from the reinsurance operation?

It doesn't have to be an annual thing. We can do it more often than that. But again, I would like to point to the fact that we started the first we received an upstream in our capital work last year. And that you saw, we also have had coming -- or the year before last and then we had it coming last year as well, an increase from NOK 1 billion to NOK 1.5 billion. And I think also important to do this in a structured and a well-functioning weight.

All right. Okay. Okay. Thanks. And with regard to the investment banking sales, is there anything we should consider as super normal in this quarter? Because also DNB markets activity over the past couple of quarters actually since the start of the refined side, the revenues from customer-driven activity have gone up quite significantly, and I was wondering, but this is something that you look for or maybe the conditions in 2024 being so particularly good that investments later you get better activity to DNB market, just because if current conditions were particularly favorable.

Ask the head of the DNB Market.

Thanks for that question, Ricardo. It's Alex here. I think one thing to keep in mind, there are no one-offs in the investment banking numbers as such. But there is, of course, seasonality in the numbers so that the fourth quarter tends to be the strongest quarter each year. I'd say that the business throughout the year is very well diversified. I think we've highlighted this quarter and also in previous quarters that the activity in has been particularly high and breaking that down, it's particularly been in the Nordic high-yield market. We expect that market to continue its structural growth. But I can point out that last year was a new all-time high in terms of issuance for that market. But we attract more and more international issues to the market. So we expect the structural growth to continue in DC.

Perfect. Thanks. Very clear.

Thank you. We will take the next question from line Martin Ekstedt from Handelsbanken. The line is open. please go ahead.

Thank you. So as another potential source of capital upside, could you please provide us an update on Luminor. So as I call your view on this is that it's a financial investment, and the expectation is that you would exit together with the private equity majority owner when Luminor is sold, is that correct? Or any update around this process?

We haven't provided any update on that, but you're right in saying that this is a financial investments, and we're following the developments, but there are no news in relation to Luminor or any transaction in the foreseeable future.

Okay. Understood. And then if I could quickly ask around Danske's personal customers business that change time to Nordea in the quarter. That one saw quite a bit of churn between final and closing. Did you notice a quantifiable positive impact from customer flows or such? Or did those go elsewhere the savings bank, cetera? Thank you.

I think we would like to comment just in general that we've seen a very high customer activity, both related to customers buying new wholesale apartments and the customers from other banks choosing DNB NR offering during the fourth quarter and this has been a positive development.

Okay. Thank you.

Thank you. We will take the next question from line Johannes Thormann from HSBC. Your line is open now. Please go ahead.

Good afternoon, everybody. It’s Thormann. Two questions, please. First of all, on your credit quality again, how much more improvement can we see in the Stage 3 exposure you still have on your balance sheet. Is there at a point where you say this is a structural amount, which will stay or should we still see further improvements that the shift from Stage 2 to Stage 3 will remain very low in the next years? And secondly, just a quick one on the tax rate for the next year, please.

Yes. In terms of the credit quality, I think what we have seen over the past few years is that we've seen some reversals, in particular related to the offshore segment that had a bit of a challenged situation a number of years ago during the pandemic or around there. So we have taken some reversals related to that. I wouldn't say that, I mean, this is not a static situation. We will always have customers moving from Stage 2 to Stage 3, and we will have customers moving back to Stage 2 and Stage 1 from Stage 3. I wouldn't say that there is a significant potential to look at the impairments we've taken in Stage 3 today. This is our best estimate as we stand today and also what we believe is the correct assessment. And again, we will most likely see customer-specific events also going forward, as has happened historically and losses will vary quarter on the quarter. I think in terms of tax, what we're saying is that we've maintained the same level of expectation that we have last year saying that we expect the tax level of 20% in 2025. But our long-term target and expectation is a tax rate of 23%.

Okay. Thank you.

Thank you. We will take the next question from line Herman Zahl from Pareto Securities. Your line is open now. Please go ahead.

Yes. Hi. Thank you. Just following-up on loan losses. Could you comment a bit on what's driving specifically reversals within commercial real estate currently? Are these macro modeling changes or specific exposures?

In commercial real estate, what we have done is that we have historically taken a bit more conservative views and what the model output would be at. What we're seeing now is that there's actually a positive development in terms of commercial real estate. We're also seeing that, there is more of a balance between the sellers and the buyers. We are also seeing that there is continued to be a very solid development in terms of office premises and the development in our portfolio. And therefore, this is our best estimate as we work as we are today. So there are no significant reversals in terms of model-based perspective on customer specific situations that could always be, but perhaps individually assessed.

Thank you.

We will take the next question from line Sofie Peterzens from JPMorgan. The line is open now. Please go ahead.

Yeah. Hi. This is Sofie from JPMorgan. Thanks a lot for taking my questions. So in the fourth quarter, you did some securitizations, could you kind of comment on how we should think about the P&L impact of the securitization and also how much it helped your capital in the quarter? And what are your plan for SRD in 2025 and 2026.

Securitization as well as insurance is an important tool that we use in terms of originate and distribute and also working in terms of capital optimization, in particular in the large corporate area, but also in the small and medium-sized enterprises. When looking at what we did last year, this is the first securitization that we have done, and we've signed a transaction with the European Investment Bank, which is a first step in terms of looking at securitization from a broader perspective in Norway, not saying that we will do a lot going forward, but I think this is an important tool that we have a very good dialogue with the NFSA around as well. This particular deal is related to more green financing and transportation tools such as cars and also vehicle in relation to construction, but more green transportation than anything else. I think when we look ahead, we believe that securitization is an important tool that we would jump back to be able to utilize even more going forward, also taking into account the capital intensity that we see in the large corporate area to be able to turn around the capital even quicker. And in terms of the cost for the SRD, it's booked in the fee line under guarantee. I need to come back to you on that in terms of where the fee is, but I'll come back to you on that, Sophie.

Okay.

But in terms of -- we are not quantifying the effects on the direct effect on the Core Tier 1 capital ratio this quarter, but we're saying that, that's also part of why we're seeing a positive development in terms of risk exposure amounts as well.

Okay. Clear. And then my second question, you mentioned in the earlier answer that long term, you expect a 23% tax rate. Would that already be in 2026, 2027? Or is it kind of 2028 or beyond kind of 2027 sometime 2030? Or when should we expect the 23% tax rate to kick in?

What we are saying is that we expect a tax rate of 20% in 2025. And onwards from there, we expect more long-term tax rate of moving to 23% again.

Okay. Okay. That's clear. And then my final question would be on dividends. Would you consider moving to paying kind of the dividends semiannually or doing interim dividends?

Well, our understanding and also bearing in mind the situation, we haven't assessed that and have not made any decisions in relation to that and to look into that more deeper. But again, we don't have any plans to do that going forward.

That’s very clear. Thank you.

Thank you. And we have a follow-up question from Riccardo Rovere from Mediobanca. The line is open now. Please go ahead.

Thanks for taking my two follow-ups, if I may. The first one is again on DNB Liv. If I look at page 71 of your fact book, and I add up the profit for the fourth quarter of 2024, I get to roughly must be NOK 1.6 billion, give or take. And you are paying out NOK 1.5 billion, if I'm not mistaken, less than NOK 1.5 billion because it looks like you have paid out kind of 100% of the profits of DNB Liv. How can the solvency go down if you don't accelerate it from 250 to 140? How can it get to NOK 140 million if the NOK 1.5 billion does not get definitely higher because otherwise, with the 100% payout, it's going to take really ages to repatriate the capital. The other question I wanted to have a clarification on -- in NII, when I see the amortization fees at amortization effect and fees NOK 180 million in the quarter. Is there anything odd in that maybe because rates are supposed to start coming off? Or how should that part of the NII move with rate cuts in the first part of 2025 or throughout the course of 2025?

Thank you, Riccardo. There is nothing odd in the amortization fees in the fourth quarter. Fourth quarter is typically a quarter with very high customer activity and many are looking to close the transactions they're working on prior to year end. And this is an element that will vary from quarter-to-quarter, and it will depend on the actual customer activity in the specific quarter. So it's hard to give you any guidance on the actual moving bits and pieces. With regards to DNB Life on the solvency ratio, this is impacted by several other elements in addition to the annual profit, more particularly, I mean, the future obligations under the insurance contracts are discounted at the future expected rate as well as the assets of the company. So the actual rate level is material in calculating the solvency ratio. We have lowered the rate sensitivity that made the solvency ratio more robust as either referred to in her previous comments when acquiring more wholesome maturity papers at a rate level that is above the guaranteed level of return to customers and other less rate sensitive, but this is still an element that impacts the solvency rate from quarter-to-quarter.

No, no, I understand that. But let's assume rates stay where they are or where they will be in 6 months to 12 months, that part should not be there anymore. So I understand there are plenty of used parts and we think that to make things easy at the very end of the day with the profit you make and the profit you pay out and if you pay out 100%, everything else being equal, how should the -- how can it go down materially.

Hi, Riccardo, it's Håkon, Head of Wealth Management. In addition to 100% of the annual profit, we also pay extraordinary dividend last or in 2024 of NOK1.5 billion. And we guided on the Capital Markets Day that we will pay out in the range of NOK30 billion over the next 10 years. in ordinary and extraordinary dividends. Thanks.

All right. Okay. All right. Thanks.

Thank you. It appears no further questions at this time. I'll hand it back over to your host for closing remarks.

All right. Thank you so much, everyone. Thank you for good questions and participation. We hope you all have a good rest of the day. Thank you.

Thank you. Bye.

Bye.

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