DNB Bank ASA

OSE:DNB

Earnings Call Transcript 2022-Q2

[Thomas Midteide, executive]

A very good morning to you all. Welcome to DNB and this presentation from summer sunny Oslo. A few of you following us online might be in your shorts already from your summer houses, but the audience here in DNB [indiscernible] are looking sharp as ever. As usual, we have prepared a presentation for you with the results of all our customer activities for the last quarter and in about 30 minutes, we'll open up for questions. You might use the web form online to ask us questions, and Rune will ask them on your behalf here in Oslo. So Kjerstin and Ida, please go ahead.

[Kjerstin Braathen, executive]

Thank you. Thank you, Thomas, and a warm welcome to all of you and the presentation of our second quarter results.

Volatility, I think, is a word that stands out that really characterizes the quarter that we are now putting behind us. Volatility in capital markets, volatility in currencies and volatility in risk premiums. Despite that, the Norwegian economy has continued to perform very solidly with a high activity during the quarter, and this is also impacting our numbers as it always does.

So we are delivering a quarter today with very strong results across all of our business areas. This sums up the quarter in 1 slide. And as you know well, we continue to highlight the return on equity as our most important financial targets. For this quarter, the return on equity comes in at 13.3% and at 12% for the past rolling 12 months, which means that we are delivering on our most important financial target for the past quarter as well as for the past year. And as we've said previously, we need to deliver in many areas in order to deliver at this level and this is the case this quarter.

We have a profitable growth across the business areas and a strong growth in NII of more than 10% from the previous quarter. Fees and commissions and product areas are performing well. This quarter, I would highlight money transfer with an increased spending activity across the markets as well as assets under management, where the flows stays stable during the quarter as the 2 highlights of the area.

Asset quality remains very solid. We do also have net reversals this quarter. The profit for the quarter ends at NOK 7.8 billion, a growth in earnings per share of more than 20% compared to the same quarter last year, which leads to a capital ratio of 18% with a comfortable headroom above the expected and required level and support and ability also to deliver on our dividend policy.

Taking a look at the Norwegian economy more specifically. The activity level has remained high during the quarter, and the GDP growth for the year is expected to come in around 3.5%. With increasing prices as well as increasing interest rates, the consumption in the economy is expected to cool down somewhat and the GDP growth is expected to normalize towards more the area of 1% in the coming year.

Now the inflation pressure also in the Norwegian economy has, in the recent quarter, been higher than expected. But we are still at levels that are lower than the European economies that we see around us. In a response to this, you saw the Central Bank raising interest rates by 50 basis points earlier this quarter in June and not 25 basis points, as previously indicated. Furthermore, the rate path was increased, and the rates are expected to increase towards 3% towards the mid of 2023. The dominating nature of mortgages with floating rates in Norway makes the monetary policy particularly efficient. And this is important in a scenario where I'm sure all of the central banks would like for the monetary policy to drop down into the real economy.

This is expected for Norway, and this is expected to lead to a cooling down of the consumption over time. High activity, low unemployment. Unemployment continues to reduce and is now at 1.7%. And we talk to a lot of companies, and many of them are reporting that they are now struggling to find the resources and competence they need to pursue their growth opportunities. So with the factors that we see working in the economy, we do expect an increase in unemployment or actually, the Central Bank expects an increase in unemployment. But still, for the years to come, we're talking about very low levels.

The energy and the energy transition forms a very strong backdrop for increasing investments. This goes for both the petroleum-related sector and across the mainland economy. We expect to see more investments across many sectors in this space, including hydrogen, carbon capture, renewable energy to mention a few. So investments across the corporate sector are expected to increase, as you can see, gradually, for several of the years that we have ahead of us.

It is important to acknowledge that the uncertainty that we have around us in the world economy is higher. It's higher than it's been in a while, and Norway is a small and open economy and we are not shielded from everything that is going on around us. But it is also important to highlight that there are forceful stabilizers in the Norwegian economy, and we have seen these stabilizers at work during the pandemic, and we know that the authorities both have the tools and the willingness and ability to put them to use if that should become necessary.

One of these powerful tools is related to the sovereign wealth fund. And as you can see, despite the turmoil in the financial markets, the value of the fund continues to grow and increase. A couple of words on the main business areas. Now for the personal customers, this is the first quarter where we are -- have integrated Sbanken in to our numbers. And of course, this has a material positive effect on the numbers. Furthermore, I'm very happy to report of the optimism and energy across both of the organizations after finally having been able to come together and talk about opportunities ahead. I think there's a lot of optimism going into those discussions, while also a very hard focus to deliver here and now to our customers.

The pretax profit is up by 16.3%. We do see a healthy growth both in loans and deposits, 0.9% in loan growth after a couple of quarters who has been slower in mortgage growth and deposit growth of 4.2%. Now we do see that consumers are more uncertain. That's visible with a lower consumer confidence, but we do not see any change in behavior. And so far, we do not see any indications that consumers are starting to spend the additional reserves that they've actually saved during the pandemic. So the growth in deposits for this quarter are what we would qualify as normal for the season.

NII is up by 22.1%, and there was a further hike, as I just mentioned in the policy rate in June. We have announced a price adjustment in relation to that change in policy rate, and this will take an effect on our numbers from mid-August. In addition to interest rate activity, there's also been a high activity in other income, in particular, on the money transfer and transactional banking area, and that activity aside also very systematic work in reducing the prices related to this type of activity, we are now at a level for personal customers that is higher than we were in 2019.

Savings agreements. I know we've talked a lot about them with you. We do see that they are sticky and people remain in their longer-term savings agreement. So the volumes are stable with regards to net flow and there is some negative movement only related to market valuation. Our private banking activity is also a part of our activity that we report under the personal customers. It's been a strong quarter for private banking. And to highlight 1 point that we are prioritizing, it is to manage funds under active mandates. And so far this year, there's an increase in [ 2 billion ] of funds that are managed in this area, which I think is a strong performance from the Group.

Corporate customers, all-time high in first quarter '22, follows up with a very strong quarter in the second quarter. So here, if we look at the profits before impairments, it's up both compared to the previous quarter by 2.6% and compared to the same quarter last year by 25%. Strong growth both on loans and deposits. Strong and gradual growth in SME with 3% in the quarter, an even stronger growth in the large corporate sector. This growth really comes in the sectors and industries and areas that we are prioritizing, namely predominantly in the Nordics. And keep in mind that the growth in large corporates, that varies more from quarter to quarter.

The results are positively impacted by net reversals. And also, this quarter, we have a positive market-to-market effect from part of the equity positions that we have taken during restructurings. Again, nothing that we indicate is recurring, but worth mentioning because I think it really underlines the solid work that is being done from the team in terms of credit quality and restructuring. All in all, return on capital in this area of 18.5% during the quarter.

It is a very strong quarter in DNB markets. So I would like to spend a couple of minutes on that. Pretax results before impairment in markets is actually up compared to the same quarter last year. The total income is up by 5% compared to the same quarter last year, and this is in a very, very volatile market that you see impacting numbers all over the market, and the areas that have delivered are related to fixed income as well as equities, and this is compensated for a somewhat lower activity in the investment banking area.

Altogether, the activity and the resilience of our earnings in this area in a more challenging market is underpinned by receiving the award or the position of #1 player in the equity capital markets across both Norway and Sweden during this quarter.

So with that, I'll sum up and leave -- I'll not sum up. I have summed up. I'll leave the floor to you, Ida.

[Ida Lerner, executive]

Thank you, and good morning, everyone. As Kjerstin mentioned, we noted a very strong and profitable currency-adjusted loan growth of 3.3% in the quarter. The growth in corporate customers of 5.9% comes from both SME and large corporates and in geographies and in sectors that we have highlighted as strategically important for us. The growth in large corporate comes in addition to this, predominantly in low-risk segments and customers.

In the personal customer segment, we had a currency adjusted loan growth of 0.9%, and the growth comes from both Sbanken and DNB. In addition to this, we had a growth in deposits of 3.1%. This leads to strong deposit-to-loan ratio of 75.7%, up from 75.2% in the first quarter. We reiterate our long-term expectation of loan growth between 3% to 4% over time. But bearing in mind the strong activity level we are seeing, we expect to come in somewhat above this target for 2022.

The net interest margin was up 2 basis points in the quarter as a result of increased average money market rate and the most 2 recent repricings that has been done, implemented mid-end January and mid-May. Combined spreads are continuing upwards with another 2 basis points.

Net interest income comes in with an increase of NOK 1,079 million, up 10.3%, driven by customer repricing, volume growth and the inclusion of Sbanken, the latter contributing with NOK 405 million. Higher average loan and deposit volumes contributed positively by NOK 140 million. Spreads and interest and equity increased by NOK 194 million and NOK 53 million, respectively. Amortization effects and fees increased by NOK 87 million in the quarter.

As mentioned before, NII effects comes if and when we change the customer rates. The notice period on repricing of loans to customer gives a lag effect. While you now see the full effect from the second repricing, we only recognize part of the third repricing. In Q3, we will see a similar lag effect when NII will reflect the full effect of the third repricing but only part of the fourth being implemented mid-August.

The fourth repricing is estimated to have an annual effect of approximately NOK 2.5 billion. Net commission and fees comes in at NOK 2.8 billion, a strong result, as Kjerstin mentioned in the turbulent financial markets. The result is in line with the corresponding all-time high commission and fee income we saw in the second quarter of 2021. For real estate broking, the second quarter was weaker. But keep in mind that the activity in the corresponding quarter last year was high. We still see a slower quarter in the -- or we see a slower market with fewer properties out for sale. Year-to-date, today compared to year-to-date 2021, the number of properties out for sale are down by 8%.

Investment banking fees were down by 34% compared to the same quarter last year due to lower activity. Bearing this in mind, we deliver a solid performance across product areas in DNB markets, proving DNB market's strong position, as highlighted by Kjerstin earlier. Asset Management, Custodial Services was up by 7.3%. There was a stable average asset under management volumes during the quarter with a slight decrease towards the end of June, mainly driven by lower volumes seen in the stock market -- lower value seen in the stock market.

Customers remain committed to the long-term savings schemes, and this is an important testament to that as well. Guarantee Commission continues to show a positive development, up 12.9%, driven by an increased demand for trade finance products. Money transfer and banking services, also as highlighted by Kjerstin, continues to increase, up 77.7% compared to the last year. We noted increase in travel activity as well as high card usage among our personal customers.

Fees from sale of insurance products was stable compared to the last year. We see positive contribution from non-life insurance, Fremtind as well, but that's been offset by reduced market values within pension products. Operating expenses are up NOK 558 million this quarter. Salaries increased by NOK 164 million, reflecting a further strengthening of core competence and ongoing projects. We have a one-off cost this quarter related to the sale of a closed defined benefit scheme in the U.K. The other pension expenses are down this quarter as a consequence of positive market-to-market effect on the closed defined benefit scheme driven by lower returns in the stock market.

This scheme is partly hedged, as mentioned before as well, and the corresponding loss is therefore recognized in net gains on financial instruments. Other expenses reflects more of a normalized customer-related activity level. Sbanken are now included in the numbers and therefore adds NOK 205 million. As mentioned before, we expect we enter into a period with higher inflation and increased activity level. This will impact our cost levels going forward. Nevertheless, we remain committed to our communicated target of receiving a cost income ratio below 40% towards the end of 2023.

We had net reversals of impairments of NOK 209 million this quarter, reflecting a robust and well-diversified portfolio as well as successful restructuring in Stage 3 in Corporate Banking. 98.9% of our portfolio is now in Stage 1 and 2. For personal customers, impairment provisions increased by NOK 94 million, driven by a change in 1 of our internal models. But there is no underlying change in portfolio quality. For the corporate customers, we had reversals of NOK 303 million. The Stage 1 and 2 reversals are driven by macro development within specific industry segments, improved credit risk in the portfolio as well as being positively impacted by the growth in low-risk customers.

We reiterate that our portfolio is robust and well diversified, but please bear in mind that losses will vary from quarter-to-quarter and that Norway, even though we are in a relatively strong position, will still be affected by the geopolitical position and the development we see macro-economically globally. Given the focus on personal customers and the commercial real estate portfolio, I would like to give you a brief overview of those exposures on the next 2 slides.

Our personal customer portfolio represents approximately 50% of our total exposure at default and is of a very good quality. The absolute majority of this portfolio is mortgage lending. Our collateral position is strong with an average loan-to-value of 54.3%, which provides a significant buffer. Strict lending regulations limits loan-to-value of new loans at 85% and requires that our customers are able to handle an immediate interest rate increase of 5 percentage points at the time of taking up the mortgage or refinancing.

Additionally, maximum personal debt is capped at 5x annual income. As mentioned earlier, we have not seen any change in customer behavior, such as, for instance, request for installment holidays or increases in forbearance. When it comes to consumer finance, we have had a selective strategy over time and only have approximately NOK 12 billion in drawn consumer finance facilities, including credit cards. We have here also not identified any increase or any individual impairments or change in customer behavior.

Now moving on to commercial real estate, which is a robust and low-risk portfolio with considerable buffers. Loan-to-value levels have been reduced in parallel with the falling yields over time. We've had -- we've been true to our credit strategy where we focus on financing corporate customers with stable cash flow and residual value. We have a very limited exposure to special purpose vehicles with financial onus. 94% of our exposure is in Norway, and we've had a very selective approach towards Sweden. The remaining European exposure, as you can see on the slide, is towards select Norwegian-owned entities operating abroad. The portfolio is well diversified across subsegments. And as the chart indicates, 75% of the portfolio is in low risk.

Our capital position remains strong at 18% with a headroom to the current FSA expectation of 130 basis points. The current requirement and expectation increased by 30 basis points to 16.7% in the quarter due to the increased countercyclical buffer in Norway. In our capital planning, as you know, we assume the long-term capital expectation of 17.7%, which includes a full pre-COVID countercyclical buffers across geographies. A solid profit contributed positively to the Tier 1 capital ratio by approximately 40 basis points in the quarter. The increase in Tier 1 capital ratio was offset by higher risk exposure amount as well as negative FX effects.

The new regulation, CRR II/CRD V which has been implemented this quarter in Norway, gave, as indicated previously, limited effect on an overall basis. The leverage ratio was 6.5%, unchanged from March 2022. With a strong Tier 1 capital ratio, profitable loan growth, we remain committed to our dividend policy. Summing up, we delivered a strong result driven by good underlying performance across customer segment as well as product areas, and we have a robust credit quality. Cost income ratio for the quarter ends at 40%. Return on equity improved from 12.9% to 13.3% in the quarter, supported by increased income and net reversals on the impairment provisions.

Earnings per share came in at 4.91, up 22.4% from the same quarter last year. With that, I would like to thank you for your attention and also take the opportunity to invite you to our Capital Markets Day in London on the 15th of November.

[Thomas Midteide, executive]

That was rock solid, Kjerstin and Ida, but there might be a few questions, anyway. We'll start with Jan Erik Gjerland from ABG.

[Jan Gjerland, analyst]

I was curious about which holdings do you have inside your trading book. How much is it in each company? What was the gain in Q1 and what was the gain in the second quarter?

Second question is, what do you think about Sbanken? You gave a sort of the impact of what you're adding it to the book. But what is your intention with it still? Is it to hold how the separate brand name, called it DNB Direct? Or how would you actually work with them? What will the synergies be? And what will the restructuring cost be?

Thirdly, how much of Sbanken has contributed to the fees and commission line, also the other income? And finally, you had a strong commercial real estate book. But in these days, is it a little bit odd to write back even though it's NOK 13 million or something in this quarter? Just a question mark?

[Kjerstin Braathen, executive]

I'll address the first few questions, and I'll leave the last one to Ida. You asked about trading. And of course, trading, we have overall a very, very limited trading activity. Our trading is in the interest rate area and currency area, purely related to Norwegian krone, but again, a very, very limited activity. And I think you can read from our numbers. Don't remember the exact number, but it's about NOK 130 million of gain this quarter. In addition to that, there are some very few positions being taken on the equity side. Normally, that contributes around NOK 60 million to NOK 70 million a year. That has been also profitable this quarter, somewhat above NOK 50 million. That forms part of our equity revenue. But altogether, it's a very, very limited part of our activity.

We also have a relatively small book with bonds that we take on our own -- that we -- the part of the bonds that we take on our own books. And of course, there's been a smaller -- negative effect on that, given the market-to-market fluctuations, which you can see in the financial numbers.

With regards to Sbanken, we are maintaining the initial plans on what to do with it, and we continue to maintain that. It makes a lot of sense, both from a strategic and financial point of view. If anything, the financial rationale has further strengthened given the macro scenario and the increasing outlook of increasing rates. We have -- we're in the beginning of working together, finalizing the plans and are thus not giving any specific indications as to the impact on costs or synergies. All I can say is that the work until now has confirmed our initial estimates and expectations on synergies. This will be, we believe, better for our customers. There will be meaningful cost synergies over time, and there will be capital synergies relating to bringing the volumes over to RB models. In relation to contribution on fee and commission, I believe it's around NOK 40 million a quarter. I think that I'll leave the commercial real estate to you.

[Ida Lerner, executive]

Absolutely. As highlighted in the presentation, our commercial real estate portfolio is robust and of low risk. So 75% of the portfolio is in low risk. We have, in this quarter, looked at the management overlays and really looked at where do we see the uncertainties we see around us. Even though they haven't materialized, what industries and sectors will be impacted by that? Commercial real estate is, of course, one of them. But bearing in mind that you also see a positive development within the portfolio, the model predicts a reversal, and we have done some management overlays on top of that to reduce that.

But still this is in the Stage 1 and 2 portfolio where you will see movements that are model based as well, and that's what you see in the commercial real estate. We have a positive development in commercial real estate this quarter from a risk perspective.

[Thomas Midteide, executive]

Okay. Next up, Vegard Toverud, Pareto.

[Vegard Toverud, analyst]

Kjerstin and Ida, you both mentioned that the consumer behavior has not changed, but the consumer sentiment is changing, and you see consumer behavior changing maybe in some other areas. So when do you expect consumer behavior to change?

[Kjerstin Braathen, executive]

I think it's difficult to say, but we are observing the exact same things. I mean if we look at the consumer confidence, it's lower than it's been in 30 years. I mean it's way lower than it was during the pandemic. And of course, this is an indication that people are feeling increasingly uncomfortable with their economy looking ahead, not surprisingly, given there's a war going on and the uncertainty in the economy is reflected through the press. But we can only share what we see in our measures. And the activity level is high. The spending continues to be high, but the spending is converting from goods and merchandise over to a service-based economy. It's going to be very interesting to see the level of traveling and activity outside of Norway during the summer.

And of course, we follow very closely if there are any missed payments, if there is any increase in the request for payment holidays, if there are any signs across all of our portfolio, which is broad and diversified, and we just can't see anything. Now it's not unlikely to expect that. And I think we've been saying this since the start of the pandemic that part of the reserves that have been piling up, I think we have a deposit base more than 20% higher in the personal customer sector than we had going into the pandemic. So these are reserves that over time, you would expect people to actually start using, but we just haven't seen it yet.

[Vegard Toverud, analyst]

So those are, in a way, funding and credit perspectives. But what about the growth perspective in this?

[Kjerstin Braathen, executive]

I think growth perspective is tied to primarily 2 things over time, price growth in the market and level of refinancings. We tend to be very strong in the firsthand market when people are buying new homes and moving. And the activity has not been particularly low this quarter, but not as high as last year. If we look at the estimates from the Central Bank, they expect the growth in house prices to cool down somewhat with the increasing interest rate. And I think what we can focus on is to grow as closely to the market as possible while focusing on profitable growth. And the future growth in mortgages and personal customers will vary somewhat with the overall activity and credit growth in the market. I think over the coming next 2 to 3 years, the Central Bank expects this to drop from around 5% to 4.5%. So a gradual slowdown, but not a huge decrease overall.

[Vegard Toverud, analyst]

And then continuing on your last point there about the first-hand market, you see in your fact book that your market share for the real estate broker has been dropping and continues to drop in this quarter. Is there any reason -- particular reason for this? And is this something that investors should be worried about?

[Kjerstin Braathen, executive]

We are not worried about it, and we are comfortable that we are in the phase of turning this around. I would say it's partly related to the market and partly related to a big restructuring of our model and a rebuild of the culture and our way of working, I would say, in the mortgage -- in the real estate brokering area.

The market has been extremely hot. And typically, we tend to do better when the market is more in a normal state. So that's partly one of the reasons but also our internal turnaround that we have, and we still have positions to fill with new brokers coming in. Many are contracted on their way during the second half. So we are comfortable that we will see growth relative to the market and also hopefully take back some market share as we move ahead.

[Vegard Toverud, analyst]

And let's final it. On the other costs not related to personnel side, there's uptick also in this quarter, quarter-on-quarter. Are you now at the level that we should expect going forward? Or is there still some catch-up to do on activities?

[Ida Lerner, executive]

Well, I think as we mentioned, there is more customer-related activity this quarter. I would say that we're not back to what we saw the pre-pandemic, and we expect that there will be further activity levels and customer-related activities in the times ahead.

[Thomas Midteide, executive]

Excellent. Next question from Thomas Svendsen, SEB.

[Thomas Svendsen, analyst]

Yes. I have 2 questions. Given this, I would say, quite dramatic change in the Central Bank guidance for interest rate hikes, what that will have impact on consumers and possible other impacts. Have you sort of considered strengthening the loan loss reserve to cope with what may or -- may come due to this?

[Ida Lerner, executive]

Well, of course. What we are -- what's important to say is that we can only take reserves for what we're seeing. First of all, what we're seeing in the portfolio, but more importantly, also what we're seeing could potentially affect us going forward. That's why we do stress tests of our portfolio. We could do diligent research or analysis of our corporate banking portfolios in addition to looking at the personal customer segment.

Looking at the personal customer segment, in particular, and as shown on the chart, we believe that there are significant buffers related to the loan to values. We also see that there are significant buffers in terms of what Kjerstin pointed to additional deposit base and more savings. We also see that the customers aren't changing behavior. And also looking back into history, the last thing people stop paying is their mortgage, and I think that's an important testament. People are very loyal to also amortize on their loans in Norway, which is contrary to what we're seeing in other geographies.

[Kjerstin Braathen, executive]

And I think it's important to bear in mind that this is their expected interest rate path. It was revised upwards. It can be revised downwards. I think we've recently seen that it's a hard market now to predict. And in other countries, it's even more hard to predict because it takes more for the monetary policy to flow through the market. Obviously, I think there will be both the Central Bank and others who will follow it very closely how that actually materializes in terms of changing behavior. And if the impact is much harsher than they had anticipated, this is also something that they obviously would review.

[Thomas Svendsen, analyst]

One more question on deposit margins. You show how they are on an increasing path. When do you think there will be more competition on deposits? And what do you think is a normal deposit margin as you show it?

[Kjerstin Braathen, executive]

We are focused on having competitive prices both on the lending side and on the deposit side. And beyond that, I'll refrain from speculating on what the future development is going to look like.

[Thomas Midteide, executive]

We have a follow up from Jan Erik.

[Jan Gjerland, analyst]

Just 2 more. The first 1 is the buybacks. You have 1 percentage point allowance from the FSA. How is your intention to use that? And secondly, on the Sbanken once more. You've referred to NOK 2.5 billion increase in the fourth -- increase, which is sort of NOK 1,250 million if you take 25 basis points jump. How much of those is related to Sbanken if you have sort of split that out since you had NOK 1,200 million last time around. So -- is it so that the competition on the deposit side has not increased? Or are you sort of getting the same kind of amount this time around?

[Kjerstin Braathen, executive]

I could just briefly comment on the first one saying that -- and I don't think we'll -- we won't split the impact. There is obviously an added impact from Sbanken, who has also revised their prices. So the estimated impact is approximately NOK 2.5 billion. But bear in mind that over time, I mean, this is a static reflection. Over time, of course, the mix of the portfolio, the assets, the various assets and the products, this can vary over time, but this would be our estimate today for DNB and Sbanken brands. Yes.

[Ida Lerner, executive]

And you're right so that we've received an approval from the NFSA in terms of buybacks. The Board has not made a decision, and therefore, we will come back if and when the Board makes a decision on that, but we remain committed to our dividend policy.

[Kjerstin Braathen, executive]

And then priority is, of course, reinvesting part of our profits on supporting our customers and growing, paying a cash dividend in accordance with our policy. And then buybacks, we don't specifically target but would use that to optimize around the desired capital level.

[Thomas Midteide, executive]

Okay. Rune Helland, vacation is 3 days away. Would you have any questions from the digital audience first?

[Rune Helland, executive]

Thank you, Thomas. You have answered most of the questions from the net already. So I actually have only 1 more question, and that's from Sofie Peterzens from JPMorgan, and she is asking about the corporate loan growth and what sectors are driving this growth?

[Kjerstin Braathen, executive]

The sectors that are driving the growth is the sectors that we have highlighted and prioritized in our strategy. It is related to the renewable sector. It is related to technology and to a limited degree related to commercial real estate. In fact, in the SME area, it's underrepresented the amount of real estate and the growth primarily comes across other sectors.

[Rune Helland, executive]

Thank you.

[Thomas Midteide, executive]

And we'll have a followup from Vegard Toverud, Pareto.

[Vegard Toverud, analyst]

Or rather a request. I think the focus from investors have increased on commercial real estate lately. So it would be very good if we could have some more detailed information than what you have provided earlier. You're providing a lot of good information, but we are greedy. So for the subsegments that you showed on your slide, is it possible, for instance, to have LTV brackets per segment?

[Kjerstin Braathen, executive]

I think we'll just note your request and consider it.

[Vegard Toverud, analyst]

I think that will be very helpful for investors.

[Thomas Midteide, executive]

Thank you, Vegard. No questions from the audience? No? Julia? No, nothing? Okay.

We'll just remind you that we have an investor call at 1:30 this afternoon. You are more than welcome to join us there. And from the whole DNB team, we wish you a fantastic summer. Thank you for coming.

[Kjerstin Braathen, executive]

Thank you.

[Ida Lerner, executive]

Thank you.