Morrow Bank ASA

OSE:MOBA

Earnings Call Transcript

[Oyvind Oanes, executive]

Good morning, everyone, and welcome to the Fourth Quarter Results Call for Morrow Bank. My name is Oyvind Oanes, and I'm the CEO of the Bank. And with me, as usual, is Eirik Holtedahl, the Bank's CFO.

We will start today as well with a presentation first before we then open up for questions at the end. If you have a question, you can post that in the Teams chat or obviously, when we get to the Q&A session, you can raise your hand and we'll open up your microphone so you can ask your question.

Okay. So then we'll move on to starting as usual by going through the highlights of the quarter. We have delivered another quarter with solid growth, improved margins, and efficiency. The underlying balance growth came in at 4% in the quarter, and we now have a total loan book of around NOK 12 billion. This growth represents a strong 22% balance growth year-on-year. Through extensive pricing measures, we managed to drive net interest margin up in the quarter by about 0.2 percentage points, and the total income for 2023 actually surpassed NOK 1 billion. This is up 30% year-on-year.

Cost in the quarter remained stable at around the NOK 80 million mark, and we can report a very strong cost/income ratio of 28% in the quarter. And ultimately, the many efficiency initiatives drive cost down by 20% year-on-year.

Looking at loan loss ratio that came in at 5.4% in the quarter, slightly up by both -- driven by both growth and macro. However, the increase was more than offset by income growth in both the quarter and year-on-year.

In sum, we can report a solid result with pre-tax profit of NOK 51 million for the quarter and NOK 206 million for the year 2023 in total.

Moving on to the next section of the presentation. And in this section of the presentation, we wanted to spend some time reviewing the status of our repositioning strategy and looking ahead on what we have set as ambitions for the medium term.

Turning now to Page 4 of the presentation. Exactly 2 years ago, we laid out a repositioning strategy for the bank, together with a 3-year plan, we concrete initiatives for how we wanted to drive the turnaround, including optimizing the product portfolio and improving throughput as well as streamlining the organization and transforming IT. We also communicated a set of clear ambitions for growth and efficiency, achieving a 15% annual loan book growth and dry costs significantly down targeting a cost/income ratio below 35% by year-end 2024.

But as we progress through 2022, we saw that the various measures started to bite. And so we communicated some, call it, accelerated targets for 2023, stating that we would aim to achieve 20% growth and 30% cost/income ratio by the end of 2023. So 1 year earlier.

And as you would have seen from what we announced this morning, we actually achieved the 20% growth target and managed to drive the cost/income ratio down to an industry-leading 28%. In other words, we deliver on both our road map and on our ambitions.

Turning now to Page 5 of the presentation. Obviously, our mid-term ambitions definitely also include improving profitability and returns. And ultimately, this will come as a result of balancing growth, cost efficiency with risk-adjusted margins. And as we saw on the previous page, we are delivering on both growth and cost efficiency. So the focus now is clearly on driving risk-adjusted margins up.

Breaking this further down, we have actually managed to keep net interest margin stable or actually slightly up, despite increasing rates on deposits by implementing a range of pricing measures throughout the quarter as well as the full year 2023. However, the accelerated volume growth and a somewhat adverse macroeconomic environment has forced us to increase loan loss provisions, and hence, impacting risk-adjusted margin.

Now going forward, we are, however, confident that we can improve loan loss provisions, and I will explain the drivers for this on the next page. There's a lot of information on this page, so bear with me. But as we have talked about on the previous calls, we have pursued slightly different growth strategies over the past couple of years. We invested in growth during the high-growth phase where loans originated in this period has a somewhat higher risk profile. And as can be seen on the bar to the left of the graph, this volume accounts for around 33% of the total loan book at the end of 2023.

In Q2 of last year, we tightened the credit policy across the markets and slow down the growth pace. And as a result of this, we experienced that new loans have a much better risk profile. As we progress through 2024, 2 things will then happen. The non-performing portion of the loan book originating during the high-growth phase will roll-off and the lower risk profile loans originated since Q2 2023 last year will constitute a significantly higher percentage of the total loan book. As can be seen on this page, 48% is the estimate for year-end 2024.

Adding then enhanced collection processes and an improved macro outlook, we are confident that the loan losses will trend down towards the 4.5% level and hence improve risk-adjusted margin by around 80 to 100 basis points by the year-end.

Turning now to Page 7 of the presentation. And before handing over to Eirik to review the Q4 financials in a bit more detail, let me summarize our midterm ambitions.

As communicated on the last couple of calls, we planned for an annual balance growth of around 10% going forward. On cost, we are already at the best-in-class level but continuous improvement and scalability should drive our cost/income ratio a few notches further down. We talked about margins on the previous page and explaining that we managed to keep interest margins stable and that improving loan losses will drive risk-adjusted margin up towards the 4.5% to 5% level in the outlook.

Ultimately, we therefore believe that an ROE of 10% to 12% in the outlook is achievable. And maybe as a last remark on this page, we are often compared with our Swedish peers. And as this illustration on this page shows bottom right corner, our returns or ROE would have been significantly better already at the 10% to 12%, however we've been on the same regulatory regime as done. Now over to Eirik.

[Eirik Holtedahl, executive]

Thank you, Oyvind. You have already given away all the good high-level information, but I will jump a little bit further into the details here. And as usual, I'll start with the growth of our loan book.

As I mentioned before, we do have an underlying growth of 4% in the quarter. And the main driver for our growth is Finland. Finland is our largest market, and we grew that market by almost NOK 0.5 billion or roughly 10%. Finland is also attractive because we have good returns, meaning that we have nice interest rates on our -- both our front book and our back book as well as also the capital requirements are the lowest for Finland. Hence, the return is the best.

In Norway, we're seeing a picture of a somewhat -- book that is somewhat shrinking. This is -- we are undertaking sales. But in Norway, we also had forward flow sales of our non-performing loans as well as on client churn. And -- but margins are good in Norway. So we maintain that. But what's keeping Norway down is that actually the capital requirements for Norway are the highest of all our market. And hence, it's the most expensive place to hold capital for -- and then the returns would need to be even better.

Sweden is placing itself somewhat in between Finland and Norway. The yield on the margins are lower in Sweden. That's just how that market is. But the capital requirements are more or less on the same level as Finland. Hence, the returns are then improved. And for that reason, we have -- that's why Sweden is in the terms of growth placing itself in the middle.

Now on credit cards and points of sales. Credit cards is showing good growth with almost 9% in the quarter. That's attributing both to the Finnish and the Norwegian markets. Whereas on the Post side, as we told before, we have now seized the product, and we will -- we have also, during the fourth quarter, converted those remaining post balances into loan balances, and hence, we will also stop reporting them as of this quarter.

Now jumping on to the yield side. It's no news and everybody is talking about it, that it is a challenging market in terms of interest rates increasing. And you can -- and what has impacted us most directly is how we have had to increase our deposit rates. As you can see on the bottom graph, we had to increase it by 60 basis points from the third to the fourth quarter in order to maintain sufficient liquidity. However, we have also been able to lift that increase and more so on our clients.

If you look at the middle graph, the green one, there we have the interest -- the yield on the performing loan book. And there, you can see that we have increased the yield by 80 basis points, which is higher than the increase in the deposits or the funding cost. Also on credit cards, we do see an increase. So in a way here, we are able to both maintain and actually increase our margins.

And if we look forward, we will continue to work on the loan book margins, on the yields there to increase it. We don't foresee that it will be lifted a much, but at the same time, we're also thinking that deposit rates now are peaking and that they're eventually set to come down in the midterm. And when they come down, there is an opportunity for us probably to increase our margins further.

Now combining what we've seen in both terms of loan book growth and yield development, you can see that our total income grew nicely in the last quarter. The net interest income grew by NOK 23 million, and also we had a gain of NOK 11 million in investments on financial instruments. Hence, our total income was now NOK 286 million and which was ahead of our guiding originally, which was at NOK 270 million.

And if we go and here what's interesting is that on a year-on-year basis, if you compare ourselves with Q4 '22, you can see that we've grown our loan book by 30% -- no, our total income by 30%, whereas the loan book has grown by 22%. Hence, we have managed to increase the overall margins on our income side. Going forward, we foresee that the total income is expected to grow in line with our loan balance growth.

Jumping to the cost side. As Oyvind said, we're on a stable level or roughly in the NOK 80 million per quarter, and it's pretty much been that for the year. But if we take a look a year back, you can see that the Q4 '22, we had actually NOK 203 million in OpEx. And as most -- and for those of you who followed us then, you will know that we did a one-off write-down there of NOK 103 million approximately, which led to that the underlying cost picture for Q4 '22 was at NOK 100 million. And we have now in -- over this year now managed to reduce that one by 20%, whereas our loan book, as I said before, has increased by 22%.

In all, combined with the fact that we have the total income, which is increasing, you can see that our cost/income ratio is inching downwards. A year ago, it was 42%. And this quarter, it ended at 28%, which is actually a level with which we're quite pleased with.

Jumping on to the risk side. And here, if you remember, Oyvind spent quite a bit of time in explaining the drivers for this. You can see we do have a loan loss ratio annualized in the quarter of 5.4%. This increase comes as a result of the growth we had in 12 to 18 months ago. So at the end of 2022 and early into 2023 and where these loans now are starting to become delinquent in a larger way. However, as Oyvind pointed out, we are seeing that we will have new loans coming in. They are less in volume. And also, they have been subject to a tighter credit policy. Hence, the loan losses on those will be lower.

And when -- and as when they start to make up a larger portion of our loan book, we should also see that this rate coming down towards a 4.5% mark in the medium term. We also expect to get here some [ percent ] from the macro. Yes, there's been some rough and certain quarters that we've been passed. But if we look at the expectations for the macroeconomic development, we particularly look at the interest rate, the unemployment rate, and GDP growth in our 3 markets. And we see that there's actually -- the analysts expect that these are set to improve these KPIs. And that should actually also translate then for -- into our figures that we should get some help to reduce our loan losses going forward.

Then finally, if we now add up together the fact that we have a higher total income, we have stable operating expenses and somewhat increase on the loan losses. You'll see that we're actually maintaining a flat profit level for the quarter. As Oyvind pointed out earlier, we do have actually a, flat is not entirely correct, before tax, we do see an increase from NOK 48 million to NOK 51 million. But we had an exceptional tax expense that we need to take in the quarter. Hence, our profit after tax came in slightly below the previous quarter.

If we look forward for the next terms, we do expect that we will be stable on the profit level for the reasons mentioned before. But eventually, as our risk-adjusted margin will set to improve, our loan book has grown and maintaining our costs. So we do costs, operating expenses at a fixed level. We do expect that we will see an increase in the medium term in our profitability.

A final word on the capital situation. We are -- we have a strong capital situation. Our CET1 ratio for the quarter ended at 20%. It's slightly down from the previous quarter, but that is because our risk-weighted asset has grown more rapidly than our profits. And this is actually a good thing because we are, I can argue slightly overcapitalized.

What's interesting for this quarter is that our capital ratios have decreased. At 31st of December, the so-called reciprocity on systemic risk buffer was introduced, and that gave us a large relief on our Swedish and Finnish loans, although we have the higher charge on our Norwegian loans. But in all this effect, all this resulted in a 1.7 percentage point decrease in our capital requirements. So you can see now our CET1 requirement is 16.1%. If we add a 1% management buffer, we end up at 17.1%, and we are, as you know, comfortably above that with an actual ratio of 20%.

And from that, I'll leave the table to Oyvind for concluding words.

[Oyvind Oanes, executive]

Thank you, Eirik. Yes. And before sort of opening up for questions, let me summarize the key takeaways from today's presentation. Loan growth continues to be solid at 4% in the quarter and about 20% for the full year. The loan book now stands at around NOK 12 billion. Going forward, we are targeting an annual growth rate of around 10%. We have delivered this growth while significantly reducing costs, demonstrating the scalability of the platform with a highly competitive cost/income ratio now at 28% for the quarter.

We have shown how implemented measures will drive loan losses down and risk-adjusted margin up as we go through 2024. And ultimately, this will help us drive returns up in the outlook, and we maintain our ambition of 10% to 12% ROE.

Thank you, and we will now open up for questions. And as I said initially, if you have a question, you can post that either in the Teams chat or raise your hand, and [ Henning ] will open up the channel so that you can post your question or raise your question.

[Operator]

Yes. We do have questions from the participants. And now we start with Vegard Toverud from Pareto. You can now open your mic and ask your questions.

[Vegard Toverud, analyst]

If I understood you correctly, you don't plan for any significant changes to your lending prices now going forward. At the same time, it appears that you have increased your deposit pricing somewhat in Norway in Q1. Should we then expect this to weigh on the margin in Q1 and potentially into Q2 before deposit prices drops again?

[Eirik Holtedahl, executive]

That is mostly for some segments. So the overall effect is quite limited. So we don't think that this will have much of an impact on the overall figures.

[Oyvind Oanes, executive]

On the contrary, Vega, while we obviously hope for and haven't built into forecast or plan for per se is that deposit rates will start going in the other direction, and that should give us some opportunity to actually improve our margin over time, especially since now we have half of our loan book in euros. And as we see and understand the potential that the euro funding cost will start going down from the mid-term of this year. That could actually give us an upside.

[Vegard Toverud, analyst]

And on the OpEx outlook here, is the current level of NOK 80 million, what we should expect per quarter also in this year?

[Eirik Holtedahl, executive]

As a ballpark figure, yes.

[Vegard Toverud, analyst]

And then just lastly, on the new -- I know it's early days, but have you looked at the new standard model for risk calculation and potentially have some early thoughts about what that could mean for you?

[Eirik Holtedahl, executive]

You mean Basel IV, which is perhaps will take effect on the 1st of January 2025?

[Vegard Toverud, analyst]

Yes.

[Eirik Holtedahl, executive]

Yes, we have -- we're starting to look at it on not much detail but just overall, but on the credit risk side, we will need to set aside for unused credit limits, 10% conversion. But in the users, there is a discussion about that there is a transitory period. We don't know yet how that will apply. Also, on the operating risk charge, we see that there is a potential for significant relief as we -- this is -- there will now be one approach applicable to all banks and compared to how the CSA model, which we are using works, there is a potential for a large increase here, provided that, it's implemented in Norway.

[Vegard Toverud, analyst]

And that would offset the potentially 10% credit conversion on unused credit lines?

[Eirik Holtedahl, executive]

Yes. And as I said here, there is also a potential for, that there is a transitionary phase on the credit -- on the credit risk side. But again, this is up to how the Norwegian government decides to implement it, if and how and when to put it that way.

[Vegard Toverud, analyst]

And if it's implemented as proposed currently, could you give a very early indication on how much that would impact your common equity Tier 1 ratio?

[Eirik Holtedahl, executive]

No, we haven't. We haven't done that much calculations yet. We just looked at the overall directions of where things are going.

[Operator]

The next one on the list wants to ask question is Jan Erik Gjerland from ABG. You can now open your mic and ask your questions Jan Erik.

[Jan Gjerland, analyst]

I have a couple of ones. Firstly, if you got to the growth, it seems like the Finnish growth is where you sort of put your efforts because it's the cheapest one. Where should we sort of look for the growth going forward? If you think about the 10% annual growth you're putting forward, is it equal in each country, is it Sweden, is it Finland, is it Norway? Is it other countries and so that you still see Nordics as your home base or just take away any speculation from you moving also outside the Nordics?

[Oyvind Oanes, executive]

Thank you, Jan Erik. In the near term, we continue to focus on the Nordic region. And Finland, as you said, Finland obviously is for us, as for many of the niche banks now, the growth market. So in the near term, the Nordics and Finland, we're seeing actually some profitable growth also in Sweden. Sweden is a bit more tricky to turn, to stand sometimes. But Finland for sure, some potential growth in Sweden. And we also see some nice growth in credit cards in both in Norway and Finland.

But if you think of it, I mean, we talked about that on previous call, there's sort of total book, our outstanding unsecured pool of loans in the Nordics, the 3 countries in which we operate is around NOK 600 billion, and we now reported NOK 12 billion, 2% of that. So there's room to grow. But obviously, as we look a bit further ahead, especially now that we are very confident with having built a scalable, robust platform looking beyond the Nordics is definitely something that we will start reflecting on as we go through the year.

[Jan Gjerland, analyst]

Okay. Perfect. Then I saw that you had another sale of NPLs this quarter with some losses or you had some extra losses taken to that. Is that true? Or was that something just uptick on it? You showed something on the Slide 1, then on the slide, did I misunderstood to understand that?

[Oyvind Oanes, executive]

Potentially that could just be the forward flow sales that we still have [indiscernible] from Norway.

[Jan Gjerland, analyst]

Okay, that's the forward flow sales, which is set aside NOK 68 million to...

[Eirik Holtedahl, executive]

We haven't had any losses as such for that because the forward flow sales are what they are.

[Jan Gjerland, analyst]

Okay. So you just sell it. And so that's just the NOK 68 million just you show on the slide...

[Eirik Holtedahl, executive]

No, that is the loss we take because we do have -- when we do some of forward flow, we do undeniably have a loss because these are non-performing loans, and what you see here is a loss, but there is no difference in expectations to put it that way.

[Oyvind Oanes, executive]

Exactly.

[Jan Gjerland, analyst]

Okay. Okay. Then I just misunderstood, sorry, the conclusion. When it comes to your competitor research had said that December was weak in both Sweden and Finland when it comes to loan losses and/or performance. Have you seen anything changes during this year or 2023 towards the end of the year, new loans you have granted? Or is the tightening of the credit policy you put forward in the second quarter, sort of what you are very happy with and you haven't seen any changes to the behavior of the customers?

[Oyvind Oanes, executive]

Yes. No, we obviously noticed the -- what research announced. And I think that was a bit of the same as we did 2.5 years ago when we sort of cleaned up a bit in our balance sheet. I think that draw most of the losses they announced.

Looking at our performance, and as we said since in Q2 of last year, we've tightened quite a bit. We've taken down the growth pace and we're actually seeing better quality when we're looking at sort of application PDs, et cetera, of what we onboard than previously. We did it fairly early, but when we announced our Q2 results say that listen, the macroeconomic environment is a bit more sketchy now, and there will be some impact. But you see that impact in the numbers we -- it reported today. There's nothing more dramatic to that other than slightly up on loan loss provisions, but this is something, as we said, we foresee rolling off as we go through the year.

So all in all, nothing very adverse or any sort of changes in the last couple of months of the year and also into the new year.

[Jan Gjerland, analyst]

Okay. So we should be quite happy. Is it so that you actually win customers from established banks because you have a cheaper credit card or a cheaper offering? Or how should you read your sort of growth versus peers in that context so that you say getting better clients as you say better applications for these days?

[Oyvind Oanes, executive]

Again, a little bit different from country to country. This refinancing product in Norway, we actually post at a spring last year because we couldn't really see the profitability in that product. So the new products or the new customers we onboard in the Norwegian markets are typically new, new customers, to put it that way. Finland and Sweden, we have a credit line product, a flexible loan. So that they are the actually the product we used to have in Norway a few years back. So that is, I think, an attractive offering that also tracks mostly new clients.

I mean, these clients might have had some consumer loans in the past, but it's not positioned per se as a refinancing loan. So again, the growth in Finland is mostly new customers. As for credit cards, I do believe we have one of the strongest, best credit card offers in the market. And since beginning of last year, actually a little bit earlier, we also started to promote that through the broker channel, and that's actually been quite a success, quite prudently in the beginning, but we're seeing that we're able to also attract customers to the credit card and see credit card growth through the third-party sort of broker channel.

[Jan Gjerland, analyst]

Can I just have one more question, if I may. On the cost side, you should keep your costs sort of fixed at NOK 80 million per quarter, if I understood Vegard's question and answer. How -- what are you doing to mitigate the inflation, the IT cost spending, the personnel cost spending, everything, which is sort of moving upwards versus your peers? So how should you just understand how you're sort of mitigating these inflationary effects? Are you still cutting back on FTEs? Are you still cutting back of IT spending, which is, and of course, you're probably taking off some systems, et cetera. And also the push system is probably out and I mean, it's improving. So when is the inflation going to increase after 2025? Or how should we read you?

[Oyvind Oanes, executive]

No, I think when we guide on the cost levels stable, actually, it is a cost optimization because as you say, I mean, we are absorbing the inflation levels in the market. So this comes from -- I mean, over the last couple of years, we've obviously done big structural changes, both in terms of organization and technology, et cetera. We continue to work very focused on driving cost out of the bank. So -- but this is now more sort of granular and continuous improvement process around, as you said, technology or -- we still have a big way to go in terms of simplifying our technology, getting some of the sort of inherent systems out or the old systems out. We're able to automate more on the new platform. So that will help us take some cost out.

Every time there are some natural attrition of people. We take a good look on sort do we need to replace backfill. So it's all these things that you pointed out and some will enable us to absorb the inflation and turning that sort of on the head, you could say that, that is a continuous cost optimization as we go forward.

[Eirik Holtedahl, executive]

You can also add that we are increasing our balance sheet. We are increasing our size and we're still keeping the cost flat. So there is clearly an underlying cost optimization here, but those numbers turn out to be flat, to put it in that way.

[Oyvind Oanes, executive]

That has to do with the scalability that we've sort of been preaching for a couple of years now that where we're finally getting to having a platform that is scalable. I mean, we can't continue to grow without...

[Jan Gjerland, analyst]

We're looking forward to follow you going forward.

[Operator]

The next question is from [ Pontus ] You can now open your microphone and ask your question. [ Pontus ] you can now open your microphone and ask your question.

Okay. Then we go to the chat. We have received a question on e-mail and the same question in [indiscernible] yes, okay. We ask a question -- we take a question from the chat. It's from [ Carl Martin Kleinberg ] A year ago, you were guiding ROE, means our return on equity, 10% to 12% by the end of 2023. You're now guiding return on equity of 10% to 12% by the end of 2025, 2 years from now. What are your current guiding for 2024?

[Oyvind Oanes, executive]

Yes. I'll try and answer that. I imagine you should read ROE. So return on equity, 10% to 12%. I can't remember, we guided 10% to 12% by the end of '23. I think our guidance for ROE was always end of '24. And you're right now, we pushed that a little bit out. But -- as we tried to explain on a couple of slides in the presentation, the ROE returns is obviously an output of how well we're doing growth, how well we are doing cost efficiency, how well we're doing on risk-adjusted margin.

And when we put out a 10% to 12% ROE as our long-term midterm goal, there was a slightly different macroeconomic environment than now. And as we explained, that has taken some hit on our margin, but we're seeing the end of that, we're seeing that margins will improve as we go through the year. So again, the ROE level of 10%, 12%, we definitely think is achievable. It is an output.

Remember, it's an output of the drivers that we work very hard on every day. And I think 2.5 of those 3 outputs or drivers, growth cost efficiency and interest margin, we have done a lot to improve. And again, as we also explained on the call today, we should be seeing loan loss provisions coming down as we go through the year, and that will improve risk-adjusted margin. And again, if you just put that together, you will see that the 10% to 12% ROE is what we believe we can achieve by 2025.

[Operator]

[ Carl Martin Kleinberg ] has another question. You lose 54% of your income on loans. How does this compare to other similar banks in the market?

[Oyvind Oanes, executive]

The loan loss ratio for similar niche banks and similar products will always be, I think, between 3.5 and 6. It depends on the strategy you pursued, it depends on sort of the risk appetite you've had. It depends on sort of how many -- how big a portion of your loan book is from newer loans. As you grow fast as we've done in '22 and beginning of '23, you obviously have a larger portion of newer loans on the book. And the loan vintage always loses most of -- or most of what needs to go into non-performing does start in the first or the second year. So the more newer launch you have on book, the higher that percentage will be.

But again, you need to compare this, this percentage with -- also with the interest margin that we are able to generate. Now we see that we are actually generating a higher NII than most of our peers in the 9% for this product. So a 5.4% loan loss ratio that we reported for the fourth quarter is absolutely something that we live well with. But more importantly, as we explained through the presentation today, this will be coming down to a 4%, 4.5%, which we think is a healthy level to be on for our type of business going forward.

[Operator]

Let's try to open the microphone for [ Pontus ] again. So you can ask your question, Pontus. It seems like it doesn't work this time either. So let's come back to you. And Jan Erik Gjerland has another question for us. You can now open your microphone, Jan Erik.

[Jan Gjerland, analyst]

You mentioned about this regulatory positive becoming a Swedish bank or moving to Sweden, if you were to do so. Is there any plans that you have put forward that you would actually move to Sweden to get this potential uplift in the ROE? Or is this just sort of wishful thinking becoming or being a Swedish bank and having a different regulatory environment?

[Oyvind Oanes, executive]

It's definitely wishful. We -- no -- but joking aside, I mean, what we wanted to illustrate on that page is we often get this comparison. Why you're delivering 6%, 7% ROE and your Swedish peers can deliver whatever, 10%, 12%, 14%, 15%. And we just wanted to illustrate that if the bank as is would be on a Swedish regime, we would have actually been at 10%, 12% as well and could have guided 15%, 18%.

But obviously, we see what other peers are doing, have done and the effect that they have had on their capital requirement by moving across the border. So obviously, this is a topic that we also take seriously and will assess and definitely evaluate it as we go forward. It is a possible thing to do. It is a cumbersome thing to do. So we'll sort of evaluate that and also, again, sort of the backdrop of where do we think that Norwegian regulatory regime is moving, hopefully, more towards, say, sort of a level playing field with the other EU countries. If not, then we'll have to take the consequences of that and look at alternatives.

[Operator]

There are no more questions in the chat or nobody else has raised their hands. So...

[Oyvind Oanes, executive]

In that case, I think, Pontus have tried to get in a few times. I think we have a call tomorrow, if I remember correctly. So we'll talk then. For all of the rest of you, thank you again for calling in this morning. I hope this was helpful. And I can only wish you a nice day, and we'll talk again in May. Thank you.