Resurs Holding AB (publ)

STO:RESURS

Earnings Call Transcript

[Operator]

We have CEO, Nils Carlsson; and CFO, Jonas Olin, with us today. [Operator Instructions] Now the floor to Nils Carlsson. Go ahead, please.

[Nils Helge George Carlsson, President & CEO]

Good morning, everyone. We are going to go straight across to Page 2 in the slides. Nils Carlsson is my name, I'm the Chief Executive Officer, CEO. And I'm with you today with Jonas Olin, CFO. And we're going to tell you about the development during the past quarter. Slide 3. Here are the highlights for Q3. Let me put it this way. The third quarter was a stable quarter for us. We're going to give you a summary in -- with some figures, and then Jonas will tell you more about the details in the numbers. We've seen a good growth, to sum up, a good growth in 3 out of 4 markets. And if we exclude Norway, our lending growth amounts to 12% over the quarter. Looking at operating income, it is down by 2%, but we're meeting it with lower costs at the same time and a continued, in fact, improved C/I ratio, which is now for the quarter at 36.8%. Our credit losses amounted to 2.5%, and that's a stable situation compared to Q2, and 0.1% better in fact. So that's a good trend. We have a very stable total capital ratio, 16.9%. It's well above where we would need to be. So to sum it up, the situation is very positive. Continuing with Slide 4. We have -- as we've announced last week, we've embarked on a transformation journey, and the aim is to strengthen our competitive edge and our growth. We want to ensure that we remain a very strong competitive player in our industry in the future. And to succeed, we need to adjust step by step, realign our operations. We need to work in a more focused, coordinated and agile way throughout our organization. And part of this is, of course, about tearing down silos internally, to some extent, but also between countries where we operate, and that we get our entire organization to focus more on being part of a larger entity between areas of functionality in countries. And another part is our desire to build rapid and smooth working processes. The measures we've implemented are very concrete. We've strengthened our senior management, as we've already announced. We've added additional competence from the business and from sales and from credit. Into senior management, we have our Chief of Customer Service, and we've also created something we call Acceleration Office, with the aim of focusing even further on the customer in everything we do, from ideas to product development, to conceptualizing new services, all the way out to our partners and private customers, to ensure that the customer experience is improved throughout. We have also strengthened our Nordic focus. We're now working more from a holistic perspective. So that we've removed our country organizations and heads of respective countries. They've stepped down and have left Resurs. And this means that one level of decision-making is removed in our organization. And hopefully, we will be even faster and more agile in this manner. The aim, of course, is to build a Nordic organization where we are much quicker in building decision-making processes, taking decisions, so that we can have a quick, easy and secure customer experience for everyone in this Nordic market. Over the next few years, this has also been announced previously, we will carry out investments in business, driving IT projects and technical solutions. And with that initiative, we want to take a further step towards being a lot more data-driven and tech-focused because we believe that this is something that we will have to focus on over the next few years. We've also reviewed our working methods. We're trying to ensure that we build a much more effective and efficient Nordic organization. And as a result of that review, we will be reducing our headcount by approximately 70 positions across Resurs in the Nordic operations. This is a measure which is expected to lead to an annual saving of approximately SEK 43 million, and we see the impact as of the second quarter of 2021. So those are a few concrete measures that we've taken. If we continue further with Slide 5 and have a look at the market. We see that there are positive signs in terms of the demand in all our markets. We are in a recovery. Excluding Norway, we see 12% growth in lending, which is very good. And as we've previously stated, the Norwegian market remains a challenge to us. And our assessment is that ever since the amendments to the Norwegian legislation and the introduction of the debt register, Gjeldsregisteret, in 2019, we have perhaps been a little bit too cautious and restrictive in our credit assessments in Norway, and we're now reviewing the possibilities of increasing the lending growth. Our insurance operations continued its positive and stable development during the quarter, with several new partners and an improved technical results and an improved combined ratio. So Solid is providing an excellent quarter, and they are very, very stable even given the current situation in the market, which is incredibly positive as I see it. There are still no signs, as far as we can tell, the payment patterns of the customers being impacted by COVID-19, and so the -- we will have a limited easening in Sweden, which we've implemented during Q3 as a result of this. We may take further steps, we will have to see. The restrictive credit assessment as a whole, however, which we introduced during the first quarter of this year will remain in place. However, we are quite cautious, and this, of course, has a negative impact on growth and top line. But this is something that we have chosen intentionally to do. We prefer to tread carefully. At the same time, these measures are in line with what we call a sustainable credit process, and this is fundamental to our operations. And it ensures that the customer will not borrow more than their private finances will allow them to. As part of the matter of a sustainable credit process and awarding of credit, we became a partner of the Alektum Group initiative Shoppa Lagom, shop in moderation, with the aim of spreading knowledge and addressing issues which will contribute to a situation where more people in our society have a balanced private economic situation. Sustainable credit awarding is something which lays the basis for secure and wise loans, and therefore, also a sustainable business for us as a company for our owners, for customers and our partners. And this is a very positive feature, and we will continue to work along those lines. Moving on to Slide #6 then. Looking at the different business areas, starting with Payment Solutions. During the quarter, we saw quite considerable fluctuation in the markets at Payment Solutions and in the different industries covered. We have a fairly broad diversification in Nordic retail, and that gives us good resilience in turbulent times in society and in the market. And so we have a fairly good ability to compensate between industries when we see a drop or a decline in demand in some. And as I mentioned previously, the Norwegian market remains challenging, and it is pulling down and -- pressure to bear on the numbers for Payment Solutions as a whole. Briefly, on the Swedish market, we see a general improved sales growth. In particular with our larger partners, we see that they've had a lot of tailwind during the pandemic. In Finland, we've seen a good sales increase with the large number of our partners in a number of different segments. In Denmark, we see that the market is beginning to recover after the major impact that was seen during Q2. However, some segments, some industries still face a lot of challenges. And for Norway, as I mentioned, we have some remaining challenges in Norway where the ratio of approved credit application's gone down, and this impacts new sales, in particular linked to the new credit rules introduced in 2019. Other than that, it's worth mentioning that after several years of successful cooperation in Norway, Finland and Denmark with Mekonomen Group, one of our major customers, we've now expanded on that cooperation to cover also the Swedish market. And this is a decisive factor. And one particular element is the fact that we have very flexible solutions, where, regardless of sales channel, we can offer unified solutions in all the Nordic markets. This is an excellent feature. Also in Payment Solutions, let me mention that we see that many consumers would prefer, for example, to use rather than own. And we are underway with offering more subscription-based solutions, giving retailers a possibility of having a very attractive offering to that target group. If we look at Q3, in Q3, we launched a new type of subscription solution for Xbox All Access, and it was very well received. It's an upgrade solution where the customer pays a fixed monthly fee. And in addition to hardware, they get accessory service such as games and memberships. And developing these types of subscription solutions, it's not just about offering a smooth experience for the customer as possible, it's also, in fact, about sustainability and developing different and various types of circular business models, where you can trade in an older model, an older product, and this is sold on the secondhand market. So there's a great focus on sustainability in that particular approach. If we look at cards very briefly, it was initially under a lot of negative strain from COVID-19 situation, where a large share of Supreme Card had travels as their focus. Now we've renavigated so that we're focused more on home improvements and staycations. And we can see this is beginning to show good results during the quarter even if we still are in a situation where we have a lower net fees and commission income compared to the corresponding quarter last year. Moving on, looking at Slide 7, we're at Consumer Loans. Consumer Loans saw good growth in 3 of 4 markets during Q3. The demand in Sweden and in Denmark is basically back at the levels where we were just before the pandemic hit. If we look at the Finnish market, it remained more hesitant during the quarter. And one potential reason besides a slower recovery can be sought in the newly introduced rules on credits -- consumer credit loans and direct marketing. So excluding Norway, we are satisfied with the growth we see in all our markets. Sweden, Finland is where we grow the most compared to last year. In Consumer Loans and the services we develop, we're constantly adding new functionalities. And I think it's worth mentioning that we have a fairly sophisticated model which we use for the Swedish market to calculate the future behavior of a customer. And in that way, we contribute to a better pricing, more -- and better adapted, more competitive pricing. And during the quarter, we were able to launch this and roll it out in the Finnish market as well. It's not something that the customers will notice to any great extent, but it's a good sophisticated model, in fact. And so the application process with automated flows is further fine-tuned, with the purpose of -- well, one purpose is to facilitate for customers, making it easy for them if they want to increase their existing loans. Now Slide 8. Solid, our Insurance offering. Solid has provided a good -- put in a good performance. Technical result up by 10% and the combined ratios improved, ending up at 88.8%. The current pandemic has a continued negative impact on the travel industry in general, and this impacts the smallest business area in Insurance Travel in a negative direction. In business area Product in Insurance, during the quarter, we focused on increasing our market share in the Norwegian bicycle market, followed by the acquisition made earlier this year. And during the quarter, we've also signed fairly important partnerships in both business areas, Motor and Product, and that's a positive development. In Motor Insurance, we see a good performance with strong growth during the quarter, bringing profitability up compared to last year. So all in all, Solid, to me, is showing a strong resilience in somewhat tougher times and have an excellent resilience in their business, where we have a fairly diversified product portfolio. And this, in turn, has a positive contribution to the results -- the technical result, which is up by 10%. So that's very gratifying. Now I've given you a summary of Q3, and we're now going to go into some of the numbers in detail. So I'm going to give the floor to Jonas.

[Jonas Olin, CFO, Deputy CEO & Head of Investor Relations]

Well, thank you, Nils. And we will continue immediately with the Slide 10, where we have the loan book, and we see that it's up somewhat compared to last year with a total result of SEK 31.2 billion. Growth in Swedish kroner is somewhat weaker because of the weaker Norwegian kroner. And we have, in the local currencies, an organic growth of 4% since, obviously, the Norwegian kroner and that it has become weaker. That is the explanation. We see strong growth in all markets with the exception of Norway, where we have a decline. And excluding Norway, we have a total growth of 10 -- 12%. Compared to Q2, the loan book is up in both the banking segment, which is gratifying, especially that we see growth in Payment Solution being the core of our activities. And growth is primarily driven by volumes increasing with existing partners, but we also continued to bring in new partners. Consumer Loans is up as well compared to last year and also compared to Q2, which means that both the segments have growth in spite of being impacted by the decline in the Norwegian market. And let's continue with Slide 11, where we see that we see a decrease in operating income with 2%, amounting to SEK 908 million compared to SEK 925 million last year. And the main explanation here is linked to lower interest income due to the decrease in the loan book in Norway, and in addition to that, the weak Norwegian kroner, which has an effect as well on the result. We have a continued negative impact with fee and commission income, even though we see an improvement compared to Q2. Our activities within factoring and credit cards initially were impacted negatively because of the corona and that because the Supreme Card had a big focus on travel. But we have now changed focus, and we're focusing on home improvement and staycation, and we see that, that gives good results in this quarter. And Q3, we see positive earnings development and also a recovery in market prices, which has given a positive outcome for net financial transactions, with an increased value of our portfolios with shares and bonds. We see a somewhat lower NBI margin. And compared to last year, it's mainly the mix changes within Payment Solutions that drives this. Our biggest partners, and Nils has already mentioned this, they have been growing faster than the smaller partners, and that had somewhat a negative impact. The mix change has sped up when it comes to the bigger partners and that they have been doing well during the pandemic with DIY home electronics and furniture, for example. Slide 12. Here, we see that operating expenses in Q3 amounted to SEK 332 million, which is a decrease with 6% compared to the equivalent quarter last year. And this is due to the continued cost focus that we have in the group. And you should note that the decrease of 6% is bigger than the decrease in earnings, which means that we have shown that we have scalability that we can adapt to new circumstances in the world around us. C/I ratio, continued to improve, is at 36.8% for the quarter, which is an improvement with 80 points compared to Q3 2019. And if we look at Slide 13, we see credit losses. They are down compared to the previous quarter, amounting to SEK 195 million. It is an increase year-on-year, however, and that is mainly because of the historically low credit book -- loan book growth. And we basically see -- and this is important that we do not see any negative changes in the payment patterns of our customers. The insecurity has decreased somewhat, we feel, but there is still a certain level of insecurity when it comes to unemployment and reduction in payment capacity. Overall, taking all of this into consideration, we feel that the extra credit provision that was done in Q1, SEK 75 million, should remain unchanged because we expect that there might be a prolonged period where we might see an increased unemployment and reduction of payment capacity, but not in the near future. Then before I continue with the different segments, we should look at Slide 14, where we have operating profit, in total SEK 380 million, which is somewhat lower compared to last year, SEK 369 million. However, an improvement compared to SEK 369 million for the last quarter, SEK 416 million for last year. And before credit losses, operating profit was SEK 575 million, which is somewhat better than last year as well as Q2. Then let's us look at our segments, Page 15. We see that Payment Solutions' loan book was down 3%, but was unchanged in local currencies. And here as well, we have the Norwegian kroner that is the main explanation. Compared to Q2, we see a small increase in the loan book. Payment Solutions is the segment that has had the clearest impact during the COVID-19 pandemic. And generally speaking, we have seen lower growth in all markets, in combination with the continued challenges in Norway, where we have a decrease in the loan book due to the new credit rules and the introduction of dells register. And we've already mentioned that fee and commission income has an impact of -- due to the pandemic, and we see that here, even though we have an improvement compared to Q2. We see commission income with a continued decrease this quarter. Risk adjusted NBI margin, 9.9%, which is driven by a higher credit loss level. And here as well, it is the customer works with the bigger partners with somewhat lower margin that has been growing faster. And then Slide 16, we have Consumer Loans, where the loan book is up 2%. And if this is adjusted for the weak Norwegian kroner, we have an increase of 7%. Here as well, it is Norway where we continue to see a negative development, whereas we have a good growth in other countries. We have a stable NBI margin, 7.5%, and COR 2.6%. And both these numbers being stable compared to last year and last quarter alike. On Slide 17, we have the third and smallest business segment, which is Insurance and Solid. Premiums earned was down with 3%, and this is explained by loss in Travel, which is the smallest component of the activities within Solid, and this is a direct consequence of corona. Claims costs were up somewhat, but we improved profitability with a lower combined ratio, it was down with 1.4 percentage points. And the technical result was up 10%, Nils has already mentioned that. And the total operating income was up with 29%, and this has to do with the recovery of the market -- the portfolios we have and the market value of those. So Solid, all in all, is a good business that has developed well during the pandemic. And then if we continue with Slide 18 and the capital position. We see that we continue to have a very strong capital base, with total capital ratio and Tier 1 ratio that go above regulatory requirements and internal objectives as well. We have a total capital ratio, 16.9%, strengthening with 1.4% compared to last year, and that can be compared to the regulatory requirement of 11.7%. And both the capital base and the capital ratios, take into consideration the planned dividend, both the SEK 400 million that we have from 2019 and also that we have 50% of the net earnings for 2020 that have been put aside. We follow the regulatory requirements, which means that we will not able to hand out any dividend in 2020 in spite of the strong capital position, liquidity and unchanged dividend policy. However, the Board intends to pay dividends as soon as will be possible. And most likely, that will happen in 2021. We also that the Swedish supervisory authority has issued a memo that has to do with the EU banking package. And according to the supervisory authority and their evaluation, that will have an average increase in capital requirements for banks of 1 to 1.5 percentage points due to the banking package. And the supervisory authority is going to present actual numbers for the different banks, which means that the effects for reserves are not known today. We'll have to get back to that during the spring. Page 19, we continue, where we see that we continue to have a good, well-diversified spread between different sources of funding, and we continue to work actively with this. We have seen positive inflows during Q2 in all currencies when it comes to lending from the public. And at the same time, we have bonds that have matured in Q3, which means that we now have a somewhat increased share of funding from lending from the public in Q3. And we can also see that the credit rating company, NCR, has confirmed our rating and adjusted the outlook from negative to stable. And that is because we exceed expectations with lower credit losses and a better interest margin in Q2 in 2020. Liquidity continues to be very good, which is positive when we have seen a lot of fluctuation in the market for corporate bonds, and that is why we have decided not to have a new issue during this pandemic. And then to conclude, Slide 20, where I can summarize Q3. It has been a stable quarter. We did not reach the objectives for annual lending growth and risk-adjusted NBI margin, but we compensate with an improvement in C/I ratio, and that continues to improve. And we also strengthened the capital ratio compared to our internal objectives and regulatory rule requirements as well. And with that being said, I hand back over to Nils.

[Nils Helge George Carlsson, President & CEO]

Thank you very much, Jonas. I have one final slide, the coming period. And looking into the next phase, our target is very clear. We've embarked on this journey of transformation that we announced last week. We're going to focus on strengthening our competitiveness and our growth. We're going to do this by investing in our business-driven IT solutions. And in parallel, we will create a unified offering for the entire Nordic market. We will, as we move forward, continue to focus on customer satisfaction by making best possible use of the knowledge we have throughout our entire Nordic organization. And we've strengthened the senior management team. Accordingly, we'll continue to focus on sustainable credit processes, as we call it. And this is a foundation of everything we do with secure, wise loans. That's how we build a sustainable business for all partners and parties involved. One example, as I mentioned, is the Shoppa Lagom initiative, the shop in moderation initiative, with Alektum. And we will continue to identify other initiatives in this area as we move forward. And as Jonas mentioned, all in all, our financial position is very strong and stable. And if we look at Q4, we do not expect to see any other trends to be added to the ones we have already seen in Q3. We expect this to be the same in Q4. And with those words, I'm going to say thank you for your attention. And now we open up for any potential questions for Jonas and myself.

[Operator]

[Operator Instructions] Patrik Brattelius of ABG has a question.

[Patrik Brattelius, Analyst]

I'm wondering about the net interest income margin. At group level, this is down by 40 points quarter-on-quarter, a mix effect you mentioned. But it's not a seasonal pattern or a secondary reason behind this. Is there -- can you recover it? And what about the margin development in the upcoming quarters, is this a new level that you can expect? Or is there something which you expect to regain which can produce slightly higher margins compared to what we've seen now in Q3?

[Nils Helge George Carlsson, President & CEO]

Thank you. That's a very good question. In terms of our margins, we have minor drops. Some are due to mix -- customer mix change. When we look at Payment Solutions, for example, that's one reason, one component. And this is because we have customers, major customers who've performed really, really well. But we also have slightly higher credit losses. Whether this is a new level? No, I wouldn't say that. We're putting a lot of work into identifying various initiatives to grow the margin on the products we sell in all our business areas. So my answer, I think, would be no. Jonas, I don't know if you'd like to comment.

[Jonas Olin, CFO, Deputy CEO & Head of Investor Relations]

I think I'll agree with you on that one, Nils. What I can add is that we're also impacted by the Norwegian kroner, the Norwegian currency, on the revenue side, the weak Norwegian kroner.

[Patrik Brattelius, Analyst]

Okay. I see. But what about the interest rate ceiling in Finland, does that have an impact? And what should you expect on the marginal impact when the ceiling or the cap is removed in Finland, could that have a positive impact?

[Nils Helge George Carlsson, President & CEO]

Yes, it's possible. It's difficult to assess. We don't know precisely how that directive is going to be devised. We don't know if it will stay in place in -- after -- in the new year or not. It's quite a difficult situation to determine. Finland has been a strong market for us, historically speaking, and we've performed well. Now we see it stagnating somewhat. So it remains to be seen basically.

[Patrik Brattelius, Analyst]

And if we look at costs, you saw good cost control, down by 6% for the year. Is there any -- are there any additional factors that could be achieved easily to reduce costs in the short term?

[Nils Helge George Carlsson, President & CEO]

Well, in the short term, you can always make savings, but our strategy is not to try and make savings into success and a lower top line. What we're working on right now to a great extent, because the market is quite difficult to assess currently, we're very cautious. Because this is really our DNA to be cautious in terms of credit losses and cost savings. So we're careful, but the strategy is not to succeed through savings.

[Patrik Brattelius, Analyst]

Okay. But are you sort of holding back in marketing costs, for example? Can you expect that to come into play again coming into 2021? Or what's your thinking on that?

[Nils Helge George Carlsson, President & CEO]

Yes and no is the answer. We have, to some extent, limited our marketing during the pandemic. So that's a correct observation. But we've not made any decisions, however, on what we're going to do in 2021. It's a little bit too early for that yet.

[Patrik Brattelius, Analyst]

Okay. And the final question then. On the Norwegian market, which you mentioned in your CEO's comments. What is new there to you? What has made you come to the conclusion that you've been a little bit too restrictive historically?

[Nils Helge George Carlsson, President & CEO]

Well, generally, in the Norwegian market, we see that there is a general drop. And that drop will have different numbers depending on who you ask. But we would say somewhere between 12% and 15% in our assessment, in the general drop in demand that is. So that's something which is quite clear in any case. Now whether we have been a bit more cautious can be seen from the fact that we don't have as much of a demand in the market. It's quite natural, in fact, to look at what sort of ratios of approved credit applications we have and if we need to loosen some of the restrictions we've introduced. It's important to remember that we have our own restrictions that we've put in place in all the Nordic markets on how much we approve, and we continue along those lines. We have almost all those limits and restrictions in place, and it does impact growth. Of course, it does.

[Patrik Brattelius, Analyst]

And the fact that you're now reviewing the possibilities, is that to be interpreted to say that you have a positive perspective on the market in 2021 and if you expect an increase in the lending in Norway?

[Nils Helge George Carlsson, President & CEO]

Our ambition in the longer term is to remain in the Norwegian market. We have no other plans than that. We believe very much in the Norwegian market. It's a tough situation right now. That's correct. However, we have no other strategy. We are positive to the Norwegian market.Now whether it's going to be in -- during next year or if it will take longer, that's also a question which will be impacted by the pandemic situation. And if the Norwegian regulatory authorities consider other types of legislation that we're not aware of yet, we are going to have to deal with it as we move on. But our strategy remains to be present in the Norwegian market in the longer term.

[Operator]

And we have a question from Robin Rane.

[Robin Rane, Equity Research Analyst]

You've just embarked on this transformation journey. You announced that last week. And you have a focus on cost reduction. But the question is, what is your objective? Is it to increase top line? And will -- can we expect more information as you continue this transformation journey? Is your main focus the organization and to streamline the organization?

[Nils Helge George Carlsson, President & CEO]

Well, thank you for that very good question. The focus right now is to change the organization so that we have one Resurs in the Nordic market. And of course, we want to have a faster, more efficient, more agile organization. And we think we can do a lot also with historical acquisitions, where we think we can get more than we had. So that is one component, and that is what we announced in the press release on October 22. We think that there are cost savings to be had there. In the future, we also feel that we will have to make investments and become much better when it comes to technology to improve there. I'm from the fintech side myself, and I know quite a bit about what -- well, what I think will be needed in the next few years. And the reason why we are announcing this, saying that we will be making IT investments, well, that is to prepare you, customers, partners. Telling everyone that we are here to stay, and we want to ensure that we become faster, much faster and more agile, so that we can provide a better customer experience and perform better, faster with faster innovation rate, if I may say that, next few years. And of course, it will cost money, of course. And we are going to activate most of this investment, and we will provide more information when we're a bit further down the road so that we can give you more information. But I think this is something that should be interpreted in a positive manner, and that is my view.

[Robin Rane, Equity Research Analyst]

Okay. And the reduction in personnel, will this, after this one-off, result in a more normal change rate in personnel?

[Nils Helge George Carlsson, President & CEO]

Well, what we've done now is that we have, in Sweden, notified of our intention. That is what we have to do. And that we are, this week, going to start negotiations with the trade unions. I do think that we might end up with fewer than 70, but that -- and that is because there's always people leaving for natural reasons. And what you also have to remember is that the 70 that we're talking about, that is out of some 700 or 800 employees. So it's a relatively small share, this adjustment.

[Robin Rane, Equity Research Analyst]

Okay. Next question about credit losses. If you feel that you do not need additional growth in the loan book, would this be a more normal level that you're at now compared to previous years?

[Nils Helge George Carlsson, President & CEO]

Well, what we see today is a result of the historically higher growth. And we also have a certain delay in defaults. And that is the situation, I think, we can expect a somewhat lower credit loss level in the future.

[Robin Rane, Equity Research Analyst]

You mean when growth picks up again?

[Nils Helge George Carlsson, President & CEO]

Yes, that, with additional growth. But even without that, it will decline over time.

[Operator]

[Operator Instructions] And Jens Hallén from Carnegie.

[Jens Hallén, Research Analyst]

First, just a short question on the dividend, just to make sure that I understood you correctly from the reports. The plan is the SEK 2.10 per share, which is outstanding for 2019, and 50% of 2020 profits will be proposed in connection with the Q4 report. Have I understood that correct?

[Jonas Olin, CFO, Deputy CEO & Head of Investor Relations]

Yes, that's the intention of the Board of Directors.

[Jens Hallén, Research Analyst]

Okay. And is it unchanged that you're going to split it into 2 payments for the 2020 profit? Or is this more a feeling that this is better doing it this way? Just, well -- or is this a matter for the Board?

[Jonas Olin, CFO, Deputy CEO & Head of Investor Relations]

Well, the Board has not resolved. They've not decided formally yet. But the intention of the Board is to pay out the total amount in the beginning of next year. But it remains to be seen, of course, whether we continue to do the same as we have before, paying out per 6 months. But the ambition is definitely that the amount should be paid out as per usual.

[Jens Hallén, Research Analyst]

Okay. Excellent. And then the financial targets. Over time -- we talked about this with previous management as well. And my question is if they remain relevant. Some are way above with the margins, you've sort of found a parking spot a bit away from your targets. What's your perspective on the financial targets?

[Jonas Olin, CFO, Deputy CEO & Head of Investor Relations]

Well, I have the same answer here. At the end of the day, this is a matter for the Board. But I'm familiar with the discussion that we've seen before, and we intend to review our financial targets, but not in the midst of a corona pandemic. Nils, do you agree?

[Nils Helge George Carlsson, President & CEO]

Yes, absolutely. I agree. These are the targets we have set for us. That's what we're aiming for. And I concur with Jonas. We have the targets. And you're asking a relevant question, but some of the targets, if you ask me, remain highly relevant. We're in a very particular situation right now. And of course, if you look at financial targets in such a phase, it could be a little bit unusual. But those are the targets that we have currently. So we work with them.

[Jens Hallén, Research Analyst]

Okay. And then a question about capital. You continue to be in the midst of pandemic. You're at around 15%, 100 points higher than it was at the end of 2019 and you've already recovered a great deal during the year. So here's my question. When it comes to the capital level where you are currently, if you look into 2021, I expect that you'd like to grow into the capital, but that would require a very, very strong growth indeed. Otherwise, what could be done? Dividends or acquisitions? Considering the high level you're at today.

[Nils Helge George Carlsson, President & CEO]

Well, we don't perceive this perhaps as a problem. Having a strong capital position in these times is a strength as far as we're concerned and perhaps even a measure of caution. We're not sitting out here with a particular strong intention with the strong capital position and how we're going to work with it over time. We believe that it's a good position to be in. It is part of our vision and our strategy, and then we'll see how it develops over time.

[Jens Hallén, Research Analyst]

Okay. And I'd like to get back to the transformation. A lot of the discussion has been about reduction of expenses, making savings to succeed. What does this mean over time? IT investments could mean more or less anything. What about the amounts concerned? And is it a 2021 measure? Is it a full year project? And what type of costs are you referring to, which will explode on to the income statement?

[Nils Helge George Carlsson, President & CEO]

Short answer, no, there's -- that's not going to happen. This is something we have outlined for a number of years ahead. We're going to shift systems and applications and the infrastructure within the bank. But we're not having something which will explode on to the income statement. That is not our intention in any way. As a concrete measure, I could mention that we have quite a small number of systems and services in a so-called cloud environment. And we see that we can improve efficiency greatly. We can move services, infrastructure, systems, et cetera, into a cloud-based environment. So that's one concrete example. So this is something that we can expect over a number of years ahead. We'll get back to what it entails and in more practical terms. As we move forward, we'll provide more information. But we're not going to cover it all in 2021. I would rather say that we're talking about, say, at least 3 years ahead.

[Jens Hallén, Research Analyst]

The reason I'm asking is because when markets -- when the market talks about IT projects, they're thinking -- worst-case scenario, they're talking about SEK 2 billion investments as per Nordea.

[Nils Helge George Carlsson, President & CEO]

No, no, no. We're not in that realm.

[Operator]

There are no more questions, so I hand over to the speakers.

[Nils Helge George Carlsson, President & CEO]

Then we want to say thank you. Thank you for this Q&A session. And I hope that you feel that you now have a good understanding of Q3. And we say thank you for participating, and we wish you a continued very nice day. Thank you.