Greetings, Inderes viewers. Nordea published its second quarter results today. I'm interviewing Nordea's CFO, Ian Smith. Ian, thank you for being here.

Good to see you again.

How happy are you with the second quarter development of Nordea?

Really pleased as a quarter of growth. I think that's the main takeaway. Looking at lending, particularly on the corporate side, we saw income growth of 4% year on year. It was really across the board too. We saw the growth, so very pleased. So, yeah.

Loan growth especially on the corporate side. I think, is this in Sweden, Norway, or in the whole Nordics?

Across all of the Nordics, maybe a little bit weaker in Finland, but I don't think there's anything to call out there. So I'd say the takeaway is across the Nordics.

The Nordic companies are investing right now, yeah?

We do notably see that both in the small and medium-sized companies and in the large corporates. That is finally the sense we get.

How about the household side of things?

Households, there's still a little bit quiet on the lending side, so people are still, I think, lacking confidence to make big moves. Savings has gone well, so if we look on the household side, whether it be just their regular savers, regular monthly saving, private banking, or people saving for their pensions in life and pension. We saw good inflows in the quarter and also good fund performance, so the savings side was very positive.

And your assets under management rose through, I think, the 500 billion euros mark?

Yes, that's right, 500 billion, up 16%, so that is good. A lot of that is driven by markets. We've seen strong equity markets in particular over the last quarter, but it is an important milestone to pass.

Do you see any signs of more optimism among households? I think they have been saving quite a lot for the last two years, but you can't save all the time.

We certainly look for those positive signs and, for example, in Denmark and Finland too, we have the highest measured consumer confidence for the last four years, so that's positive. That needs to be sustained before to really get excited about it. And if we think about where some of our growth is coming from in corporate lending, it's in defensive space, if you like, so it's investment in defence, technology, infrastructure, cybersecurity, and energy resilience. These kinds of things. So that is driving good growth on the corporate side, because that's where we think we have to invest. You can sort of understand a little bit why consumer confidence is still low, but it's encouraging to see an uptick in it.

And loan losses, they were quite small, but not like zero. In the past few quarters, they've been almost zero, but six basis points?

Yes, six basis points is without releasing any provisions from prior years, which had the effect of reducing loan losses even further in previous quarters. So where we are, six basis points, you should think about that as the normal level.

And I think last time I asked you that you are winning there, you're growing faster than the market, and it seems you're winning the right customers because there's almost no loan losses. Even if you grow quite a bit.

That is right. We're maintaining our credit standards and things, so this growth is in good space.

What was your reaction when the Danish prosecutors said they are not so happy about Nordea's money laundering prevention? I think it was in the beginning of the 2010s, and now they're demanding a fine of almost 900 million euros. If I recall correctly, what's your take on that?

You are aware we're in court in Denmark. It's a long process where we've gone to court because we think it's the only way to resolve the historical issues in relation to weaknesses in controls. For money laundering, etc. We've always accepted that we didn't meet the standards we should have, and as you say, this is more than 10 years ago. But we find the demands of the Danish prosecutor in this case to be just ludicrous, and therefore the only place to resolve that is in court. So yes, we've seen some large numbers quoted in the press and things. We made a provision back in 2019 for these matters because we knew we would have to pay something, and we still believe that provision is sufficient.

That was, I think, around 100 million. Around there? You paid once your dividend, half-year dividend, as normal, but you've been quite reserved about the buybacks, so what is the reason behind that?

To the dividend. It is the first time in Nordea's history that we have made a dividend. I think shareholders will welcome that. The reason was just as you say, being a little reserved on buybacks is because of opportunities to deploy capital into growth, and that has been a priority. The order of magnitude, or the order we think about things, is generate capital, deploy that into growth, whether that is organic in our current business or inorganic, M&A. Then if we have nothing left over, then that is available for buybacks, and right now growth is taking up all of our capital generation. I think that's positive because it's going to improve our earnings per share. I think our shareholders see that, that's what I'd like to say.

That should be the way. At least in the report you mention that the number of personnel actually decreased last quarter. Your expenses grew only a little bit, I think, and in one conference recently Frank Vang-Jensen said that Nordea is rethinking whole processes again because of AI. Now we're encountering the same AI discussion we had last time, that you give some concrete examples of processes you have been rethinking, and you really see the savings come through, or productivity rise here too? Yes, so

Improvement in our four core customer processes. Mortgage lending, corporate lending, payment and savings, that's a key part of our strategy for 2030, so delivering improvement for customers, but also structural efficiencies and costs. So a key focus for us, and we think AI can deliver more in that space. It's still early days in terms of how that works, but an example of what we're able to do is to dramatically reduce the amount of time spent on credit applications. Applications for loans, that should drive further efficiency, yes, but also means that customers get their decision and their money faster.

And you also lowered your guidance for the cost-income ratio. I think it was previously 45, now it's 44 to 45, maybe not too dramatic, but was this the reason for that?

The plan is working, so we're seeing good income growth. We're managing our costs, our cost of risk is in good shape, and so what we see is we'll be able to deliver a lower cost-income ratio than we thought at the start of the year, so we want to update the market on that. So it'll be somewhere between 44 and 45, whereas before it was we should be around 45, so it's a small improvement, but heading in the right direction.

Thanks, Ian, for the interview.

Really good to see you, thank you.