SEB (OTCPK:SVKE.F) Q3 2025 Conference Call Summary Industry Overview - The call discusses the macroeconomic environment affecting SEB, including interest rates and foreign exchange (FX) movements, which are critical for the banking sector [2][4][14]. Key Points and Arguments Macro Environment - The average 3-month Stibor rate decreased in Q3 compared to Q2, with the Riksbank lowering the policy rate by 25 basis points to 1.75% [2][3]. - The average 3-month Euribor also saw a decline, while the European Central Bank maintained the deposit facility rate, impacting SEB's Baltic operations primarily on the deposit side [2][3]. Profit and Loss (P&L) Insights - FX movements significantly influence both the P&L and balance sheet, with a stronger SEK leading to lower income and costs, while a weaker SEK has the opposite effect [4][5]. - The P&L was affected by a negative impact from FX of approximately SEK 600 million, offset by a positive day effect of a similar magnitude [7][8]. - Net interest income (NII) was positively impacted by higher lending volumes and elevated NII from investor services, particularly during the dividend season [8][9]. - Business and retail banking experienced a decline of around SEK 200 million in NII compared to Q1 due to lower deposit margins and pressure on mortgage margins, although some stability was noted towards the end of the quarter [9][10]. Capital and Risk Exposure - SEB's current share buyback program amounts to SEK 2.5 billion, expected to conclude by October 21, 2025 [13]. - A transitory increase in risk exposure amount (REA) of about SEK 50 billion is anticipated due to Baltic IRB models, impacting the CET1 capital ratio by approximately 80 to 90 basis points [13][14]. - The dialogue with the European Central Bank regarding the approval of these models is ongoing, with gradual recognition of this effect expected starting late 2025 or early 2026 [14]. Costs and Expenses - Total expenses for 2025 are targeted at or below SEK 33 billion, with adjustments based on FX rates [11][12]. - Imposed levies are expected to decline, with an estimated total of around SEK 3.5 billion for the full year, similar to the previous year [12][19]. Market Activity and Outlook - The call noted that summer months typically see lower activity in capital markets, but SEB is positioned to capture opportunities as they arise [10][11]. - The competition in the Baltic region remains stiff, but loan growth is healthy [9][21]. Additional Insights - The sensitivity of the CET1 capital ratio to currency fluctuations was highlighted, with a 5% change in SEK affecting the ratio by around 40 basis points [5]. - The impact of share price on costs was discussed, indicating that a higher share price increases costs related to long-term incentive programs, although this is not a significant portion of total expenses [12][28][31]. Conclusion - The call provided a comprehensive overview of SEB's performance and outlook for Q3 2025, emphasizing the effects of macroeconomic factors, FX movements, and competitive dynamics in the banking sector. The management remains cautious yet optimistic about future growth opportunities while navigating the challenges posed by the current economic environment.