Avanza Bank Holding AB (publ)

Welcome to the presentation of our Q1 results. I will start on a general note and then hand over to my CFO Anna Kasselblad and then hopefully leaving plenty of room for questions.

I'm new to you all, at least in this role, so I'll start by introducing myself.

I joined almost four weeks ago as CEO of Avanza, so I'm quite new, but spent essentially my whole career in this industry of savings and investments. Been with Investor, McKinsey, SEB, Nordea, and then the last few years with a FinTech in the debt market and being on the board of Nordnet. And when coming into a company or like Avanza, I've seen things that work better than I expected and some things where I think this can probably be done better, but that I think is normal. What really stands out is the culture that I've encountered here. It is truly different from what I've seen previously in my career. It's very friendly. It's welcoming. It's forward-leaning. It has a lack of hierarchy, not organizationally, but in the way people interact. And there is a genuine customer focus, like for real. And that is something that I need to bear in mind going forward, because I think it's truly a competitive advantage for Avanza. But before kicking off, if I try to summarize the quarter very much in short, I think we had great inflows both in terms of capital and customers. We saw customers have a slight risk on, meaning that we earned a bit more on the brokerage side. We earned a bit more on the FX side. We earned a bit more on the fund side. But the customers as part of this risk on activated a bit of their cash into risk assets. So we had a little bit lower of net interest income comparing to the fourth quarter. But looking at the most important forward-leaning KPI, as you know, net flows were good in the quarter. If I analyze the numbers, it's 11% over AUM, even though that is probably too positive, given that Q1 is typically strong. Roughly 25% of our net flows were recurring, so monthly savings or occupational pension premiums. And roughly one third came from new customers and roughly two thirds from existing customers. And on the customer side, we attracted almost 50,000 in the quarter. And I think we should reach 2 million, which I think is a big milestone later this year. We had a low churn also this quarter of 0.6%. I would love to compare these. 22 billion with the market, but we don't have the market numbers yet. What we do have and that we didn't have in the last call is the Q4 market numbers showing that we actually had a market share of 100% since some of our competitors had outflows. So that left us with a AUM market share by the end of the year of 7.1%. Where we do have market numbers is on the fund side, which is very important for our customers, but also for our recurring income. And here we took 11 billion out of the 33 flowing into the market. Also the occupational pension side is contributing to our recurring income. And it's very connected to our funds business since almost 80% of the capital on the occupational pension side is placed in funds. And on the occupational pension side, we had 1.5 billion of net flows into the quarter. What I'd like to mention also on the fund capital, which is on an all-time high level, is that roughly 43% of those 281 billion is in our own fund company. So that's 121 billion. Moving on to the brokerage side, we saw increased market shares on our side on the Swedish exchanges, both in terms of transactions and turnover, which resulted in, as you see on the left-hand side, increased activity from our customer side. But on the right-hand side, you see our hope that when trading sentiment moves into even more positive territory that we would see more of our customers being active on the trading side as part of this risk on we as i mentioned in the beginning we saw our customers activating their cash so net buying funds and securities leaving their Transaction and savings accounts on the slightly lower level which we see on the time series here We actually Which is not seen on this graph, but there is actually a slight uptick in the end because of the dividend season But we cannot see this because it's monthly Or maybe quarterly numbers Looking ahead I have not been here long enough to have a perspective on our strategic direction. So these four focus areas were decided before I joined, but I think they're very relevant and they have served us well in the first quarter and we will continue to focus on them for the rest of the year. We see an increased competition on the more transaction intense customers, the slightly more wealthy customers. So we're focusing on improving our offering there and have done quite a bit already this quarter. And then we see too many of our new customers getting caught in the funnel. So they become customers, they start an account, but they don't really start being savers or investors. So we are focusing on improving that and done a bit already in the quarter. And then we are investing in our pension offering. I think it is probably the area in the Swedish savings market where Avanza has to play the biggest role in continuing to challenge because it's still very inefficient. And we have actually freed up capacity invested into a new development team on the pension side during the year. So that's on the note of internal efficiency, which is super important to continuously do. And then we have our stability very high up on our agenda. And we're happy that we had a good quarter on that note. These are just examples of what we've done for the more trading active customer base. a number of features that have been well received. What we did after the quarter was something that I think was the biggest thing for our customers, which was a feature on helping with stock analysis, with comparing different stocks with key numbers, much appreciated. And then a few words on our stability of the platform. This is an area where it's difficult to stick out your head after four weeks. But my sense is that we have been a little bit too eager to move into the very modern and edgy technology in the past, which is good because we want to be in the forefront. But the flip side is that it's less tested. It could be less stable. And going forward, I would be more mindful to make that conscious choice. Should we be really in the forefront in this area or should we take something that is a little bit more tested? We also continuously modernize our tech and where we've spent the most effort in the last, I would say, two quarters is on the pension side, which we will continue to do during the year. And where we need to start later this year is on the customer data side, which will be important when we move more into personalizing the experience for our customers, but also very important when we use more modern technology like AI. We need to have a better customer data platform. I have communicated to the organization that we will do a change when we have a new CTO in place, placing all tech related staff in one unit. Today we have IT operations maintenance and security in one box and then the forward leaning development in another box and to me it's important that they come together that any development that is done have the maintainability in mind with everything new we develop and I think that will be easier sitting in under one person in one unit. And looking forward, I'm probably quite biased here since I just decided to take this job. But I think if you want to play in the financial services industry, I think the savings industry is very compelling due to the underlying growth trends. And if you want to play in the savings industry in Sweden, I think Avanza is well positioned to take an over-proportionate share of this growth. I think I stop there and hand over to you, Anna.

Thank you, Gustav. And good morning, everyone. I'm proud to say that we're once again reporting the results that are the second strongest ever. Looking at the top line operating income is in line with the income for Q1 2021. And again, this proves the resilience in our business model. Operating income consequently improved both compared to Q4 and Q1 last year. Operating expenses decreased slightly compared to last quarter. And don't draw any conclusions from that because our communicated cost guidance for the full year with an increase of 9.5% still stands. And the net profit was up 11% both compared to Q4 and Q1 last year. We saw increased optimism in the stock market during the quarter, leading to higher customer activity, which had a positive effect on net brokerage income that was up 34% compared to Q4. Private banking and pro customers accounted for a lower share of the brokerage income, which led to gross brokerage income per brokerage generating turnover increasing to 11 bps from 10.6. Foreign trading was also positively affected by market conditions, and net currency-related income increased by 43% compared to last quarter. Brokerage generating trading in foreign markets accounted for 19% of total brokerage generating turnover in the quarter, which is the highest it's been since 2021. Fund capital volumes increased and reached a new all-time high in the quarter, which had a positive effect on net fund commission that increased by 11% compared to Q4. However, income per second of fund capital continued to decrease, although at a slower pace than previous quarter and was at an average of 26.1 bps in the quarter and 25.9 bps by the end of the quarter. In other words, the trend towards the larger share of indexes funds continued, ending up at just above 45%. Net other income decreased by 16% quarter-on-quarter, mainly due to lower income from corporate finance, which decreased to 2 million from 2013, while both income from advanced markets and from stock lending was in line with Q4. Also, the increased customer activity and thus more logins resulted in higher other commission expenses. Looking at NII, we saw a decrease of 5% compared to Q4. This was mainly due to higher interest expenses due to increased volume in our own savings account. And as mentioned already last quarter, resolution and deposit guarantee fees were adjusted in Q4 according to actual outcome, which was lower than estimated and therefore lower in Q4, meaning this also contributed to the increased cost in the quarter and for the full year 2024 we estimate a fee of approximately around 50 million to be compared with 36 last year and going over to the income side which was fairly stable the surplus liquidity and treasury portfolio was negatively affected by customers net buying and securities which in turn affected the deposit volume during the quarter and However, as Gustav already mentioned, at the end of the quarter, deposits increased as a result of the dividend season. Income from internally financed lending increased due to increased volumes. The mortgage rate was raised by 50 bps in November last year. That's fully impacted the earnings in this quarter. And we didn't make any changes in the quarter when it comes to mortgage rates. However, this week, we lowered the mortgage rates with close to 15 bps volume raised. The average interest rates on internally financed lending increased slightly to 466%, and the average interest rate on deposits was 186%. Compared to Q4, operating expenses decreased by 1%, and this was a result of lower costs for external services and information costs within the other expense line. Personnel costs increased as a result of the yearly salary review taking effect from the 1st of January. And marketing costs are seasonally higher in Q1 due to the winter campaign. And as I said, the previously communicated estimated cost increase of 9.5% for the full year stands. As already mentioned, internal efficiency is a prioritized area and one of the main focuses for this year. And we have good growth prospects with current staffing and by increasing internal efficiency. Our aim is to free up time in operating units so that we are able to further strengthen development resources and focus on innovation. And a good example is that we developed the digital onboarding process so that existing corporate customers can now apply for endowment insurance without any manual processing, providing a more convenient customer experience. And at the same time, manual steps and internal involvement are reduced. Furthermore, forced sales for over-leveraged customers have been automated as well. And internal efficiency is to a large extent down through many small steps to tweak our operations in the right direction. So it's a continuous work that has to be improved more or less every day. The capital position is still very strong and we are very confident with that and the low risk in the balance sheet. But please note that unlike the other quarters, our external auditors haven't been auditing the quarterly results and profit generated in the quarter has consequently not been added to own funds. And at the end of the quarter, both the total capital and the leverage ratio were well above the requirements. To conclude, we are proud to report another strong quarter and the resilience in our business model. Also, our impressive growth figures are keeping steady. We are making progress within our set areas, focus areas for 2024, where we believe that increased internal efficiency will play an important role to facilitate continued innovation. And with that, I would like to open up for questions

Thank you. Dear participants, as a reminder, if you wish to ask a question over the phone, please press star 11 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star 11 again. Please remember we'll compile the Q&A roster. This will take a few moments. And now we're going to take our first question. And it comes from the line of Patrick Bertelus from ABG. Your line is open. Please ask your question.

Thank you. Can you hear me? Yes. Perfect. Thank you. So my first question is to Gustav. Welcome on board. So how do you view Avanza's IT platform and the migrating more of the IT platform to the cloud? Will that help with the stability in your view?

So technology is complex. I'm a little bit humble after almost four weeks to stick out my neck too far. But I believe, I personally believe that the cloud is where the future is. I think that's the direction we should go. But I have not done the homework, how, when, and speed. We already have quite a few things in the cloud. I cannot at this point answer, will that improve stability or not? I think one of the benefits that I see is on the cybersecurity side that you get an even stronger security layer when you're in the cloud.

Okay, that is fair.

Then moving on to another more of an overview strategy question. So how do you view some of these 2025 targets that you, are you steering the company towards achieving these? I'm thinking about like the cost target that you have of 12 BIPs, for example, or how should we think about these?

I mean, first of all, the task that I have from the board is to develop a forward leaning growth strategy. That I haven't done yet, and it will take a while. When I've done that, I need to think hardly what targets will tell me that I'm moving in the right direction to reach that. So that's on one note. I haven't done that homework. You're asking about the targets we have now. I think they make sense. I think some of them are stretchy. I think the 10% market share target for 2025. It's very difficult just doing the math. We had 7.1% market share end of the year. We gained 0.7 in a good year. If I extrapolate that two years ahead, we would gain another 1.4% market share, leaving us with 8.5, meaning that we would need to run super fast and we would need to have a a very positive exchange for stock sentiment since our customers are more heavy tilted towards equity compared to the market. So it's a stretch target.

We will try to reach it, but I think it's a stretch target.

Okay, fair. Thank you. And then my last question is regarding the cost. It was flattish here in quarter over quarter. but you still reiterate your almost 10% cost guidance. So can you help us to a little bit talk about how should we think about the trajectory of cost for the rest of the coming three quarters in terms of growth? Is it back-end heavy, or how should we think about it?

It's not, as I said, it's not just evenly distributed among the quarters. You know that we have a little bit lower personnel costing in two, three quarters. So I would say just extrapolate and lower a little bit during Q3. And one important part is, of course, also when people are leaving events and we're trying to recruit them, we know from experience that that always lags more than people anticipate. So that could also have an effect. But going forward, it's It's hard to say to give you anything, but according to budget, we will reach the 9.5%.

Okay, because historically it seems like marketing has always been pretty high in Q1 and that has boosted the cost base, but we have not really seen this this quarter. So we then should see a significant pickup in the second quarter. So what is driving that?

It's from both... Information costs, we think that that will go up, but we saw some decreases. We are renegotiating some quite important agreements for us where we think the costs will go up because we have like three years agreements on that and that we think will come forward, for example, in Q2. So I think there are some signs of costs going up, but you are correct that we are having had more marketing costs in Q1.

Okay, perfect, and I'm satisfied. Thank you.

Thank you. Now we're going to take our next question. Just give us a moment. And the question comes from the line of Jakob Haslevic from SEB. Your line is open. Please ask your question.

Good morning and first of all congratulations Gustav on your new position. My first question is on the number of brokerage generating customers which increased by 14% during the quarter. Has it mainly been new customers joining the platform during Q1 who has begun trading or has it rather been the 2023 cohort?

I would say that we have seen increased activity among all customers and we have also seen a few customers who's been not trading that much lately, which has started to trade again.

Okay, so there's no specific cohorts which have increased activity. 14% increase is quite a big number in just a quarter.

We've seen increases among everyone.

All right, thank you. And it would also be quite interesting to hear how you reason when it comes to NII and more specifically, margins as I don't really care too much if deposit volumes decline if customers are buying equities but are you confident that you can keep deposit margins now stable when the Riksbank cut the policy rate or do you expect continuous flow from ISK to your savings accounts which we saw during the quarter or what is your view on offering fixed rate accounts in the future?

I think that we haven't set a clear strategy for how we will act when the interest rates are going down, but I think we mentioned during Q4 as well that we think that we can lower the interest rates on, for example, the base segment and the standard segment in line with the decreases from the Riksbank. If you said we're going to see any flows from the ISK into the savings account, that is not what we have seen during the quarter. It's rather that people are net buying in shares and other equity traded products during the quarter. So it's rather money coming from the outside that is entering into the savings account. So those flows, I haven't seen any trend increasing on that. And as you have seen as well, the growth in the savings account has more or less come down.

Okay, but you haven't seen any outflows of savings deposit into the large banks who are now offering fixed rate accounts at quite attractive rates?

No, we haven't seen any outflows.

I mean, the inflow we see on the savings account is coming from

outer world and then the the outflow from the savings account is going into the transaction account internally all right that's very clear thank you and just a final question to get to know you just reflected better uh could you help us understand your vision for avancer going forward what milestones have you put up and how do you see the company developing in the coming years it's a great question jacob and and i owe you the answer

But I think it's too early. And if I have the answer, I would want to have anchored that with my organization and my board first. So you need to give me a little bit more time.

OK, fair enough. Thank you very much. Thank you. Now we're going to take our next question.

And the next question comes from Nicholas Macbeth from D&B. Your line is open. Please ask your question.

Thank you. So first a question to Gustav, given your background working with pensions at one of the incumbent banks. What is your assessment of why advanced occupational pension business has not truly taken off in line with what I think many have been hoping for during quite some time? I mean, we know that the market share is still below 2% in occupational pensions and that inflows actually fell in occupational pension since Q1 year-on-year. So what's your assessment here? What is the potential and what do you think is needed for an answer to that potential? I think the potential is big. I know that one of the most important things when you're a corporate buying these services is typically the head of HR and sometimes the CFO responsible for that procurement. you are super keen to have a smooth administrative process. As soon as your employees get the salary change, as soon as you get new people coming in or people leaving, you need to feed that information to your pension provider. And that is too cumbersome today doing business with Avanza. And that's one of the things that we are investing to to mitigate now. Do you think that's enough to smooth processes, or do you think you also need to kind of change the way you're working with sales and distribution in this market to really accelerate growth? I mean, we have in the past and today decided not to work with the brokerage channel. I have not challenged that yet. I've been here too short. We know that pensions is one of the most complex decisions you take on the individual side. And I'm talking about the private individual. It's one of the most scary decisions you're taking because there are tax implications, timing implications, et cetera, et cetera. So by nature, that's a little bit more challenging with only digital handholding, which is what we're offering today. I think the combination of that hurdle on the private side with with the hurdle on the corporate side we need to address both of them one of them we are addressing now on the technology side the other one we need to think hard on how to do all right that's interesting and then a question on the culture as you mentioned in the in the report and also on the call very positive impression and I think that's consistent with what many employees tend to say about the culture. But from the outside, we can also note the relatively high turnover in some of the senior positions over the past year with, for instance, the CIO and the CPTO leaving this year and also some colleagues leaving for a startup competitor last year. So have you identified anything in the organization culture where you see potential for improvement to reestablish continuity and loyalty? I think... My colleagues, they want stability. I think that's clear what they sent to me. They're very happy to have a captain on board, irrespective if it's me or someone else. They were just very happy to have a captain. So creating stability, not meaning that I would not do anything, but you can create stability and do forward leaning stuff will be important. I am currently out recruiting a new CTO and a new CPO. which will be very important roles for me to fill. I actually mentioned that I am hiring a new head of HR, which she will start early May. I see this also as a very good opportunity for me to build my team. So I think it also has something positive that we actually have these two open roles in the organization. But you're right, the organization needs stability. Okay. And then also a question on your philosophy on the kind of trade-off and the balance between pricing and growth and volumes. So I think that has shifted a bit through the years. I think earlier in the advance of history, I think it was more focused on growth and volume with price reductions increasing. continuously on the broker side, for instance, whereas maybe in the past few years, it's been more stable development on the pricing side and a bit more focus on margins, at least that's my impression. So what's your philosophy here? Do you think more about protecting margins and pricing, or do you think you can use pricing to kind of drive higher growth? What's your approach and the thinking on the balance between these two? I'm speculating now because it's a little bit early stage, but I think we should keep our successful strategy of doing things better, cheaper, easier. But when I say cheaper, I need to take that into perspective to the quality we provide. a very good quality compared to many of our competitors. And I actually worked for a different bank a few years back where we reduced the brokerage to zero to get back customers. And we still got no customers because our quality was not good enough. So when we say cheap, it's cheap in relation to quality. It's not an exact answer, but that's my philosophy.

Okay, I appreciate that. Thanks for the answers.

Thank you. Now we're going to take our next question. And the next question comes in the line of Rickard Strand from Nordea. Your line is open. Please ask your question.

Hi, good morning and welcome, Gustav, to a new position. Starting off with a question on the improved brokerage activity Is it possible to draw any conclusions at this stage about the sustainability of this improvement if you see it as a temporary pickup or if it's something more sustainable underlying?

Then we need to speculate what the future has in front of us. So now I'm speculating. We saw a positive... stock market sentiment in Q1, and we saw a direct effect on the activity of our customers, but we still don't have a good trading sentiment. The volatility is a bit too low. So I think if we come into an environment where we have the right level of volatility, we have positive stock market sentiment, then I think we could see a different level of brokerage income compared to today. But on the other hand, if you move into a super uncertain situation, then we would see the opposite. So it's hard to give a good answer here.

Fair enough. On the fund margins, they continue to slide down in the quarter, and you mentioned that it's due to increased inflation. increased index funds weight. What do you see here going forward if we see sort of sentiment troughing out and potentially improving? After that, do you expect potential that margins could increase in more active managed funds or do you expect this trend to continue?

Again, this is my personal view. I mean, we've seen this trend, as you all know, for many, many, many years. I think the direction of the trend is flatter. We saw much more flatter this quarter, even though it was in the direction. I personally think that it will flatten out because the share of these passive investments are soon getting to a point that everyone is following someone. I mean, You need someone to set the price of the underlying security. And we're getting to a point where I think that balance will shift back.

Is that a fair perspective, Rika?

Yeah. And do you see that you could launch any new initiatives to potentially offset this if the trend continues? I'm thinking in terms of new products or other ways to mitigate this.

Absolutely. But then we're coming back to strategy where I don't want to pick out my head. Of course, there are things you can do here.

Then going back to the mortgages, where you have commented that you did not raise the prices as you had the chance to do, but given that we're getting closer to a rate cut, could you mention something about how you expect to change your rates going forward? Do you expect to change in...

in conjunction with the rate policy rate hikes or policy rate cuts or do you think that it could be sort of smaller rate cuts in between the policy moves yeah you're right that's it we have the the mortgage rate linked to the policy race and that we didn't so contractually we have the right to to increase the mortgage but as i said that this week we decided to to further decrease the mortgage rate and that is completely because we want to have a competitive interest rate and we can see that not the least the incumbent banks are offering quite competitive rates especially when it comes to rebates on on the private banking segments so this is my personal view but looking at if the risk bank is going to to lower the the policy race in May, I would say it's probably not that we will have the mortgage rates on the same level because we have already a rebate. But then going forward, we want to get back to where we have the margins that we have the contractual right to do. But for us, it's very important because this is a marketing product for our private banking customers. So it's important that we have a competitive offering.

Okay. Then one final one. You have previously considered the potential from issuing 81 capital to optimize your capital base. Is this still on the table or has something changed here?

It's not really changed.

We are looking at it all the time, but we still think that the pricing is changing. It's quite high, even though the price has come down, but we think that looking at our really strong capital position, we don't see any need to do that for the moment, but we are considering it on a continuous basis and also have the dialogue with the board.

But you're not seeing it as an option to potentially distribute more capital to your shareholders as a way of optimizing that or...

I think if we make you one capital and have a really appreciated by the SFSA, but that is of course an option and we are having it on the, we are considering it from time to another, but we are not having any official plans for the moment.

I mean, it's a normal tool in Baltimore. We don't have it on the table right now.

It's a logical question from your side, but we don't have it on the table right now.

Excuse me, Rickard. Any further questions?

No, that's all for me. Thank you.

Thank you. And now we're going to take our next question. And the question comes from the line of Herman Carrick from Carnegie. Your line is open. Please ask your question.

Good morning. Thanks for the presentation and taking my questions. Maybe a first one. You mentioned a little bit about activating new customers better and that they're getting stuck in the funnel. Could you tell us a little bit more about what you can do and is this something you're seeing more frequently now than previously? Is it kind of customers that are even more inexperienced than they used to be around savings and investment that needs more handholding to become active on the platform?

Good question, and I need to get back to you. I don't have that deep insight yet to answer it.

Okay, fair enough. Then you mentioned a little bit that you want to use less of the more edgy tech and maybe more standardized stuff. do you think that will have an impact on your ability to attract talent? We often hear that talent wants to work with exactly those kind of technologies, that that's exciting.

Yeah, I mean, that's a balancing act. But if you take the progressive web apps, where we were basically one of the first in Sweden to use, it helped us a lot. We developed code once for the UX, and then we could publish it in different mobile devices. just once, we had lots of problems back then. Maybe we should have waited a year with that. But you're right, we need to find the balance there all the time, also when it comes to being attractive as an employer.

And then just on cloud, you mentioned that you think that's likely the future. How big of a project do you think it is? We've heard before that the venture has overtaken some strides towards moving some things up to the cloud. How much is left? How much of a project would that actually entail?

I mean, there are different strategies here. One could be that every new development, you develop it in the cloud. So you don't drop and lift existing code. Then that journey takes a long time, but it costs very little and there's very little risk. And then the opposite is a big bang. And I'm just speculating, but I'm sure we will be somewhere in between. But I don't think it's cheaper to be in the cloud today compared to be on-prem. But I think that it is the future. I think it will be better in the future. That's my driving force, not that it's necessarily better today.

Understood. That's very helpful. And then one final question. I believe there was an interview with you in one of the Swedish newspapers where they tried to tilt it a little bit like you would want to go abroad with Avanza as well. I think you mentioned that you wanted to have a look under the hood first. I understand it's still very early days, but what could you tell us about your vision for Avanza when it comes to Swedish only versus also in other countries?

That journalist really wanted to make a twist on Germany and abroad, but there are many interesting markets outside Sweden when it comes to savings in investments. On the other hand, I am very humble about the effort to go into a new market, totally greenfield. The brand that we have in Sweden is fantastic. It's helping us every day. In a different country, we would be totally unknown. So it's more, when it comes to going to a new country or not, it's more, it's less about how much tech development would we need to do to have a, I don't know, a Norwegian Crown account and so on. It's more about can we be successful fast enough, question mark. And to be honest, I haven't done much of those thoughts my first four weeks. It has more been to understand strengths and weaknesses in the company, meeting key employees, getting a sense for the culture, and so on.

Totally understandable. But thank you very much for the early insights, and I'm sure we'll hear more in the future. That's all from me. Thank you.

Thank you. And now we're going to take our next question. Just give us a moment. And the next question comes from Enrico Bolzoni from JP Morgan. Your line is open. Please ask your question.

Hi, good morning and thank you for taking my questions. One, I just wanted to ask you, you mentioned during the call about the need maybe to improve a bit the offering when it comes to the wealthier customer base where you're seeing a bit more competition. I wanted to ask if you can give some color in what form you see more competition there. Is it about pricing? Is it about servicing or maybe a combination of both? And partially related to that, I think it's quite interesting you're launching a dark. A bit surprising as well, because clearly it would imply that you have some clients that put very big orders through the system to then benefit from using ADAR. Can you just comment and give us an idea of how big are the average ticket sizes for these cohort of clients? That would be interesting. And then my second question relates to your early phases, but you mentioned about these organizational changes you want to make to streamline the technology. In light of your experience with some of Avanza competitors, what do you think can be, medium to long term, a sustainable growth in cost for Avanza compared to where it's now? And then finally, just briefly on AI, can you give us any color in terms of where do you think you'll be able to apply this technology and whether you are already utilizing it in any services across the bank? Thank you.

Enrico, it was a lot of questions, so if I miss one, remind me. But if I start with an easy one with the dark pool, our customers are more active when it comes to small stuff. I mean, the smaller companies compared to the larger companies comparing to the overall market. I mean, the institutional side are very much on the large cap. And there you could run into problems. partly sold by a dark pool, even if you're not the big customers, because the liquidity is so thin. So that's on the dark pool side. And then you asked about... Yeah, you also asked about what is the driving force for focusing on improving the offering towards the more wealthy, more active customer segments. This is an area where a lot of Swedish competitors both new and old school are focusing because it is a very attractive customer segment. It in aggregate has very big AUM. And so it's more driven from that perspective that competition is going to increase. And also that this is our legacy. I mean, these are the customers that came to Avanza in the very beginning. And I think that we have been good to attract also retail retail, but we cannot forget this important, a little bit more sophisticated client segment. So that's the driving force. And then you talked about the organizational change. I would say when we have done that, we would look pretty much standard. I would say we do not look standard today. Today we are. a little bit an outlier if I compare organizations. And then you talked about the cost projections.

Can you take that question again?

Sure, thank you. So yeah, I just wanted to ask exactly that. So just going back to what you just said. So you say you're a bit of an outlier, but in what regards, in what respect? So how can you align to the rest? What does it mean? in simple term means. And then, yeah, what implication can, if any, can that have for the long-term cost trajectory of Avanza?

Okay. So it's not cost-driven at all, this organizational change. I wouldn't draw any big... I mean, today we have IT ops and IT maintenance and IT security in one box, and we have IT development in one box. I want them to be together. I think it's easier to have a long-term... strategy for our tech side and also think it's easier to have a maintainable platform because the developers need to have them the maintainability more in top of their heads than they probably do today when there is an organizational distance between development and maintenance.

Thank you, very helpful. And just finally, I just mentioned on AI, if you currently are using it or if you see any opportunities near term,

So we're playing a lot with it. We have done nothing that helped us, neither on the cost side nor on the customer offering side. Potentially it would take a while because before we see concrete effects in our P&L, but this is an area where we need to be in the forefront. I mean, Avanza with this background and with the very digital Setup should be one of the players that that should be able to take advantage of this first Very clear.

Thank you very much Thank you And now we're going to take our next question just give us a moment And the next question comes land of Michael McNaughton from UBS your line is open please ask your question I

Hi there. Good morning, everyone. Congratulations, Gustav. First question is, you've mentioned some of the improvements that you've come in and recognised in regards to pensions and the organisational changes. Just wondered if those are the kind of two areas that we should be focusing on or if there are other areas of improvement that you've kind of identified?

I'd love to answer your question, Mikael, but again, please give me a little bit more time and I don't want to be forward leaning on those things before I have anchored it with my organization.

Sure. OK, that's fair enough. And then one more just on the results themselves. So, you know, brokerage income per trade was better. And as you mentioned, it was driven by a higher proportion of trades amongst the lower brokerage classes. I guess my question is, was that fairly spread across the month and the quarter? Or was there one month in particular that was quite strong? Just to try and get an idea of the run rate into Q2.

it was quite evenly distributed among the month, January to March.

OK. Great. Thank you very much.

Thank you.

Now we're going to take the next question.

And the next question comes in line of Ian White from Antonymous Research. Your line is open. Please ask your question.

Hi there, morning. Thanks for taking my questions, please. Just a few follow-ups. Firstly, on page five, it just seems to suggest that the number of professional customers fell by 5% since year end. I wanted to check if I was reading that disclosure correctly and if there's any particular driver that you would call out there to explain that decline, please. That's question one. The second question, Just in terms of the fund margins, can you just give us a reminder of the differential, basically, on prices paid by pension and insurance customers versus others? Basically, is growth in the pension and insurance business dilutive to the overall fund margins, all else being equal? That's question two. Thirdly, How should we think about the drivers and the sustainability of the uptick you've had in the FX-related income in the first quarter? Is this appliance basically drawn into US markets specifically? Is there any data or evidence, I guess, that you'd point us to to say that that was going to be sustainable in terms of just the market dynamics that may have changed in the last few weeks? And just finally, can you just clarify, maybe I misunderstood your earlier comments, I think I heard that you've cut mortgage rates or decided to cut mortgage rates 15 bps this week. And that's solely reflective of competitive conditions, presumably, given that there's been no change on policy rates. Have I understood that correctly or did I mishear something there, please? Thanks very much.

On the last question, you understand it fully correct. It's only making sure. that we have an offering that is in line or better than our competitors. When it comes to FX, I mean, we've seen the three most traded securities outside Sweden, if I recall correctly, was Tesla, Nvidia, and then Novo Nordisk. So that's US dollar and Danish krona. Your question is forward-looking. Do we expect this level to continue? I think this quarter was... It was risk on, slight risk on for our customers. Then we see these things. We see, you know, more brokers and we see more appetite for foreign securities. I think it depends totally on the market sentiment and, you know, the risk on, risk off for our customers. And then, help me, Sofia.

Yeah, when it comes to pro customers, I don't think you should read anything into that because it tends to fluctuate a bit between the quarters depending on if they want to trade or not. So that's quite normal, I would say.

And then there was one more question, I think. Yeah. The impact of... Yeah, go ahead, please.

Pension customer, was it... All right.

So your question was, if we get flows into funds directly or via a pension scheme or pension wrapper, does that affect our income margin? And the answer is no. it's the same pricing.

Okay, got it. Thanks very much.

Thank you. Now we're going to take our next question. Just give us a moment. And the question comes from the line of Nicolas Veselier from BNP Paribas. Your line is open. Please ask your question.

Hi, good morning. First of all, best of luck, Gustave, in your new role. My first question would be a bit of a follow-up in your push to gain a shelf wallet with the wealthy customers. Could also this work on enhancing the offering lead you to have like a more maybe financial advisory-based offering, for instance, or having a leg where you could be also a platform for financial advisors, a bit like your peer in the UK, AJ Bell, has this D2C and advisory side.

It's a very relevant question, but now you're into a very much a strategic forward-looking question. Should we move into that territory? And the question you're asking is, can you attract a large additional AUM from your competitors with only digital hand-holding? Or do you need to move into physical advice or hybrid advice?

It doesn't have to be physical. It could be also like providing technology for advisors to work with, like a JBL desk, for instance.

So if I understand your question correct, we do already do that. So we're a supplier, in a sense, to independent financial advisors in Sweden who then run their trades and have their accounts with us. So that we do already, but it's not from us wanting to offer financial advice through someone else. It's more that we want to take part of that business. We want to take on that AUM and trade.

And do you know what percentage of your savings capital this represents today, roughly speaking?

We need to get back on that, but it's not big. It's not substantial.

Okay. Maybe another question on the competitive landscape you're seeing currently in Sweden on the deposit side. So do you see some trends, as we can see in the industry, of customers moving their cash deposits towards the more remunerated forms of deposits? And also, what have you seen from the the behavior of competitors over Q1. I mean, we've seen a few players trying to enter the market with a high offer of like up to 5% of remuneration on deposits. So what do you observe on the market right now?

So, I mean, we see, I mean, the market sees competition from riskier players where the alternative for them of wholesale funding is very expensive because their credit rating is poor. I mean, they're willing to pay up, riding basically on the deposit scheme guarantee. But I don't know, Anna, is it more than we've seen in the past?

No, and we haven't seen any specific outflows. We haven't seen a lift decrease when it comes to the savings account partners, but nothing specifically that stands out.

Yeah, but do you see something in the market that No, not more than we've seen for a few years.

Right, very clear.

Thank you very much. Thank you. Now we're going to take our next question. And the next question comes from the line of Marcus Sandgren from Cap Le Chevron. Your line is open. Please ask your question.

Yeah, good morning and congrats on your job, Gustav. So I just wanted to get back to your mortgage strategy. I mean, why are you, do you really need to lower pricing on something that is really cheap to start with? And secondly, I mean, you have a loan to deposit ratio that the incumbent banks would just dream of. Why wouldn't you considering lowering your LTV requirements to just to, I mean, it would be a more attractive offering and you would put more excess liquidity to work. And that would be great, I think, when rates start to move down.

If I start to comment on the latter part, I mean, that's a risk appetite question. First of all, I mean, because we know that mortgages are very low risk, but you would take more risk if you go up on LTV. But the other thing is, would we want those additional volumes? And then we come into Anna's territory, how much of fixed lending do we want to have vis-a-vis our you know, in theory, fast moving deposit side. I know we're very conservative there, but I mean, it's a risk appetite question to me. And on the pricing side, I would argue, yes, that we are very cheap because we actually made that price reduction just to be in line. And we're not talking to be in line with official pricing. We're talking to be in line with the prices that our private banking customer or private banking prospects can get and will get with our competitors.

Okay, great. Thanks. And then secondly, I was just thinking about, you talked a bit about the strategy of market share versus margins, but given the history of lower prices on FX and on, what's it? your stock trading. What are you seeing for the future in terms of overpricing? Do you expect that to, I mean regardless of what you want to do, but you see that to continue to go down or do you think that has stabilized as well as you think of funds?

It's a really tough question.

We know we have some new competitors entering the market and they say that they will compete with prices but on a personal note i don't think it's not just about pricing when it comes to to stock trading it's about the the whole offering where we where we have a very good good offering with all the data and historic figures and time to execution and so on so i think you have to have a more broader perspective and from a customer perspective as well. So I don't think it's just all about prices, but if the prices, if it would be another price war, time will tell, I would say.

I think on the FX side, if I look at the whole market, I mean the real margin compression that has happened over the last 10, 15 years because of the transparency. So I think that big drop, I think that's already done. And then speculating out in the future, We seldom see prices go up in the financial services industry, but maybe and hopefully it will flatten out.

Okay, very good. Thanks. Thank you. And now we're going to take our next question.

And the question comes from the line of Andrew Lowe from Citi. Your line is open. Please ask your question.

Hi, thanks for taking my question. I have two. The first is on net interest income. If I look at the non-savings deposits as a share of total assets under custody, that's now 4%, which is far below your historic levels. So my question is, is there any further downside to this in the near term? And how do you expect this to evolve going forward? Do you expect it to increase as rates come down? And then the second question was just around the departure of your CTO. I'd be curious if you could say anything about this. Was this a disagreement about the strategy? And specifically, did this relate to your decision to slow down the pace of technology? Thanks very much.

Very good. Starting with your last question, that had nothing to do with me and nothing to do with my view on the future of technology. So it was a decision taken before I joined. The company and the board were kind enough to ask me if I had any objections. And I said, I don't know the person, I don't know circumstances, so I have no perspective. When it comes to your first question on transaction accounts over AUM or for last percent, I would view, I think, at least I view the aggregate of savings account and transaction account and look at that over AUM. Because in a rate environment, which is lower than the hassle of moving into a savings account short term between trades, that will go down. So I think in a lower rate environment, you would see this 4% go up, but you would probably see the savings account share go down. So I would view them as one aggregate, actually, when I look at the customer behavior.

Great. That's very clear. Thank you. Thank you.

There are no further questions for today. I would now like to hand the conference over to your speakers for any closing remarks.

Okay, thanks very much for listening in today, and we wish you all a good Friday and a nice weekend.

Yes, thank you. Bye-bye.