Avanza Bank Holding AB (publ)

Welcome to the Aranda Bank interim report January to September 2025 webcast and conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. I would now like to hand the conference over to your first speaker today, Gustav Unger, CEO, please go ahead.

Thank you and good morning and welcome everyone to the presentation of Avanza's Q3 report. My name is Gustav Unger. I'm the CEO of Avanza. And with me here in the room today, I have Carolina from HIR and Adnan, who is our interim CFO and also our chief technology officer, Fredrik Broman. Especially welcome to you, Fredrik. Thank you. Today, I will start off by summarizing the quarter and go through the financials. After that, I will hand over to Fredrik, who will give a briefing of our tech and the ongoing cloud journey. Starting with some key highlights from Q3, the business model with multiple revenue streams have been showing its best side with strong contribution from both trading and interest-related income. And we are proud to be reporting a strong operating result, actually matching our previous record for a single quarter. Our customers had a much calmer market environment to navigate, and their net buying of securities nearly doubled since Q2. It has been a productive quarter here at Avanza. On the pension side, we initiated a collaboration with LifePlant. which broadens our pension offering with a comprehensive personal and independent pension advisory service. The acquisition of Sigma stocks finalized and the work with creating Sweden's best and most modern discretionary mandate product intensified. Now we're working in close collaboration with the private banking customers that have showed interest in the product, developing it together with them. On the theme of private banking, Jacob Smith joined as head of private and investment banking, meaning I now have a nearly complete management team, only missing the new CFO Jonas that will join by the turn of the year. We also launched several features for the stock market enthusiasts, including digital trading on the London Stock Exchange, new and improved portfolio analysis, and AI-generated report summaries on the stock pages. Looking forward, a lot speaks for brighter times ahead for the Swedish economy, although we are only seeing small signs of this in our numbers so far. During the autumn, the government presented an even more expansionary budget than last year, and the Riksbank has announced another policy rate cut Hopefully, this is what is needed for the Swedish economy to finally take off. Regardless, it is good for the household to get more money in their pockets. They are still cautious and have so far not accelerated either consumption or long-term savings this year. The latest savings market statistics show that cash savings were more than twice as high during the second quarter this year compared to Q2 last year. And the flow into funds in that quarter decreased by 2 thirds. This aligns well with our theory that customers' money has largely remained in their salary accounts. However, we are seeing small signs of a turn in the right direction. We have welcomed 41,000 new customers in the quarter, reaching a total of over 2.2 million customers, which is fantastic. We're also seeing a cautiously positive trend in the net inflows, which have strengthened since Q2, although we're still pacing slower than our ambition. Our savings capital is back above 1 trillion Swedish and has increased by 10% so far in 2025. We are truly seeing our business model at its best this year. Operating income is at its second highest ever for a single quarter, and increased by 8% compared to Q2, driven by higher brokerage, FX, and fund commissions. Looking at the nine-month period, operating income increased by 18%, driven by all income streams except for the NII that decreased slightly. Our costs are seasonally low in Q3 and therefore decreased by 8% since last quarter. Altogether, this adds up to a strong operating profit of 818 million matching our previous record for a single quarter. Return on equity for the quarter was strong at 45% and EPS at 4.37 Swedish krona. If we take a closer look at the revenues, both trading and interest related income streams were contributing strongly as healthy part of the income mix. Trading activity held up well in line with the latter part of Q2, despite the lower volatility in the market. On top of this, there were 8.5 more trading days in Q3, which provided an extra boost to the turnover and the number of trades. The number of brokerage-generating customers also increased. Looking at the brokerage margin, it was steady at 11.4 pips, same as in Q2, This despite the higher share of the brokerage generated by the standard segment and a substantial increase in the share of foreign turnover from 23 to 28%. The positive margin effect from this was offset by a higher turnover per trade, especially in the fixed fee brokerage class, which gives a lower income per trade. The aversion we saw to US stocks in the spring turned out highly temporary. The interest for foreign trading is clearly back and our FX income increased by 34% compared to Q2. This is good since our customers' portfolios still have too much exposure to Sweden to be considered well diversified and the trend of increased foreign trading should therefore continue. The fund business has developed nicely and net fund commissions increased driven by higher fund capital. The share of index funds increased by 1.1 percent in the quarter to 49.7 percent. Despite this, the fund margin was stable at 25 bps on average and at 24.8 bps on September 30th. We have seen a big interest for global index funds, which are generally priced slightly higher than Swedish exposure. Other income decreased as a result of lower income from Avanza Markets and higher commission. If we zoom in on the net interest side, we are once again seeing resilience to lower market rates. The Riksbank cut the policy rate in late June, which impacted the return on the surplus liquidity, although the full effect is delayed as we have up to three months interest rate duration in the bond portfolio. Looking at the lending side, the mortgage is directly tied to the policy rate and the rate was cut by 25 basis points in late June. We also decided to cut the margin lending rate by 34 basis points. This had a positive effect on the attractiveness of our offering, and the effect from lower interest rates was largely mitigated by higher volumes. The average rate for internally financed lending decreased to 3.01% from 3.27%. On the interest cost side, our interest rate expenses for deposits decreased as a result of lower deposit rates, despite increased volumes on the savings account, especially by the end of the quarter. The volume increase was largely a result of our external savings accounts partners lowering their deposit rates. The average annualized rate on deposit decreased from 91 to 80 bps while the amount of customers' deposits in interest-bearing accounts increased to 54% at the end of Q3, which can be compared to 51% at the end of Q2. In September, the Riksbank announced another policy rate cut of 25 bps, which took effect October 1st. With regard to this, we decided to cut the savings account rate by 20 basis points The reason we're not fully passing through the policy rate cut is to position ourselves with a slightly more attractive rate in the process of discontinuing the collaboration with external savings accounts. Also on interest costs, earlier this year, the Riksbank decided that all banks must deposit a portion of their deposit base to 0% interest rate by 31st October 2025. For Avanza, this means that 225 million Swedish will be deposited. This lost interest income will be reported as an interest expense. Basically, this is a confiscation by the Riksbank. Altogether, we still have a healthy net interest income contribution to the income mix, and the Riksbank is now estimating a stable policy rate. for a foreseeable future if the outlook for inflation and economic activity remains intact. Moving on to costs. The personal costs are seasonally low in Q3 due to summer vacations, while the operating expenses were 8% lower than Q2. This year, vacation leave was higher compared to 2024, while the positive effect was even bigger. With last year's Q3 report, we announced strategic priorities up and including 2030. Our growth ambitions are high, and initiatives in both pensions and private banking are intensified during the second half of the year. At the same time, the cloud journey is proceeding according to plan, and we're moving closer to our goal of having started development in the cloud environment before the year ends. Avanza is firing on all cylinders, and therefore the cost guidance of 11% increases for the full year of 2025 stands. As you can see, we remain well capitalized, and we audited the figures this quarter, meaning that the profit has been included in own funds. We have a prudent margin both to the leverage ratio, including P2G, and the total requirement, including risk-based P2R. even though our deposit volumes on balance sheet have increased some compared to Q2, largely driven by the closing down of our external savings accounts. We can handle increased deposits of 40 billion before reaching the LR guidance. In September, the Swedish FSA announced the results from their supervisory review and evaluation process of Avanza, the so-called SREP process. The Pillar 2 guidance on the leverage ratio remains at 0.5%, and the total leverage ratio requirement thereby still amounts to 3.5%. The risk-based Pillar 2 requirement, either P2R, was reduced from 5.71% to 5.02%, which decreases advance of total risk-based requirements from 18.21% to 17.52%. In other words, the leverage ratio requirement remains governing for Avanza's capitalization. And since the margins to the risk-based capital requirements are now even higher, the likelihood of that changing is even lower. With that, I will now hand over to Fredrik for a briefing of the tech and cloud journey.

Thank you very much, Gustav. And good morning, everybody. So my name is Fredrik Broman. I joined Avanza team. a little bit more than a year ago, August 2024 as CTO. So as you know, Avanza is one of the best known brands in Sweden. Customers love the product and the company has a reputation of being one of the best employers in the country. I always had a personal interest in savings and savings products and had the advantages of looking at Avanza from the outside, from the inception, continuously pushing the boundaries for what good looks like in this industry. And that has always been very impressive to me. So when Gustav offered me the opportunity to join the team and that very exciting journey, I did not hesitate to accept. It was a very easy decision. I'm happy so that I joined. It's been a fantastic year so far. What do I bring? I think that I've had quite a few years in FinTech already and also been working with the stockbroker previously, so I think I bring quite a lot of experience from fast-paced tech companies together with a solid understanding of the industry and also understand what it means to operate tech in a highly regulated environment. So something about what I see and what impresses me the most. There are two bits to that. Avanza stands on a very strong tech platform. My predecessors have worked very hard to create a homogeneous tech stack with few components, standardizing tech and processes to a very high degree. And that makes us fast. Few components means less overhead. It means that people easily can move between teams and jobs because they recognize the tech stack wherever they go throughout the company. We can make changes in one place that all teams can benefit from, whether it's upgrades to specific bits of technology or if we have to roll out quick security updates. We can do it in one place and make it happen instantaneously across the platform. And it also means that all the investments we do in the platform benefit everybody. So the investments we do in central teams, making sure that we gradually upgrade our tech platform, the entire company benefits. Obviously, it's a quite high performing platform. We have a lot of customers averaging 450,000 daily active users. It's very high intensity in transaction volume. We have a very large portion of the trades on Nasdaq and First North, which means that we need to be on our toes to make sure that performance and reliability is top notch. But I can also see that the architecture is where it should be. The company has spent quite a lot of time and investments making sure that we stay on top of things and using best practices as they evolve in the industry. We have a modern microservice architecture already in place. It's easy for teams to deploy changes. We do many changes every day from different teams to the system and without our customer noticing. We have structured A-B testing, making sure that we can try different versions of the product to different customer segments and trying out new features to see how customers react and what the effects actually are before we decide which way to go. And the data platform is very modern and very strong. We have had quite a long investment in making sure that we can deliver data throughout the system to teams and to stakeholders to measure how we do, making sure we can track KPIs and making sure that our decisions and the way we operate the platform is data driven. That's on the tech side, but you don't get far if you don't also have a very strong team. Avanza has a very strong tech culture. That's part of the inception. I mean, if you're a company that tries to do something completely different and you do it with tech, that's built into the walls of how you operate. It's been like that for 25 years and it's still the case. But also the strong customer focus. I think that's quite unique to other places I've been. Even though customer focus always has to be strong in successful companies, this is something that is very present in my teams. There's always a discussion around how we can improve things for the customer. What is the next step? How do we get that feature a little bit better, a little bit smarter? How can we take the next step in making things better? And you can always hear the discussion focusing around, it's not the tech that matters, it's how do we make sure that the customer benefits the most from what we do. The strong brand also attracts talent. I'm in the fortunate position to see quite steady inflow of very strong candidates when we open up new positions. This is quite different from other places I've been at, which is a very fortunate position to be in and something that we would like to protect, obviously. But also when people join, they stay. We have a very high employee NPS. People like working here and they enjoy the job they do. They enjoy the culture, they enjoy the way we operate. And we have a very low attrition rate. People stay for a long time. Something about how we operate. Obviously, the core operating unit, as with other tech companies, is a team. We group teams together into something we call areas, and we have 10 of those at the moment. Five of those areas are within my domain, and five of them are in the product domain. However, there's a very close collaboration, obviously, because you can't quite separate the product part from the tech part. They go very closely hand in hand. The purpose of a team is that they're expert within the domain and they are giving a specific problem or a set of problems to solve for. And they start according to that need. So depending on what kind of team and what kind of problem they're asked to work with, we're going to staff the team differently. But typically, there are front-end developers, back-end developers, QA, UX, engineering managers, the product owner, but sometimes we also have people from other parts of the organization joining the team as product specialists if there are specific areas of expertise that are needed to better understand for how to build the product. We're asking teams to be responsible end-to-end, and what does that mean? It means that they look at the problem, they are responsible for the solution, they implement it, roll it out, and then maintain it. So we don't have any handovers. We make sure that the people working on the problem, they stay within that context so that they can improve on the solution over time. And one of the benefits of having an area, obviously, is that we can look at it from a bigger picture perspective that, all right, we don't sub-optimize in a specific team, but we can make sure that the teams together solve for large problems. and that we stay within what we need to do for the strategy, complete customer journeys, et cetera, et cetera. Team behaviors here at Avans are very similar to what I've seen at other fast tech companies. Agile processes are best practice here as in other places, and focusing on customer problems. We work at high speed, and we are able to make changes as needed. Most teams will push out new changes every day. Decisions are made on data, as already mentioned, and we do use experiments and customer interviews and surveys to gain customer insights to make sure that what we build and what we deploy actually makes sense for end customers and bring value. And we track progress using KPIs as a lot of other and most other tech companies would do as well. Right, so let's talk a little bit about the cloud journey. So earlier this year, as earlier communicated, we signed a deal with Google, making them our main provider for the Google platform. That was already an existing relationship. We had used them for our data platform for quite a long time, and we also used them for productivity tools. But now the relationship broadens to include more parts of their product offering and basically allowing us to start moving more of our software to the cloud. So why do we do this? I think that there are four main reasons, even though there might be other benefits as well. I think the most important one is that allow us to spend more time creating customer value. So it's on the theme of stop doing things that we don't have to do. And instead, we can spend that time and that effort on building what we are best at, which is good savings products and services for our customers. We think that even though the developer experience at Avanza today is modern and Good. We also have to spend time maintaining that. Instead, we can leverage on what Google has and allow us to ride on all their investments. And we can sort of use their productivity tools and the way that they write and deploy software into the cloud, allowing us to spend that time on other things. But it's also important to continue to attract talent. The cloud migration has been ongoing for quite some time and many, many years as part of how the industry wants to operate. And it's an expectation for newer generations that tooling and infrastructure and components are in the cloud. And it's a way for us to make sure that we stay relevant and can keep attracting talents over time. Scalability, obviously, it's not hard for us to scale in our current setup, but it means that we have to do work, right? We need to buy hardware, install it in our data centers, maintain and operate that, and make sure that we have enough scale for peak at all times in our data centers. With the cloud platform, an exercise of process from our side to make sure that we utilize enough capacity at any given time. So it's less of a matter of buying and operating and more of process making sure that we have the right capacity at the right time, which is obviously a big advantage. So how are we doing? Well, we are on track On budget and timeline, what we've said so far is that we're going to have one service in production before the end of the year, and we will make that target. And one service in this context means that we're going to have at least a little part of our savings offering in the bank, some computational part that we're currently doing on-prem. But it's worth mentioning that we already have several components in the cloud. I mentioned the data platform before that has been in the cloud for quite some time, but we also moved part of our infrastructure components already. Some of the networking components are now in the cloud. The content delivery network, basically pictures and text for the web and app are already in the cloud, et cetera. So even though the target is one service in production, that's not the only thing we're doing and not the only thing we're moving. What happens next is once we have a solid platform, which is what we're building at the moment, we will just start migrating at a controlled pace, service by service to the cloud. That's an exercise that we expect to take several years. And at the end of 2030, the plan is to have moved everything that is suited for the cloud. What does that mean? It means that there could be components that for some reasons are not well suited to run in the cloud, for example, for latency reasons. If there are parts of our trading platform that it makes sense that they still run in the data centers that is decision we will make and we will have a setup where the majority of our things run in the cloud and some parts will be left in the data centers for those reasons all right so i am as a cpu you cannot not say something about ai which is obviously the biggest trend in the industry at the moment not just in our industry but tech globally So what are we doing within AI? So I would say that we are exploring and selectively investing in AI. And we're doing so in three areas. Gustav already mentioned that we launched an AI feature in our product this quarter, which is a summary of the quarterly report from companies on the Swedish Stock Exchange. Basically, it's using our own existing data, summarizing it, making sure that people get the highlights from the quarterly reports. And this is probably a good example of how we will use AEI for the product offering initially, using existing data, existing products to and enhance them with AEI to see that, okay, how can we make this better? How can we use AEI to improve on existing features? Within my teams, we use AEI or generative AEI to write code, obviously also trend within the industry. We're exploring different pathways. We have quite a few teams using AEI already to produce code, and we're trying to integrate those kind of components more and more into our development pipelines. And lastly, and perhaps most importantly, one of the advantages of AI is that we can solve for operational problems a lot easier or maybe solve them at all in a way that wasn't possible before. Thinking about internal processes that are complex, that contain a lot of data where human interaction previously was needed. And we're looking through quite a lot of those and see, all right, with AI as a new tool, can we solve this in a better way and making us more efficient? One example of that is that we have an internal tool for our customer service people to quickly get answers to questions they get for customers, shorting the time from a question from a customer to how quickly we can respond. And that was all from my side.

Thank you, Fredrik. If I summarize, I would say we're once again reporting a strong quarter, as far with previous record and with healthy contribution from both trading and interest-related income streams. Avanza is going on all cylinders, and we're making solid progress within our strategic priorities. And looking forward, a lot speaks for brighter times ahead for the Swedish economy. Avanza is very well positioned to capture that future savings market growth. Thank you, and with that, I will open up for questions.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will now go to your first question. One moment, please. And your first question today comes from the line of Martin... Eksted from Handelsbanken, please go ahead.

Thank you and congratulations on a good result today. So I wanted to focus first a bit on fund income. So the share of index funds in the fund mix jumped to around 50% in Q3 after staying flat since the end, right? At the same time, it seems at least in my model that average fund commissions actually gain the basis points in Q3, although this may be within the margin of error given we don't have volumes in between quarters on a monthly basis, etc. But so first I wanted to check if you have any clarity to add around the dynamics and what prompted customers to choose index funds in Q3 to a larger extent than in Q1 and Q2. And if these were, you say, international funds to a larger extent. carrying a higher margin, which perhaps explains the margin update. And then secondly, could you just give us an idea of the average margin of index funds on other funds currently, as well as any trends you see there, both on the customer side and in terms of what customers are choosing, as well as on the side of external fund providers, i.e. the pricing of funds. That's the first one. Thank you.

Thank you, Martin. On your little bit forwardly related questions on index fund and what we believe going forward, I think it's hard. I think we have seen, if you have a little bit longer time series, as you know, we've seen an increased share of index funds. Now, it has been fairly flat for a while, and then you see an uptick in Q3. Is that a new trend? Is this something new? I don't think so. I think we saw a aversion to U.S. exposure in the spring after Liberation Day and so on and so forth. So it was a lot of reallocation, not a lot, but it was a reallocation away from the U.S. exposure to European and Swedish. In the quarter, we saw the most bought fund category was global funds. Apparently, our customers did show global exposure to a large extent through passive exposure this time. I don't see that that's a trend shift or something like that. You had the second question. It was around margins, yeah. I mean, we don't see We don't see much repricing from the fund companies that we have on our platform. We haven't done any repricing of the Avanza Fund Company funds. So I think the trend that we have seen is more on active to passive and we have seen that flattening out still with an increasing allocation to passive exposure, but that trend is slowing down. That's still my view looking ahead.

Okay, and could you give us a rough idea of average marginal index funds versus active funds, if you have that at hand?

I don't have, I would need to guess too much, Martin, to spit that number out right out. Maybe we can get back to you.

Yeah, fine. And then a second question, quicker. Apologies for the long-winded first one. I just wanted to check around the tax rate quickly. So the implied tax rate fluctuates a bit more in 2025 than it's done in the past two years, between 13.5% and 15.5%. And it's also come up on average since 2023 and 2024. So can I just check what's a reasonable assumption for us to put in our models on an ongoing basis for you guys?

You would then need to make assumptions about profit contribution from the bank and the fund company vis-à-vis the pension company. I can just note that in Q3, the Capitalförsäkring rapper was very sought after. One could assume that the ISK and the capital endowment product would be more in favor given the more favorable tax rules that were implemented. But the division between ISK and the capital endowment, I would say we think that foreign exposure will increase over time because our customers' portfolios are not well diversified. There's too much exposure to Swedish equities. I think it was 75% or something like that by the end of the quarter. So that if something speaks for more volumes in the capital endowment product, because it's much simpler to handle foreign exposure there.

Okay, thank you. That was very interesting. That's all from me.

Thank you. We will now go to the next question. And the question comes from the line of Patrick Bratellius from ABD Sundar Kholia. Please go ahead.

Thank you. Can you hear me?

Yes.

Perfect. My first question is regarding the cross-capacities. If you reiterate the cost guidance of 11%, the year-to-date income is in, like, 70% of the full-year guidance. So, basically, the cost will grow 22% year-over-year in Q4, or up by almost 25% quarter-over-quarter. Please specify a little bit more in detail what it is that will happen here in the fourth quarter that will ramp up the cost so much.

I think it's a fair question, Patrick. I think the way that we handle vacation in our profit and less statement needs to be underlined here. So when our colleagues and myself take vacation to a larger extent than just linearly over the year, it has a positive effect on our staff costs. So in Q3, we seasonally have low staff costs. And actually this year, we at Avanza took vacation to a larger extent than, for example, last year. So just looking at Q3 and then looking at what uptick would that with 11% mean to Q4, I think is a little bit misleading. And then we are doing a lot of interesting things. We incorporated Sigma Socks into our books. I think it was 1st of July. We are, as I've said before, we are not hiring sales capacity on our occupational pension side before our offering towards the corporates are improved enough. And we are at that stage and we are increasing the sales capacity there. And we're doing a lot of interesting things on the cloud, so hence our cost guidance for the year stamps.

Okay, fair enough. My second question is regarding the deposit rate. To my understanding, you chose not to lower the deposit rate fully on your savings account in order to attract more savings capital compared to the banks on the international savings platforms. What is your ambition here? Is there potential that you will even raise the savings deposit rate additionally, or are you satisfied with the move you have made? Is that the effect you had expected? Can you talk a little bit about that?

So our best guess at the moment is that the latest rate cap from 2 to 175 was the last one for quite a while. I mean, that's at least what all the macro guys in the Swedish industry are telling us. So we felt this was the last chance to do something outside the normal. So we did reduce the rate of the savings account with 20 bps instead. of the 25, which maybe would have been more normal, given that Riksvang cut the rate with 25%. We felt that we wanted to give a little bit extra to the customers, this last rate cut, maybe last, but in this long rate cut from 4% down to 175%. And on the margin, we wanted to be a little bit more competitive with our savings account, since that is even more important for our customers now when they external savings accounts are slowly but surely disappearing. What is our ambition here? Our ambition is very high as with everything we do, but we want to do it in a way that is good for our customers, that is good for our banking partner, and that is seen to be good also from the regulator. So I think what we guided at, uh in q2 still stands we we would love our customers to remain with as much as possible of their savings capital on on our platform but but how they will eventually decide to act we don't know and we we run this process up until the spring next year as we said also before and we we um We hope that our customers have chosen this product through us because they like Avanza, not because they like the underlying exposure to a certain consumer credit bank, for example.

But how they act, we will have to wait and see.

This is to Fredrik. Thank you for the presentation.

Very interesting. In your view, since you talked about All right. Thank you very much for the question.

It's a good one. So I don't see any limitations of the current platform in terms of going outside of Sweden. The cloud is not a prerequisite. for us to do that. However, obviously, there are other advantages of going to the cloud. For example, assuming that international expansions will yield a strong customer inflow, obviously, scalability is easier in the cloud than on-prem. But generally speaking, the platform as it stands from that perspective, I don't have a problem going outside of Sweden. Okay, fair enough. Thanks so much.

Thank you. Thank you. Your next question today comes from the line of Jakob Hedselvik from SEB. Please go ahead.

Good morning, everyone. Just to continue on Patrick's question on cost. I mean, the cost increase in Q4 would be 22% year-over-year if we are going to keep the full-year cost guidance, despite you beating cost in Q1, Q2, and now Q3. Is the Q4 high cost level the new run rate for 2026 as well, or should we expect a lot of one-time cost to occur in Q4? Could you give us some more detail on it, please?

Yeah. I would not want to be worried about hangover effect into 2026. We have communicated our costs for the whole period of 2030. We want that to be maximum 8%. It will be a little bit higher in the beginning, which we see this year when we're taking a number of investments. So it needs to be trending down and we want to come down to a really scalable level by the end of the period, of the 2030 period. So without going into detail, Jacob, I wouldn't be worried about this hangover effect into 2026.

Okay, thank you. And then on external platforms, you write that some partner banks have decided not to fight with you regarding the deposit. But could you give us some more color on how many partners will take the fight? And could you give us any tangible results from the outcome with, for example, Nordax that was supposed to leave the platform at the end of September?

It would be nice to give you more transparency here, but I need to navigate what is agreed with different banking partners and what to keep private, what to keep public. The The data point we gave in Q2 that if customers do not act, we believe that 50% would end up on our balance sheet and 50% would end up with one of our banking partners. That is based on a legal handshake with different banking partners. But how customers would actually act, I mean, most of them we hope will act and not just wait and be passives. So it's hard for me, Jacob, to give more transparency than that.

Okay, fair enough. Just a final question then. Net brokerage income per trade declined 4% sequentially despite strong overall results. What's driving the turnover per note increase in the quarter and how sustainable is the shift towards a fixed price brokerage class, which you mentioned in your report?

I don't see a trend per se. When looking into other quarters, it's hard to see a trend that would go in that direction. I mean, you could argue that if it's larger customers that are active, then you would likely have a larger ticket size on average, but we don't see it. a trend here, but that was something we saw in Q3. That's why we highlighted it.

All right. Thank you. Thank you.

Thank you. Your next question today comes from the line of Enrico Bolzoni from JP Morgan. Please go ahead.

Good morning. Thanks for taking my questions. Sorry to go back again on cost. I was just curious whether you can provide some color, because you clearly say that the progress with the migration to cloud going well. And I think in the past you said that out of the 11% expected cost increase, about five was related to this cloud migration. So can you just give us some color how much of that five has already been implicitly reflected in the Q3 print? Again, I'm just surprised because clearly costs are developing very well and it seems a big jump now in Q4 versus Q3. So I was just wondering whether maybe few things with the cloud are not progressing as fast as you hoped or any other color that would be helpful. And then my second question, can you just give some color on the clearly the ISK, the tax exemption has been increased to 300K from next year. How much of the impact do you think we have already seen this year, and how much do you think will be in 2026? In other terms, do you think that in 2026 we will really see an uptick in contribution to ISK accounts? Thanks.

I'll start with your first question. I think we progress, of course, the cloud journey on our dashboard, the company dashboard as one of the most important KPIs, and that we're flagging green. And when it comes to the 5%, that's still a good guess for 2025. And as I said to Jacob, I wouldn't be worried about spillover effect or that we go in with too high run rate into next year and that would create problems for us. I think we have good control of our costs. We are making conscious investments into the future. When it comes to the ISK, if we look at the data for this year, so we saw tax exempt up to 150,000 Swedish krona. I thought we saw some effect in January. because we had strong inflows, if you recall, and a fair share of that ended up on the ISK side. After that, I think the data got blurred by everything happening around us with risk aversion and so on and so forth. So it's hard to actually use the data, I think, to predict what will happen next year when the tax exams go up to 300,000. But more than half of our customers would enjoy that tax exempt to 100%. So it should have a big value for our customers. And it would make it even easier to save because you don't even have to worry about that yearly tax. But it's hard for me to give a number because this year has been so distorted by things going on around us.

Thanks. And by that, you mean that you already have 50% of clients that have more than 150K in an ISK. Is that fair?

More than 50% of our customers have less than 300,000 in an ISK. Thanks. Thank you.

Thank you. Your next question today comes from the line of Ermin Keric from D&B Carnegie. Please go ahead.

Good morning. So maybe if I can, one more question on cost. Sorry for that. But just to understand how you can ramp it up that much in Q4, because typically we talk mainly about staff costs with Avanza, right? So it's hard to get that run rate that much higher in Q4. So is your cost base going to change in terms of the composition going forward with being more, I don't know, kind of... external fees, or are you going to do much more marketing for Q4, or how do you get up to that figure, just to better understand? And then the second question would be, if we look on the net flows, we've actually seen almost a 30% drop on the occupational pension flows year over year. What's driving that, given that that's actually one of your focus areas? And then the last question would be, on the kind of tech presentation. So you're talking a bit about a homogenous tech stack and being standardized, but I believe, Gustav, when you came in, you talked a bit about Avanza doing a lot of in-house solutions and maybe being a bit too complex in some regards. So is that, can they have different views on it, or you've already taken out all of those efficiency improvements from standardizing? Thank you.

if we start with the the cost side i mean 2025 is is an investment year um we want to be mindful of what do we take on at fixed cost is uh new colleagues and what do we take on as temporary cost in terms of uh um help from the external side consultants and so on and so forth and we try to balance that we have in the past been very very keen to have everything done by colleagues and not from external help. But we are a little bit more mindful now when we're doing these investments not to carry on fixed costs to the full extent. So when you look at Q4, there is a mixture of those two. There was a second question before Fredrik's question. I can't recall that one now. I think when we look at the market statistics, it looks good when we look at premium vis-a-vis competitors, which I look at more than... I haven't looked much on the you know, nine months versus nine months. Maybe I can get back to you on that one, Ermin.

Absolutely. That's fine.

And then on the tech side, so we still have a lot to do. We have done good progress. So maybe just to repeat your question, I was impressed by how digital Avanza is towards me as a customer. But on the inside, I saw that we have a big potential to be more digital and efficient towards me as a colleague and to all our colleagues. And that we have a work to be done to take out manual processes, automate more. And that we're doing. And I think we've had good progress this year. But that will take a long time to be. Before I say, I think we're done with that. We have had two main focus areas this year. One is moving on of securities, and the other one is how to handle death estates. And next year, there will be one or two other areas that we shoot through. And the year after that, that will be something else.

Got it. Thank you.

Thank you. Your next question today. comes from the line of Andrew Lowe from Citi. Please go ahead.

Hi, guys. Thanks for taking the question. I've got one on competition, customer churn, and marketing costs. So there's been lots of noise about rising competition in Sweden from other digital platforms. Your 2023 annual report quotes the customer churn of less than 1% and the 2024 annual report says around 1%. So I'm curious to hear how this has evolved during the year. And then kind of related to that, I guess, is the fact that you're only spending 1% of your revenues on marketing, which is far lower than any of your European peers and Nordnet's up there, marketing costs. which seems sort of biased to Sweden. They're still relatively low, but why don't you do more here and increase your marketing budget?

Rebecca, our head of marketing, would love to hear what you're saying. Of course, always a debate on where to spend your money. I mean, our biggest and most important marketing tools that are our existing customers. and who refer us to friends and family. We have actually notched up marketing in two areas this year, where we feel that the brand recognition is not where we want it to be, and that is within occupational pension and that is within private banking. Can we do more? Yeah, maybe, but we want to spend our money wisely. When it comes to churn, that's something that we monitor very closely. What we report to you, we complement internally with soft churn and very soft churn, just to make sure that we could identify any early trends. It is fairly flat. Also during 2025, we monitor that on a monthly basis. Do we see high competition? Yes, we see high competition. We saw high competition also five years ago, even though the players were slightly different then.

And I think we will see high competition also five years out. Great. Thanks very much.

Thank you. As a reminder, if you would like to ask a question, please press star 1 and 1 on your telephone keypad. We will now go to the next question. And the next question today comes from the line of Ian White from Autonomous Research. Please go ahead.

Hi there. Thanks for taking my questions. Just a couple from my side, please, both around the net inflows. You've talked a bit about the dynamics in the second quarter. But just looking at 3Q, the net inflows are down 35% year over year. and your listed peers look to be up sort of 20% or more. Just how would you explain that, please? And what makes you relaxed about it? That's question one. And relatedly, on the private banking net inflows, there were some strong numbers there around the turn of the year, sort of 4Q24 and 1Q25. But I think it's fair to say that momentum has slowed in the last couple of quarters. Has anything changed there regarding the competitive dynamic? And how do you regain momentum there, please? Thank you.

When it comes to net flows overall, I'm not at all relaxed. I think that's a very important KPI. It is under our ambitions. But we try to understand, is it us or is it the market? And And one important data point was the Q2 market statistics. We don't have it for Q3 yet, where we saw that 100 billion went into deposits and very likely salary accounts. I think we Swedes were shell-shocked and we have not activated that money into long-term savings. And if I talk to friends in the consumption industry, they feel that it hasn't gone into consumption neither. We start to see signs of that in the end of the quarter, some brightening of the economy. But we are happy to see an increase in the net flows from Q2. And we hope that when the Swedish economy takes off and the Swedish households are more positive towards the future, that they actually take this money in salary accounts from the sideline and not use it only for consumption, but a fair share also into long-term savings.

The second part of the question was around... Yeah, what was your second part of the question? On the private banking net specifically.

Thank you. The way we measure net flows in the pro and price banking segments are, I think, a little unfortunate because they don't follow market practice. But I've discussed this with Carolina quite a while and we feel that it's more important for you to have a long time series of comparable data. But if you join Avanza in September with 10 million Swedish, and then in October, you apply for private banking, that flow of 10 million is not recorded as private banking flow. So you need to, for net flow or for inflow into private banking to be recognized, you need to sign up for private banking directly when you come from external, otherwise it's shown as flow into the standard segment. So what I look at much more, I mean, I can follow these flows more in detail than you can, but what I look at with the numbers we produce externally is actually the change in savings capital. That will give you a much better view of is the price banking franchise growing as it should or not. And as you see, the savings capital growth of both pro and price banking has been growing healthily.

But just to be clear on that latter point, the change in savings capital, I guess the biggest driver or at least a very material driver there is change in market levels, right? It's changing just the market values. Why would that be a good indicator for sort of growth in the private banking franchise?

I would compare it with the other segments to compensate for the effect that you need to have. you need to sign up to become a private banking customer is the first thing you do when you come from one of the incumbent banks. Otherwise, it will show up as flow into the standard segment.

Okay. Is there any measure you can provide to us that tells us sort of the flow of new customers or capital flows? that is sort of eligible or relevant for private banking, sort of whether or not that person has yet applied for the service? Because that sort of feels like the measure that we're trying to get at here is the sort of customer wins, if you like, that are relevant for that product, whether or not they've actually activated or applied for it. Is that something that you guys track at all?

We do. Let us reflect if we can help you better that going forward. What I look at internally is the target I have on the head of price banking in terms of number of new customers per month, and that is tracking green.

I see. Okay, thanks very much. Thank you.

Thank you. We will now go to our next question. And the next question comes from the line of Nicola Vasilija from BNP Paribas. Please go ahead.

Good morning. Thank you for taking my questions. I will only have two, please. A bit more on the big picture for the platform. I'm interested particularly in private assets. We see strong demand in retail channels for private alternative assets. I know that you, from memory, offer some of them with providers like Schroeder's, for instance. But we've seen recently some of your peers are taking new initiatives on that side. For instance, European peers trade Republic as partners with a few of them and offer capabilities to invest through automated savings and for amounts as low as one euro per trade. So I was wondering if you could update us on your capabilities in that segment and potential product innovation or new partnerships you could have. Thank you. That would be the first.

When it comes to private exposure, that's something that has been hard to get as a private individual in Europe and in Sweden. And one of the reasons for launching the private asset funds last year was to make it more available for us retail investors. It's dipping the toes in this area from our side. And I think we can do much more on that going forward. But we're also mindful that it needs to be products that are suitable for our customers and where the cost to get this exposure is something that we can stand for with our brand, where we want savings and investments to be... It shouldn't be expensive to save with us. I've looked into this area a lot also previously in my career and the trend is clear. And I think we will see more of these products that have been exclusively tailored to institutions in the past that they will trickle down to retail investors. But I don't think we're fully there yet to do it in a good and cost efficient way.

So I understand that for now it remains pretty marginal in your overall savings capital?

Yes, today it is.

Okay. And my second question would be, could you update us a bit on the numbers around the automated monthly flows you receive in the platform from the different saving plans? Has it changed much in the last few quarters?

That's also something we track monthly because that is it has an especially high value to us and that it's trending nicely positively. We changed the measurement as we described also because we had a cap of I think it was 20 000 in the past so people who have a standing transfer of 30,000 would just be excluded from that. So that's why we made the change and we follow it closely. It has great value and we see a good positive trend in the numbers during 2025.

All right. Thank you. That will be all for me. Have a good day. Thank you.

Thank you. There are currently no further questions. I will hand the call back to Gustav.

Thank you much. Thanks for joining and have a great day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.