Avanza Bank Holding AB (publ)

Good morning, everyone, and welcome to the presentation of Avanza's Q1 report. With me in the room in Stockholm today, I have CFO Jonas Sverling and Carolina Johansson from Investor Relations. I will start by quickly summarizing some highlights from the quarter and then hand over to Jonas who will take you through the financials. After that, I will talk about the other exciting news announced this morning that we are now entering the next phase in our international expansion. establishing Avanza in Denmark by the second half of 2027. But first some key highlights from Q1. It's safe to say that a changing world has now become the rule rather than the exception. Rapidly shifting macro factors set the agenda throughout last year and the first quarter of 2026. Despite the thermal and geopolitical concerns, we are again reporting a fantastic quarter, the strongest in the history of Avanza. Our customers have once again had to navigate rapid turns and high market volatility. For us at Avanza, this means an environment with high trading activity, which boosted trading income. Foreign trading also held up well, and in absolute terms, it was higher than the previous quarter, although it decreased slightly as a share of total trading, where our customers, especially at the beginning of the year, choose to shift their exposure towards Sweden. I believe this is a natural result of our large Swedish companies being seen as a safe haven when it storms on the stock exchange. but potentially also a sign that savers were positioning themselves for hopes that the Swedish economy will finally gain momentum. We have welcomed a total of 55,400 new customers and had net inflows of 16.5 billion Swedish krona, although the phase-out of external savings accounts continued to have a negative impact. We're making solid progress within our strategic priorities, Regarding the private banking offering, we took steps along the way by further visualizing and differentiating the private banking offering from the general offering with a new visual design for private banking customers, as well as a new landing page where we more clearly package everything included in the offering, i.e. a new and more exclusive look and feel. In addition to polishing the surface, we have also sharpened the content by improving our mortgage with more interest rate levels and open up for lending for holiday homes. Furthermore, we have also soft launched our digital discretionary portfolio management for a selected group of customers, a milestone on the road to a broad launch later this year. We opened up for Pride Banking customers during the quarter to register interest in the product, which many did. For pensions, our great focus now lies on improving the product experience and the offering for corporate customers using Avanza's occupational pension for their employees. And here we took the next step to strengthen the relationship with the corporate customers by having a number of our employees certified to provide advice to companies on pension and insurance related issues. I can also announce the positive news that Jesper Bonivier, who since 2019 has been CEO of the fund company, has been appointed COO. While Jesper takes on his new assignment, I have begun the recruitment of a new CEO for Avanza Fonder, who will continue to drive that business forward. Also, Elin Wiker was hired as a new savings profile at Avanza. Elin is a well-known profile in the Swedish financial media with experience from both journalism and asset management. She will contribute with an increased focus on stocks, company analysis, and market-related content across several platforms. Last but definitely not least, we announced the exciting news this morning that we are now entering the next phase of our international expansion, establishing Avanza in Denmark by second half of 2027. I will speak a lot more about this later, but we'll let Jonas take you through the Q1 financials first.

Thank you Gustav and good morning all from sunny Stockholm. Let's start with some financials. We are today reporting fantastic results. This is the highest quarter result in the history of Avanza, once again with strong contributions from all income streams. It's up 9% versus last year and 10% versus previous quarter. Cost for Q1 came in below Q4, resulting in total in a record quarterly operating profit of 879 million. All in all, net profit is up by 21% compared to last quarter and 7% compared to the previous year. Return on equity ended up at 40% for the quarter. If you look at the income mix, it remains healthy with strong contributions from all income streams. The volatile market environment from last year continued and accelerated into 2026, and so did the high trading activity. This positively affected brokerage income, which increased by 21% compared to Q4 and by 10% compared to Q1 last year. Income increased despite the decreased brokerage margin, which was at 10.6% in the quarter compared to 11.2% in Q4. The share of brokerage generated by Private Banking and Pro was stable at 26%, so this was a result of higher turnover per note, especially in the fixed price brokerage class, which means a lower income per krona. The relatively lower share of foreign trading also contributed to the margin decrease. However, in absolute numbers, brokerage generating turnover in foreign securities increased, and this led to a strong currency-related income up 10% since last quarter. If we move to fund commission income, that was the only income line that decreased compared to Q4. And if you look at the fund capital by the end of the quarter, it decreased slightly compared to the end of Q4 following market value changes. But if you look at average daily volume, it was higher actually than last quarter. And as the fund income is based on daily volume, this means that the small income decrease was a result of the mix in our customers' fund portfolios. Where win the quarter has seen a big interest for Swedish exposure while US and tech funds in particular have been net sold. This has resulted in an increased share of index funds amounting to 52.5% by quarter end and a decreased fund margin at 23.3 basis points on average and 22.8 basis points by quarter end. Finally, other income more than doubled compared to Q4, and this was primarily a result of the volatile market environment, which fueled trading activity in ETPs and thus avanzed market income. Compared to Q1 last year, other income decreased, which is mainly due to the closing of external savings accounts. But also higher other commission expenses were among other smaller commission cost items. The cost for payment commissions increased as a result of more people logging in through bank ID, which typically happens when a lot happens on the market. And not necessarily leading to trade activity. It's just when people want to check in on their accounts. Zooming in a bit on the net interest income. Once again, we see a volume driven NII increase. The policy rate was stable during the quarter and Stiber three month average as well. However, with around 20 basis points pick up towards the second half of March compared to when we entered 2026. We start by looking at the lending side. There were no changes to margin lending rates compared to end of Q1 to end of Q4. Margin lending volume increased slightly, but we have seen higher margin lending volumes intra quarter when market sentiment was more positive. We have an attractive private banking mortgage and the mortgage volume increased also this quarter. As part of our work to improve the private banking offering, as Gustav talked about, in late January, we introduced three new interest rate levels for customers with savings capital exceeding 30, 50 and 70 million respectively. We expect, however, a very limited initial margin effect from this, but we believe it would be a good way to attract more savings capital and increase share of wallet within the wealthier customer segments. The annual average interest rate for internal finance lending was stable and amounted to 2.8%, down one basis point from last quarter. Our income from the surplus liquidity increased compared to Q4, primarily driven by higher deposit volumes. The policy rate cut from October is fully reflected now in the return on treasure portfolio in Q1, since we have up to three-month interest rate duration in the portfolio. However, as said since late March, the risk premium has increased in the interest rate market, which is reflected in slightly higher interest rates. But due to the interest rate duration, this only contributes marginally in the quarter, but will benefit the return in the portfolio with a delay. On the interest cost side, interest expense for deposit increased due to higher volumes, and we made no changes to deposit interest rates, and the annual average deposit rate also remained unchanged at 0.76%. 57% of customer deposits were on interest-bearing accounts by quarter end, more or less unchanged from 58% compared to end of Q4. How the policy rate and market rates develop is obviously yet to be seen. When it comes to our interest rates, our strategy remains the same, making decisions in relation to each policy rate announcement, taking both customer behavior and competition into account. This applies to margin lending on the asset side. deposits on the liability side, whereas private banking mortgages are contractually linked to the Riksbank repo rate. The return on the treasury portfolio naturally moves with increasing market rates with a minor delay depending on the term profile of up to three months. Although we hope for more stability in the market than for an economic pickup rather than higher interest rates and a delayed economic recovery, Avanza's business model can handle also an increasing interest rate environment, which, what is equal, as you know, would mean an increasing NII. Moving over to costs, they came in lower than Q4, in line with what we said with some of the Q4 costs being temporarily elevated. Personnel costs were stable, while other costs decreased, mainly then as a result of lower costs for consultants. Also, marketing costs were elevated in Q4 due to initiatives within private banking and pension and came down a bit now in Q1. Our guidance of 9% and a cost increase excluding international expansion stands. In March, we carried out our second successful issuance of 81 capital as part of our long-term work to optimize the capital structure and prepare for continued strong growth in savings capital. The issuance amounted to $500 million. and carries a coupon rate of three months Tiber plus 2.85% compared to 325 basis points in last year's issuance. This issuance was heavily oversubscribed, which is a sign of strength for Avanza, which is evidently seen as a secure company in a quite volatile market. The capital constraint for Avanza is the leverage ratio, and the main driver of the leverage ratio are changes in deposit flows. Strengthening the leverage ratio through additional 81 issuance was, as said, part of optimizing capital structure, both in light of external savings accounts being closed down and structurally internal savings accounts increasing. Deposits on a balance sheet have grown by 40 billion in one year, and partly due to the closing of external savings accounts, with barely 2 billion left in these accounts by end of the quarter. Deposit growth going forward will thus be linked to our overall growth in savings capital, where deposits will always constitute a natural part that is dependent on market conditions, risk appetite, and how customers choose to allocate their savings. The leverage ratio requirement remains, as said, the main capital constraint for Avanza, and at the end of the period, it was at 4.2%. This means that we still have a good margin for the total leverage ratio requirement, including pillar 2 guidance of 3.5%. And that we can handle increased deposits of 27 billion before breaching it. However, there's a slightly less room compared to Q4, which might seem odd considering the A2A issuance and that the retained earnings for Q1 have been included in owned funds. Here we should bear in mind that March was a shaky month on the stock market for our customers, meaning that we did see net selling of securities. Also, in late March, the dividend season started, which always temporarily increases deposits as it typically takes a while before customers reinvest. And this is a healthy reminder of the importance of having a prudent buffer requirement. Having said all that related to financials, I will now hand back to you, Gustav, as I'm sure all of you who are listening are interested to hear a bit more about our international expansion.

Thank you, Jonas. this morning we announced the exciting news that we are now entering a new phase of our international expansion but looking back a bit in late 2024 we announced international expansion as one of our five strategic priorities for sustained strong growth with the rationale that we at the clear market leading platform for savings and investment in sweden arguably the most developed and competitive market in europe should have great prospects to succeed also abroad. Although growth in Sweden is not expected to slow anytime soon, this is viewed as an important step to secure Avanza's long-term growth journey also many years from now. There is a great potential to make a difference for savers outside of Sweden, where opportunities for quality savings are often substandard. Our long-term vision is to become a leading European platform, and now we're taking the first step by expansion to Denmark. There are many markets that are interesting for Avanza. In less developed savings markets, there are bigger opportunities to have an impact, but they require a longer-term effort to reach out and change deep-seated behaviors. As a first step, a market with more similarities to the Swedish one became the obvious choice. Denmark is a natural fit for our first international market. It is the second largest savings market in the Nordics that resembles the Swedish one in many ways in terms of structure, competitive situation, culture, and not least language. Furthermore, Danes, just like Swedes, have both high digital maturity and financial knowledge and willingness to switch provider when it comes to financial services. On top of this, it's a market with significant growth opportunities, where the market is about 70% of the size of the Swedish savings market, according to our definition, and with a population that is about twice as wealthy as the median Swede. In Sweden, with our unique customer-centric Avanza culture, we have succeeded in making investments and savings into something fun and inspiring for our customers. This is what we will also do in Denmark, and I'm convinced that Danes will also appreciate our offering. Moving on to how we're doing this, we will establish ourselves organically, while ensuring that the swedish business continues at full speed we have decided to build a new platform using an ai first development approach there are several reasons to why we made the decision to build new rather than adjusting the swedish platform one is the enormous leaps taken in technical development in recent years the cost of building software has decreased drastically in a short time which now allows us do this in a cost-efficient way. Another important reason is that it gives us full flexibility. Savings and needs look different in different countries and by building anew we can adapt the offering according to local savings culture where needs are different. By keeping the international platform separate we also ensure that we maintain full speed in innovation for our Swedish customers and and growth in our swedish business while we build a scalable path into europe as this platform will serve as a foundation also for other markets in the future we are as always keeping cost conscious and low risk approach the establishment will involve an initial investment that we estimate at 120 to 150 million swedish of which around 20 will be capitalized This means that around 50 million will impact the 2026 cost base. Now, to give you a rough idea of our roadmap, the main priority will now be to get started on establishing a Danish branch and recruit the branch manager and create local presence. We will also start staffing up in other areas to make sure that this does not weigh on any parts of the Swedish business. We are detailing the customer offering and local branding strategy, setting up processes and procedures, while of course working on building the new platform. We will launch during the second half of 2027, bringing our customer promise of cheaper, better and simpler savings to Denmark. The main target will of course be to have Denmark's most satisfied customers. After the launch in the second half of 2027, we estimate the annual cost base at 80 million, which then increase over time as business grows. Additionally, we will need to work with marketing and brand building in a completely different way than we need in Sweden today. Smart marketing requires timing and flexibility. And here we expect to spend up to 60 million Swedish per year during the first three years after which these costs will decrease. I am convinced that our promise of a cheaper, better and simpler way to save will be appreciated in Denmark as well. With that said, we are humble about the fact that it takes time to break into a new market. We therefore see it as reasonable to reach profitability around five years after launch. At the same time, as we take this exciting step to make savings and investing better for Danish customers, we continue with full energy in the efforts for our Swedish business, where growth will occur in the coming years. Our long-term vision is clear. We want to leverage our proven strong capabilities and become a leading European platform. Denmark is a natural fit the first market as it bears similarities to the Swedish one in terms of structure, competition and culture and it provides strong growth opportunities for Avanza. We will expand organically without affecting our strong and growing Swedish business at low cost with an initial investment of 120 to 150 million Swedish meaning very limited impact on the 2026 cost base. Our customer promise remains when we export our Swedish success abroad, and I look forward to offering also Danes cheaper, better, and simpler savings.

The Swedish business is strong, and the growth prospect remains.

We report a record result where the strength of our business model with several income streams is once again demonstrated. We are working at full speed with our prioritized areas. And we are now entering a new phase of our international expansion, establishing Avanza in Denmark by the second half of 2027. So to conclude, Avanza is well positioned to capture future savings market growth in Sweden and abroad. And with that, we open up for questions.

Thank you so much. Dear participants, as a reminder, if you wish to ask a question, please press star 1, 1 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star 1 and 1 again. This will take a few moments. And now we're going to take our first question. And it comes from Martin Eckstedt from Handelsbanken. Your line is open. Please ask your question.

Thank you very much. Can you hear me okay?

Oh, yes, we can.

Great. So to no one's surprise, perhaps a few questions on your Danish expansion then. So break even in five years from launch. Can you share some of your scenario assumptions around this, including from margins? Simply put, I think Nordnet is currently making around the Swedish krona 50 to 60 per trade versus the situation in Sweden is, I believe, below 20 per trade. So is there a risk that this ends up just being a race to the bottom on margins in Denmark?

I think when it comes to our forecasts into the future, we of course have an internal business case with different scenarios landing in our external communication to reach break-even after five years. When it comes to raised to the bottom. I think one could have Sweden as a case example. If you look at the last number of years, our main focus would be to make savings and investments something joy and fun, to do it with our tonality, to deliver on our customer promise that we have in Sweden. But we don't want to go into exactly what we will offer in the Danish market for competitive reasons.

Okay, understood.

So I heard from you that a couple of quotes like other markets in the future will use the Danish platform and the long-term vision is to become a lead European platform, etc. Do I sense a bit of a strategic shift here? I think your earlier strategic review concluded to take basically one more European market before 2030, but didn't say very much about what lay beyond that.

I mean, we have become more insightful now, one and a half years after we presented the five strategic pillars where going abroad was one of them. What we said then was that we will by 2030 be established in at least one more European market. We see Denmark as a natural first step. It is a first step. Our ambition is to go into new markets when we see some traction in Denmark and when we have management capacity to do the next big thing. That is not here and now. but it is out in the future.

Okay, understood. And then just quickly, if I could ask on the new platform that you're building in Denmark, and I also saw that the announcement includes some cost related to cloud tonight. Isn't the general idea that the cloud transition makes taking new markets more plug and play for you rather than it would warrant further cloud investment? Just Help me understand that.

I'm not sure I follow this cloud remark when building the Danish platform. Naturally, it will be cloud-based as we are also moving the Swedish platform into the cloud, but the cost of 120 to 150 million are the costs that we foresee to investment basically to build the Danish platform, to establish ourselves in Denmark with the processes, the procedures needed, the legal work to become a branch in Denmark and so on and so forth.

That's additional cloud related cost on top of what's already communicated for the cloud transition in general. It's not a carve out from the Swedish related cloud transition cost.

Correct. So when we communicated that we're going into the cloud with our platform in Sweden, that is separate from what we're doing now. Now we're building a new platform, a new international platform, of course, taking the different modules from the Swedish one. and the international platform will also be cloud-based. Yes, but one should not intermix these two numbers and these two efforts. One is to move the Swedish platform from our data centers into the cloud. What we're talking about now is to build an international platform with a start in Denmark.

Okay, thank you. Thank you. That's it for me.

Thank you. Now we're going to take our next question. And the question comes line of Patrick Bertellus from ABG. Your line is open. Please ask your question.

Thank you. Can you hear me? Yes, we can. Perfect. Yes. I will also follow up on some questions on Denmark. So we start with this reaching profitability in five years. Could you share a little bit again your underlying thesis here about what customer base and AUM levels do you need in Denmark to reach this break-even level?

We have a quite detailed business case internally that we will not share externally and that rendered the external communication around reaching break-even after five years. It requires a certain intake of customers and it requires a certain assumption on margin, and it requires a certain assumption where we have been given more information on the cost side.

Okay, fair enough. But as Avanza is currently unknown in Denmark, how do you aim to differentiate yourself versus more established players like Saxo Bank or Nordnet Hoos? been in Denmark for quite a while in terms of price, product, user experience?

So we will use a lot of our success factors from the Swedish market when we go into Denmark. Of course, it needs to be adapted to the slightly different needs and customs in Denmark. We will need to work with marketing, as I mentioned. on a different scale compared to what we do in Sweden, because in Denmark, we're not the white piece of paper when it comes to brands, but compared in Sweden, it's a much, much, much, much less known brand. So it will require more and different work on the marketing side. But apart from that, for competitive reasons, we will not discuss what exactly our offering will look like.

Okay, fair enough. Moving a little bit away from Denmark temporarily, so given the elevated market volatility seen here in Q1, how do you think about the sustainability of brokerage income and also FX income here in the coming quarter as volatility normalizes?

I think one interesting observation from the first quarter is that I feel that it has been a lot of uncertainty. I feel that there has been a lot of geopolitically important news. But if you look at the actual volatility, it's not that well elevated. I think we peaked at 30 something, 35 or something. I mean, now it's down below 20. And despite the fact that the volatility was not very high in Q1, it was slightly elevated, we saw a lot of activity. I think the environment where our trading-related incomes thrive is directions to trade on, not necessarily just noise, which volatility can be seen as, but actually directions to trade on. And then we want... We don't want low volatility. So when trying to project trading related income, then one has to make some assumptions about will there be directions to trade on for our customers next quarter and will volatility be reasonable? We don't want the crazy volatility and crazy uncertainty that we saw when Russia invaded Ukraine, because then our customers rather became a little bit passive for a while.

Yeah. Okay, fair enough. Thank you. That was all for me for now.

Thank you. Now we're going to take our next question. And it comes from the line of Jakob Haslevich from SEB. Your line is open. Please ask your question.

Good morning, everyone. I have two questions, one on Denmark and one on NII. If we start with the Danish cost facing and KPIs, you guided 50 million expense in 2026 and 120, 250 million in total on the launch. What are the key milestones and go, no-go decision points? And how should we model cost run rate in 2027 after the launch? Should we expect you to capitalize 20% of the 80 million running cost post launch as well?

So on the last question first, We have a philosophy where we try to be as transparent as possible to put as much of our cash out as possible on the cost line and not take it on the balance sheet. Here our assumption is, and maybe you can detail on that, but that of the initial investments, up to 150, that we will capitalize around 20% of that.

Yeah, exactly. Just adding to that, the investments that are made up to launch, which will be sometime during second half of 2027, and then that will transition then into more ongoing running costs, which we estimate starting at around 80 million and then slowly growing as the business grows. Those 80 million would include all running costs, but then also Amortizations of capitalized costs during the startup period, which would be part of the 80 million going forward. And then the 80 million will grow when the business grows and staffing increases, etc. And when it comes to the question regarding milestones and deadlines, just as we don't share exactly what our product offering and our target customer segments will be. We do not yet detail the different milestones and the decisions that are made along the way, but we will get back to that in the forthcoming quarterly updates.

Okay, thanks for that clarification. And then on NII, market rates moved a lot during Q1, which you, Jonas, talked about before. from pricing in a rate cut to then pricing in rate hikes. I guess it is your bond portfolio that's linked to the three-month cyber, correct?

Yes, that's correct.

So should we then expect the bond portfolio to yield more already in Q2, or will the step-up rather be in H2 if we assume current market rates stay at these levels?

Yeah, I mean, we since somewhat longer rates than overnight, for instance, since five or three months, then in some cases we have some other investments as well. We have some sort of even shorter term investments like Riksbank certificates, etc. With those rates elevated, we hope to get somewhat higher returns in portfolios that are linked directly or indirectly to those types of market rates. Since the elevated market rates only applied to it was a little bit into March. We would expect them given Market rates remain on this level a pickup in Q2 But we also saw a little bit of a decline towards end of March and beginning of April. So it obviously depends on every market rate move We say that our interest rates term profile is up to three months. We have a target to keep it below three months. That should imply what you say.

And then on deposit volumes, I mean it increased in March versus February. Is this due to the dividend season starting and has not deposited like historically developed positively in April, May, June as well when more dividends are paid out and you also get the tax refunds from the tax agency? So should we not expect a tailwind on NIR from volumes as well into Q2?

What will happen in the future is always hard to answer. You are correct that we have seen a little bit of that pattern in past years. On the other hand, my feeling and why I say feeling and not fact is because our Time series is a little bit distorted now by the phasing out of the external deposits. But my feeling is that our customers did reduce the risk levels during March. We saw that with the decrease in the margin lending exposure. And I feel that we saw that in going from risky assets into cash a little bit. So the deposit volume also, as you know, depends on the risk appetite of the customer, you know, next month or the month after that.

Yeah, that's true. Thank you.

Thank you so much. Now we're going to take our next question. And the next question comes from Andrew Lowe from Citi. Your line is open. Please ask your question.

Hi, thanks very much for taking the questions. Can we please explore the decline in the gross brokerage margin this quarter in a bit more detail? I know that you flagged that The share of foreign trading is down, but it remains above the average over the past two years, yet the commission margin is significantly below where you've been trading in the past two years. So can you specifically talk through the effect from the higher turnover per note within fixed price brokerage class? So what's going on there? How does that mix compared to history? And what are your expectations going forward for the brokerage margin? I would think that your average trade size will continue to go up and it's gone up 7% Q on Q in Q1. So does this effect maybe nullify the benefit from larger trade sizes over time? Thanks.

That's a good question, Andrew. Now we're talking about customer behaviors out in the future, which is always difficult. But you're correct that the lower brokerage margin in Q1 was influenced by a higher typical trade on the fixed commission trades. That will continue. I don't know, Caroline or Jonas, if you have any dare to have any view about the future there.

Difficult to say.

Maybe then, sorry if you don't mind me interjecting, could you just talk through how has that evolved over time over the past two years with the sort of mix of people doing floating rate or fixed price trading?

Maybe we will have to get back to you. I don't have that time series in my head, Andrew.

Okay.

All right. No problem.

Thank you. Now we're going to take our next question. And the question comes live of Enrico Bolzoni from JP Morgan. Your line is open. Please ask your question.

Hi, good morning. Thank you for taking my questions. One, going back to the expansion in Denmark, Could you please confirm or clarify whether the offering in the Danish market will be completely equivalent to the one that you currently have in Sweden? I'm thinking about in terms of product offering as well as perhaps client segmentation, to be helpful. Related to that, I appreciate you don't want to give too much detail, but you briefly mentioned that it's a very attractive market because the Danes have quite a lot of capital. Do you expect that the profitability of your clients in Denmark will be higher compared to the profitability of clients in Sweden on average? And then finally, I had a question on artificial intelligence. You briefly mentioned that This helps a lot, for example, when it comes to writing software. I think this is what you're referring to. But I was curious to know whether you are rolling out this technology in some form also within your existing platform in Sweden, whether clients can already access some AI functionalities, or if not, whether you think this is something you'll be able to roll out in the near future. Thank you.

Start with your first question. If you just look clinically at the Danish market and compare it to the Swedish, what do you see when it comes to margins and so on and so forth? Prices are higher in Denmark. I mean, the brokerage fees are higher in Denmark than in Swedish, which is natural because Sweden is more competitive. If you look at banks and compare the net interest margin, it's higher in Denmark compared to Sweden. It's a little bit more difficult to compare because it's different currencies. different central bank rates. But apart from that, I don't want to go into our assumptions behind our breakeven estimate of around five years. When it comes to AI, I mean, we use that today in our customer offering. It's not on a big scale, but a little bit. We use it to enhance our development. And the third pillar where we want to use it is to improve internal efficiency in general, where classical automation is maybe not the right path forward or robotics is not the right way forward, then AI could be the way forward. But there we have no concrete success stories yet.

I'm sorry, on the offering in Denmark, will it be equivalent in terms of products?

We don't want to go into how our offering will look like in Denmark for competitive reasons. I understand that you want to know, but I hope you respect that we need to go out with this message now for more reasons, but we don't want to give away more to the market.

Sure, that makes sense. Thank you. Thank you so much.

And now we're going to take our next question. And the question comes in from . Your line is open. Please ask your question.

Good morning. Thanks for taking my questions. Maybe starting off, you mentioned that the ambition is to be a leading European player. What do you mean by that? By what time? How will you measure that? Is that having most users among digital savings platforms? Having the most savings capital? Or by what metric are you referring to then?

We want to state our ambition, Ermin. We will not communicate what exactly defines leading and by what time. We want to be clear to the market that we're now going into Denmark. But we also want to be clear that that's the first step. But I don't want to be more specific than that on how do we define leading and how many markets do we need to be in to define leading and how many customers and so on and so forth. Not yet, at least.

Okay, fair enough. Then on the platform, so you're going to build a new platform for Denmark. if you add additional countries in the future will that be added to that platform or will it be a separate one for each and every geography given that you also mentioned it makes it easier to kind of custom make the offering for local needs the plan is to build a platform that we will use in our international expansion in the first phase we will

optimize it for Denmark, but we will build it in such a way that we are able to deliver on our ambition to become the leading European platform. That will come at a certain cost, but it will be smaller adjustments when going into next markets compared to now building it from scratch.

Okay, so it's fair to say that if you would add another country, it would be a lower cost than what it will be for Denmark then?

Yeah, we haven't done our thorough analysis, but that's clearly my view.

Okay, great. Then just, I mean, you don't want to talk so much about the actual offering, but could you talk a bit about your insights as to how Danes are different in their savings culture compared to Swedes. What are the most contrasting things?

Maybe the propensity to get exposure to the fixed income markets through their, I mean, compared to the Swedish one, advanced covered bond markets. So a little bit more fixed income. compared to Swedes, but on a European perspective, Danes behave similar to the Swedish ones. Another one differentiates is, of course, the appetite for foreign exposure in Denmark on the equity side, which is bigger than in the Swedish one, which stems from the fact that the Danish stock exchange is in relative terms much smaller than the the Swedish one.

Thanks. Then if I may, just one final question, going back a little bit to AI. We've seen some launches in the US on kind of advice driven by AI within savings and so on. How do you see that going forward? Could you actually enter the whole advice space through AI and how far away are we from technology being mature enough for that?

I mean, we want to build closer relationships with our customers.

We want to do that without having to build up a large force of financial advisors. And the way to do that is through technology. And I think we have come a far way today compared to 10 years ago. And of course, we will be much further advanced when you look out in the future.

And I think AI will play an important role there. Okay, thank you. Thank you.

Now we're going to take our next question. And the question comes from Hayley Tam from UBS. Your line is open. Please ask your question.

Morning. Thank you very much for taking my questions. If I can, could I ask a couple about Denmark as well? Yes. So just to confirm a very simple one, the target profitability in five years, can I just confirm that's the second half of 2032 that we're talking about? And then in terms of the nature of the business, I know you don't want to talk about too much detail, but just to understand, should we be thinking about this as a trading and investments business only or should you also be doing lending and deposit taking? And I guess really the reason for asking that is to understand the 70% total addressable market versus Sweden. I'm just wondering how you define that, given I think Nordnet has said their Danish addressable market is, I think, 6 or 7 trillion. And I think you said your Swedish one is 13. So 70% would clearly make your addressable market higher. So those are some simple questions there, if I can. Thank you.

The important for us is to meet the customer demands. And our focus is savings and investments. We are not talking about other parts of banking products like payments or salary accounts or P&C insurance. But we're driving on the success we have in Sweden, where we have niched in on savings and investments. And that's the plan to use that also when we go abroad. I know it's a little bit vague, Hailey, but I don't want to be more specific than that.

No problem. Thank you. And if I can ask again about the building of the brand new platform, do you think there might be an enhancement you could then reverse into the Swedish platform once that's done? Or is it really just about the different regulatory structure and building something truly scalable for Europe that's driving this decision? Just to help us understand that a bit better.

I mean, we will optimize the totality. So if what you are asking about the reloading would be the case, then we will, of course, use that advantage also for the Swedish side. But that's not the focus here and now. The focus is to build a great international platform with the start in Denmark. That's the focus.

Got it. Thank you very much. Thank you.

Thank you so much, and now we're going to take our next question. And the question comes from Ian White from Autonomous Research. The line is open, please ask your question.

Hi there, thanks for taking my questions. Three from my side, please. First of all, given the comments you've made around technological change enabling your cross-border expansion, what are the constraints now for Avanza or indeed other firms to expand across borders in future, do you view AI as presenting a big watershed moment for the industry where it's much easier for firms to launch operations in new markets? That's question one. You mentioned Denmark being a natural first step, and I appreciate we don't wanna get too far ahead of ourselves, but would you expect subsequent steps to be in Scandinavian countries, Or is the whole of Europe in the conversation here with respect to your longer term expansion thoughts? And finally, where are you so far in terms of your goals to achieve market leadership in private banking and occupational pensions? I know those are a couple of the key initiatives that you set out previously. What KPIs would you highlight to indicate that those things are on track, please? Thank you.

So if we start with your first question, I think one should not, when going into new markets, one should not underestimate that you need to put procedures in place, you need to have the licenses in place, you need to have the connectivity to the payment system, to tax authorities, et cetera, et cetera. So you need a lot of knowledge, and I wouldn't say easy to go into a new market but what we say is that the development of software is faster and easier now and that helps us in this case but building software is just one part of going into a new market the second question oh so we don't want to limit ourselves to to the nordics um So we have identified a number of interesting markets for us, but the focus, and they are in Europe, but the focus right now is really on Denmark. And the third one was on progress in private banking and occupational pension and what do we measure. We want to be by 2030 the largest private banking player in Sweden in terms of number of customers. So internally we track number of customers especially much and on the occupational pension side we want to be the largest player and we measure that in terms of premium space. So that's what we follow the most. I think we're doing good progress. I think we have a lot more uh to do and a lot of exciting things in the pipeline um and i think we we we had a board meeting yesterday and we we flag the progress on both those as good okay thank you on on the first question thanks for the extra detail around that um would you be prepared to sort of quantify that or indicate you know if we say software is

is no longer the same sort of barrier to expansion that it was. Is that 20% of the challenge previously? Is it half of it? Is it sort of a small consideration or a big consideration in the context of those other things that you mentioned, licenses, connections to payment systems, et cetera?

If I phrase it this way, I think it's very hard for a pure tech company to go in and be successful in our industry. I think you need to know a lot about customer behavior, how you make something that can be perceived as very scary and difficult like long-term savings to make that into something joyful. You need to understand and navigate in the very regulated environment. Those competences that I just mentioned, they are just as important tomorrow as they are today. But the software side goes faster. I don't really dare to quantify what share there is. I'm looking to Caroline and Jonas if you're there. Okay, sorry.

Okay, that's helpful. Thank you.

Thank you. Now we're going to take our next question. And the question comes to the line of Oliver Caruthers from Goldman Sachs. Your line is open. Please ask your question.

Hi there. Good morning. Oliver Caruthers from Goldman Sachs. Thanks for taking my questions. I've got three more questions on Denmark, if that's okay. First one, I appreciate that you're not giving us the full details of the business plan, which makes sense. But one of the things that you did emphasize during the presentation, multiple points, was this cheaper way to save points. So just where do you envisage being cheaper? Any detail you can give on that would be helpful. The second point on the new platform that you're building for international expansion. So presumably this means that you're going to be introducing dual running costs. New product launches are going to have to come on both platforms. Just trying to follow your rationale here. Maybe a little bit of a follow-up to Heidi's question, but it's the idea that you'll retire the Swedish platform at some point in the future. Any color you can give on the rationale there would be helpful. And then final question. I think it's really interesting that you're talking about building this European champion, and I'm sure you saw some of the comments from the European Commission last week about the potential upcoming merger reform, which could be some of the biggest reform we've seen in Europe in over 20 years, potentially moving to a more friendly backdrop in terms of their signing off on M&A, particularly surrounding innovation and the creation of European champions. So you're obviously going for more international expansion. You're going down the organic route here, but can you just share your latest thinking in terms of why this is the optimum way for you expanding rather than looking at acquisitions and combinations, particularly given that as you expand geographically, you're going to be increasingly competing against some of the US players coming to Europe. Thank you.

I'll start with the last question, Oliver. I think what the European Union is talking about is not blocking these large mergers in the perspective of the large traditional banks. consolidating to match the industry structure better in the US. I don't think that changes if we would like to make an acquisition, in my humble opinion. We have been looking at three ways to go abroad. One is organically, which we're now doing. We have also looked at acquisitions. We've also looked at the partner routes. we partner up with someone and do it together. We now decided for the organic approach, but of course we will have our radar on for if opportunities would arise on the M&A scene. Now in the room, maybe help me with the first and second question. All right, so so we we stress in our communication our Our The philosophy that has guided us for 26 years and still guide us in Sweden which we called better simpler and easier and that's we want to make a And that's how we behave in Sweden today. And we want to behave in a similar way in Denmark. So you could use Sweden as an important data point when looking at Denmark.

The second question was... Yeah.

I mean, we're now building this international platform focused on Denmark. Partly because it is faster for us now and cheaper to build new. And partly to save and protect the Swedish progress. We could have adjusted the Swedish platform, but it would have taken not large effort for the different teams, but it would have affected many teams a little bit. And we have so much interesting stuff in the pipeline that we don't want to slow down the development on the Swedish side. If you look far out in the future, do we like to have two platforms? No, we don't, but that's not in the cards here and now. Now the focus is to have swift progress on our Swedish business and going into Denmark by the second half of 2027.

If I may add to that and emphasize what you said before, Gustav, and what we have said in all quarterly calls up to this one is that we see very strong growth potential in Sweden, and that's where we will see the most meaningful growth the coming five years. And that goes into the equation in terms of having the separate platforms and making sure we can really execute on the growth plan that we have in Sweden up to 2030 and beyond. Okay, thanks a lot. Cheers.

Thank you. Now we're going to take our next question. And the question comes from Marcus Sandgren from Publisher Row. Your line is open. Please ask your question.

Good morning, guys. Two questions from me, please. The first one, the share of trading in foreign currencies decreased this quarter, but for the past quarters it has been trending up. In your business planning, what are you calculating with how much do you expect to be done in foreign currencies going forward. So that's the first one. And then secondly, speaking of AI and the downsides of AI, there has been talks about that new systems will be used by criminals for cyber issues, basically. Do you expect any additional costs for increasing the the shields towards cyber crimes, basically. Thanks.

If I start with the last one, that is high up on our agenda and cybersecurity in general is very important to us. It's not a development that is very friendly out there. The scene changed with the 2022 Russian war on Ukraine and our the Swedish support of Ukraine. We have seen more activity from the east. And with more efficient technical tools, potentially in the hands of criminals, we also need to get better. And that is something that we are working on. I think we are well invested on the cybersecurity side. We had an update from the head of cybersecurity yesterday. I think he has a good plan how to counter what you refer to. I think there was a first question also. On the foreign trading. On the foreign trading. We believe that our customers have too much home bias. We believe that that home bias is less prominent today compared to five years ago. and we believe it will be even less prominent five years out. But market sentiment and asset allocation will distort that trend month to month. And now, especially in January, we saw an asset allocation towards Swedish equities. And next month, it may be something else, but we believe that there is an underlying trend towards bigger foreign exposure.

Okay, very good, thanks. Thank you.

And now we're going to take our last question for today, and it comes from Andrew Lowe from Citi. Your line is open. Please ask your question.

Hi, thanks for taking the follow-up. I had a question on your net flow expectations. So consensus has come down to about when you first outlined your vision, Gustav, the number that you gave was 10%. And you're talking more and more about international expansion. So could you just clarify, do you remain committed to that 10% figure? And could you just outline what you think the building blocks are to give the market confidence that 10% net flow growth in Sweden is the right long-term target. Thanks.

We have now for four quarters been affected by our dismantling of our external deposits. We still have almost 2 billion left. that will negatively affect that number. I mean, everything we do, Andrew, is to build the business long term, which we do through acquiring new customers and get net flow from new customers and existing customers. And the efforts we're doing in private banking and occupational pension, but also in our core to the whole broader segment, is to gain net inflow. We have seen challenging markets now for the majority of last year and also this first quarter. I don't have any data yet on the Swedish total market for this quarter, but last year there was a big drop in Swedes flows into funds. I think it was halved. On the flip side, there was more than doubling inflow into deposits. And the majority of that deposits comes from salaries that are then stuck in salary accounts with the big banks. So we hope and I hope that the Swedish economy will get going and that the geopolitical concerns reduces so that the Swedes have long-term savings higher up on the agenda than they have had for the last four or five quarters.

Great. Thanks. Thank you, Andrew.

Dear speakers, we have no further questions for today. I would now like to hand the conference over to Gustav Unger for any closing remarks.

Well, many thanks for attending, and have a great day. Bye-bye.