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.