Nordnet AB (publ)

Hello, everyone, and welcome to the presentation of NONET's first quarter of 2023. My name is Marcus Lindberg. I'm the head of investor relations at NONET. With me today, I have our CEO, Lars Håkan Noling, and our CFO, Lennart Kern. Lars, Håkan, and Lennart will start off by presenting the results. and then we'll have a Q&A session. During the presentation, all participants will be on mute. And when we come to the Q&A session, you have two alternatives to ask questions. You can click the raise hand button. I will then unmute you where you can write your question in the Q&A button. Presentation itself is available on our website, moonitab.com. Okay, let's start. Lars, please go ahead.

Thank you, Markus. We can go to the next slide. So some key highlights for the first quarter, it's been a very strong quarter with strong financial performance with the record revenue, highest revenue ever in a quarter and the second highest profit in all this history as well. We maintain cost control with operating expenses in line with financial targets. We see more positive momentum in customer growth and net savings, stemming from a bit more positive market climate. We also see a slight recovery in trading activity, despite the uncertain macro environment that we are still in. That is interest income almost tripled due to higher interest rates versus quarter one last year. And we see continued positive interest rate sensitivity into 2023 when we will get the full effect of the interest rate hikes across our Nordic footprints. We also launched several products, including quarter integration to take part of financial reports, digital pension transfer, and also an instant deposit in Norway. And overall, we have a strong capital and liquidity situation that Lennart will talk more about later in the presentation. Go to next. A little bit of the financial highlights. We have a customer growth of 8% year on year, but we see a clear pickup in the customer growth in quarter one versus quarter four. Savings capital is about flat year on year. Number of trades is down 17%, but that's due to we had a very strong quarter one in 2022. But if you compare to quarter four, number of trades are considerably up. And revenues, I commented on, up 27% and the highest revenue ever, 1.1 billion SEK in one quarter. We see then a strong growth in net interest income, compensating for a slight decline in the trading revenue. Operating expenses aligned with guidance of 7%. We had slightly higher cost due to marketing in quarter one. As you know, we won this bank of the year award and we spent marketing money to publish that result. And we see also that we continue to have a very good operating leverage in the business and we increase the profit with close to 40%. And that's the second highest profit ever than around 800 million SEC. Go to next. And we see continued growth in customers and net savings despite the still volatile market climate we are in. We grow the customer base of 43,000 and net savings 7 billion. It was a bit lower than quarter one last year, but considerably up from quarter four in 2022. Go to next. And our geographical diversification to risk the business model and enables growth. And as you see, we have higher customer growth outside of Sweden, also less impact on savings capital from negative markets also outside of Sweden. We can go to next. And we also, like I said, see a slight recovery than the trading activity, despite the still uncertain macro environment we are in. In the graph to the right, the blue line there, you see the number of trading customers are considerably up from quarter two. And we also, to the graph up to the right, you see also trades per trading customer is up. And the share of cross-border trades is also on a stable level of around 25%. go to next um and we also see i mean that the trace per day have doubled since 2019 and also the the the trading margin or the income per trade is better So if you look at the graphs to the left, the red line, you see that number of trades per customer are down versus the peak levels we saw in 2020 and 2021. But we have doubled the customer base since 2019. So if you look at total amount of trades per day, that's year to date around 225,000. That's almost double the amount of trades we had per day in 2019. We're really benefiting from our big increase in the customer base. And if you look at the graph to the right, you see also that the income per trade is increasing, and that's due to a higher share of cross-border trading, where we have a higher margin, and that's due to we have more customers now in Finland, Norway, and Denmark, and they trade naturally more cross-border since the local exchange is fairly small. So we can go to the next slide. Looking a little bit on the fund side, you see in the graph up to the left that the fund capital is about stable since 2021. But of course, this was a pretty big setback in 2022 due to negative markets. If you look at the fund allocation in the pie chart in the middle there, you see 22% of the fund capital is Nordic branded funds. And that's around 34 billion. And we see a very positive growth overall in the Nordic fund family. And Nordic branded funds are mainly broad index funds. And if you add then the other index funds on the platform, index funds then contribute to around 45% of the fund revenue and active funds around 36%. And fixed income is still fairly small, around 30%. We don't see that much movement yet in fixed income. Looking at the fund customers down to the left, we have now close to 800,000 customers saving in funds. And that's around 46% of our customer base. And that's a continuous increase from 39% of the customer base in 2019. And as you know, the fund business is a big focus area for us. And we also see positive net buy even in 2022, which was a tough year, but that's considerably picked up then, of course, now nationally in quarter one, which was a strong quarter. Let's go to the next. And look at deposit levels. We see that deposit levels decline, driven by customer net buying. And if you look at the graph to the left, you see deposits in relation to the savings capital on the platform. And that's historically varied between around 11% to 15%, a little bit dependent on the market movement. When the market is strong, the customers are more invested. And when the market declines rapidly, they liquidate their assets and it's more than deposits. Now we're on 10% deposits versus sales capital, so that's a little bit below average. And in the graph to the right, we see that the customers are definitely taking on more risks, investing quite a lot in both shares and funds. So they invest a total of 19 billion SEC in the market in quarter one. And then that's compensated by net cash inflow around 6 billion and also dividends 5 billion. But letting all this out, the deposits are down around 7.5 billion in a quarter. But we're still very, very happy that the customers invest in brokerage and funds, which is a core business and what we really drive on our platform. We can go to next. Looking a little bit on the liquidity portfolio, and a snapshot here is that the liquidity portfolio will generate around 1.6 billion SEC in 2023, assuming the volume is over end of quarter one, 2023, and the currency allocation between the markets and the credit spreads and market consensus that we see on the stable rates that you see here. down to the right. But in total, we have, when it comes to deposits and also add an equity to that, we have around 78 billion, where 50 billion of those is in our liquidity portfolio and 28 billion is in our lending portfolio. And as you see, we have very positive momentum in the liquidity portfolio stemming from increasing interest rates across our Nordic footprint. So we have increased interest rates in all the countries. But of course, this is a snapshot, and the sensitivity is, of course, how deposits will develop over time, and also what interest rate pulse we will have. This is the latest estimate, but of course, if that changes, it will impact also the snapshots. Go to next. So also a snapshot on the loan portfolio, assuming the quarter one volumes and interest rates as per April 1, we estimated to generate around 1.2 billion SEK in 2023. And looking at the lending volume in the graph up to the left, we see that Quarter on quarter, that personal loans is fairly stable, mortgage is stable, and a slight increase in margin lending. But we see a big increase overall in the lending revenues, of course, related to the increased interest rates in the lending portfolio. But also here, the sensitivity is, of course, the volume, the lending volume, but especially then the interest rate pass and interest rate movement going forward. But overall, we have a very low risk lending portfolio, a loan to value of margin lending and mortgage is around 40%. And our unsecured business is also a low risk unsecured portfolio with fairly limited credit losses. um and we had no credit losses in in the mortgage and modern lending portfolios so next um also the snapshot on the the deposit interest rates that we paid to the customers uh we estimate that to be around 270 million since 275 million in 2023 assuming then the volume that we see on interest-bearing accounts in the end of the quarter and also again the currency and customer account makes that we have, but we did the interest rate change in Sweden on April 21, so we also calculated that into this number. Sensitivity here is, of course, how much money will be transferred to a specialist savings account, where we have the highest interest rates, but also, of course, the interest rates pass. But if the interest rate pass increase, we will likely also have high interest rates on the liquidity portfolio and the lending portfolio. And today, 26% of the customer's deposits are on interest-bearing accounts. Go to next. So if you look at this in summary, we have a resilient revenue then bolstered by diverse revenue streams. If you look at the graph down to the left there, you see the light red is the net interest income, which has been growing then compensating for a slight drop in the light blue, which is transaction revenue and fairly stable fund revenue at DocBlue. But if you look at the CAGR's growth, average growth rate since 2019 for each of the revenue streams is actually good. 44% for net interest income, 40% for funds and 30% give or take for the brokerage revenue. And looking at the margins in the graph down to the right, we see, of course, increased margin on deposits due to high interest rates. The light blue, we see a slightly lower margin on trading due to less trades per customer. And also a slight decline on the fund margin due to the shift from active funds to passive funds. But also that we have a platform fee in Norway and also that the customers buy slightly less foreign funds where we also have done the FX revenue.

Go to next.

Looking at the full P&L in a little bit longer period, we have very strong revenue growth, around 30% per year since 2019. At the same time, we have a very scalable business model and very good cost control. Costs have only increased around 4%. Per year in the same period. So basically the entire revenue growth ends up on the bottom line and it's a true position of profitable growth. So we've increased the profits with around 75% per year since 2019.

What's next?

A little bit of the product highlights also, I mentioned a few of them already in the introduction. We launched now a fully digital transfer process of pension in Sweden together with the company in Shorley. So that has been very well received by our customers. And we also had a lot of new versions of our award-winning app. Just to mention a few that we now have early calls with quarters, so you can follow both the presentations and the reports via our app and also via our web. We also introduced company logos, so logos before all the company names, a small thing, but it's been really appreciated by the customers. And also that we have now enabled instant deposits in Sweden, but also in Norway, which haven't had instant deposits before. So that's also been really well received by the customers in Norway. Okay, so with that, Lennart, I hand over to you to talk about the capital liquidity situation.

Yes, thank you very much and welcome everyone and good morning. We can go to the next slide. First of all, it's very comforting to say in those turbulent times that we have a solid capital position with also strong liquidity and good credit quality. And we can summarize this by saying that the total capital ratio is 24% and the requirement was 18.4. CET ratio is 16.5 and requirement 12.1. And also the leverage ratio is 5.6 compared to 3.0 or 3.9, whatever you choose to say. This has been able, of course, with an increase in the owned funds with 500 million, partly results deducted with the expected dividend, but also the issue of the 81 of 300 million, which was also very successful and very good timing to it. before the turbulence hits the market by Credit Suisse, to say. Also, liquidity position is, of course, good. We have an LCR of 447%. And that is due to that we have a deposit, even though it has decreased by 7.7 billion, it's still 3.5 billion. And we only lend out about 28 billion. So we have a loan-to-deposit ratio of 40%. and the NSFR is also the net stable funding ratio, which we are not funded in the capital market with long bonds, while that is very good, of course. But it's also important for us to keep a high quality in the liquidity, both regarding it should be liquid bonds and it should be high credit worth. So thereby, we have the covered bonds, 62%, And then we have the government or equivalent on 25% and only 8% of it is senior. So it's very high liquidity and very, very high credit classes. And that you can also see all the rating pie chart that you have to the right of that one with most of it in AAA bonds and 20% in AA. So it's a very good quality. It's also important for us who has as low risk as possible in respect of interest rate risk and credit spread risk. Why we have shown this shortfall for quite a long time now, where you see that the unrealized losses or result rather in the HTC hold to collect portfolio is just around zero. And that is due to that most of that is in the 0 to 6 month maturity bucket, both regarding fixed rates, but also in HTC. The rest is actually in FRM, and most of it is in the available for sale portfolio, which is an unrealized result of about 100 million, but that is always affected the capital base or own funds. So it's also always within the books. So no hidden parts within that. The capacity for leverage ratio has now increased to that we have 34 billion more in deposit we can take on before we reach 3.9 guidance limit. And actually 69 billion more in deposit before we reach the bottom line of 3.0. So we feel very secure in both the liquidity, the capital, and the credit quality situation. And that's very pleased to have been able to feel that comfort within this first quarter with all the turbulence that has been there. I'll leave it over to you again, Lars Håkan.

Thank you. The balance sheet on one slide. Thank you very much. A little bit on the strategic focus. Some of you have seen those slides before, so they're going to move pretty fast. But starting with our strategic focus areas, which are four, starting with engaged customers, we're building this one-stop shop for savings and investment with a really great customer experience. And to reach this, we every day build on a platform for savings and investments to build the best platform possible. But we also know we would never have happy customers unless we have really talented and passionate staff. And here we want to see an upward trend on employee satisfaction, which we have, and also that we can attract and retain top talent, which we can. And the bottom, sustainable business. We are in a trust business. We need to earn that trust every day and especially need to secure that we manage the compliance risks and other risks in a business in a good way and that we overall are trusted and like brands. And number four, the fourth area is profitable growth to capture the fantastic growth potential we have in the Nordics and to continue to take market share in a growing savings market. But at the same time, doing this with scalability and focus on cost control to have also stable cost level going forward. Next. And looking then at the growth in customers and savings capital, there's been a really good long-term growth. And we saw that that also accelerated from 2019 when we launched our new platform. But we see, I mean, the reasons for the growth is, of course, that the everyday enable better and better customer experience, the new features and products and automation, but also that they have critical mass when it comes to customers in all countries that last for a word of mouth based growth. And we've doubled basically the customer base, as I said, since 2019. And we're now at 1.7 or close to 1.8 million customers across the Nordic footprint. And also good growth in savings capital, both from underlying market growth, but also net savings. We'll go to the next slide. And this is a key slide, and that's a big reason for our strong revenue growth that we had and will hopefully continue to have, and it's that we are taking market share in a growing savings market. But still, we have a rather low market share, so ample room to grow for many years. We have around 6% market share of the total addressable population in the Nordics. That's currently around 28 million. We also have 6% market share of the addressable market, which is big, it's 13 trillion SEK, and that market share is up from 3% in 2016, so taking market share. And we estimate the addressable market to be around 20 trillion SEK in 2026, both from underlying growth in the savings market, but also that we launch two new products, Livrent pension product in Denmark, and also the endowment insurance in Finland. And to the right, you see we have highest market share in shares, but lower market share in funds and pension. And that's why we also put a lot of focus both on the fund area and the pension area, where we see a strong growth potential going forward. We'll go to next. Also a very scalable business with good cost control. We've managed to maintain the cost almost on a flat level since 2019 in spite of a doubling in customer base at the same time and also revenue growth of 30%. And the reasons for this is, we talked about this before, that we have a really scalable cloud-powered tech platform that can allow us to onboard a lot of new customers and transactions without driving costs. Also that we work with the automation and simplification. That's a win-win. We scale better, but it works better for the customer. And our customer growth is very efficient, mainly based on PR and word of mouth, so low acquisition costs. And we also work heavily with third parties to manage spend in a good way there as well. Looking at the midterm financial targets, we are slightly below on the customer growth target, 8%. But like I said, we had a pickup in quarter one versus quarter four, which was good. Average savings capital per customer is around the guidance. Income in relation to savings capital, this is last 12 months, but this will move up to around 55 bps during the year when we see the full impact of the interest rate increases. And the expense we talked about, we're in line with our guidance of around 7% this year. Go to next. So just to wrap up the priorities for 2023, that we're going to launch the Finnish endowment proper around end quarter two, beginning quarter three. And it's going to be a fully digital product and it's going to be flexible. You can buy both the funds and equity and it's going to be low and especially transparent fees. So I think we're really going to have a fantastic product with this in the finnish markets and we're also laying the foundation out for the danish liberty product which is a two trillion sec market that we aim to launch in 2024. we work heavily with the integrating shovel our social networking platform for investments and we integrate that now into our app and web and we're well on our way and because of course we're going to continue to expand the northern branded fund offering in our fund company and naturally we're going to continue to focus on cost control and scalability so with that marcus i i think i hand over to you for q a

Great. Thank you. So now we'll open up for questions. So like I said before, if you want to ask a question, just click the raise hand button. I'll then announce your name and unmute you. Or you can submit a question in writing using the Q&A function or just send me an email. So the first question comes from Jakob Heslevik at SEB. Please go ahead.

Good morning. Can you hear me?

Yeah, morning.

Good morning. Perfect. So my first question is on the NAI assumption for loan portfolio and deposit interest on the slide you showed us. I mean, the number you gave us earlier, is it correct that it does not include the potential rate hike from Riksbank in tomorrow and from Norway and ECB in May and June?

The lending guidance uh correct me marcus is that based on the interest rate password it's just the present one okay sorry yeah so then i said wrong yeah you're correct it's based on on the existing rates exactly not not the interest pass going forward okay perfect uh and if we look on deposit inflows uh what is the automatic monthly savings and i mean net savings were a bit lower during the first month during this year

So I was just wondering how more customers post them or have they lowered the amount or is it due to less new customers or is it any specific larger outflows?

No, we don't see any big change in monthly savings. And as you know, we also had a one-time effect on net savings around 1.7 billion SEK related to one big customer transferred that out in one go. We didn't earn any money on that savings capital. So it didn't impact revenue, but it impacted net savings.

Okay, thank you. And one last question. I mean, deposit cost increased from 5.3 million last quarter to 58.4 million this quarter. How large share of this cost is related to Sweden versus other markets?

Like I said, I mean, the interest and focus on the savings account and interest and savings account is bigger in Sweden. So majority of the cost is in Sweden today.

Okay. Thank you. That's all for me.

Great. Next question comes from Nicholas McBeath at BNB. Please go ahead. Good morning. Morning. Morning.

First question on deposit competition. So how do you see the competitive landscape for deposit in Sweden? Do you notice any increasing competitive pressure from banks such as SBAB, Danshypotek, see any flows between Nordnet and such banks? And to what extent do you think customers view such banks as substitute for deposits compared to Nordnet?

Yeah, it's a good question. I mean, currently we see positive cash flows, net flows in Sweden. And with the interest rates we have now on the savings account, I think we're very competitive. We're currently at 2.5%. I don't know what SBAB's latest is, but we're fairly aligned to that. So, We don't see any outflows due to customer chasing yield. Of course, since we have wealthy customers in Sweden, they can take out money to invest in property or a listed company and things like that. But we don't see any major outflows of cash for just having yield. I think we provide a very competitive product now and yield on a savings account.

Okay, and then also a question on deposits outside of Sweden. So I think you've previously been quite confident that you don't see any major risk that you would need to start paying high deposit rates in Denmark or Finland. How do you think about that at this point?

Of course, we monitor competition, we monitor flows especially, but like I said, The interest of savings account is not as high outside of Sweden. It's none of our countries, Norway, Denmark or Finland. So we don't see at all the same focus and push and also transfer a lot of money to savings accounts neither in our bank as well as other banks. So it's a different climate in Sweden for sure.

Okay, and then I had a question on net savings. So if we disaggregate your net savings in the quarter, it seems like there are some diverging trends in Sweden and Norway versus Denmark and Finland with lower savings in Sweden and Norway. So could you please comment what you're seeing in terms of differences of the savings behaviors across the marketplaces?

Yeah, like I said, we had a big one-off in Norway of 1.7 billion. I didn't say it was Norway, now I say it's Norway. So that of course impacted the net savings quite a bit in the quarter for Norway. But in Sweden, I would say it's... I think we have both. We have good inflow. Of course, we have some outflows, but not for chasing yield, but it's been customers also investing in property or other unlisted companies and such.

Of course, it's very tied to customer growth where we tend to grow a bit more outside of Sweden. New customers bring in quite a lot of new capital.

Yeah. Yeah. Okay, and then final question on outlook for loan growth, please. So I noticed there is lending volumes appear to have stalled a bit over the past couple of quarters. Is it liquidity capital or demand that's holding the loan book back? And what's the outlook here for the next few quarters?

Yeah, I think when you look at the personal loans business, we have no intentions, as you know, to grow that. We don't mind if it even decrease a bit. When it comes to margin lending, we have seen a pretty good pickup during the quarter in spite of a little bit of turbulence. When it comes to lending or mortgage, sorry, it's of course, I think it's good to have a stable level. But of course, our interest rates are not sticking out in the same way in this environment. We're still the lowest, but of course, relatively wise, we're a little bit lower. less lower than we were in a lower yielding environment. But I think we're happy with having a fairly stable development now on the mortgage. But of course, we also see now over time a pickup in Norway, which is very good.

Okay, perfect. Thank you.

Thank you. Next question comes from Ermin Kirik at Carnegie. Please go ahead.

Good morning. Thanks for taking the question. So maybe just first one on the lending. Is there any product where you see that it will be harder to continue to have the same pass-through rates going forward? For example, on the margin lending, is there a level where clients will not think it's a relevant product at all if the rate is too high for me?

Yeah, it's a good question. Of course, there is a limit somewhere. And we have been where we have the highest modern lending rates in Denmark and Norway. We've been a little bit more careful, but I think there is still some additional possibility to pass through. But of course, we're reaching at some point a limit, but we're probably reaching the limit of the interest rate path increase as well.

Okay, that's very helpful. And then, sorry if I missed it, but did you say how much is currently in pure savings accounts now and how that has changed during Q1?

Yeah, I didn't say savings account per se. I said 26% in interest-bearing accounts overall. That's also the ISK and KF and such accounts. But I don't know if you disclosed the exact figures on savings account, Marcus.

Yeah, it's about 5.5 billion. It was about 4.5 in Q4. Most of the increases in Sweden and a little bit in Denmark, too.

Perfect, thank you. Then the last question would just be on the commission rates. They came up a bit in all the different countries in Q1, essentially. And I'm just thinking, how should we see that? Is this now a normalized rate? where you see a kind of normalized mix of customers which are trading or should we look kind of on an average Q4, Q1?

It's of course difficult. It's about the customer mix. If it's more retail versus heavy traders, you have a higher commission and also the mix between countries with a higher commission outside of Sweden compared to... So it's a little bit the country mix and the segment mix.

Got it.

Thank you.

Thank you.

Next question comes from project materials at ABG. Please go ahead.

Thank you. My first question would be on the deposit competition topic. A little bit of a follow-up to the questions asked by Nicolas earlier. So you talk a lot about competition here on deposit rates. So who do you view are the price setters and the largest players within the market that sets the rates that you follow?

Yeah, but in Sweden, it's, of course, SBAB that sticks out. But then, of course, it's our competitor, Avanza, both on the savings account, but also the move they did on having interest rates on the tax wrappers, the ISK and the KF. When they did that, we had to follow, even though we don't think it's very beneficial to have a lot of cash on those accounts for tax reasons. In the other countries, of course, we look at both the big banks and the competitors, but I say Sweden is more active, like I said.

Yeah, thank you. I understand. Do you see more harmonized pricing between players here when the new rate decision coming up? Or do you see that competition has picked up following what has happened in the US, for example?

I think, I mean, probably ending some kind of end of the interest rate hike pass from the central bank. So it's at some point also, I think the deposit rates will level off on interest bearing accounts.

I see.

And compared to the US, you know, I mean, they also have the liquidity funds where you can get four and a half percent on three months government papers, which we don't have in the same way in the Nordics.

yeah yeah but uh yeah so it's not an intensified competition the last couple of uh no i wouldn't say that no no turning to transaction income the brokerage fee you charge to customers it's dependent on which broker class you register to hence i would assume that some customers are being charged slightly more than what could be the optimal level if they are in the right brokerage class. How would you view a product innovation that would optimize the right brokerage class for the customers immediately?

Yeah, I think it's still good if the customer choose what they want to do because of different preferences at different times. But today,

what we look at is perhaps that you can change a commission class a little bit more often than you can today so that's something we have on the radar going forward yeah yeah because my follow-up with them be if if you would have that solution that would optimize it what what how much could uh the brokerage fee then drop in comparison to the current level would you expect?

I don't have a number on that but I don't see a dramatic drop I don't think we're going to go to that we automatically do it for the customer at every single point I think it's still important the customer can choose what class you want to have and of course if you can choose more frequently it might be some impact but we don't see that as material.

And if competitors would go this route, would you feel obliged to follow?

I know it's a... Yeah, that we need to look at at that point in time. Sure.

Thank you so much. That was all for me.

Thank you. Next question comes from Maria Semikatova at Citi. Please go ahead.

Hi, everyone. A couple of questions from my side. First of all, I appreciate the disclosure that you provide on deposits. Just wanted to check with you if you're seeing continuation of trends so far in April that customers are utilizing cash to buy more products. equities and funds, and maybe more broadly, because you refer to the historical levels of deposits relative to savings capital, there's still things that are reasonable, let's say, threshold in the current rate environment, or there is no reason or kind of high opportunity cost right now to keep in cash. Yeah.

I mean, looking at the historic numbers, we have periods there as well with high interest rates. Of course, the change has been perhaps more rapid this time to increasing rates. But I think it's market dependent. I mean, the customers invested a lot in quarter one, and that's why we saw an impact. If we have a weak market again, it might move in the other direction where people liquidate more of their assets faster. So yeah, time will tell. I think in April, I mean, it's a little bit, I mean, it's an Easter month as well. So it's a lot of Easter holiday in all the Nordic countries, distorting the picture a little bit. So let's see for the full quarter, quarter two.

Okay, thank you.

And also keep in mind that dividends flowing onto the platform has an effect and Q2 tends to be a pretty heavy dividend quarter as well.

Yeah, that was useful that you broke down the inflow there. And then maybe just kind of switching topic on the Finnish endowment wrapper. You mentioned this addressable market of 40 billion euro. I don't know how much you can say at this point, but maybe kind of general thinking, you have a market share of around 9% in Finland. Is it a kind of fair aspiration for the future for this product as well? And maybe on profitability, we know that fund margins are the lowest in Finland, kind of in terms of product economics, if there is anything you can share.

Yeah, I won't guide on specific market share, but as you know, we're very strong in Finland. And if we look at the ASK account, I think we have around 65, 70% market share. So of course, we've been extremely... Market share, but it will take time to build it. But as you know, it's a very flexible product, so you can both invest in funds, but also in equity, and there's a lot of demand for that. Also going to be some kind of wrapper fee on it as well. So I think it's going to be a very competitive product, but still a profitable product for us.

Maybe just one minor question for Leonard. There was a higher credit loss on unsecured lending in Sweden. If you see any signs of stress, what drove that higher cost of risk?

No, that increase or rather that higher level was mainly due to provisions, due to IFRS 9 models and also that we have a new forward flow agreement. which actually has a little bit less payment within it. So no, we don't see that. Any change in the credit quality of that portfolio.

So basically, don't annualize this quarterly number. If things actually not materialize, we should be at a good level and it should come back down.

That's very clear. Thank you. Great, next question comes from Enrico Bolsoni at JPMorgan.

Please go ahead. Hi, good morning all. Thanks for taking my question. Just a couple of questions from my end. One, can you give us any update in terms of the split of saving capital or deposit by type of account between pro, the private banking, the standard accounts? I think you gave an update at the Capital Market Day a while ago. Well, I've not seen one since then. And the second question was, I mean, in light of what happened, a very turbulent quarter, have you reconsidered maybe exploring the possibility of offering also transactional banking? Because this is said to be one of the ways where you can increase stickiness of deposits if basically your customers could use you just for their all-around banking activities. Thanks.

I think the latest split on savings capital, I don't have that in my head right now. Perhaps you can provide that, Marcus, a line, what we reported before.

Yeah, we'll get back to you on that.

When it comes to transactional banking, no, we focus on savings and investments to build the best platform for savings and investments. And we have a super interesting roadmap there. And I think if we... broaden ourselves too much and go more ahead on all aspects of the big banks, that will not benefit us. What really makes us successful is that we focus on one thing, and it's to build the best platform savings investments for the private investor. That's what we're going to continue to focus on.

Thank you. Okay, next question comes from Rikard Strand at Nordea. Please go ahead. Richard?

Can you hear me?

Yes.

Now it works. Sorry about that. So first question on the deposit environment outside of Sweden, where you mentioned that you're less worried about the deposit competition outside Sweden. Just wanted to hear, is that because of competitors or competition in general, being lower or is it because your customer base in these countries don't really see sort of the competitors as a viable substitute for Nordnet in these countries?

I think it's a combination. We have a very strong position and they are on the platform to invest and prefer to stay there and do the investments. But also in general, in the markets, it's less focused on savings account and interest rates and savings account compared to Sweden, where the focus is very, very high.

Okay. Then on the on the Finnish wrapper there where you seem quite excited about this product launch, but could you share your sort of hopes here in terms of if you think that this product will primarily attract volumes, sort of new volumes from your existing client base, or if it's sort of that you're hoping to acquire new customers that will primarily bring in the new flows here?

But again, I think there is a combination both at the existing customers that perhaps have been a dominant wrapper with some other players since we didn't provide it. This is very efficient if you have a little bit more money. So of course, attract some savings capital that's now sitting outside that they hopefully gonna then transfer to our platform. That's one, but I also think we can become more attractive to new customers, especially in the private banking segment that didn't really see us as a player because we didn't have the dominant wrapper which you basically need to have if you're going to save a lot of money in a tax-efficient way. Okay, thanks.

And then just a final one on brokerage margin. If we exclude the gains or income you got from cross-border trade, the margin seems to be up in basically all countries, but primarily Sweden and Norway. Just wanted to hear if you could give some more flavor on the drivers here and if you see these as sustainable going forward.

Yeah, it's especially a mixed shift, more retail trading versus heavy trading. So, you know, the heavy traders have a lower margin. They normally trade a lot, but this quarter we saw retail trading quite a bit and increasing exposure than both to funds and equity. So that's and retail has a higher margin and commission. Yeah.

Okay.

Thank you.

Thank you. Now we have a written question. Do you think your average trades per customer per day is structurally lower now than it was pre-COVID? Or do you think we're below the trend currently?

Yeah, I mean, if you look at the historic levels, we're definitely below the trend. So our expectation, as we saw in quarter one, now when the market is a little bit more positive, that you have a little bit stronger momentum. But of course, it's going to be very market dependent. And I think there's still a lot of concern out there. I mean, the customers took on risk now in quarter one, but now I think there's concern about... if it's going to be recession and how deep it's going to be potentially then. There's a little bit more concern right now. Of course, fueled a little bit with SVB and Credit Suisse, but in general, a little bit concerned about the economy.

Okay, another written one. So you and I also have a fairly large share of customers, the population who own shares in Sweden. What do you think the market growth looks like? And is there still room to grow in Sweden, essentially?

Yeah, I think we and Avanza together have around 10%, give or take, of the population in Sweden. So I think it definitely is still room to grow, both on the customer side, but also if you look at the savings capital or how much we have in the market, it's not more than 10% either in Sweden. I think that they're soon to grow for sure.

And of course, we're adding new customers in the market all the time and new young customers are probably looking for a digital bank since they're used to that type of interface.

It's a good comment because the growth comes both from, of course, the big banks and pension companies, but also all new customers that turned 18 and want to invest on their own. They would say an absolute majority of those choose a digital platform.

Great. I'm just looking through the written questions.

Seems like we've answered most of them. Here's a bit different one. How have you integrated AI in your savings platform? Give some examples or potential use cases.

Yeah, so as you know, I mean, we move more and more of our environment to the cloud. We have Google as a partner, which are, of course, experts on managing data. So today, in order to have some personalized features, for example, if you buy a stock, you also get some recommendation of other stocks that's bought by other customers buying similar kind of stock, for example. But I think we're going to see a lot of examples on AI. But what you need to watch out for is that you maintain control of your data. We're a bank. We need to adhere to bank secrecy and GDPR. And that's why it's also very beneficial for us to be with Google Cloud, because we have our own private environment. We encrypt all of our data, so we own the data fully. So in that way, I think we can utilize a lot of AI tools in a good way. But you really need to secure your data when you use AI. You can't just send them up in any kind of AI application out there. But it's one thing what we can do for the customers, but of course also there's going to be efficiency in development as well, that you can use AI supporting the engineers in developing new code.

Great, thanks. Then one about our own fund business. So what's the potential for the Nordnet fund business? What portion of the total fund AM could it be? Are there targets? And what's the benefit of having your own funds and fund company?

Yeah, I think, I mean, it's currently 34 billion, then around 22%, but we see a steady growth. It's a very high interest in the Nordic funds, and I think the benefit is that we can provide broad index type funds to good price, but still have a fairly okay margin on our side, especially when they combine the funds in a portfolio like the Nordic One portfolio, which is good for the customer, but it still gives us a good, healthy margin. So I think we have much more, by having a fund company, we have much more control of the offering and the pricing to make it attractive for all parties.

Great. And then one final written one here. So this deposit bridge that we gave on slide nine, where you see how that net buying and inflow and outflow affect the deposit. What would that have looked like earlier in Q4? Was it affected by net buying or was it outflows, dividends and so on?

Yeah, I mean, again, I don't have the exact numbers quarter four, but we saw we had less net savings, but more cash coming in in quarter one onto the platform. But, you know, in quarter four market was still, I mean, okay, it was a pickup, but still a lot of uncertainty in the customer base. So the net investment wasn't even close. It was assumed to the 19 billion that we saw in quarter one. So it's a big shift in market. taking more risks from the customers in quarter one.

Okay, great.

I think, yeah, I think we're out of questions for this time. So we'll wrap up there. Thanks to everyone who connected today. Our next bullet report is on July 25th. You can visit our website, nordnetad.com or reach out to me if you have any questions. So thank you for your interest in Nordnet and have a great day, everyone.

Thank you. Thank you.