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.