Nordnet AB (publ)

Hello everyone and welcome to the presentation of Nolet's second quarter of 2023. My name is Marcus Lindberg and I'm the Head of Invest Relations at Nolet. With me today I have our CEO Lars Åken Norling and our CFO Lennart Krang. Lars Åken 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 then when we come to the Q&A session you have two alternatives to ask questions. So you can click the raise hand button, I'll then unmute you and call your name or you can submit a question in writing through the Q&A button. The presentation itself is available on our corporate website noletav.com. Okay let's start the presentation. Lars Åken please go ahead.

Thank you Marcus so we can go to the next page. You have some key highlights. It's been a good quarter with strong financial performance with revenue growing 50% versus quarter two last year and profit up 75%. Also good customer growth and positive net savings in spite of quite challenging macro. But uncertain macro environment and low volatility is an overhang on trading activity and we see the volatility index, the VIX index being on a four-year low. Net interest income more than doubled due to high interest rates and we see also positive interest rate sensitivity going forward and we assume to grow the net interest income significantly into 2023 when we see the full impact of interest rate increases. We also expect to meet the full year guidance on cost and it's been quite a productive quarter also when it comes to product development with improved curated lists, new landing pages and deposits at Finland and we have an overall strong capital liquidity situation and our CFO Lennart will cover that later in the presentation. You can go to the next page. So some financial highlights for the second quarter. We've grown the customer base with 9% in one year. Savings capital is up 15% and we see a clear turnaround in the markets from October last year. A number of trades is down, we scored two last year with 16% due to challenging macro environment with high interest rates, high inflation and it was a weakening economy and as I mentioned the volatility index, volatility on the market in the market has also been low during the quarter. The revenues are up 47% where we see slightly lower trading revenues but that's more than well compensated by increase in net interest income. Operating expenses is up 8% from quarter two last year, so a little bit high in our guidance of 7% but we estimate to meet the guidance. We meet also a little bit easier comparables in H2 this year versus H1 but it's also worth mentioning underlying cost increase if you discount the FX effect, around 6%. As you know the Swedish Krona has depreciated quite a bit during H1 and when we then convert cost in foreign currency to SEC that of course impacts cost up. So hopefully we see a little bit calmer development in the Swedish Krona in H2. We see that we still have very good operating leverage in the business and we grow the profit with 74% year on year. We see continued growth in customers and net savings despite the macro environment we are in and looking at the customer base we have actually larger growth in customers in quarter two this year versus quarter two last year. Net savings is a little bit mixed picture, it's a little bit low in April and May and that's mainly due to that the inflows have been low during those months and it's related to it's been a lot of holidays, Easter and other holidays. But if you look overall in H1 and net savings we see a stable development in retail segments but it's been more reallocation of capital in the private banking segments where they've done a lot of amortization of mortgage and also done alternative investments like real estate and private equity. We can go to the next page. We also continue to have positive impact from geographical diversification that the risk of business model and also enables growth. We see quite good growth when it comes to customers in all of our countries but we have higher growth in savings capital outside of Sweden but it's also partly due to the FX effect when converting the foreign currencies to weak Swedish krona. We can go to the next page. Looking a little bit of trading, you see on the graph to the left at the blue line we have slightly less number of trading customers versus quarter one and that's due to a little bit worsening macro but what you see up to the right in the graph that trades per trading customer is down quite a bit in the quarter and the dark blue line is the VIX index, the volatility index, overall the volatility and thereby the trading in the markets been low overall in quarter two not just with Nordnet. But we see continuous strong performance in cross-border trading where we're slightly up versus quarter one and that's due to this higher level of having cross borders due to the country mix with more customers outside of Sweden. We can go to the next page but in spite of the lower trades per customer we see that trades per day has almost doubled since 2019 since we also doubled the customer base from around 900,000 customers to 1.8 million customers during the same period. We also see that the income per trade is also higher than in 2019 so pre-COVID and that's due to higher share across border trading due to the country mix that customers outside of Sweden trade more on foreign exchanges than in Sweden. We can go to the next. Talking a little bit about the fund business we see a strong growth in the fund capital close to 170 billion SEC now in fund capital on the platform. It's both from underlying market growth but also that we see very good net flows as you see in a chart at the bottom and not the least in H1. If you see it the mix of the fund capital is around 50 percent. This is index funds, external index funds and also Nordnet funds which are mainly index. While active funds share is now 35 percent and it's down from 48 percent in 2020 so it's a level of 30 percent. Then there's also as you know been a proposal on the retrocession ban in a new risk regulation in EU but the impact for us on that one will not be material. Fund revenues are around 10 percent of revenues overall and also only around 50 percent of the fund capital will be impacted by retrocession ban. It was in Norway and also in the partner business in Sweden that's 48 billion. We already have a platform fee and repay distribution fees there so that's no problem and then we have 38 billion in our own funds where we don't pay distribution fees and then it's basically half left we need to address and likely it's going to be a platform fee that might impact the margin slightly negatively in Sweden but we have very low margin in Denmark and Finland already so that we might instead see an upside. Fund customers is growing also well and 46 percent of the customer base now own a fund on our platform. We can go to next. Coming into deposits and net interest income looking at deposit development in the quarter has been fairly stable but we still see a strong net buy from the customers in the market both equity and funds 13 billion in the quarter is a little bit lower than quarter one but still a strong net buy and that's compensated by dividends and also net sales. We see a lot of savings in cash coming onto the platform but if you look at deposits versus savings capital on the platform in total it's around nine percent now and that's below the average we see in the previous year that's been around 11 to 15 percent. Go to next. Also talking a little bit about the different components on net interest income starting with the liquidity portfolio where we give it then a snapshot of assuming then to a second quarter volume current allocation credit space market consensus estimate on rates going forward. We see a snapshot of 1.7 billion in total in revenue from the liquidity portfolio. The main sensitivity here is of course deposit and deposit development going forward. If you look at the chart up to left we see we currently have 47 billion in the liquidity portfolio and that's derived from 73 billion in deposits, 5 billion in equity and others and then deducting 30 billion that we have in lending and we see a good growth in net interest income from the liquidity portfolio and in spite of the liquidity volume is falling a bit and that's due to the high interest rates we have had during the year and we continue also to have some increases later this year. You go to next page looking at the loan portfolio and assuming then the second quarter volumes and interest rate per 1st of July we see a snapshot here of 1.3 billion in revenue for 2023. Here we might have a slight upside because we estimate that the lending volumes is going to increase a bit and also the interest rates are likely going to increase as well later in the year. Looking at lending volume is currently around 29 billion where we see stable development in personal loans and mortgage we see growth in margin lending but that's also partly due to the FX effect in converted margin lending volumes from DKK and Euro to DKK. But we see a very good growth overall in the revenue from the lending both from higher volumes but also from higher interest rates and overall we have a low risk lending portfolio as you know with a loan to value around 40% and also very limited credit losses basically only related to the personal loans business. We go to next page looking then at the deposit interest rates what we need to what we pay them back to the customers assuming then the interest rates we have now on our accounts and volume and currency customer account mix we have end of this quarter. We estimate that we're going to pay back around 330 million second in 2023 and currently we have around 27% of the deposits the total on interest bearing accounts and we see in the graph up to the right here that the big interest for savings account and interest rates is in Sweden where we see quite a big transfer to the Swedish savings account while the transfer to the service account in the other countries been very low in spite of having fairly good interest rates both in Norway and Denmark but the one reason for this is of course that we have customers with more capital in Sweden and if you want to be liquid for a while with a larger pool of cash of course you want to have as good yield on that capital as possible. Looking also a little bit on net savings versus interest rate on savings account down to the right we don't see any real correlation between interest rates on savings accounts and net savings at least not between the countries because we see that 70% of the net savings are coming from Finland and Denmark and H1 and in those countries we have the lowest interest rates on savings accounts. We go to the next page so summarizing then the revenue picture we see now that the net interest income on the last 12 months is around 50% of the revenue and the provision income from the fund based on transaction revenue is another 50% and we see that we have diversified and a good model that's because the net interest income is a little bit communicating vessel with the provision income so if you have high interest rates that we have now we have good development in net interest income but we also know that high interest rates are impacting markets negatively and that means less trading and thereby less provision revenues but we know also when the interest rates drop and the activity in the markets pick up so then we have higher provision revenues but then a bit lower net interest income so very good communicative vessels between those two revenue streams and if you look at the revenue margin per product or for asset class of course we see very good development in the deposit due to high interest rates if you look at the light blue line there it's the trading and margin is going down due to less trades per customer and also fund margin going down a bit due to the revenue shifts from revenue mix between active and passive funds. Go to the next. So all in all we have a good operating leverage and a good growth in revenues around 30% per year since 2019 the same time very stable on cost only up four percent -on-year so basically the entire revenue increase ends up on the bottom line so true position of profitable growth. Go to next. Some highlights on the product side during the quarter we have launched a new content management system and that allows for a lot more dynamic content on our web pages and also in our app and we have launched non-new start pages in all countries but we will also launch new pages the key pages on the web is going to be based on the new content management system. We also have a 50 new version of our award-winning app so we basically launch a new app version every four days and so it's both improvements in the curated list that we have instant deposit with trusty and more shareable features in the app to mention a few. So with that I think I hand over to you Landra to talk a little bit about the capital and liquidity situation.

Yes I will be quite quick about that you can go to the next slide please and to sum it up we have a very solid capital position where we have a leverage ratio of .1% according to the requirement 3.9 that gives us a great capacity to take on new deposits of course this is due to both an increase in capital base that also decreased deposits as we have spoken about but also the capital allocation situation where we have a total capital ratio of .3% to be compared with the requirement of 19.1 that is also due to the own funds of course which has increased but also the lower deposits but also that is a decreased risk within the portfolios so a very strong capital situation regarding liquidity we have this liquidity portfolio 47.15 billion compared to the deposits where we have 72.5 so it's a strong liquidity buffer that we have here also on a very short maturity structure with almost 40% of the capital is now maturing within 12 months and mainly within six months so we are always addressing the liquidity situation to have it on a short basis and also with low credit risk mainly AAA, AA and single A and very few BBB rated instruments and as you can see it's mostly covered bonds and governmental or similar parts senior yes some of financial institutions and then it's cash so also the liquidity position I would say is very strong and that is very good to have in uncertain conditions as we had this spring now I think it's stabilized but it's still very good to have this because this gives so much flexibility on how to handle the capital situation

forward as well thank you Thank you Lennart so a little bit of

a strategic focus going forward I can go to the next page as you know we have four key strategic ambitions starting with the customers to have the the most satisfied customers and being a one-stop shop for savings and investments so you as a private investor should find everything that you need on a platform when it comes to savings and investments and to reach this vision we of course every day build on the platform for savings investment have the best platform but we also know we would never have happy customers unless we have really talented and professional staff which we have and we will also want to see an upward trend on satisfaction which we do and also that we can attract and retain top talent which we also see that we can and then the third area is sustainable business we work in a trust business and we need to earn that trust every day and especially important that we manage our risks both the compliance and other risks and that we overall are trusted and like brand and last area is profitable growth so if we capture the fantastic potential growth potential we're having in Nordics and continue to take market share than in a growing savings market and also we do this with a stable cost level so ensure also continued scalability and cost control. Go to next. As you know we have long-term growth in both customers and savings capital the customer side is from continuous improving the customer experience building the best platform but also that we have a critical mass in all countries driving -of-mouth growth and savings capital growing even more than customers both from net savings and market growth. Next and more that we are taking market share in a growing savings market and that's one key reason for our good revenue growth we've had the last years and we have six percent market share of the population in Nordics with six percent market share of the trustful savings capital that's big that's 13 trillion SEK and that is up from three percent market share in 2016. So we're taking market share we estimate also the the address market to grow to around 20 trillion SEK in 2026 both from underlying growth and also that we launch new products like the diamond wrapper in Finland and leave-rent pension product in Denmark and as you see in the bar graph to the lowest market shares and funds and pension where we also put a lot of effort in those areas and we see great potential. Next we also focus quite a lot on cost and also ensuring that we have a scalable business model we have had stable costs for since 2019 in spite of doubling the customer base from 900 000 customers to 1.8 million customers during the same periods. So we have a very good cost control and also very scalable business the main drivers for the operating leverage is our cloud-based tech platform that can onboard a lot of customers without driving cost. We also work heavily with process simplification automation which is win-win then it works better the customer we scale better better also very good and efficient customer growth mainly PR based and word of mouth based low acquisition cost and we also then work of course heavily with the third party spend with all the vendors that we have. Next looking at the quarter two performance versus our midterm financial targets we are in line I would say a little bit below on customer growth but still consider 9% growth and this macroeconomic climate that we have is still very good. Over to the next. So looking at the key priorities for this year is to launch now the diamond wrapper in Finland which we believe is a really exciting product is fully digital it's flexible we can both buy funds and equity and also low and transparent fees and we aim to launch this in quarter three this year but also that we lay the foundation for the Danish live rental product so we can start developing that for really during next year. We continue to integrate the chevrolet as you know is a standalone app on web today but we're now building and moving all the functionality the Nordnet app and web and we're well underway and we also look at expanding the Nordnet branded fund offering and we've got successful with Nordnet branded funds and there will be more funds to come in the next 12 months. And we're going to focus of course continuously on cost control and scalability. So with that I think I hand over to you Marcus for starting the Q&A session.

Yes thank you Lars Håkan-Lennart so we'll start the Q&A so like I said before just click the raise hand button if you want to ask a question or submit a question in writing if you'd like. So the first question comes from Jakob Heslevik at SEB please go ahead.

Good morning everyone just trying to figure out Denmark. When I look at deposits it's down quarter over quarter and down versus Q4 last year a bit but on the other hand the brokerage savings capital has increased substantially during the same period. So could you just confirm that the decrease is due to Danish clients investing in stocks and that it's withdrawing anything from your platform?

Yeah so it's investing in the market but also it's a currency effect since the DKK has appreciated quite a bit versus the SEC in quarter two. So when you try to convert it back to yeah now this is mainly that invested in the market correct.

Alright perfect and when I look at traded value in cash market it is down substantially in all markets I believe in this quarter for the first time. So could you give any more color on your client behaviors and what has changed during this quarter?

Yeah I think the clients are more careful we see smaller trades so the tick size is smaller but then the so and also volatility as you know overall in the markets in quarter two has been low. So I think they're waiting to see a little bit what's going to happen are going forward if you go into soft landing or hard landing or what's going to happen during the fall.

But you haven't seen any specific mix shift between the price banking customers or heavy traders or ordinary clients?

No I think ever traders has been, ever trading has been okay a little bit decreased and in retail and private banking but no big shifts I would say no.

Alright thanks and then lastly just a comment on the competitive landscape of the different countries would be helpful. How many hikes have you done in the quarter in each market on the savings account and other than Sweden do you see any real competition in the remaining Nordic?

I don't have the exact number of hikes Lennart perhaps you do but we've hiked both in Sweden as you know we've hiked in Norway and we hiked in Denmark I think I believe as well. But clearly it's most focused on interest rates in Sweden also due to the customer mix a little bit like said we have customers with larger capital here and they're more of course interested in yield if they're going to have a portion of that as liquid. But we don't see any change in behavior I mean as you saw when it comes to savings capital in the savings accounts it's in Sweden where we see that the customer transfer in Denmark, Norway and Finland it's been stable even though we have fairly good rates we don't see any inflows to the savings accounts.

Alright thank you that's all for me and I wish you all a great summer. Thanks thank

you. Okay next question comes from Edmin Kirik at Carnegie please go ahead.

Good morning thanks for the presentation and taking my question. Maybe the first one just on the balance sheet you've had quite a big swing from treasury bills into bonds. Will that have any material impact on kind of the return on liquidity portfolio going forward?

No actually that's an effect that the deposits have fallen down and thereby maturing those bonds we're not reinvesting so it's not on purpose it's really an effect of where we have the maturities more than that. Got it thanks then a

little bit back to Jacob's question before in Denmark specifically we see quite a big spike in the commission rate I think it's up like 30% quarter on quarter on brokerage. Is there anything specific that's driving that?

There's a few things I think a little bit more retail but a little bit more effects but also a little bit lower cost of revenue during the quarter as well that might even all a bit over the year but it's those three effects in combination. Thank you that's

very helpful and then on if we see further rate hikes which is likely in kind of from policy rates side

how

do you see your ability to continue to pass that on to your customers in terms of lending rates as opposed on the margin lending side we're coming to quite high nominal rates as it is?

That's a good question I think when it comes to mortgage and personal loans we can definitely pass on more than lending we need to look a little bit on the max rate there but we also have a lot of segments and packaging underneath the list rate so to say so there might be some flexibility but of course we need to look at the absolute rate there as well and we are continuously doing that.

Excellent then one last question would just be on the cost to savings ratio it's been quite stable at 17 basis points and I know you have your cost target in kind of nominal terms. How would you still see the cost to savings ratio in the coming two three four years is that kind of materially declining from here or is this?

Yeah hopefully it's declining if you have a stronger market so have a growth now in the coming years then savings capital will grow hopefully a bit but from that savings and underlying growth while cost will as you know be mid single digit growth so if the markets are performing as they normally do in the longer period they will improve.

Great thank you very much have a nice summer.

Thank you. Next question comes from Nicholas McBeath at DMV. Please go ahead.

Thank you and good morning so first a question on the trading activity and I was wondering how you think about the current activity levels versus normalized levels so granted volatility has been a bit lower in a quarter but at the same time I think overall stock markets have been doing okay in the Nordics and globally and still we're seeing rather low activity levels so first what is needed in your view for trading activity to reignite or could it be actually that this is kind of a normal level? Looking at the chart that you showed with trades per trading customer it seems like that's in a declining trend from 2017 so you think that it could be the case that this metric is actually should be declining over time because for instance changing customer mix?

I think I mean looking at the markets where we have the biggest decline is in Finland and Norway and those markets really performing quite bad this year Finland is down, Norway is plus minus zero while Norway last year was very strong for a long time and we had good trading there due to that so and I think the customers are a bit careful I mean they don't yes the market's been up in Sweden and Denmark but in the US but it's still some kind of belief there is this sustainable and what's going to happen now with the peak race and what's going to happen with the economy especially so we feel that the customers are a bit more careful definitely so let's see how that plays out going forward when perhaps a little bit more clarity at least on where the economy is moving.

All right then on growth and net inflows we're seeing net inflows being down now in Q2 year on year in all countries except Sweden where it's up on 40 percent year on year which I think is a bit surprising given circumstances but what in your view explains this diverging trends between the different countries when it comes to net savings? Is there anything that you see in the flows in a more granular level that helps you understand? Not really I mean I

think in quarter two specifically we saw outflows quite on low normal levels but there were a little bit lower inflows in April and May like I said and not least in countries also in Sweden I think it's much a lot related to holidays it's been was a long Easter and a number of other holidays that impacted retail a little bit but if you look at HY, H1 inflows in total I mean retail has been very stable we haven't seen any really effect that retail have less money to save but the effects and the swings we have is still on private banking not really that they're chasing yield perhaps like before because we have good rates now but they reallocate their capital they amortize quite a bit on the mortgages and they buy alternatives like real estate and private equities outside of our platform to some extent.

And you're seeing more of that behavior outside of Sweden than in Sweden or what what explains the kind of divergence between Sweden and the rest?

Yeah I think in quarter two I think Sweden was less impacted by the holidays and I think it was more impact actually outside of Sweden where Norway almost stopped for two weeks during Easter for example so it's more a seasonality effect and I think the private banking effect we see across but of course since we have a lot of private banking customers in Sweden we can also have I mean one off in the other direction that's positive so it's fairly large flows in banking in Sweden.

Sure and then a question on the fund margin which was done quite a bit in the quarter which you kind of attribute to shift into passive funds and less cross-border transactions so could you elaborate in a bit more detail what you're seeing here any particular segments where those trends are more pronounced and any comments whether you expect this trend to continue over the next few quarters any view where you think the fund margin might bottom out?

Yeah I think I mean we've seen a lot of the shifts probably already I showed in the picture with a mix of about 50% now in index and 35% in active and active is down from peak of 48% in 2020 so of course it might be slightly less active but at some point I mean there is a demand for active funds and especially performing funds so if it's going to be and then it's 30% than fixed income so of course you can still have some shifts to a little bit more index but I think at some point I mean doubt that the active funds would go much below 30% but let's see but that would surprise me.

All right and then just a quick follow-up related to that as a last question from me and yeah I mean if I were to play the devil's advocate here and on revenue growth for the next couple of years just noting that brokerage income doesn't really pick up interest rates likely quite near peak and fund margins coming down it's possible to sketch a rather an oblique scenario for revenue growth for a few years ahead so what gives you hope in sustained revenue growth in the next couple of years if we talk in a kind of a specific line by line business?

Yeah I mean one is that we have continued the customer growth and also net savings as a fundament I think the fund revenue will even with I mean I think we are reaching some kind of bottom margin soon and we as you know we grow the fund capital quite a bit both from market growth but also all the initiatives we have in the fund business both the fund business per se and also the pension business and I believe trading is it is you know we've doubled the number of trades per day since 2019 even now with the low trades per customer and we also have higher income per trade due to cross border so we see when the interest rates will come down we expect to see a higher activity in the markets so increasing provision and trading revenues so like I said that we see net interest income and provision net a little bit as communicating vessels when we have very high interest rates and very strong NII of course you have an impact on on provision income and vice versa.

Okay that's fair thanks for the answers and yeah I wish you a nice summer to all of you.

Thanks thank

you. Thank you next question comes from Patrick Platerius at ABG.

Thank you a little bit of a follow-up there if we continue on the fund income if we look into the country specific we can see that the fund income margin is quite low in Finland and Dänemark. Can you talk about what you can do to address this?

Yeah a few things I mean one is that we market more and more of our own funds so we have a higher margin so that's one thing and also with the retrocession ban if you potentially introduce a platform fee I think that can enable some higher margin also in Finland and Dänemark but in the short term is that we have more mix of our own Nordnet funds.

So if we compare them to Norway which seems to have a slightly higher margin compared to these two countries is that a level of ambition and also Dänemark and Finland if you were to introduce that platform fee?

Yeah it's hard to tell at this stage but of course we have an ambition overall to increase the fund margin in Dänemark and Finland if we reach all the way to Norway let's see but of course we have an ambition and also we have a lot of experience from the fund platform model in Norway that we

can do. And there is no plan to introduce it even though there won't be any regulation change?

Yeah it's hard for me to comment on that but of course we look at the market continuously and also regulation but as you said we can launch it of course without regulation it's a little more tricky to explain to the customers if you the only player that do that in the market in Norway you know all the participants moved in the same way due to the retrocession value.

I understand thank you and if we look at the deposit and compare it to the savings capital it seems like it's the lowest share of deposit in relation to savings capital since since we have the data. Can you talk a little bit about what is driving this development and what you expect of this ratio looking ahead in the for the second half of 2023?

Yeah but like you said we are below average we see even though the customers are a bit more careful we see anyway that they buy in both quarter one and quarter two which is of course ultimately good for our core business because then we will likely trade that going forward in some way but then we'll have a short-term impact on let's say net interest income of course. How that ratio will play out during the fall I think is very dependent or very related to how the market is performing if it's a weak market or a strong market or neutral market. So we see how it will play out due to market where market is moving I would say.

Okay thank you and my last question is regarding the slides showing the strong liquidity and capital position if you could talk a little bit how you view your dividend policy given these strong ratios?

We regard that as stable as we have had for several years now 70 percent of net profit is the dividend policy and see that looking forward as well. Of course this gives us a lot of flexibility but it's also very important for us to withhold the strong capital position and liquidity position so but the 70 percent is still the policy.

Got you thank you so much have a

great summer.

Thank you.

Thank you next question comes from Alex Medhurst at Sparklays just go ahead.

Yeah morning all and thanks for taking a lot of questions I mean a lot have already been asked so thank you. Firstly just on sort of deposit costs how confident are you that you can sort of keep paying that zero interest on the vast majority of our non-saving account deposit balances? I mean obviously customer behavior shows the deposit balances have sort of largely stabilized but do you see any pressure from other stakeholders like regulators or press like we're seeing in other markets?

Yeah that's right.

Secondly maybe a slightly new question on the platform fee model in markets where like Norway where you're already paying or already have a platform fee in place do you make an incremental margin above the platform fee from your own funds or are the own funds sort of not on a platform fee model as well? Thank you.

Yeah so I think with interest rate of course we follow closely the flows and what's happening in the market also competition but as we've seen even with pretty high interest rates I mean the top rate in Norway is 3% even with that rate we don't see any really inflow into the savings account in Norway like was in Denmark. So and we don't see any real pressure from the press or from competition or and I think it's a little bit due to the like I said customer mix again if you don't have that much capital and you plan to invest it in the coming six months or something you're not really chasing yield in the same way as of course if you have a lot of capital. So we haven't seen any change in behavior in this quarter at all outside of Sweden I would say. When it comes to platform fee model we of course we have a platform fee also for nonet funds and on some of those we also have a management fee on top of that some are or have a management fee of zero but it's a mix but we have an additional upside on our own funds if you look at the total.

Right

thank

you very much.

Thank you next question comes from Rikardsand at Nordea

please go ahead.

Hi

good

morning can you hear me? Yep. Yeah. So starting with the cost you reiterate your full year cost guidance but just starting to look into next year given that some inflationary pressure seems to be a little bit more sticky than previously anticipated and also recent FX movements for the Swedish crown just wondering if you could give any first view on what you think the cost pressure could be comparison to your long-term cost growth ambition of five percent for next year?

Yeah we still see that we can reach the midterm on around mid-single digits. I think as you know underlying this country for FX we are six percent growth this year in spite of all the inflation of course if the crown are totally totally crashes it might be a different scenario but we don't expect that so with the development we see now we don't see any you know change of all guidance.

Okay then on mortgages I think it was on Airman's question there on your ability to raise landing rates further going on I think when it comes to mortgages I guess there is some lag effect since you're a little bit slow to raise rates there but looking at it now it's almost down at zero margin compared to investing the same liquidity into three months cyber or IBER rates. I just want to hear your your considerations here do you expect over time that margins will recover and perhaps to what level and if not are there other considerations that make you sort of still want to lend this as mortgage volumes because you fear that you might be seeing larger outflows of savings capital otherwise?

I think you will since we don't have all the heights in there you will see a higher margin as you from that but also as you know we want to have a low price on the mortgage because we see it's a great tool for private banking both for attracting capital and keeping capital but of course we look overall what's happening in the market and how we position ourselves not least versus Avanza and the major banks.

But still sort of since you had a lower margin to start with you're still okay with having close to zero excess margin compared to investing it in three months. Yeah but I think when you

see the full hike which we have you will see a slight margin is that correct Leonard?

Yes sorry correct okay so expecting to come back. This is the end figures it's average yeah Okay and then then first of July the last one which is not within those figures.

Yeah and then just on follow-up clarification there on the margin lending should we expect more flat lending rates from this point and onwards or do you still expect that you have ability to raise it further up?

Yeah but I think we have some ability varies a little bit from different countries but again it's not just a list rate we have also a lot of discount levels underneath that we can work with a little bit but of course we monitor carefully also that we don't come to too high level on absolute terms but I think that there is some room there still.

Yeah thanks that's all for me.

Thanks. Thank you next question comes from Enrico Balsoni at JP Morgan let's go ahead.

Hi good morning thank you just

a couple sorry just click on

mute again yes can you hear me now? Yep yep. Hi thanks and good morning just a couple so one can you just give us some comments on how do you see the cost of living crisis developing in the Nordic markets of course very high mortgage repayments now inflation is still high have you seen any change in the behavior of your customers can you give some granularity maybe in the different courts or maybe between the different countries? Yeah. So just to get a sense of whether you know flows can be maybe impacted just because people have less money to save and the second can you just explain me a bit more why you have the need to actually increase the deposit remuneration outside of Sweden if you have basically very little competition and as you showed us the saving deposit outside of Sweden didn't increase that much so I was wondering why actually there is a need to increase the remuneration at all for example in Norway it looks like you are leading as if like you're expecting some at some point a transfer or anyway as it was just good to get some some color from you thank you.

Good question sir I think when it comes to net savings I touched on this a little bit before but like I said we don't see any impact in retail in none of the courts both old pre-corona corona courts and after corona courts it's been stable inflows or net flows in H1 so we haven't seen any big impact for cost of living crisis yet anyway in the retail segment where we see the movement and capital reallocation is in private banking and they some of those customers quite aggressively advertise mortgage it's not only mortgage not net mortgage but also mortgage that they have with other banks but also that they are due to the market also invest in alternatives and a lot of customers buying property real estate because they believe it's cheap now and also te investment so it's much more movement in the private banking not because they have money it's more that they reallocate their assets in a bit for return. When it comes to the increase of interest rates on savings accounts outside of Sweden I mean there we follow the market a little bit to see that we're okay we're not going to be leading in any market but we of course need to see a little bit what's happening but then of course you don't know until afterwards if what's the effect is on a height but but since there's been very low very limited transfer to the savings account it's not really impacted the the cost for us either but I think we need to be we at least need to look a little bit what's happening in the market we don't need to be leading in any way but we we need to see a

Okay next question comes from Jacob Cruz at Autonomous

let's go ahead.

Hi thank you so just a couple of questions firstly on the on the NII I think if I add up your guidances for the year on the lending and the liquidity on the deposit side I get to about just below 2.7 billion of of NII I think consensus just about 2.5 when you think about the trends that you see in terms of deposit flows in terms of pricing dynamics and you take that that those projections you have do you think on balance that these other dynamic effects are more to the upside or to the downside related to that static analysis that you provide and then secondly I just wanted to ask on the Finnish endowment wrapper if you could say anything about the kind of revenue or volume opportunity that you're looking for in the say the next three years from that one thank you.

Yeah and yeah

when it comes to the snapshot on net interest income I think there are some sensitivities in there of course on the lending we will likely see a little bit higher interest rates and higher volumes perhaps a slight upside there when it comes to the liquidity portfolio of course the sensitivity there is the deposit developments and that's an effect how much customers then net buy in the market and there's a little bit to do with the market development during the fall so it's hard to predict a little bit but there is a sensitivity on the deposit so and on the savings account and the rates there I mean and yeah we likely perhaps we have slightly higher rates in some countries but I don't see any any major impacts I think the main thing to look at is a little bit the deposit development and also what's happening with the lending portfolio and the lending rates but all in all yeah it's hard to give a guidance on if it's an upside or downside it depends on what's happening deposit levels.

And the

second one was volume opportunity on the endowment wrapper I mean the full market there is is around 400 billion SEC and I think we have a great potential of course like any more pension like products we take time to build capital but I do see that this is going to be a great tool for us in Finland to build additional savings capital and net savings.

Thank you very much. Thanks.

Okay next question comes from Panos Elinas from Morgan Stanley.

Go ahead. Let's see you're calling it from a phone so you have to unmute on your phone. Hello yeah hi hello yeah

yeah hi yeah

thank you so I think everything is uh was quite clear just maybe a couple of clarifications from my side on the you mentioned earlier on the cost growth for for the best half of the year that included some hires in tech and product I was just wondering the full year guidance implies slower cost growth in the second half of the year so it's just has these roles now been filled or do you expect more more there or what's what's driving basically the slower growth in the second half of the year compared to the first

that's my first question.

Yeah so I think I mean if you look at the comps also in the age two last year we need to slightly easier comps versus h1 and so that's one aspect and we also were a little bit higher on marketing also in not least in quarter one where we had a specific campaign in Sweden related to the bank of the year so we see we can manage the seven percent level unless I would the corona crashes totally but I think it's crashed quite a bit already so so like I said online we have a cost increase around six percent discounting for the effects effect go first off

and I think

yeah sure and then obviously there were a few changes in country managers and I'm referring to Denmark and Norway

yeah

shall we expect any significant change in strategy in those markets or anything new coming up?

No I think there's no change in strategy we want to be a one-stop shop for savings and investments we need great customer experience and what we continue to work within in their markets of course the live rent product and in Norway is we basically have all the tools and components in Norway and it's really to leverage us in a good way both retail and private banking

Thank you that's very clear and then on the Finnish insurance branch I think the latest prejudice was referring to a second quarter launch what's the proclam there just now launched or?

That we estimate to launch like I said in quarter three. Okay fine

okay

I think that's

from me thanks so much. Okay thanks.

Thank you I think we have time for one last question we have Emil Ljonsson from DNB please go ahead.

Hi good morning I just have one question so I'm looking at the yields on mortgages and personal loans and margin lending and also on deposits and I'm wondering is there a reason to expect that the yields on any of these products will be sort of sticky if we were to get central bank rate cuts or in other words is there a reason to think that the interest rate beta on any of these products would be different as rates go down compared to rates went up?

I mean I think the one that you can play a little bit more with this is margin lending and what we we see we haven't followed exactly either up or down historically and so that's of course we've monitored a little bit the competition was happening there with the mortgage it depends of course on competition but there you know we're already very low so let's see how we play that but of course you want to have a very competitive

product going forward. All right and what about deposits?

Okay you mean deposits yeah but I think that we're going to be leading is mortgage the other ones of course we can we can monitor a little bit and I think that's the one that we need to follow that down with the rest of the market. All right

and just lastly anything to say on that on personal loans?

Yeah I think of course there's some room to maneuver there as well I think the one that we really need to follow the market and be leading is mortgage the other ones of course we can we can monitor a little bit and see what's happening.

All right well that's it for me thank you and I wish you a pleasant summer.

Thank you

thank you very much so down to the last question for today so thank you for attending the presentation our next quarterly report will be out on October 24th please visit our website known at ab.com or reach out to me if you have any questions so thank you for your interest in knownet have a nice day and a nice summer bye bye

you bye thank you bye