Nordnet AB (publ)

Hello everyone and welcome to the presentation of Nornet's fourth quarter of 2023. My name is Marcus Lindberg, I'm the head of investor relations at Nornet. And with me today, I have our CEO Lars Åke Noling and our CFO Lennart Kram. Lars Åke and Lennart will start off by presenting the results. And then as usual, 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 either raise your hand, press the raise hand button. Or then I'll mute you and call your name. Or you can submit a question in writing through the Q&A button. So if you write your question, I'll read it out loud. Or you can just email me. The presentation itself is available on our corporate website, nornetab.com. Okay, let's start the presentation. Lars Åke, please go ahead.

Thank you, Marcus. So we can go to... Yeah. Starting with some highlights for the fourth quarter. Very strong financial performance, record revenue and profit. The best quarter ever. Also very good customer growth and positive net savings. And considerably better than quarter four last year. And we also see that we're regaining positive momentum in our core fund and brokerage business. Which has a growth quarter on quarter versus last year. For the first time since 2021. Net interest income increased by 40% due to high interest rates. But also higher lending volumes. Continue good cost control with cost alignment guidance. Also very strong capital situation. Where we will have a dividend of .7.2. Aligned with our guidance of 70% on net profit. And we also decided to redeem and buy back the 81% in March. And we're also evaluating a buyback program. And our CFO, Leonard, will talk more about this point later in the presentation. And we also see very strong results in different customer satisfaction service across the Nordics. Both EPSI and SGI. Where we are number one in EPSI in Denmark and Finland. And that's like SGI. And number two in SGI. Swedish Quality Index in Sweden. And we are the bank with the highest growth in SGI. And in some categories we are actually number one. Like product quality. So we're very happy to see that. And we're also planning to invest extra in marketing. To capitalize on a strong position and growth opportunities. That we'll come back to as well. We'll go to next. So some of the financial highlights in the fourth quarter. Customer growth 9%. Which we still consider good in this market. Saving capital up 15%. Both from underlying growth in the savings market. But also net savings. And number trace is slightly down from last year. But quite a bit up from quarter three this year. Or in 2023. Revenue is up 25%. And again here I would like to stress that. Now we see revenue growth in all revenue streams. Both the fund business, the trading business. And net interest income. Which we are of course very happy about. Good cost control. Cost in line with the guidance of 7%. And still very good operating leverage in the business. With a profit growth of 33% to 830 million. We can go to next. This is a full year figures. Customers savings capital is the same story. Trades is down 30% from rather tough market last year. With a lot of uncertainty. And also overall low volatility in the markets. And revenues is up 35%. Where we see then a drop in trading revenues for the full year. Even though we were positive in quarter four. But then compensated by increasing net interest income from high interest rates. Cost also for the full year is 7%. And actually underlying with excluding FX. With the weak Swedish Krona. The cost growth was actually around 6%. Good cost control. And again a very good profit growth of around 50% year on year. We go to next. And we see a continued growth in customers net savings despite on certain macro. And on a full year basis the growth in customers and net savings is about the same as in 2022. But if you look at quarter four versus quarter four. It's considerably higher customer growth and also net savings 23 versus 22. We go to next. We also benefit from being a Nordic player. With the geographic diversification. That the risks are business model but also enables growth. And we see good growth in both customers and savings capital in all of our Nordic countries. We go to the next. Coming in to talk a little bit about the different revenue streams. Starting with trading. And to the left there you see the number of trading customers are picking up in quarter four. And that's due to that we saw strong markets in November and December. So trading activity was higher. But still trading per trading customer up to the right there. You see it's still on fairly low level and following the VIX index. That's we've seen overall low volatility in the markets. Especially in H2. But share of cross-border trades are on a stable high level around 25%. And that's due to the country mix that we've higher share of cross-borders trading outside of Sweden. Go to next. So we see there in the graph to the left. In spite of considerably lower trades per trading or per customer per day. We see that the total number of trades per day has almost doubled since 2019. That's due to we have double the customer base during the same time. And really with this big and active base when market picks up like we saw in November and December. We get a definite boost on trading. So hopefully with stronger markets going forward that will enable higher trades per day for us. Also the income per trade is higher than in 2019 due to higher share of cross-border trading then from the country mix. Next, talking a little bit about the fund business which we're actually very proud of. We have very good growth in the fund business. Both standalone but also that in the pension business. We've increased now the fund capital to 185 billion second. That's 28% up in one year. So it's the two times the growth we have on average savings capital. And this is due to very strong net fund buying during the year of 23 billion. And especially we see very strong growth in the Nordic branded fund portfolio. Which is now currently about one quarter of a fund capital around 43-44 billion SEC. Also would like to highlight a little bit the shift we've seen from active to passive funds in 2020. The active share of the funds was 48% but that's down now to 32% in 2023. And likely a big part of the shift from active to passive is behind us. Also allowing for a more stable fund margin going forward. What's next? So talking a little bit about the NII, net interest income. Starting with the deposit development. And we have deposit to savings capital of 8% which is historically low. Deposit volume decreased a little bit in the quarter due to customers not net buying funds equity. And not fully compensated them by net savings and dividends. But we also in this quarter had a pretty big currency effect. Because the corona actually strengthened of 2 billion SEC. Without the currency effect we would have been rather flat on deposits in the quarter. And go to next. So I'm going to now walk through quickly the different components of the net interest income. Starting with the liquidity portfolio. And as usual we do a snapshot. We see that we can reach about around 1.6 billion in revenue from the liquidity portfolio in 2024. And the volume we had in the quarter of 2023. And also the market consensus on IBO rates that you see down to the right. Currently we have 43 billion SEC in the liquidity portfolio derived from the 67 billion in deposits. Some cash equity of 6 billion. And then you subtract the lending of around 30 billion. But clearly you see that in the bar graph up to the right that we have a sensitivity then of course of the deposits. If deposit volume would increase. And we are like I said a low level of 8% deposit to savings capital. If that would increase 1% that would mean 300 million SEC additional revenue in 2024. Go to next. Then the lending portfolio snapshot around 1.5 billion in 2024. That's higher than 2023 due to higher lending volumes. But then this is based on also four quarter volumes. And the class through of interchanges of 50% of modern lending. Mortgage 100% and on secure business of 90%. And here we likely have a little bit upside because the volumes would probably increase during 2024. And some of the interest rate tags we now also quarter four has not been taken effect yet either. We have a very low risk loan portfolio. The loan to value around 40% for modern lending and 45% for mortgage. And credit losses is only in the unsecured business which is around 2% during 2023. It's a bit up from 2022 but still very good level in this market and the low risk portfolio. We can go to next. And then deposit interest and cost snapshot is 500 million in 2024. They're assuming that the interest rates volume per December 2023 with 100% and pass through of changes of the rates that we saw on the previous pages. But also a stable volume of 13.5 billion on the savings accounts. We see the development on the savings account that is still the transfers are most pronounced in Sweden. It's considerably less in other countries even though we now have competitive interest rates in all countries not just Sweden. But of course here we have a sensitivity with an increased volume on savings accounts. Smaller pass through we could then go to 18 billion for example from 13.5 and pass through 50% instead of 100%. Then it's 100 million higher cost here from 500 to 600. But we have to remind ourselves also when we increase the savings account volume, majority of that volume is actually external deposits which was also yielded on the liquidity portfolio. So all in all for that it is income if you look at the snapshots it is around 2.6 billion and same level as 2023. But in summary resilient revenue streams are bolstered by resilient revenue bolstered by diversified revenue streams and we see that in all the revenue streams. Of course most pronounced in net interest income now lately because of the interest rate increases. But we also know that net interest income and trading is a bit communicating vessels when interest rates are high market performance is a little bit worse and vice versa. Looking at the margins for product of course high now in the policies due to interest we see the trading margin going down due to less trades per customer. But we see now that the fund margin has started to stabilize and was just one BIPs drop in 2023. And the main reason for this is that we likely now have the big shift from active to passive funds behind us. Go to next. So you're born all this down to the P&L. You see that we've grown revenues around 30% per year since 2019. At the same time we had the cost fairly stable only 4% growth. So that means almost entire revenue growth is ending up on the bottom line. So two positional or profitable growth and very good operating leverage. Next. And some product highlights. Of course we're doing a lot every quarter. We launch a new version every second hour and a new app every three days. But just a few things. I mean we now started to include a lot more dynamic pages on our web and not least for inspiration. And we just launched a new stock inspiration page that's been very well received. We also come very far in the migration on shareville from the old app to web into the Nordic app web. We launched a number of nice features during the quarter like onboarding and profiles and groups. But what I'm most happy about is that the migration has also been very successful. We've seen engagement in our posts dramatically up in one year when people start using the new platform instead. So with that I hand over to Lennart NSFOR to talk about the capital situation.

Thank you so much and we can go to the next slide actually. And we have a strong capital situation and that is due to continuous good earnings and a very low risk business model with limited lending that puts up south here. During the year we have increased the own funds by almost a billion. Most of that is from the earnings of course. But also the capital requirements have been lowered both as an effect of SFSAs, SREPs they do every second year but also lower deposit levels that mean our liquidity is down but also the risk of the liquidity portfolio. So really it's a joint effort both increase the own funds and reduced risk and capital requirements. Levels ratio is still the long-term constraints and even though it is up to as of the end of year 6.7%. This is mainly due to of course the strong capital situation with the funds but also the low level in historical means of deposits according to savings capital which is now down to .2% as you saw earlier here. And the low level is mainly due to our customers that during 2023 been net buyers of stocks and funds actually. And we expect the deposit level to increase going back upwards in relation to savings capital which will then decrease the leverage ratio but also increase the NII of course. Leverage ratio is the constraints also because that is harder for Nodin to control. The risk capital rated capital adequacy that we can control by invest differently in the which drives the leverage ratio it is all the customers choice and how they prefer to do. So that is what we have to have a buffer for both in the long term how that is developing but also having the buffer for very very short and quick changes of it as we saw in March 2020 when the deposit increased by 20 billion almost 40% of that time within a quarter. So yes the leverage ratio is still the constraint for us. But with this capital situation we are continuing doing the dividend of 7% of earnings of net profit sorry giving in a dividend of 7.20 per share. But we also mean to reduce the capital and that we do by redeeming the 81 bond which is for school 21st of March. We have received permission to do that from SFC and for your knowledge I mean that is 500 billion on Stibor plus 6.75 percent an annual cost of 60 million about. We are also evaluating a long-term buyback program and that is to manage further excess capital of course. This would not be one time it will be long term over a couple of years. So slowly get us down to the proposed leverage ratio range 4.0 to 4.5 percent as we also announced today. And then we have just those capital ratios we have implemented those to be more transparent with you about our capital situation and the plans ahead. And that is to have this buffer to regulatory requirement but also saying yes this is where the leverage ratio is sustainable and this is where we want to be between 4.0 and 4.5 percent.

Thank you. Thank you Lennart. A little bit about the recap of our strategic focus. We can go to the next. As you know we have four key strategic ambitions starting with the having the most happy customers being a one-stop shop for savings investment with an outstanding customer experience and to get there we build on our platform for savings investments every day with a high speed in development. And we also know we can never have happy customers unless we have employees with the upward trend on engagements and also that we can attract and retain top talent which we can. Then a sustainable business. We are in a trust business. We need to earn that trust every day and work extensively with risk management with both compliance risks and other risks and overall secure that we are trusted and like brand. And the last area is profitable growth to capture the Nordic growth potential to continue to take market share in the growing savings market and also ensure scalability and cost control going forward. We can go to the next. And as you know we've had a very good long-term growth in both customers and savings capital both from a dramatic improvement in customer experience that we continue to enhance basically every day. But also that we have a critical mass of customers in all countries. More than 400,000 customers plus in each one of the countries striving fueling that where the mass grows and of course good net savings during a period as well. What's next? And we're taking market share in a growing savings market. We have 6% market share of the population and 6% of the dress savings capital that was in 2022-13 trillion SEK and that was up around 3% in 2016. At the same time we know that the market is growing both from underlying growth in the savings market but also that we launch new product like the diamond wrapper we launched in Finland this fall and the live rental product we're going to launch soon in Denmark. So the rest of the market is we estimated to increase from 13 trillion to 14 trillion SEK in equity and lowering funds and pension. That by will also put a lot of effort in those areas and we're also really happy to see that development coming now with very strong growth in the fund business. What's next? Cost and cost focus is also really important to us. We've had a rather stable cost development since 2019 in spite of doubling the customer base from 900,000 customers to 1.8 million customers during the same period. So very scalable business and overall very good cost control. Key drivers is that we have a very modern scalable cloud power tech platform and that can onboard a lot of new customers without driving cost. We work with the automation simplification and when the concept processes which is a win-win works better for customer, we scale better. Also very efficient customer growth, low acquisition cost mainly driven by your word of mouth. We plan to increase this a little bit now and come back to that but it's still a very efficient growth even without spending and also that we manage the third-party spend in a good way. What's next? So looking at the medium internal financial targets, if you look at the actuals in 2023 versus the targets we are in line or above on all targets except for customer growth. It's slightly below with 9% versus 10% guidance of 10 to 15%. But we still consider this is good in the rather difficult market during last year. We made two changes then to the medium term financial targets. One is like Lennard talked about, we added the capital ratio targets to set some kind of boundary for a shared buyback program and when it comes to cost, I mean underlying costs are still mid single-lidded growth but then we plan to invest an additional 80 million sec per year in marketing which I'm going to talk about now. And we want to capitalize on the position that we have. We have a very strong market position in the Nordics. We have a good platform, we have very happy customers and hopefully also we'll see a more benign market going forward with better macro and a little bit better performance in the markets. So we think it's a good time to do an extra investment now. The investment we announced is up to 80 million sec extra per year from the level of 45 million sec. So last year we spent along 10 million sec in marketing per country which is a low level and now we plan to increase that to roughly 30 million sec per country. And what we want to achieve with this of course is to increase the customer growth. So from the 9% where we are to the upper band 10 to 15% or upper part of 10 to 15% which is our guidance. Of course this will take some time, you build this over time but to do this then this investment will allow us to drive brand awareness but also increase the pool of customers that can consider Nordnet as a platform. But we will be very transparent so we will be disclose and track the market cost separately and of course if you over time see that this is not efficient we can also scale back but it takes time to see the full results of this and it's not a thing you can just do for one year and scrap. It takes a couple years before you see the results. Yeah and we just running off with the priorities for 2024 and we're working now extensively with the Danish leave-rent the pension product. We have a branch manager in place who's going to hand in the branch application during quarter one. We aim to launch at the end of this year or beginning of 2025. We continue to expand our Nordnet brand fund offering as a new exciting launch coming up now mid-Feb so watch out for that one. And as I said also the integration and migration of shareable app and web to the Nordnet app and web is going really well and we're likely going to be done with that work during the summer and then we're going to close the old platform. And we have brand position we've talked about to strengthen brand awareness to extra marketing spend but overall of course you're going to continue focus on cost control and ensure that you have a scalable business also going forward. I think I'll stop there Marcus and hand over to you.

Great okay so it's time for questions so if you want to ask a question please use the raise hand button and I'll unmute you and you can of course submit a question in writing if you want to. So the first question comes from Jokka Peslevik at SCB please go ahead.

Good morning everyone so my first question is on the increased ad investment. I think you said during your presentation but could you reiterate if you have already begun with the campaigns and have seen any effects already and also which market you see the biggest potential in?

Yeah so we haven't increased spend yet what we're doing now is working on the concepts and we're going to do that together with the external party. When that concept is done then we're going to start rolling it out and it's likely going to be from I would say end of quarter two. Have we spread the spend? We haven't fully decided. It's likely that we perhaps a little bit less spend in Finland since we are number one and they're on the platform there and a little bit higher in the other countries but I say I think we have a good potential in all of our countries with an increased marketing spend if you do this right of course in an executed one.

And just related to the customer growth target of 15 percent if you get to that brand should we expect to see it already in 2024 or is it rather 2025?

2024 is too early it takes time to brand awareness and consideration within the customer base. We're likely going to see a sign of that in 2025.

Perfect very clear. My second question is then on buybacks. So first of all do you have a mandate from last AGM in spring of 2023 which is something you will request in the upcoming AGM?

We do have the AGM mandate however buyback wasn't requires permission from SfSA which we have not we do not have at

the moment. So likely I mean the buybacks is going to be from H2. So likely we start the buybacks from H2 both to have a new approval from AGM but also an approval from the SfSA.

That's very clear so we should expect you to use buybacks then to get down to four and a half percent or is four percent an alternative then in the leverage ratio?

Over time yes over a couple of years.

Perfect

very

clear.

Now I think it's important to know that I mean over a couple of years we do also see additional earnings where we'll add on to own funds during those years and we also watch closely the development of the deposit of course so we don't jeopardize anything.

That's very smart I think and just one very last question do you have an update on the unsecured lending portfolio?

No it just is ongoing so you either sell or of the book or that we set it in runoff but we come back as soon as we have something to communicate.

Perfect let me thank

you. Thank you the next question comes from Patrick Brattelius at ABG please go ahead.

Thank you can you hear me?

Yes.

Perfect I would like to start regarding the the comment where you mentioned that you expect the deposit base to savings capital to increase the the coming years given that it's below average historical levels. Can you please share with us some of the reason why you believe that will occur?

Now I didn't say it will increase but it's of course likelihood that we see a little bit stronger deposits over time since we are right now on very low levels and of course a little bit market dependent on that one. Say if it's more volatility I think we'll see more deposits and also higher customer growth will also probably lead to more deposits a bit stronger market for example would probably do that also increase the inflows to the platform. So I'm just saying that we are on a historic low level so there is a likelihood that we have an upside I just wanted to share the sensitivity on that upside so one percent increase is about 300 million sec.

I think one aspect of deposit levels that's sort of under appreciated is the aspect of higher transaction level so right now we see net buying which reduces deposits but when you have buying and selling across 1.9 million customers you have that transactional cash that's kind of missing now. Back in 2021 when we were at sort of 13 percent deposit today and that was all transactional cash since there was no savings account to park your cash in so once trading activity comes back that should actually help with liquidity and deposit levels.

Thank you because we have seen increase in equity markets during Q4 and deposit has fallen despite that quite sharply in November. How is your strategic thinking about raising deposit rates to attract more deposit to offset this drop in deposits?

If you look at quarter four in total we actually were flat if you exclude the effects and we clearly saw especially in November-December when it was more volatility in trading that the deposit held up very well and you got more trading deposits. I think we have competitive interest rates in the markets now to at least to keep the deposits we have on our platform. If you should increase that further to track the even more capital that remains to be seen there's of course a cost to that as well. We have a pretty interesting model in Norway where we have a differentiated a bit between the private banking rates and retail rates to track private banking capital with very good interest rates and see how that plays out.

Thank you and then a question on the buyback a little bit of a follow-up. According to my calculations it looks like your over capitalization then adjusting for this 81 would be roughly 1.5 billion but then you build capital giving your high profitability and then you talked about maybe the exposure also falling. Do you have in can you share with us some of your thinking about run rate buyback level given that you wanted to have it on a long term not just a short term buyback program?

I think that's not what we want to see. We see the development of both the earnings and the deposit levels how they line out during the years but also I think it's important to see that it is within the range of 4.0 and 4.5 and if you go to 4.5 that's a billion a little bit more than that of excess capital so it's a little different there but the range is to be within 4.0 and 4.5 within some years so that we have those tools to work with.

Okay that is fair and then I squeeze in just the last question. Can you talk about any impact in Finland from the tax wrapper launch given that it launched here in the fall and has it gone according to plan and were you expecting a bigger impact or a smaller impact? Can you please share some details here please?

I think the product spins very steadily not least in the private banking segment and it's been very well received and we are approaching close to 1 000 customers and close to 500 million second net savings but the activity overall in the customer base is higher than expected so all in all I would say we have a good start but this will build over time like any insurance products but we see the feedback from customers and from the market has been very very good.

Fair enough thank you so much. Thank you next question comes from Nicholas McBees at DNB. I think you need to unmute on your end Nicholas. Yeah try now I think you're unmuted. Nicholas can you hear us? Okay hopefully Nicholas can come back we'll go to Edmin Kik at Carnegie please go ahead.

Hi do you hear me?

Yes.

Perfect hi thanks for the presentation and taking the question. So starting maybe on the increased marketing spend have you made any analysis on kind of the payback period or the conversion rate you usually have on marketing spend on the marketing spend you've had previously?

Yeah I mean you know we right now we have a acquisition cost around 700 SEC but lifetime value to acquisition cost is 24 turns which is very high so with this investment we're likely going to increase the CAC to perhaps around 1100 but still have a very good LTV to lifetime value to CAC so I think it really makes sense to fuel growth with a low LTV to CAC that we have and the strong position we also have in the markets but of course we're going to follow this over time to see that we get the facts that we want otherwise of course we will scale back but it will take some time before you see results here especially when you build brand awareness and consideration that takes definitely more than a year probably two.

Got it and maybe just following on on the cost topic so marketing I suppose it could be seen as a normal kind of running thing you need to have in your operation as well is there other parts that aren't included kind of in the cost guidance that could come up in the coming years to make you actually on a reporter basis have an overrun compared to your cost target?

Not that not as we see it and this was a considerable investment I mean we had good growth also with low spend I mean we spent 10 million per country last year we still had nine percent growth but I think there is a clear opportunity for us now to push a little bit with the strong position that we have and increase customer growth because over time was really fueling our business is customer growth and that savings.

I 100% agree I think for the long-term franchise value it makes a lot of sense Then just on your NAI sensitivity as well you assumed 90% pass through on lower rates on the consumer lending given that you anyhow kind of want to churn out that portfolio why would you pass on anything of lower rates to those customers?

It's probably somewhat regulated in agreements so you need to pass through some of the interest rate decreases

okay that's work there then thank you

thank you let's try Niklas again let's see let's try I think you need to accept to be unmuted Niklas right okay we'll move on to Michael McDonough at UBS Hi there can you hear me?

Yeah can hear you great I just did another follow-up on the marketing I think most of the questions have already been asked but just thinking about the sequencing in 2024 should we expect that to be kind of front-loaded or evenly spread out across the year?

Now I mean like I said right now we're working on a concept together with third party so of course maybe some costs related to that but we won't start the marketing external marketing push until end of quarter two and then quarter three quarter four so probably a little bit skewed to later in the year but like we said we're going to report the marketing costs separately you will see it in excel sheet so it's going to be very easy to track as well

okay great and then just another follow-up on the the start package in Sweden just wondered if they'd seen any impact of that in Q4 and then also you saw some some pricing competition and from some competitors in Denmark as well any comment there on how that's affecting your pricing thoughts?

Yeah but I think in Sweden with since now we're really competitive on the start offering and also you can change commission class that's really we see some positive effects but not least on also MPS score and customer satisfaction of course not just due to this it's overall everything we do on platform but this comes as well so we have a very positive trajectory in customer satisfaction we saw that in SGI as well Swedish Quality Index what we still need to work with in Sweden is awareness brand awareness so that's why I think some extra push also in Sweden on marketing spend makes sense when it comes to Denmark and the stocks are lowering prices we haven't seen any effects they did this in beginning of January but we have an extremely strong start in them Denmark with both the customer loss and that savings and we want to be positioned as S&P at this one-stop shop with a great customer experience we don't necessarily need to be cheap on every single price point of course overall a good price but so far no effects of course we'll monitor situation and see how it plays out but I have to remember that success has always been cheaper than us basically and they've been moving their prices a little bit up and down that they were done quite a bit in 2021 2022 and I think they raised the prices and now they moved back again so

great okay and then just one final one on the level of net inflows I think in Q3 you mentioned that it was the reduced levels still because of reallocation of capital from private banking clients is that still what you're seeing in Q4 or are there any other trends that are emerging? No I

mean the retail trend is still very strong and stable still allocation especially in all the cohorts of private banking which is quite a lot of money but again hopefully if the interest rates start going down and the markets are performing a little bit better that we'll see a lot of that capital coming back to be invested also in equities and funds great thank you very much thanks

thank you let's see I'm not going to try Nicholas again but I'll try it's Karli at the EMB Emil Jonsson let's try let's see if you can hear you email it here we go

hi it's Nicholas here I'm using Emel's that's

also works

great great so yeah follow up on the increased marketing spend and the potential communication between higher marketing and customer growth so looking back since the IPO you've kept your customer growth target largely intact actually you even reduce it slightly from the 15 percent you had for some time as well to now it's doing 10 to 15 percent while the cost growth growth guidance has increased from being slat for many years ahead that you stated in the later raised to five percent and now you're going to be probably above 10 percent for 20 24 so is it fair to conclude that it is more expensive than you previously assessed to reach your customer growth ambition and secondly how can we be confident that your cost growth will indeed go back to the five percent in the medium term given the trend with accelerating cost growth we see now from zero percent to five percent to now yeah around 11 percent

yeah I think you see a little bit different factors a lot has changed since the IPO I mean I think no one could dream about the growth and customers and that savings and overall in the business that we've seen and in spite of that we have say we have a very stable customer development we increase cost per year on average four percent per year since 2019 at the same time we double the base on 900 000 to 1.9 million customers now and so I say overall we have a very scalable business and a very good cost control I think we showed that also last year even in a very high inflation environment we managed seven percent but the underlying if you exclude fx it was actually six percent aligned with our our guidance and so underlying what we see that we can maintain mid single digit is just as we see an opportunity for an extra push in marketing of course if that doesn't give effect over time in the way we want we can we can step that back like I said we report it separately you will be able to track that cost item specifically okay

but but what has kind of triggered you to reassess the yield you get from marketing expenses right now so traditionally you've been more targeting more growth through branding using savings economists podcast events and also word of mouth so does it does it suggest that you see higher customer acquisition costs in the future

yeah but not really I think we I mean or like I said we our acquisition costs is around seven sec now versus a lifetime value of what is it 20 000 so lifetime value to acquisition is like 24 turns it's extremely efficient customer growth and I think that makes an opportunity to push a little bit extra marketing to increase acquisition costs a little bit it does still have a very good ltv to cack and of course we I mean we want to reach as big part of the market as possible when we're strong in investor trader segments we want to be strong also in the service segment but to fully get there we need to build additional brand awareness that we don't necessarily do in that those segments with the savings economists and word of mouth so I think it makes sense to to build a more generic brand awareness in the markets where we are and also then increase the pool of customers that can consider Nordnet as a platform

all right and then how much additional net inflows do you expect the kind of incremental five percent higher customer growth to bring so let's say you go from nine percent to upper end of the 10 to 15 percent interval so all these customers you hope to gain from more marketing and expected to be minor customers in terms of AUM or substantial drivers of incremental net inflows

yeah well we see I mean when we grow as much as we've done the last years I mean the new cohorts have been traditionally very strong both when it comes to activity and net savings of course we can't match the fully or have a trading segment that we had before when it comes to to trace the customer but it's been very very good and active customers and also putting a lot of good net savings over time on the platform so we don't see that as a big problem but we don't see that necessarily cohorts going to be worse going forward it's just that we want to have a higher reach

all right and does that then suggest that the the slide you showed with trades per trading customer should continue to trend down

I mean I think like I said with the new cohorts if you look at trades overall that the number of trading customers that's equal between the cohorts it's just number of trades per trading customers a little bit less in the new courts due to the old course due to a bit more heavy traders than in the old cohorts but I don't say it will dramatically I mean push that level down I think the why we see the level now is more market dependence and I think for the customer base 1.9 million with and some more activity in the markets we have an upside on trading going forward

all right and I think especially in sorry in in Sweden is especially where you've seen that trend where we started with having mainly heavy traders and then expanded more to the broader market outside of Sweden we have you know all kinds of customers we are the number one platform and have a very broad segment of the market so incremental customers are generally sort of part of the average there you don't see that same sort of dilution outside of Sweden and we've grown outside of Sweden for for over years

yeah and then on the net interest income so I appreciate the NAI snapshot for 2024 but clearly it's a bit speculative given the uncertainty regarding rates and volumes so could you say something more specific on what these your snapshot suggests for Q1 I think you mentioned you still expect some further tailwinds to the yield on a liquidity portfolio from previous rate hikes so do you see potential for higher NAI Q1Q and Q1?

I think what we need to see then is how the deposit plays out and then also we see additional upside it was not on liquidity was on lending portfolio where we had announced hikes we should not in the snapshots and also likely a higher volume and then we see of course there on the downside a little bit and how much transfers we get to the savings accounts but again a majority of the inflows of savings accounts we know come from external deposits that would also then drive yield on the liquidity portfolio

so did I understand correctly that you have some announced rate hikes to to your on the lending that is not included in the snapshots

exactly that will come in in play and in Q1 it's not dramatic but it's like across like 25 points dips on some products how about the lending book

does that I

think Marcus can come back to Denmark

and Norway all lending products there and film what

we do in adjustment all the individual rates of modern lending in general as well so that will also play out okay

perfect thank you yeah I think on and I clearly like you to make a sort of assumptions on on your own assumptions but the way we laid out the snapshot with what we know now if you look at sort of where the risk is if it's top side or downside I think the market rate curve prices end so rates starting to come down in h1 about a total of a hundred dips and change across the markets for the year I think the that's sounds fairly reasonable that rates cuts would be more aggressive than that and on the volume side that's of course tough to know but and we are an all-time low when it comes to to the process to am and long growth should likely continue to grow so I'd say that the risk there and it's more to the to the upside too and but of course it's it is it's hard to know so we lay out sort of a a snapshot so you can you can apply your calculations to it

yes understood

yeah great the next question comes from Richard Strand at Nordea please go ahead

hi and good morning starting off with a question on capital you have announced that the your you have the intention to buy back your 81 there are 500 million SEC but going forward would you be interested in is your new 81 capital if you see tighter spreads or is this should we see the this sort of shift here that as permanent I

think we should we do not consider any issues at the moment we have excess capital but if that will be a good alternative we can always look upon it but not in the plans as of today and definitely not to replace this one that we we at the moment

but if you do something we can be optimistic as well it depends on the market development the rate development then

coming back to the cost increase there in terms of marketing spend just interested to hear is there any is this something particular in terms of timing that inspired you to take this action now in terms of product launches trading change in trading sentiment etc

yeah but two things I would say what one is I mean that we get a platform that's really appreciated by the customers we are a one-stop shop now in all countries but we also see in the of course you measure your customer satisfaction ourselves by mps but what we see also in the external benchmarks that we're very strong that we're very strong pick up in the sgi in Sweden clear number two on the bank that's growing also number one on product quality on that one for example we're number one in in similar measurement epsi in in denmark and in Finland so of course we want to leverage the strong customer satisfaction a strong market position we have and I think it's a good time and the other part is so also macro a little bit hopefully we have a little bit more macro the coming years hopefully then drive a little bit higher growth in the markets as well a little more activity in the markets

yes thanks and then we had one of your main competitors talking about improving their offerings to more active customers and they mentioned specifically that they could potentially lower fx fees for cross-border trading is that something you see could could impact nordnet's brokerage income from from cross-border or do you think that your customers are happy across the nordic countries yeah

I mean if you look at why they choose us as a platform to start with is this one-stop shop that you can find everything that you need and of course couple the outstanding customer experience then of course we need to overall be competitive on price but we clearly see that we don't need to be cheapest on every single price point we've seen that with the euro coming in with zero basically we've seen that commission we've seen that with big banks lowering commission we've seen it so far with saxo as well so of course you're going to monitor at all time competition and see how it plays out but we also know from experience that we can rely also on the strong position and a very good platform around

thanks and then one final one from me lorzok you mentioned it sounded like you're getting a little bit more optimistic about flattening out the margin pressure on funds is that something you see sort of the trend leveling out or or is that just sort of an hope for for getting I mean we clearly saw it

between 2022 to 2023 there was virtually flat on margin and I think this tremendous shift from 48 active in 20 down to 32 active in 2023 I think it's likely that majority that shift has happened because there is clearly a room for active funds as well

yeah thanks that's all for me thank you next question comes from Enrico Boltoni from

JP Morgan let's go ahead hi good morning thank you just one clarification on the marketing costs to start the the the previous spend of 45 million you mentioned that will still be reported together with with the operating costs right so it's just the 85 million that will be on a line or are we going to see the

entire marketing costs so you see the

45 plus 80 so the entire will be on a separate line okay you

have it today if you in the excel that's on the website you can see it we have split it already and you have all the history there too

okay thank you that's it that's helpful and related to that I know it's early because you said you're going to start in 2q I was just wondering whether is there any seasonality we should be aware of so for example the UK a lot of firms usually increase marketing around the isis season so the first quarter is this going to happen as well in your markets or actually is going to be more evenly spread out once you once you start yeah

I think of course there's some seasonality for with also as well especially during summer vacation probably we won't feel that much for example and when people get back to work in and August September I think it's a good time for example but then can be a little bit market dependent as well but but but but we rather spread out anyway but of course we will we'll try to stay a little bit during two so we don't spend too much in the quiet periods

okay thank you then I had a question on just on on the regulatory pressure again I read across here in in the UK there's there's been a lot of regulatory pressure on on trading on nai I was just wondering if you could give us just your take in terms of how how the regulators in in the markets you operate are seeing the the margins that the platform are generated on on cash but also I would say more recently the fca has been a big concern about the you know the gamification of trading so you know the advertisement around trading shares for retail customers which clearly is relevant to you so I just came to hear your thoughts on this

yeah

I think when it comes to nri is more be the big banks which been a little bit scrutinized I think we are very competitive you know we have high interest rates on savings account and we have good lending rates and we are a bank we have a bank license so we can run a bank business which is also a bit different from from any of the UK platforms when it comes to gaming so no real pressure to to regulate or have some windfall tax on on nii and in any of the countries when it comes to gamification I think I mean we are we you know we're a long-term savings platform we promote long-term savings diversified savings and also to do save regularly most customers actually do this and and we're also very careful marketing we've there's been a number of marketing service one in Denmark I think in Norway etc and I think that one in Denmark has been closed and we came out without any comments basically so but we really try to be careful and adhere to regulation of course when it comes to marketing

thank you and one final question please on the pass through rate in terms of the remuneration on saving accounts as rates start to fall you put that sensitivity table which which is useful what what are your thoughts here I mean what are the chances that actually you'll be able to to pass through not an under percent of that I'm just thinking from probably a competitive dynamic does it really matter what the other players will do or what their other other consideration I think outside on

Sweden we are more the price sector with the number one in Sweden we need to see a little bit what Alonso is doing and they might be bound a little bit on the interest rate on their external accounts that they provide but let's see how that plays out but we need to as a number two in a way follow competition in Sweden

okay thank you

okay a couple of last questions before we wrap up so we have Pano Salinas from Morgan Stanley please go ahead yeah

hi can you hear me

yeah yeah

I think most of my questions are answered just maybe to put everything together so marketing expense going up as you mentioned acquisition costs going up as well so you need to spend more to grow the customer base to your targeted 10 to 15 percent is it specific type of customers you're looking at especially student maybe are you are you aiming more towards private banking type of customers and then tied to the marketing spend you're so touched upon the competitive landscape and the pricing likely coming down in brokerage effects and stuff but also on the on the rates I mean as my colleague also mentioned on the on avanza and the postponement of the rate hikes in in you also gave some sensitivity on the deposits for 100 percent and 50 percent pass through so does it suggest that you likely delay repricing once rate cuts commence and is it more likely to be towards a 50 percent than the 100 percent thank you

I think with the custom marketing and I think we we we target all of our three segments this investors traders and savers and but of course I think this investor trader segment are big and we want to build as high awareness as possible in all of those segments because I think the rate growth potentially in all so it's not just going to be directed to to to one specific group like PB is going to be a more broader brand awareness campaign than that when it comes to the the rate cuts on the deposits on savings account like I said here is we are more the price sector outside of Sweden where we we can can change probably with 100 percent pass through in Sweden is different we need to also look at what avanza is doing so that's going to tell the game a little bit hard place out in Sweden

that's

clear thank you

great I think the last question from from Andy Lowe at city please go ahead

hi guys can you hear me yeah yeah great um just I would love if you provide any thoughts on throughout 2024 sort of mix shift from your savings deposits to for your your mixture of deposits savings you've obviously seen a big step up and that's increased throughout 2023 so do you think that mix shift is done and then maybe another way to that's about 5.6 percent do you think we're close to the lower bound or do you think the scope uh lower

thank you quite better did you understand right Marcus I

think the the one question of what sort of savings account balances it's I think we're it's hard to know where it's going to stabilize it's at 39 percent of deposits now but it's it makes sense that it would start to stabilize once rates come down because the rates have triggered it to come up and rates are starting to come down we'll see where that

will also need to market pick up so more money moved into transacting instead of saving

exactly and then that's sort of what I talked about for that transactional cash which as Andy pointed out is is that at some kind of close to an all-time low now and what would trigger that to come back is sort of markets to be a bit more investable this this sort of trading instead of just net buying so I think that the risk is clearly to the upside there and the trigger of this coming back a bit more this transactional cash is markets being a bit more investable which would would make customer growth come up customers bring new cash that cash even though it's meant for investing it sits for a day or two or a week take that across 1.9 million customers you have some constant liquidity take the the private banking sort of allocation away from markets coming back commit that markets are now more investable some of that cash twinkling in and coming back that would also help deposits and that would be cash coming back to be invested that's sort of transactional cash so I think there are a number of factors clearly that will help deposits come up and the risk to the upside the question is of course sort of timing how fast it goes and at what point but I think it's clear that what is happening in that direction at some point thank you great I think that is the last of the questions for today so thanks a lot for attending this presentation you can visit our website known at ab.com or reach out to me if you have any questions so thank you for your interest in known it have a nice day and goodbye everybody