Nordnet AB (publ)

Good morning and welcome to the presentation of NONET's second quarter of 2024. My name is Marcus Lindberg. I'm the head of investor relations at NONET. With me today, I have our CEO Lars-Åke Noling and our CFO, Lennart Kräm. Lars-Åke and Lennart will start off by presenting the results and then we will 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 in Zoom. 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, nonetab.com. Okay, let's start the presentation. Lars Våke, please go ahead.

Thank you, Marcus. We can go to the next slide. Starting with the highlights. So we're all a very strong quarter with an all-time high revenue and profit with growth across all of our revenue streams. And the majority of the growth is coming from our core business, the trading and the fund business. And we also see continuous strong growth in customers and net savings due to positive market sentiment. Also a very healthy trading activity and strong brokerage margin from a high share of cross-border trading and also a high share of retail trading. And very good also growth and progress in our fund business, where Nordnet funds are now growing by 60%. But overall, we have a good growth in the fund capital and also good growth in the fund revenues. Net interest income outlook looks stable. It's about the same as last quarter. We see a slight decline on the interest rate paths, but we have a little bit higher volumes on deposits and lending. And cost growth is expected to train the line with guidance for the full year. And we expect the second half cost growth to be a little bit lower from ongoing savings initiatives. Also a very strong capital situation where we have the dividend and also the buyback process is ongoing, waiting for approval from the SFSA. And we're done also with the migration of Shareville. So it sounds like the old Shareville classics. Shareville is now fully integrated in our Nordnet web and app and integration has also been very successful. Looking at the numbers, also good numbers, customer growth 11%, quickly closing up to 2 million customers across an audit footprint. Savings capital also very strong growth, 21%, both from underlying growth in the market, but also very strong net savings. And here we have record numbers now, 960 billion, and we're approaching also 1,000 billion second savings capital on the platform. It was very positive. Also, now we see that we have a positive growth in number of trades. And that's why, since we saw that. And of course, from positive market sentiment and momentum. Revenues up 20%. We have a record revenue of 1.3 billion, close. and especially strong growth in the fund and the trading business. Cost is growing 10%, but if you exclude the increase in marketing cost, the underlying growth is 7%. But as I said in the beginning, we expect to land on the guidance of mid-single-digit growth for the year. Also, continuous strong operating leverage in the business with profit growing 24% to all-time high of $904 million. And also customer growth and net savings is very strong. I mean, for the quarter was 54,000 customers. We have almost 100,000 customers for the first half. Net savings, 19 billion in the quarter and 37 billion in the first half. And that's considerably higher growth rates, both in customers and net savings versus last year. And our geographic diversification, the risks of business model enables growth and we see good development in all our markets. Sweden a little bit lower on customer growth, but we see very strong savings capital growth and Denmark is of course sticking out with both very high customer growth and savings capital growth. Next, looking a little bit on our revenue stream, starting with the trading revenue. We see a number of trading customers is about the same as last quarter. Trades per trading customers is also about the same. We still see, though, that the volatility in the market is low. So the VIX index is low. So a little bit high volatility. I think trading can pick up more. But what's very positive is the cross-border trading is very strong, and it's almost 30% in the quarter from both the country mix, where we have a lot of cross-border trading outside of Sweden, but also that the US markets overall have been strong and attracting a lot of trades abroad. Looking at trades per day in total, in the graph to the right, to the left, we see that almost double number of trades per day from now versus in 2019, even though that the trades per customer has been going down. And that's, like we said before, that's because we have a double customer base from 900,000 customers to close to 2 million now. But what we also see now in this year, first half, is that the actual trades per customer is actually going up a little bit. We've broken a negative trend, which is positive. And we also see that income per trade is considerably higher now than in 2019, and that's due to the country mix where we have high share of cross-border trading outside of Sweden. And also here we see an increase in the first half of the year on margin. That's because the cross-border trading is even higher and also that the retail share of trading is high. Going to the fund side, very strong development in funds, very strong net flows. We have 229 billion SEC now in fund capital overall and fund capital growing twice as much as total savings capital and especially strong growth in our own Nordnet branded fund with half of the net buy goes into our Nordnet fund family. And we have now almost half of the customer base owning funds. And we also look at activity on fund buy and sell down to the right, where we see that 25% give or take of the customer base buy or sell a fund each quarter, and that's around 500,000 customers. And we also see that the active to passive share is stable with an active share of around 30, 31, 32%. Going into net interest income, we're still on a fairly low level on the deposit versus savings capital of 7%. But we see a slight uptick in deposits from 66 billion to 68 billion in the quarter from both strong net savings, high dividends. But we also see that customers continue with very high net buy in both equities and funds, which is, of course, good for our core business over time. What's next? So looking at the liquidity portfolio snapshot, it remains at around 1.6 billion. Let's assume that the volume is on quarter two and also the interest rates pass, you see, down to the right. And they are a little bit lower than last quarter, like I said. But we're a little bit higher than the deposit volumes than we saw last quarter. And the main sensitivity here is, of course, how deposit volume develops over time. And we likely will see an upside as we are on very low levels on 7% deposits versus savings capital, where we historically seen 12 to 15%. On to next, looking at the lending portfolio, then snapshots here, also about the same as last quarter. And assuming the second quarter volumes and the IBOR interest pay pass we saw, but with a pass through a mortgage and unsecured, close to 100%, but margin lending 50%. And we see that in the graph to the left there that we grow marginal lending very healthily while we're stable lending volume on mortgage and and personal loans according to plan. And we really want to grow margin lending. It's a core lending product for us. It's used for leveraging the portfolio. It's high margins, but it's also less rate sensitive. We don't expect 100% pass-through. We expect 50% pass-through of interest rate changes going forward. You can move back. Also, still a low risk on the lending portfolio. Loan-to-value is around 40%. Credit losses is only on the unsecured. A little bit higher levels, 2.5% first half. A little bit higher than last year, but that's due to the market climate. And I think it's still good in this more challenging high interest rate climate. But all are not realized losses. It's also a lot of accruals in this. And looking at the deposit, the last part, then the snapshot here is 600 million. If you see the volumes on the savings account at the end of quarter two and the pass-through of the interest rate changes 100%. And sensitivity here is, of course, the growth in the volumes on the savings accounts. But we have to remember also that the majority of the growth coming into savings account now is external money and it's not internal transfers. So that means that we also will get an upside on that money on the liquidity portfolio. So all in all, looking at the full revenue picture, we have a very stable and good revenue development. And we really benefit from having three revenue streams. We see good growth in all of them. But as I said, especially strong growth in our core business funds and trading. And also looking at savings capital, like I said, approaching 1,000 billion. We're all-time high right now in quarter. And looking at the margins as well, down to the right, we see them, like I said, a pickup on the trading margin from high share cross-border trading, also high share retail trading. And we see a stabilization of the fund margin. So that means that the entire volume increase we see in funds, we get also on the bottom line since we have the margin stable. And we see the active to passive shifts is slowing down. But also when the customers buy passive funds now, they mainly buy Nordic funds where they have a higher margin compared to other passive funds. And all in all, business model with great operating leverage. We've grown the revenue with 30% per year since 2019, while the cost has only been growing 5% per year. So it's a very scalable business model. So that means that we are in a two position of profitable growth with almost entire top line growth ending up on the bottom line. Go to next. Some product highlights and the big thing is that we, like I said in the beginning, that with Sunset Shareville, the old app and web are closed and we fully integrated our shareable into our Nordnet app and web. And the migration has been successful. I'm going to comment that on the next slide. But also continue very, very high release rates on the app. with 24 new versions during the quarter. We're building more and more functionality into the apps so that customers should be able to live their entire life in the app. And looking at the travel migration, we see quite increasing engagement as was our aim as well when we integrated this in an ordinate app and web. We see the posts in the different forums is increasing almost three times. And also a big pickup in signups to Shavell. And we know that Shavell is something that differentiates us in the markets. No one else has this. But we also see that the Shavell customers are more active with more trades and also higher commission levels. It's an important product for us. Then I hand over to Lennart to talk a little bit about capital and liquidity.

Thank you very much. And with those results, we still maintain a very strong capital situation where we have a capital ratio of 25% and a CET ratio of 20-21%. So it's far beyond the requirement and we feel very comfortable with that. Also, the leverage level ratio is 6.5%. Those are unaudited results, and thereby we do not report those to SFC. You see to the bottom right where we have the regulated reporting, not very much difference, still very, very strong. But that is how we made it this time. We also have a good and solid liquidity position with a liquidity in relation to deposits over 60%. And we have less than 50% in lending out of the deposits. So we feel very comfortable with that as well. And it's very important for us to maintain that level. That is why we do not extend the lending part too much, but rather focus on the margin lending. So, yes, sorry. So now we're looking into the replies from SFSA so we can start the buyback of stocks here in the fall. We expect that to be in the late summer. They have four months and we submitted the application in April. So we'll soon receive it and then we will start off with it.