Nordnet AB (publ)

Good morning and welcome to the presentation of Nonet's third quarter of 2024. My name is Marcus Lindberg and I'm the head of investor relations at Nonet. With me today we have our CEO Lars-Jokke Noling and our CFO Lennart Krän. Lars-Jokke and Lennart will start off by presenting the results and then we'll have a Q&A session. During the presentation, all participants will be on mute. When we come to the Q&A session, you have two alternatives to ask questions. You can either click the raise hand button, I'll then unmute you and call your name, or you can write your question using the Q&A button. The presentation itself is available on our corporate website, nonetab.com. Okay, let's start the presentation. Lars Rokke, please go ahead.

Thank you, Markus. Yeah, some highlights from the quarter. It's a strong financial quarter with continued growth in the core brokerage and fund business. Highest customer growth also in several years. And we passed the milestone 2 million customers in August. So we've... increased the customer base from 1 million customers to 2 million customers in about four years. We also see healthy trading activity and strong brokerage margin. Margin is strong because of the high share of cross-border trading, but also a little bit high share of retail trading versus private banking. Very good progress on our fund focused strategy. We know that funds growing 65% in one year, but overall fund capital is growing 42%, which is also very good. Stable outlook for NII in 2024 at 2.6 billion, same as we had in quarter two and same as last year. Good cost control and cost growth is expected to trend in IV guidance for the full year, excluding the extra marketing cost. And we also initiated a share buyback program. I think Lena is going to talk more about that, but we're going to buy back 500 million SEC or up to 500 million SEC until March 2025. And a lot of product launches, enhancing app and share functionality, especially we launched a very asked for function, and that's analyst ratings and target price. I'll come back to that. You want to go to next? Some financial highlights. We see an increase in customer growth. Customer base now growing 12%. Also very good growth in the savings capital, up to 26%, both from underlying savings capital growth, but also strong net savings. And we actually last week passed the milestone of 1,000 billion in savings capital on the platform. Number of trades also up 13% year-on-year from stronger markets and stronger market sentiments. Revenues up 6% where we see a strong and good growth in our fund business and our trading business, but a slight decline in the net interest income due to lower interest rates. Good cost control, like I said, underlying cost growth is 6%, excluding extra marketing costs. And we expect to meet the full year guidance, like I said, and also good operating leverage still and profit growing at 6% year-on-year. We'll go to the next. Also clear rebound and step up in customer growth and net savings versus last year, especially a strong quarter two here with 75,000 new customers, also supported by the campaign we ran in September to celebrate 2 million customers. So each new customer got 200 SEC in Nordnet balanced one fund. So we had almost 40,000 new customers in September in itself. But also very strong, they're saving 16 billion for the quarter, but so far 54 billion in 2004, that's more than a double that we saw last year. And we will continue to be supported by our geographical diversification. The response to business model also enables growth. And we see strong growth in both savings capital and customers now in all countries. But again, especially strong growth in Denmark, where we passed now 500,000 customers. And also we passed a milestone in Finland with 600,000 customers. a little bit on the revenue stream starting with the trading number of trading customers in the quarter is about the same as last quarter also trades per trading customer is about the same and we see at least the Nordic markets are a little bit in a holding pattern since May so it's probably going to be some kind of breakout from here but it's a little bit limited trading in the period but still a step up versus last year but still very high cross-border trading due to the country mix where we have more customers than outside of Sweden and they trade more cross-border but also of course that we have strong US markets that also attracts cross-border trading. Go to next. So you see, if you look at trading overall per customer in the base, the red line there to the left is stabilized now in the last two years. It's still a little bit lower level than we saw pre-COVID, but still we almost have a double amount of trades per day in absolute terms due to a double of customer base from 1 million to 2 million during the period. We also see a considerably higher income per trade with 44% up since pre-COVID and that's mainly due to more high share of cross-border trading from the country mix that we have. Also, again, very proud of the development in the fund business. Fund capital growing twice the savings capital and 42% up in fund capital in one year. Also very good performance in our own Nordnet branded fund family where we see one quarter of the fund capital is in Nordnet branded funds and half of the net buy is also going into Nordnet branded funds and that's a family of index funds. And half of our customer base owns funds and activity is pretty high also. So 500,000 customers did fund buy or sell during the quarter. We see continued a little bit shift from active to passive, even though that slowed down. But we see now when the customers buy index and mainly buy the Nordnet index funds where they have a higher margin as well. Thanks. So a little bit on net interest income then, starting with deposits and deposits versus savings capital is still at a fairly low level of 7% versus the historic trend of 12 to 15%. We saw a slight increase of deposits in the quarter from strong net savings and also dividends. We continue to see very high net buy into both funds and equity or shares, which is, of course, very good for our business long term. Looking at the liquidity portfolio snapshot, we see that's going to land around 1.65 billion in 2024, assuming the volumes we see then in quarter three, end of quarter three, and also that we get the unsecured loan money into liquidity portfolio now in October. And then currency allocation, currency space, of course, market consensus estimates as per below. Two comments. I mean, of course, the sensitivity here is deposits. We are on a low level, so it's growing customer base and growing net savings. We likely would have an upside here over time. And then it's, of course, the interest rate passed on to the right, which is lower than we saw in quarter two. It doesn't impact the quarter that much, but of course, it has a bigger impact in 2025. I can go to next. Loan portfolio snapshot, 1.55 billion in 2024, assuming that the third quarter volumes, but excluding the non-secure that then moved to liquidity portfolio. And with the IBRA consensus estimates as per previous page, and a pass-through of 100% of mortgage, but 50% of margin lending. And And here also we foresee a continuous growth in our lending portfolio, not least the modern lending, which is the product that's been growing. And that's the most profitable lending product for us. It's also a lending product that supports our core business. And it's also less rate sensitive, but only estimating than 50% pass-through. And so far this year, the pass-through has been even lower than that. I can go to next. Deposit side, I mean, we estimate 600 million SEK cost for that, assuming the volume we saw in September, and interest rates as actually per October 9, with 100% pass-through estimated on central bank rate cuts. Sensitivity here is, of course, if the growth of deposits into the savings accounts, but we see that that growth has slowed down, and I think In an environment with lower interest rates, more money will move to transaction accounts and be used for transactions over time. But we also know when we get the new money into the savings account, the majority of that money coming from external deposits that we also then will have yield on our liquidity portfolios. So all in all, resilient revenues done, supported by diversified revenue streams. So we have good growth in all the revenue streams, both NII, the fund business and trading. But again, especially happy with the very strong growth we see in the fund business from the focus we have there, but also a good pickup in trading revenues from more positive market sentiment from lower rates and lower inflation. Looking at the margins for trading is slightly up there down to the right due to high share cross-border trading and margin for fund businesses stabilizing now around 25 bps from a little bit slow down from active to passive move, but also that when a customer bypass it, they buy an alternate passive where they have a higher margin. So looking at the numbers in total, I mean, it's the same story. It's very good revenue growth over time, almost 30% growth per year since 19. But at the same time, a very scalable business, a good cost control where cost has only been growing 5% per year in the period. So almost all the top line growth is ending up on the bottom line. It's a true position of profitable growth. Next. Also shipped a lot of nice, exciting features during the quarter. This is just a snapshot that we have. We released a number of new features in Kjärvill. We integrated Kjärvill fully into our app and web before summer. And now we have the team that can ship continuously new, exciting stuff. And we see very good momentum in both sign up to Kjärvill and also post in the Kjärvill forums. We've also been very active with the app, with overall 25 new versions of the app in the quarter. But we're especially proud of the launch that we did yesterday, which then have analyst data and also a target price statement. So, Lennart.

Thank you very much. We can go to the next slide. We're pleased with the continuity of being able to say that this is a very strong capital situation and also the liquidity situation is very solid. All this, of course, creates a lot of flexibility. We have launched the buyback program, share buyback program, 500 million in late September. which actually withdraw 500 million from their own funds and still a very good capital position. So this flexibility will give us room to continue the buybacks even after this one has exceeded that will be done in 21st of March 2025. So we look forward with the continuous even then good capital situation. I don't think it's very much more to comment on here. It's, as I said, very solid. And we can continue, Lars-Åke.