Good afternoon. Welcome, everyone. Thank you for dialing in to our presentation of the preliminary results 2024, as well as our update on our strategic priorities. My name is Achim Schreck. I'm heading the IR function here at flatexDEGIRO. Before we dive straight into the presentation, let me do a little bit of housekeeping first. Firstly, I'd like to welcome our speakers today. We have with me Oliver Behrens, our CEO since October, as well as Benon Janos, our CFO, who's been with us now for 10 years.
Hi.
When it comes to the agenda, our setup is, as usual, that we would like to guide you through our preliminary numbers. First, explain a little bit more the context of our record results 2024, as well as some maybe single items worth highlighting in the P&L before we go into the outlook, which will both be presented by Benon. Oliver will then follow up with the strategic priorities, which we have communicated yesterday evening, as well as this morning, and our roadmap for achieving our midterm guidance in 2024. As today's presentation is open for all analysts and investors, we've opted for taking questions via the Q&A tool you see here in the webcast, and we highly encourage all of you to make active use of it already during the presentation. Following the presentation, we will take a short 15-minute break before we then go into Q&A.
During the Q&A process, we will then also take the liberty to group similar questions into one in order to make sure that we get through most of the questions in the time available. For that reason, please accept that we will not be able to read out individual names to the questions. I will repeat the housekeeping for the Q&As once we get to it. But now, without any further ado, I would like to hand over to Oliver for some introductory remarks, please.
Thanks a lot, Achim, and also a very warm welcome from my side. Thank you for joining us today. My name is Oliver Behrens, and as Achim mentioned, I joined flatexDEGIRO as CEO in last October. While it is obviously a great pleasure to stand in front of you today and open my first appearance by pointing to a record year in revenues and earnings, it goes without saying that this is, more than anything, the success of my colleagues in the management board and more than 1,200 colleagues across the firm who have greatly delivered in times that were not always very easy. To some extent, we made our lives harder ourselves by not keeping up with regulatory requirements in the past. But we have largely rectified this by now.
With the mandate of the special commissioner ending in September and BaFin reducing our SREP by 150 basis points in December, we are clearly on the right track, and following this right track, we have the capacities to again focus more on commercial topics, our customers' needs, and how to better serve them. The launch of crypto trading has been a first step, but only one of more to come. This is why, and after some intense first month at the company, I'm very excited to also share our strategic priorities and vision for flatexDEGIRO as we look ahead to 2027. These strategic priorities will guide us over the next three years, enabling us to continue to deliver value, especially to our customers.
And when you do good, or when we do good for our customers, I'm convinced that you are also doing good for your shareholders and employees as well. Our aspiration is to be Europe's leading investment platform to build wealth, and our strategy to get there is to build on three core pillars. We will expand our existing business, diversify our product and service offering, and increase operational efficiency. Please have a bit of patience. I will dive deeper into these three pillars later on. The opportunity we have with flatexDEGIRO is highly attractive, and I'm a very realistic guy. From 40 years in the financial industry, I know that this is not a walk in the park. We'll have to work hard for it to materialize, and there might be some bumps along the way.
But the ambition we have set ourselves for 2027 to grow revenue by more than a third, and thereby to almost double our net income, is what the whole management team is committed to delivering based on the individual initiatives I will provide more detail on later. But for the moment, let me close my introductory remarks here and hand over to Benon first to present the preliminary 2024 results. Thank you.
Thank you, Oliver. Good afternoon, everyone, also from my side. Many thanks for dialing into today's presentation, and I also very warmly welcome you. I'm very pleased to present over the next few minutes our strong preliminary results for the fiscal year 2024 to you. Please do note that these figures are still preliminary. The full and audited annual report 2024 will be published on March 26. We have clustered the presentation of our 2024 preliminary results in six buckets, namely customer growth, commission income, interest income, revenues, costs and earnings, and the outcome of our 2024 guidance, and of course, what to expect for 2025. Please note that in the interest of time and focus, we will not go through all slides that were uploaded in the presentation this morning in full depth.
That's also particularly true for the Q4 performance slides, which you'll find in the appendix and will not be part of my presentation today. We will revert to the usual financial results format with our Q1 2025 quarterly figures, but this time, the focus is on our three-year outlook in addition to a record fiscal year 2024. First, let's take a closer look at our customer growth metrics for 2024 on slide eight and slide nine. I'm pleased to report that our monthly customer growth in 2024 consistently outpaced 2023, with a significant acceleration observed in the fourth quarter. While the peak in Q4 surely was supported by more market activity around the U.S. election, the general trend clearly underscores the effectiveness of our strategies and the growing demand of our offerings across Europe.
For the full year, we achieved a remarkable growth of 421,000 new customers, representing a 24% increase over 2024. Sorry, over 2023. Moreover, we have made substantial progress in optimizing our customer acquisition costs. In 2024, our acquisition cost per customer was EUR 75, which is a 24% reduction compared to 2023. This improvement reflects our ongoing efforts to enhance efficiency and maximize the return on our marketing investments. As you might have seen earlier, we have reached a significant milestone with our customer base now exceeding 3 million. Our customer base has grown by 1 million over the past three years. This consistent growth reflects annual rates ranging from 13% to 16%, showcasing our consistent ability to attract and retain customers year- over- year despite a more demanding base effect.
Also, with these results, we were able to continue our industry-leading customer growth with a compound annual growth rate of 14% over the past three years. It's worth noting that probably only one non-listed peer has demonstrated stronger growth during this period. However, this peer's growth is mostly driven by its pivot from neo brokerage to neo banking. Despite all challenges over the last three years, as you can see on this chart, we have constantly performed top of the industry in relative terms, and given that we meanwhile have achieved the largest customer base, even more so on absolute numbers. Of the peers you see on this graph, we are the only player not bound by one or a small number of countries operating in, but rather taking on Europe as a whole. Let's turn our attention to our active customer base.
In Q4 of 2024, we achieved the largest active customer base in our history, with close to 1 million customers actively trading. Please note that we define an active customer here as a customer that is performing at least one trade per quarter. The share of active customers per quarter has also shown a positive trend, slightly increasing to 31% in Q4 of 2024, and while the share has been pretty stable over the last two and a half years at around 30%, we clearly do see some room for improvement, to which we will also come back later in our strategic priorities. Now, let's move on to the development of our commission income. First, as you can see on slide 13, we have maintained a stable range of 20 to 25 trades per customer per year on average over the last two and a half years.
Why am I referring to two and a half years here, like on the customer activity chart before? Because the first quarter of 2022, and to a much lesser degree, the second quarter of 2022, has still been unaffected by negative external factors such as the strong increase in inflation and the central bank's reaction to it by hiking interest rates. As one would expect, trading activity has been higher at flatex, though we observe very similar trends across both of our brands. Our customer base at flatex is a bit older and therefore, in general, wealthier and trading heavier, which explains the difference to DEGIRO. Let's now examine the growth and the number of settled transactions across our brands. Our growing customer base has been a key driver for our 11% increase in settled transactions.
Notably, our performance in 2024 has outpaced 2023, with accelerated growth particularly evident in the second half of the year. The growth in transactions was also supported by external factors such as, for example, the increase in volatility in financial markets around the U.S. election in November of 2024. Moving on to the next slide, we saw a notable increase in our average commission per transaction driven by several key factors. Firstly, the price adjustments implemented in May of 2023 at DEGIRO have positively impacted our revenue from the third quarter of 2023 onwards. Additionally, a favorable product mix and a higher share of U.S. trades have contributed to this growth, the latter being particularly visible in our high Q4 numbers. It's also important to note that the first quarter traditionally shows higher commission per transaction due to seasonal effects.
This is driven by the booking of certain annual fees that are typically charged in January or February each year. In summary, all these factors combined have led to a substantial growth of 20% year- over- year, reinforcing our strong financial performance and positioning us well for future success. Now, let's move on and focus on interest income, our second most important revenue stream after commission income. In 2024, again, we have seen impressive net cash inflows onto our platform, amounting to a total of EUR 6.6 billion, a 47% increase compared to 2023. We saw positive net cash inflows of more than EUR 500 million per month on average in 2024. 95% of these inflows were invested in securities, up from 91% in 2023. Additionally, we have observed an increase in cash per customer in 2024, coinciding with falling interest rates.
This trend has led to a 17% increase in cash under custody at year-end. As a result, we now have over EUR 4 billion of cash assets our customers entrust us with, on which we are not paying interest ourselves, a consequent strategy that has been in place since the inception of flatex almost 20 years ago. Let me quickly remind everyone how we use these EUR 4 billion of cash under custody to generate interest income. We currently redeploy around a quarter of the cash volumes back onto our platforms to provide fully collateralized margin loans to our customers. Our margin loan book had a volume of EUR 1.2 billion at the end of 2024 and has significantly benefited from our expanding customer base and the additional access provided to DEGIRO customers. The average interest rate for these loans has also increased in 2024.
Of the remaining cash under custody, we keep most of the funds overnight with the German Bundesbank. Although interest rates fell during the year, they were still 9% higher on average than in 2023. To sum up, we have seen growing volumes in our interest income, as well as rates in all relevant areas, resulting in a 32% increase in interest income to EUR 180 million in fiscal year 2024. Obviously, there will be some real headwinds with regard to the rates in 2025, but I'll come to that in some more detail when I'll present our outlook for this current year. Let's first finalize the full revenue picture before we discuss costs and earnings for 2024. In total, we generated the highest revenues in the history of flatexDEGIRO in 2024.
Revenues of EUR 480 million exceeded previous year's numbers by 23% and are a good 15% higher than even the previous record seen during the COVID meme stock hype year of 2021, where we posted EUR 415 million in revenues. The share of interest income in revenues has risen continuously in recent years, but this trend is not likely to continue this year. Other operating income is mostly related to IT services and typically a smaller position for us. In 2022, it was artificially boosted by the non-operating reversal of provisions for long-term variable compensation. Although the underlying business included in other operating income has played a minor role over the past years, this should change in the future. Oliver will further elaborate on this when detailing our strategic priorities. After a detailed review of our top line, let's move on to costs and then earnings.
On this slide, we have portrayed our different cost items and their development over the past years. Let me dive a bit deeper into the different drivers for each cost item. It is clear to see that our operating expenses have gone up quite considerably over the year, especially personnel expenses and admin expenses, a trend we plan to reverse in 2025. Personnel expenses increased by 19% year- on- year to EUR 116 million. Salary increases, as well as the hiring of additional employees over the course of 2023, actually, in the context of remedying regulatory findings led to this increase in personnel expenses. Please do note that our personnel expenses already include EUR 5 million of provisions for measures planned in 2025. We have also capitalized some EUR 2 million less of development costs this year.
In 2024, we fulfilled our commitment to keep the number of employees at year-end below the level we started with in January. We ended the year with 1,253 employees, some 4% less compared to the 1,301 we had on December 31 in 2023. For 2025, our commitment is now to go a bit further and keep the personnel expense line in the profit and loss statement at or below previous year's level. These provisions are one important element to get there. On marketing, we have spent some 7% less despite an acceleration of customer growth. With a total marketing spend of EUR 32 million, our average costs for customer acquisition fell significantly to EUR 75 compared to EUR 100 in 2023. Other administrative expenses increased to EUR 61 million in 2024 compared to EUR 49 million in 2023.
The increase is mainly attributable to higher IT costs, as well as higher professional services, legal, and consulting costs. They were partly related to projects in connection with regulatory requirements and helped us to successfully close the last severe BaFin findings, which led to the termination of the special commissioner's mandate at the end of September last year. In sum, and I said that at our Q3 call already back in October, our admin expenses are up to EUR 10 million too high. We plan on reducing them with a focus on lowering expenses for professional services, legal, and consultancy fees. As a side note, being a regulated bank requires various fees to be paid that are levied on the actual size of the bank, whether it is on balance sheet or customer deposits.
So we do have a natural tendency to a higher admin costs line as we successfully grow. So we have to work twice as hard to bring these costs down. Let's move to our profitability. For the first time, full year EBITDA crossed the EUR 200 million line, up 44% year- on- year. In all quarters, EBITDA margins were between 40% and 45%. In addition to the already mentioned one-off items in the personnel expenses, i.e., the EUR 5 million provision for personnel measures in 2025 and the EUR 2 million lower capitalization of development costs, we also booked an additional EUR 2.5 million depreciation from streamlining IT developments this year. So combined, that's a EUR 9.5 million pretax effect or approximately EUR 6.5 million post-tax. In other words, our record net income of EUR 112 million could have been noticeably higher.
However, this more prudent and long-term oriented approach served and will continue to serve us well. Before we close the chapter for our preliminary 2024 results, let's see how we have performed versus our 2024 guidance. We started the year with a guidance of revenue growth between 5% and 15% and net income growth of 25% to 50%. We have raised both to the upper end of these ranges after a good and solid first quarter. We increased the revenue guidance further after the Q3 figures to slightly above the upper end. With the now presented numbers, we have exceeded both, driven by a fourth quarter that was clearly better than anticipated due to the lasting effect of the U.S. elections. Revenues grew by 23% year- on- year, and net income increased by a strong 55% year- over- year.
With these results, top line was slightly ahead of most recent market expectations, while net income was a tad below. But I guess this can be mostly explained by the one-off items I just described in detail to you. With this, I will now close our look back on the past business year and have a quick look at our expectations for 2025. We expect an overall mixed picture with growth in commissions income compensating for a decline in interest income. At the same time, we will focus on bringing down costs, as mentioned previously already. This means that we expect the top line in a range of plus/minus 5%, with some more optimism on the bottom line where the range goes up to plus 10%.
While our guidance is based on revenues and net income only, you also find on this chart some key assumptions we have taken in order to get to these numbers. Some of these assumptions might be considered conservative by some, such as keeping trading activity and levels of cash under custody only stable despite recent numbers. As mentioned before, staying prudent and conservative has served us well, and we would like to keep it that way. Markets can turn quickly. Things can change. We have a meaningful amount of interest income headwind to compensate. Now, I'm very pleased to hand back to Oliver, who will walk you through our strategic priorities for the next three years. Over to you, Oliver.
Thank you, Benon. Before going into our upcoming strategic priorities in some more detail, allow me a minute to put in context where we currently stand.
The last three years have been quite challenging for us, both from the perspective of a rather dull trading environment that at least was compensated by our ability to increase our interest income, but also when it comes to our internal homework we had to do and have done. We are therefore in a much better place today. There are still some things left to be done, for example, with regard to the last remaining less severe findings from the BaFin audit, and we will do them thoroughly. So maybe the deck is not yet 100% clean, but it's definitely not slippery anymore so that we can start running on the deck again instead of tiptoeing around. And running is clearly the faster way of getting us to our next milestones. So what are we running towards?
Interest rates are expected to come down further in 2025 before stabilizing in 2026. That will cost us some interest income we have to compensate for this year, as Benon mentioned in the outlook for 2025. At the same time, lower interest rates are generally good news for equity markets. But we don't want to rely on this. We want to be in the driver's seat to accelerate our growth. To do this, we will enhance our commercial focus, improve organizational setup, and bring the cost down in areas where they have been bloated. But let me also be very clear here. Yes, this will have a positive impact on revenues. Yes, this will have a positive impact on earnings. And yes, this will likewise be beneficial for our shareholders. But at the core, this is about becoming Europe's leading investment platform to build wealth.
This is the positioning we will claim for flatexDEGIRO. The rest will follow from it. Not the other way around. In a fast-paced industry, you constantly need to deliver for existing and future customers and never rest on historic laurels. If you look at the strategic opportunity, there are three categories. The first category is focused on making sure we as an organization are fit for growth and create the high financial leverage that one would expect from a growing online platform business. Ensuring that we are running in one harmonized IT platform is key here. Second, there is an already existing huge potential which we are not fully utilizing. We have more than 3 million customers, but the share of those who actively trade in any given year is actually less than half of this.
The share of highly active customers that generate 80%, 90% of our revenues is comparably small. That might be normal in our industry, but we want to put the business on a wider, more stable basis. Geographically, we have already started to diversify the business operating in 16 countries instead of just the Netherlands and Germany. Some markets are doing really well and have grown to quite some size. Especially in those key countries, we need to increase our local presence to ensure we properly understand market differences and serve special local customer needs. Finally, in this category, there are certainly opportunities in our treasury activities when I look at the EUR 4 billion of cash we can work with. In the third category, you have products and services we don't have but will launch over the next three years to enhance our offering.
That's purely brokerage-related on the one-hand side, but it also includes revitalizing one of our legacy businesses, which is currently kind of hidden in the other operating income, namely business process outsourcing, where we basically can offer non-retail banks a solution to collect retail deposits. We call this Deposits as a Service, if you like, and flatex is a business we in essence already have. It's in this second category of new products as we are talking about utilizing the unique strength of a legacy side business to grow it into a relevant business line. We are simply seeing a lot of growing demand for the service, and we are able to supply to the demand with a little extra effort. Product and service launches are obviously driven by customer needs.
At the same time, finding ways to increase our share of recurring revenues is also something we constantly have in mind. For the next few minutes, I would now like to dive a little bit deeper into these three categories and put some more flesh on the bones I've just thrown at you. Increase efficiency. Let me start by laying the foundation for what is the basis of every successfully growing business, an efficient organization, and what we will focus on to make the most out of this future growth. As Benon mentioned in his comments on our cost base, it currently is a bit too high. There are good and valid reasons for it: the acquisition of DEGIRO, our strong growth, the BaFin findings, which obviously were homemade. But we are at a point now where we simply need to reverse this trend.
Some cost reduction has already been initiated and will be visible in our cost base declining from Q3 to Q4. This we need to absolutely continue, and this is largely related to admin expenses such as legal and consultancy fees. But we also need to challenge the general relation between headcount, revenues, and profits. If you just simply compare our revenues per employee or our net income per employee with a wider peer group, we don't look too good. In some areas, the growth measures I just described will help us to also grow into the organizational structure that has already been created. In other areas, we will have to do a bit more on costs, and Benon mentioned already that our accounts for 2024 already include some EUR 5 million in provisions for such measures. Will this be enough to fully close the gap to peers on revenues per employees?
Probably mostly yes. On net income, not, as our business setup naturally requires some higher costs in marketing, for which in return we should also expect to continue to see industry-leading growth. Talking about ballpark figures here, we would expect to be able to keep our operating costs very much in check over the next three years, despite our expected top line growth. Reduce complexity. Reducing complexity is also the key word for my last slide on this strategic category. We have already communicated that we are in the process of switching from a German Aktiengesellschaft to a European SE. This will give us more flexibility, but most of all, just simply a much better expression of our DNA as a European leader. We aim to switch to the SE already at some point during the second half of 2025.
Lastly, we are also successfully getting rid of some legacy alternative credit and investment engagements that are not related at all to our core business. They were entered into mostly during the negative interest rate environment, but with the benefit of hindsight, not worth the effort, and basically with zero yield over the last three years. Or to put it in perspective, we haven't lost any money with them, but we can surely deploy the capital much better going forward. Grow and strengthen existing business. In online brokerage, with a cost-efficient organization, you can achieve quite some operational leverage, particularly in a fixed-cost-led setup like ours. But that's only really fun when you also grow your top line. So how do we want to achieve that? Let's start with the opportunities in our existing business. Building on a strong customer base.
Over the last three years, of which none was held by unusually special market conditions such as COVID or meme stock hype, we have achieved a 13% to 16% customer growth every single year. Obviously, we want this trend to continue going forward, and even if we just add another 10% per annum, we will cross the four million customer mark by the end of 2027. Now, you can't just look back at the history and hope it will continue like this by itself, or you can define specific measures to substantiate your assumptions. Of course, launching new products will make us more attractive to new and existing customers, but it's also about improving what we already have. For example, we added another Platinum ETP partner in Germany in January.
We will optimize the search functionalities, the market data we provide, and enhance portfolio analytics and charting tools, none of which is rocket science, but all of it is important, so is the general customer experience in the app, attractive offerings to various audiences, and to also target them accordingly in our marketing efforts. These efforts don't just play a role in winning new customers. They are likewise important to activate or reactivate customers that are inactive today, so the dimensions we are talking about here is the share of active customers. In 2024, slightly less than 50% of our customers have done at least one trade, one transaction, and there is a clear difference across the individual cohorts, which you can see on the slides, i.e., the years in which we have onboarded new customers.
It's probably no surprise that during COVID years, we won a large amount of additional customers, which we never targeted in our marketing and which therefore basically came for free, in addition to the customers we would have normally won in those years. Clearly, those three customers have a lower quality for us in the sense of being less active and thus less diluting for the group-wide activity rate. What is quite encouraging to see is that already the last two cohorts, i.e., new customers we won in 2023 and 2024, show an above-average share of active customers. So we are already moving in the right direction. The focus here will be, on the one hand side, to be on those customers that might not have done a transaction but still have meaningful assets on our platform.
On the one hand side, on the other hand side, we will also optimize our communication processes to engage with customers on a more personal level so that a higher share will not even become inactive in the first place. More specifically, looking at individual countries, you see that the top six countries account for roughly 80% of our customer base. Half of this customer base we have in our home markets, the Netherlands and Germany, but also in growing markets such as Spain, Austria, France, and Italy. We have built a presence that makes it worth adapting a more localized approach in these countries. That starts with tailoring our offering and communication to local needs, but also stretches into building local relationships with partners and regulators. In a first step, we are talking about a rather limited local staff representation.
In addition to our existing customer base and market presence, my experience of the last 40 years tells me that we also have more potential when it comes to our treasury strategy. From the roughly EUR 4 billion of customer cash at flatexDEGIRO, on which we are paying no interest, a good one billion is used for fully collateralized margin loan business. That's a great product we hope to also grow in the context of onboarding new customers. But what else? Today, the vast majority of the remaining cash is simply parked overnight at the German Federal Bank. That's great to avoiding risk, and you even get some interest on it, but it's probably not the most efficient way. We are looking into slightly more active strategies without abandoning our fundamentally risk-averse approach.
But with the significant size of these deposits, even a single basis point of improvement on average already would result in EUR 250,000 more pre-tax profits. And these funds, we would also like to grow further by offering term deposits to our customers in the future, by which we would again extend our product offering for customers without cannibalizing existing business, at the same time strengthening our maturity profile. With this, I would conclude the category of growing and strengthening the existing business and switch to the new product ideas and how to further diversify our offering. It was essential to launch a new product very late in the last year and very early after my arrival, where the rollout of crypto, which was the first product, has started in mid-December. And the pickup so far has been in line with our initial expectations.
Our offering does stand out in the German market as we are giving full transparency over the total cost for a crypto trade. With most peers, you will find some marketing claims such as no commission, just the spread. But then this so-called spread is significantly bigger than most people would expect. With us, customers know it will be between 0.6 and 0.7 of the volume, and that is it. This is a significantly more attractive pricing compared to what you would otherwise pay as a customer. For the operational setup, we've decided for a partnership structure with experts in the corresponding fields, increasing our time to market and also lowering the operational and liability risk at our end. With the launch of crypto, we now offer our customers the trading in almost all major asset classes in our platform.
We may look into still missing products such as foreign exchange further down the road. For our international rollout, we have already submitted our MiCA license application to the BaFin and expect to hear back from them at the end of this quarter. We are in a very good dialogue with them to get us there. As you can see from our roadmap, we will concentrate first on the geographical rollout before we extend the product offering. The next go-lives are planned for flatexAustria and DEGIRO in the Netherlands, France, and Spain, with further DEGIRO markets to still follow this year. Other new products, one other new product we have already spoken about is Securities lending, by which we would allow our customers to lend out some of the stocks and ETF they are holding to generate additional income for them.
The focus at the moment is on DEGIRO as the process is significantly easier under Dutch law. From today's perspective, we would estimate the approximately 20% to 30% of the DEGIRO assets are of particular interest for specialized Securities lending desks at global investment banks. So that would be something like EUR 7 billion to EUR 10 billion today, on which the generated basis point returns were to be split between the customers' assets and the partners required to facilitate the process. A more basic-looking product is Savings plans, where we frankly have to do some catch-up to ensure that we are offering our customers a state-of-the-art product, including also the option to include single stocks into our savings plan, for which the handling of fractional shares is required. In Germany, we have an ongoing political debate about adding capital market-based elements to the pension system.
The former government made some promising proposals in that direction at the end of 2024, and we believe that the new government, however, it will be formed now after last Sunday's election, will pick up this topic again with some priority. It is therefore absolutely crucial to have a strong savings plan offering in the market as soon as such pension accounts become reality. For an online brokerage platform like flatex, the attractiveness will first and foremost lie in the long-term customer growth and the stickiness of these customers and their assets. The product itself will likely come with relatively low commissions, and the trading activity of these accounts will also probably be on the low side. But the underlying effect of bringing millions of Germans more into contact with investing in capital markets must not be underestimated.
More importantly, the government will most likely change its tone towards investing in capital markets, which will be beneficial for our overall business. However, while we are optimistic about it, let's wait and see until the new government has eventually formed and what the concrete proposals are they will come up with. But this is not only a discussion in Germany that is held in Germany. There is an increasing need to address the pension gap or the unfunded pensions across Europe. We are also planning to potentially add products that are tailored to clients with a lower risk category or lower risk appetite, such as structured deposits. While, strictly speaking, these are not savings plan products, we have added them here as well as they are addressing a very similar target audience. Deposits as a Service.
The last point in relation to new products is business process outsourcing, what I have called Deposits as a Service earlier in my introductory remarks. For more than 10 years, we are already offering our banking capabilities to non-retail banks that want to attract term deposits but don't have the infrastructure to deal with thousands of clients. It's a white-label solution which is seamlessly integrated into the partner bank's market presence. It's a relatively small business today, which forms part of our other operating income, and in a negative interest rate environment, it has frankly not been attractive to try to grow in this field. However, the market environment has changed, making it a lot more attractive today and not just against the positive interest rate environment.
The general demand for sources of retail funding is rapidly growing in the European financial market, driven by changes in the European Capital Requirements Directive. But not all banks have the retail presence in Europe. Our service offering will probably come quite handy for many players to comply with these new requirements in a fast and efficient way. After presenting all these measures, I still owe you a summary of what it means if we add together all the bits and pieces. We have intentionally decided to do this on the basis of 2027 numbers. By then, we expect to have the presented measures in full swing and can therefore consider a full year impact.
In summary, our ambition is to accelerate top-line growth in our core banking business unit, also in non-brokerage, when it comes to business process outsourcing to help third-party banks to attract term deposits from retail customers. Hand in hand with this growth, we will keep a close eye on costs, reduce complexity, and further harmonize our IT landscape. While we focus on organic growth measures such as reduced complexity and harmonization, it will obviously also be very beneficial in case of any M&A opportunities should those arise. Delivering on these measures together with the improvements we have already made over the last two years, we would expect to be able to also regain the full trust of the capital markets and to continue to close the gap of our valuation against peers.
Financially speaking, we expect with these measures to be able to generate in 2027 revenues of approximately EUR 650 million and a net income of approximately EUR 200 million. Comparing to our 2024 record results, this ambition equates to a roughly 10% CAGR on top line and 20% on earnings. Now, let me quickly hand back to Benon for a few remarks on our thinking about capital allocation. Thank you.
Thank you, Oliver. 2024 has been another strong year with a net income well over 100 million EUR, and I do understand that on the basis of our solid capital structure, there is quite some interest in better understanding our capital allocation policy going forward. As you know, in 2024, we have earmarked 55 million EUR, or around 75% of 2023 profits for a small dividend and a share buyback program, which is still running for about two more months. So far, we have bought back a bit over 2% of outstanding shares, and our AGM approval is for up to 10%, so there still is ample room. However, over the last month since Oliver joined, we have been fully focused on our strategic priorities and developing a sound understanding of the potential over the next three years, which today we have presented to you.
Before we can communicate specifics on timing and size of future capital allocation to shareholders, we will now finalize our annual financial statements and, on the basis of these additional measures, update our financial midterm planning, including our capital planning and risk modeling, to ensure that we are not limiting our options in any way. Once this process and potential subsequent discussions with the regulator have been completed, we will be able to discuss any midterm policy on a solid factual basis. Thank you for your understanding. Also, many, many thanks for your attention today. I hope Oliver, Achim and I have been able to give you a good overview of flatexDEGIRO's development in the last business year and our strategic roadmap looking forward. However, we, of course, also want to give you the opportunity to ask any additional questions you might have on these topics.
Maybe, Achim, over to you again, and you run us once more through the process for the Q&A session.
Thank you, Benon, and thank you also, Oliver, for this insightful presentation. As mentioned at the beginning, we're going to take now a 15-minute break. We have already received quite a number of questions, but please do feel free to continue sending in questions via the Q&A tool. We will then, as mentioned earlier, group them and answer as many of them as possible. In case we were not able to answer all of them, don't worry, we'll then come back individually from the IR team, so myself and Laura. Thanks for your attention so far. We will be back at quater past three German time. Thanks again, and see you in 15 minutes.
See you in a couple of minutes. Thank you.
See you.
Thank you, everyone. Welcome back to now our Q&A session. As expected, we have received quite a number of questions so far. We originally planned for something like 45 minutes in the Q&A. We're happy to extend it by another 15 minutes, but then we'll definitely have to leave to get to our plane to come to London. But we'll try to answer as many of your questions, obviously, as we said earlier at the beginning. Let me start right with a question for Oliver. You mentioned that regulatory shortcomings have largely rectified. What is still left to do?
Thank you, Achim. There are, of course. We have focused on the F3 and F4 findings, but there are a couple of F2 and F1 findings, so we are on a good track to basically remediate these and have measures in place to overcome them. I think most of those topics are basically now part of the BAU process to basically help us to stay in the middle of the road, if you want to say so, in terms of our risk and control framework.
Benon, there's one question regarding the 2025 guidance on net profits, and why is it the target growth rate not on an adjusted net profit basis, excluding one-offs?
Yeah, that's something we actually stopped doing more than a year ago. We don't adjust numbers anymore. We try to focus on the top line, i.e., revenues, and then we focus on the reported net income, and like today, we explained some of the one-offs that are included in the net income line, but that's not something we would officially report as an adjusted net income line. I think it's up to every investor or analyst to make their own calculations based on those one-offs, but we don't adjust reported numbers.
Oliver, a question on crypto trading and the development now in January. Can you elaborate a little bit more on where we stand, what we have achieved so far, and what the current first numbers look like?
Yeah, I think the take-up, as I mentioned in my presentation, has been pretty much in line of what we've been planning for. At the moment, the clients do about 500 transactions a day. The good news is here that we have built a seven days a week, 24 hours trading desk in our Berlin office, which is a good way of helping also people with jobs in the space. And that is a good basis for other businesses we can also take on. And let's not forget, we only have started in one single market, which is Germany, and that is due to the fact that we wanted to be fast and show to the organization that we can make a difference in launching new products. I think the full scope we can only see when all the other markets come into play.
I think that is a very good start to show to the organization, but also to the market, that we can deliver on additional product offerings and for additional markets as well.
Thank you, Oliver. Benon, regarding the move to the SE entity, are there any changes in the tax rate to be expected?
In general, a move to the SE entity does not have any impact on the tax rate. However, I would like to add on the previous answer. I missed the second part of the answer. The question is, do you expect any one-off costs for 2025? And the answer to that is, as of today, no, but the year is long, as we know.
Thank you, Benon. Regarding the midterm guidance, what interest rate assumptions are embedded in this guidance?
The way we tackle interest rate projection is that we do not employ economists in our firm. So we very much rely on the official ECB surveys and the results that the European Central Bank publishes. So with respect to a potential deposit rate that the ECB is paying, we take what is being expected at the time we do the modeling. If we then look at our margin loan business, we clearly add a delta on top, which can be pretty much derived from our historical action. So we do not take economic views per se.
In regards to the interest rate on margin loans, how is that connected and what's the expectation for 2025 forward?
The way I would like to answer that one is, if you look back during the time when interest rates were negative 50 basis points, we still had margin rates of 4% and more. At the top peak at flatex, we were up to 8%. So with interest rates swinging from minus 50 basis points to 400 basis points, our margin loan interest rates were swinging from headline without discounts from maybe a bit above 4% to a bit below 8%. So you can probably take this range and do an overlay over the actual interest rate that the ECB projections make.
Regarding the cost per trade, how much variable cost per trade do you face as you plan to handle a higher number of trades?
In general, the way we run our system is that we today do not expect a non-linearity or a step function going forward. We continue to further build out our IT systems. We continue to capitalize personnel costs, albeit at a slightly slower rate this year compared to last year. And the continuous investment in the platform makes sure that we can handle those transactions. A good example is the crypto offering that we have now in Germany. That's for the first time an offering where a 24/7 trading is required. So typically, it's a big deviation from a trading between the exchange opens in the morning and shuts down in the evening. We were able to do that without any major impact. So we think by and large that we can do that in-house with our software code without unusual non-linearities.
Thank you. Talking about the other income line, can you imagine that line reaching 10% of revenues on the long run, or is it more than just single digit?
That would be 48 million compared to last year's figures. I would love for that number to be there, but let's not get ahead of ourselves. What we try to do is to make sure that we switch the business model. That's actually a very important point that Oliver made already, and I would like to emphasize. If you are being treated as a supplier for services and you are being paid per product, you typically make a 20% margin on the business. That's been always like that. If, however, you suddenly are able to serve a specific business need and you help a bank or another party to provide parts of their funding, you can suddenly get basis point charges. So the question here is, and we haven't signed any contracts yet, how much basis points charges can we get on which projections? That's all about.
At this point, I mean, it's the first time we communicated this strategy, and we want to have it in swing in 2027. I think by 2027, it might be a bit ambitious, but let's see how it develops.
Maybe to add to that, annuity income, I think, is the overall bucket which we are talking about. So revenues from volume and not from transactions. We think we have a good chance in this Deposits as a Service to move from, let's say, a ticket fee per account to basis points fees. But also the other initiatives. Let's see what we can achieve on Savings plans just with equities, where clients can basically, I can, if you have a great idea, I can take your five stocks, and if I have no idea, I can start with five shares, for example, and have a savings plan. We can ask a little fee, basis points on volume or on reshuffling, rebalancing. So there are many, many ways of creating annuity income. The first step into this direction is the Securities lending, which is also fees based on volume.
Our own deposit offering will also be fees based on volume. We just have to prove that we can get us there. And that's exactly the point why we are focusing on these few topics, and we will not change course and execute on those topics.
Thank you, Oliver. Looking at the Q4 cost development.
There are four questions on individual cost items, which I'm happy to go through. The first question refers to the nature of the EUR 5 million provision booked in the fourth quarter of 2024, and frankly, that's very simply speaking, a cost that we have taken in order to reduce headcount by approximately 5%, all other being equal. So if you do that in certain geographies, particularly in Germany, you clearly have to get into negotiations with our employees. So this has been earmarked for that in order to further reduce our overall headcount. Can you provide more color on the EUR 2 million capitalized expense in the fourth quarter? What are the nature of the expenses?
If the question refers to the EUR 2 or EUR 2.5 million of additional depreciation that we have taken, this is with respect to minor projects within the DEGIRO software code, where we simply discontinued development and simply cleaned up the depreciation asset base. If it refers to less capitalization on personnel-related costs, it's simply the fact that we have been, we simply required less man-hours to spend on developing new code in this past year. The next question, if we exclude the EUR 5 million one-off expense in Q4, we still see a substantial increase in personnel expenses of roughly EUR 4 million quarter on quarter. What are the drivers for that? Is that a sustainable leverage we should expect for 2025 as well? That's, of course, a very good question. Let me elaborate a bit on that. When Oliver joined, he has 40 years of experience in various banks in Germany.
He has made clear that in general, we have paid a bit less as a bank to our employees, if you look at monthly salaries and additional salaries compared to industry standard. If you do the math, we have been, on average, given out about 50% of a month's salary to our employees. The standard in Germany is substantially higher. As we had a record year, as we had fantastic earnings, we decided to give back some of the money to our broad employment base through a higher short-term incentive bonus, which was booked in December in the fourth quarter. What is your current CET1 ratio and regulatory requirement? Can you provide your thoughts on capital return to shareholders, please? Okay. So the regulatory requirements are mainly communicated through the known SREPs, and they have not changed. Everything that has been communicated stands as of today.
We have come to a point where we don't put future CET1 ratios on any slides. We know that it will go up when our books are fully audited and published, and we either ask the regulator for approval or wait until our AGM for the shareholders to approve. If we would do the math, we would probably arrive at levels beyond 30% CET1 ratio. But as mentioned before, we did put them on charts before because they were a very sensitive topic. Thankfully, they are not anymore. But let's first finish the annual audit. Let's get the number formally approved, and then we can communicate a new CET number, which will be then presented. But in general, our capital base and our regulatory capital base continues to be very well covered.
There's one additional question also on the increase in personnel expense, and I think you have already covered most of it. Maybe just to add one element, part of the question is, additionally, I believe you mentioned that headcount was down compared to last year, which makes this substantial increase somewhat counterintuitive. Can you clarify on this? Would be greatly appreciated.
Very frankly, it's also counterintuitive to me, and we as a team had to do, of course, the same digging in to fully understand. There are a couple of elements to fully get that. First of all, a lot of people came onto the platform at the end of 2023. So the hiring in 2023 was back-end loaded. So when you start and end the year with a certain number of people, you, however, have a year-on-year effect, which is completely different. So it's the power of mathematics that the 2023s are substantially lower because many people came in only at the end of the year. So that effect is one of the reasons. We have general salary increases, which is an important and big line. It's still legacy implications from the huge inflation we have seen over the last years.
And we have seen a 4% to 5% increase in the general salary line last year. We have had an increase, and I just spoke about that, which we booked in the fourth quarter for our variable compensation on the short-term incentive line. That's the situation that we simply wanted to pay back to our employees some of the money based on a record year. And frankly, we also had an approximately EUR 2 million Christmas bonus line, which also was booked in the fourth quarter. So clearly, we see this personnel line in 2024 as a peak, and we have to now work to make sure that this coming year is, as I mentioned before, flat or down.
Thank you, Benon. flatex has always presented itself as an alternative for investors of traditional banks. However, flatex does not offer fixed income or bond trading, essential for many investors. Why is flatex not offering this, or are there plans to change?
In general, we do offer bonds. We may be not known for being a bond trading house, but everything that comes with an ISIN normally can be traded. Like always, there are exceptions in certain countries with certain limitations. Italy is one of these markets where we see some protectionism from the Italian banks to have full access to the Milan Stock Exchange for those products. By and large, our plan is to continue and expand the bond product line. That one has not been important in the zero interest rate environment, but clearly now it's not at the levels it was before, but it continues to have a relevance.
Thank you. Can you provide an indicative CapEx budget over the course of our plans until 2027 versus the roughly EUR 40 million or so which we have spent each year in 2020 and 2023?
We are still a growing company. We still added people in the past. We will continue to work on our software code, and we will continue to replace and potentially build out our data centers as we move on. Like for the crypto offering, we had to buy servers that had special technical requirements we didn't have before. It's very similar actually to the regulatory reporting, sorry, the regulatory capital question in that now that we communicated what we have planned to deliver on products, we will go back, finish our annual numbers, and then do a proper capital and cost planning, which today we have, however, not at the scale and granularity that would be required to, for example, talk to the regulator.
The targets factor in customer growth of at least 10% per year, which is below the previous year's roughly 14% we have seen. What is driving this conservative assumption versus the historic growth? Do you expect growing competition, and how do you see customer growth across markets and segments? Crypto offering shouldn't boost customer growth too, shouldn't it?
Yeah, the 10% line, I understand that some people might consider it as low, particularly given that we already had a pretty decent January. Can you bring back the question? You.
Sorry, no.
Okay. Sorry, the question vanished from my screen, so I lost track.
Customer growth 10% versus the 14% historically and across markets and segments.
Yes, we may be a bit conservative on the customer growth line. That's very clearly the case, but we did well with being a notch conservative, and don't forget our general customer line grew over the last years, and the base effect is larger and larger as we move forward. Crypto trading is a product that is helping, but it's still small. We operate in 16 countries. Today, we are live now for two months in one country, so we do see clear inline expectations with respect to the number of trades, the notional traded, and client activity, and also assets under custody, frankly, but it's too early to say whether we attract really new clients simply based on this offering. We have not yet really rolled out our marketing initiative on that product in Germany. We will do so over the course of the year.
So once we roll this product out, this will be a question for 2026. But given the reasonably attractive spread that we are going out with, we probably should get some focus from clients who like to trade with better spreads than elsewhere. There was a third question embedded in there.
Markets and segments.
We have split our business into the core countries, the growth markets, and the rest. We don't plan to change that. We spend more marketing dollars, of course, in the core markets and in the growth markets. And today, we do not expect to change that. We do not have marketing campaigns dedicated to individual rest countries at this stage. This may change, but for now, we're focusing on the countries that Oliver has shown in his chart when he presented.
Yeah, I think we have a lot to do in these core markets, and there's a lot of potential there. So let's not get distracted.
Thank you. And there's one question for you, Oliver, regarding your general view on M&A. Do you see flatex as a natural consolidator of the European online brokerage market, and do you see any interesting opportunities?
As I mentioned, I think we have closed significant parts of our undervaluation gap in recent months. We kept up with the other listed peers. We will spend a lot of time on integrating our platforms and that our platform becomes even more scalable and being able to absorb other entities. At the moment, I would say we'll be pretty busy with ourselves, so to speak. On the other hand, we will have an open eye and be open for discussions if and when opportunities arise, when things come cheap or things go into trouble, we will be open to look at that. At the moment, it is important for us to bring the two companies, at least from the platform side, into one and then differentiate the offering in the various countries with the different flavors needed and required.
Thank you. The next question is on guidance. It's again clicked away.
A comment to the IT team in the back. Can you please try not to click the questions away before they're being answered?
Thank you.
I think I feel.
No, it's back. The question is as follows: 2025 guidance for stable commission income for trade. Can you clarify, please? Do you assume similar product mix into 2025 as in 2024? Crypto higher margin, yet guidance implies same to 2024 income per trade. Do you assume further ETF penetration to be margin-dilutive? Okay. There are a couple of comments to this. First of all, the ETF train is rolling, and there will always be a general trend to further ETF penetration. We have not seen trends that deviate from that. We enjoyed nice, very nice stable commission income per trade based on a big focus on the U.S. market, on U.S. stocks. We have seen the top seven U.S. stocks being traded very actively from NVIDIA to Alphabet.
And we think that while those trends can persevere, you can always see a decline, particularly with a general ticket size possibly coming down if markets come down. Crypto so far has been in Germany accretive for whatever it's worth. But as we have not fully finalized on the pricing of the crypto product in other countries, it's hard to see whether this can pertain. But what I can say is that today, for the two months of crypto trading in Germany, if we just look at it in an isolated way, that would have slightly lifted the average commissions per trade, given that the notional volume traded seems to be higher than we may have expected. Once we move to the DEGIRO platform, this can go down a bit in size or in line with the size of the transactions on the DEGIRO platform.
Maybe to add to that, you can clearly see that clients in different age groups also use different financial instruments. So you have a lot of young clients or, let's say, first-timers or first people that get first in contact with financial instruments. They somehow use the ETF savings plan. But the further they grow in their wealth positioning and their savings, they try other products, and there's a natural step, especially from the young generation, to try as a next step crypto because that is used among their peers as financial instruments to be added to the general understanding that they need to do something for their retirement and that ETF Savings plans is the best step, first step into savings.
And then it's clearly seen that, as Benon described in his remarks, that with us, most of the clients still use shares as the main instrument for their diversification, especially the more they get into it, they want to see the individual instruments. And there's a benefit of seeing the shares in the portfolio instead of just seeing in the extreme one asset as one ETF in the portfolio. And that's why we want the product in the middle to be hopefully popular as well, is where you can select the stocks your friends have, your family has, your peers have, or even the people in your country have to have a savings plan based on shares. To see the shares in the portfolio is a different emotional touchpoint than having just one asset as a wrapper, as a fund or an ETF.
Thank you, and maybe staying a bit on the commission income per trade, do you plan any changes on pricing for transactions over the next three years?
There is currently no plan to add any new pricing schemes on a broad scale. We may do small adjustments in certain markets, but compared to what we have done at DEGIRO over the last three years, there's nothing on the table.
Of course, we review our pricing tables on an annual basis to see whether we are competitive and whether there are areas of improvement. But at the moment, as Benon said, there is no significant change in course. There will be minor actions where there are some areas in currency exchanges and, but that's minor points that will not have a significant impact on earnings.
There are two questions related to capital. One, I think, has been answered already, which is the current CET1 ratio, including 2024 net income. The other one related is the level of capital that would be available for capital distribution to shareholders and potential M&A.
Yeah. So for starters, we already earmarked EUR 50 million for the share buyback. They are also subtracted from the regulatory capital. We added as a group approximately EUR 89 million of free cash flow in 2024, and we enjoyed to have a good base. We have one specialty, and that's the third version of the European banking regulation kicking in. It's a step function in terms of capital requirements. We are very well covered for that. But we will only know the full effects when we have the books audited and have sort of the first report out with fully audited numbers. So it's a number meaningfully above EUR 100 million. But let's do the math once we get there, and we'll comment on that in one of the future quarterly calls. That's probably the best way to deal with that.
With that, the EUR 50 million that have been earmarked already are subtracted. Similar to the M&A opportunity, it's the same calculation. Whether we spend the money on M&As, which today is not on the table, or return it to shareholders from a finance point of view, that's a very similar calculation.
There's also been the question that earlier in 2024, we have obviously announced and started the share buyback program, but no shares have now been bought back since December. And in the guidance and report, there's no current mentioning of the capital allocation to shareholders, but M&A. Does that mean to any shift?
No, it means nothing. So don't overinterpret things in there. We mandated a third bank to do the share buyback for us. We set targets as to how much we want to buy back, and we agreed on the timeframe. That plan is fully underway. I'm also a bit surprised that we have had for a prolonged time no purchases, but in the end, it's up to their discretion. We continue to expect that 50 million EUR will be bought back over the next, including the 28 we have today. So the remaining 22 million will be bought back over the next weeks, and we will finish the full 50 million by the beginning of the second quarter. So no real changes there.
Oliver, can you quantify expected returns from Securities lending until 2027, and what would be the margin for customers and for us?
I think, of course, it's a question how will it be taken up by clients. But I think I mentioned in my presentation the numbers in terms of assets that would qualify for Securities lending. The focus market, first market is the DEGIRO market in the Netherlands. That's up to somewhere around EUR 10 billion in volume of the EUR 31.5 billion assets under custody and equities. We expect the revenues to be somewhere around, when it's fully rolled out, somewhere around to be the EUR 20 million mark plus. If you add this with the existing B2B depositor service business plus a little bit of growth, we're not too far off of the numbers that people have been suggesting in 2027.
Is there an ambition for flatexDEGIRO to create a social trading part on its platform as some competitors do?
At the moment, we have no plans for that.
Are you considering launching any asset management product in the coming years, for instance, own ETFs in partnership with existing issuers, or do you see the scope to charge platform fees on customer investments in third-party funds?
We monitor closely what others are doing. We see, of course, some nervousness around the Payment for Order Flow, potential changes on the European scale. That's why exactly I introduced the idea of share-based Savings plans where we give the opportunity of the selection of the shares to the individual or to groups of individuals or where people can basically follow others and copy their investment style. And that is, to me, a little bit of social help from, let's say, professional investors to those that want to be guided. And we can charge some fees there. I mean, I think it's not a great claim to blur responsibilities and roles in this field. Our job is to create a platform for all products available where clients then can select what they need. Should we mix this with, excuse me, our own offering and compete with asset managers? Probably not.
Thank you. Then back on the M&A topic, two questions. One, I think again has already been widely answered in regards to M&A opportunities that will be considered, but also looking at the 2027 targets. Does that include M&A or is it on an organic basis?
I can take the question for you. So that's on an organic basis, including existing clients plus new products that we deliver and bring onto the platform spiced up with potential improvements from our treasury activities.
Exactly. We talk about things we know and not about things we don't know.
Talking about things we know, maybe you can elaborate on the business opportunity for the business process outsourcing or deposit as a service. What is it exactly and how much revenues could business potentially generate and what's the kind of fee structure to be expected?
After the experience with Silicon Valley Bank and the introduction of instant payments, the nervousness among most bank CEOs and, of course, the regulators, where, let's recall, where clients basically moved money with a mouse click away from their bank that have come into the headlines to some other, from their perspective, safer place. The funding sources in the eyes of the regulators and, of course, in the eyes of the CEOs of many, many banks need to be diversified. That's why I think the Net Stable Funding Ratio was introduced. That is a ratio that basically looks at different sources, the tenor of the sources, and the binding terms of the sources. There are some banks that basically fully depend on capital markets funding, especially when they have a monoline business, and. So there are various parties we are going to talk to. What is our offering?
Our offering is basically we create, let's say, the internet branch, the online branch, which is basically a slave of our own offering, but just for deposits on our platform, which is able to cater for different mandates. So it will be invisible for the clients in a way. So they see the offering of XYZ Bank in terms of deposits. It will be administered on our platform. We deliver everything from KYC, account opening, call center services, monitoring, but we will deliver the cash. And that is fully transparent to the client because the client will be a client from XYZ Bank, but we will basically deliver the service platform for that. That will help them to diversify their funding sources. And that is a very valuable proposition.
We believe that there is at least a handful or more clients, potential clients out there that are willing to look at our services because we are not seen as any competitor in this field for them. So I strongly believe that there is an opportunity. There's also a CR requirement for the foreign banks to basically not fully depend on the funding of their parent company. Let's not forget the foreign banks in Germany at the moment have about EUR 2 trillion of balance sheet. And they also give loans to large players in the market. And these loans and the capital and most of the funding is mostly sent by parent. And within the EU and the regulation, there's also a need for, or let's say it's called a Klumpenrisiko, if you get everything from your concentration risk from your parent.
They will also look for diversification of funding. There are many ways to diversify your funding. You can do this through repos. You can do this through bond issuance. But there's a significant benefit if you gather retail funding because it's seen as very, very sticky. We see this as an opportunity for us. We will explore this. We have small numbers in the planning for 2027, but let's see whether we can jump over that hurdle or not. Hopefully, that answers the question.
Benon, one question more for you now. As you mentioned, the divesting of non-core financial engagements that earn zero interest at the moment, how much capital would be unlocked following the divestment?
Today, if you look at 2025, they will probably generate a small pickup, but over the years, they have not. If we look at pure capital and cash, then it's a total of a bit around EUR 100 million, out of which EUR 30 million we plan to finish this year. As mentioned before, the contracts are signed, but the deal is not closed. The remaining 60% to 70% is something we'll be looking at over the next two years.
Thank you. There's one question asking, isn't it normal that new customers are more active as they onboard and actively decrease as the cohorts grow in age, which I believe is related to the cohort chart we have shown earlier?
I can answer that. So, cohort analysis, it's probably one of the holy grails of online brokerage, and there is a lot of information in looking cohorts in detail. There are many trends. There is not necessarily a general trend that activity always goes down with clients. What's more important is the stickiness of when a client is onboarded. So when a client onboards and gets familiar with stocks in a time when volatility is rather high, these clients tend to continue to have an above-average volatility. Yes, an above-average activity. The activity can swing in line with market attractiveness levels, but it's embedded in the DNA of the cohort that a client learned that stocks or trading in stocks can be interesting or beneficial. So we do not see necessarily a tendency to change dramatically. Even today, flatex is now close to 20 years old.
We carry clients from old cohorts who continue to be very active and active way above average. As people grow older, they tend to be on average richer and have on average more time to trade. That's a good thing for us.
Staying on the topic of less active or inactive customers, as shown on the chart, we have around 250,000 clients which currently are holding more than EUR 1,000 in their accounts. Do these people regularly log into the platform? What is the communication and engagement we have with them, or is it just used as a backup account with primary relations somewhere else?
That's a very good question. We are developing tools basically to engage with these clients, to send them messages, to give them hints. As I mentioned, in our questionnaires, which we regularly do with clients, we still have the feedback that 36% of our clients have no idea what to do, or at least they need help. That's why for us it's so essential to be dedicated to financial education, to help them to overcome, let's say, the resistance. What should I do? How can I make not a mistake? And how can I thrive in investing? And that's why we see a lot of demand for investment seminars, especially with our partners, which are also a lot of mutual fund companies, but also on the certificate space where people look at the different instruments, what they can use.
What is also very interesting is that the clients will in future be able to basically join some kind of a library where they can have education tailor-made to their needs, and they will get some help from, let's say, people in a similar situation to hopefully help them to engage, and I would say somebody who became a client had a reason to become a client. Maybe they forgot about it in the meantime, but we can help them to basically rememorize and help them to get to the next level.
That's clearly one of the areas where we do have some catch-up to do. This is certainly due to the focus we had over the last years on the regulatory findings that we largely closed. And looking forward, unlocking that potential and strengthening the autobahn to the clients' minds will be very important going forward. And let's not forget, when a client trades, that's one thing. If a client has cash on our account, we make money off that. That's a good thing in general. Once we launch the Securities lending product, we will unlock a third pillar, which is if a client has no cash with us and the client does not trade, yet he has interesting stocks in his portfolio that he likes to lend out, he will generate a pickup and so will we.
So it's literally an entire new expansion on the percentage of clients that we generate revenues off. But there will, of course, always be a small fraction of clients that will probably be very hard to activate.
Thank you. flatex has basically twice as many employees compared to some of the Nordic peers. Why is this difference? And is it related to the fact that flatexDEGIRO operates in so many language areas as well? How do you see the possibility of using AI to increase the efficiency of your customer relations?
I think this is a good question. Let's say on the surface, it looks like there's a significant difference, or it looks like twice the number of employees. At the same time, the business model is significantly different as well. First of all, we're operating in 16 countries, which needs a different effort. Secondly, we have our own IT team, about 450 people within those 1,300 employees. We also operate at the moment our own data centers and so on. The setup is different. That doesn't mean that's an excuse for not analyzing whether we have the right and the lean setup we want to have into the future. At the moment, we still have at least two platforms we need to unify. We will monitor this closely. As Benon and I mentioned very clearly, we have a clear focus on cost and very strict cost discipline.
We will monitor this and see what we can do. You can see this in the provisions for 2020, in the accounts of 2024 for 2025. There were a lot of questions around that. We will reduce headcount by a decent number, and that's why we built the provisions. So we are keeping an eye on it. We already kept headcount under control relative towards the beginning of 2024 to make sure that this is not an area we are very bullish on. At the same time, of course, if we expand in further markets and so on, there might be some growth opportunities here and there. But at the moment, we focus exactly on what lies ahead of us.
Thank you. There's one question on the pension opportunity, and maybe you can elaborate a little bit on this. This feels like it could target a less active, but potentially stickier customer base. Do you expect the new coalition government to introduce relevant vehicles in Germany soon?
On a very positive note, if I exclude the risk of Friedrich Merz forming a coalition with the relevant percentages of voters on their side, I'm pretty optimistic that there will be an outcome on the pension system. When you look at it, Germany has about 83 million people, out of which 65 are, let's say, employed. It only has 20-25 million custody accounts at the moment. I would say at least 40% to 50% of all employed people are in scope for retirement savings based on securities, which would mean the market could grow by a significant number of new custody accounts, especially when there's a tax incentive coming. It's absolutely right. These are long-term assets. They are sticky assets. But the clients need to be educated that they don't stop their Savings plans when the market is turning sour for a while.
They should see this as an opportunity and use the cost average effect for basically gaining more performance. How quickly will this come? We left it open, a little bit vague in our planning, but it's clear that Germany has a lot of investment needs ahead of itself: infrastructure, digitalization, rebuilding of the economy and the car manufacturing sector, autobahns, and so on. We have a 3% deficit ban in the constitution. There is no other way than mobilizing the man on the street to invest in some parts and support the change of the country. I'm hoping for the better. Let's see how realistic the new government can execute on this plan, but it would be an add-on to our current planning. Thank you.
To add on to that, can you give a sense of how meaningful the additional potential revenues from pension accounts as well as crypto would be for the 2027 midterm guidance? Is it a major or minor impact, or how much would come from still just current momentum and ongoing growth?
I would call this the icing on the cake. It depends on how quickly the government will get their act together. We see this as a 2026 starting topic. That's exactly the point why we put all the numbers for 2027 as a full-year impact. My personal view is that the number of custody accounts in Germany could go up by 40% or 50% if they get it really right, and you want to see this on the optimistic note. The same issue arises in other countries with an unfunded pension system, and the dependency of European capital markets on foreign capital is so high that the EU Commission, the ECB, the regulators, and of course, the governments have a strong interest in increasing local ownership in markets.
And that should help because they also see what happens in the U.K. ISA accounts, what happens in the NISA accounts in Japan, and especially, of course, the 401(k) accounts in the US. The power of investing and owning local percentages in capital markets is essential to convert the economy as well. So I think there will be a significant impact if they really get it right. But the thing is, the story has a long beard, and they have never really been on execution. As mentioned, the paper is in the drawer of Mr. Lindner, who basically left the government, but the issue is the same. And that's why, on a positive tone, I'm optimistic that we will get something to play.
In general, to close off on the answer and go back to the key of the question, we have set realistic but also ambitious goals, and there will be some new revenues needed to get to these goals. I would probably include Securities lending, a very common existing product in the Dutch market, into that category as well. Yes, we will need new revenues from new products in order to get there. We are confident that we'll get there.
Thank you, Benon. Actually, there is currently, in my queue, at least as I see, no further questions. I would hand back to Oliver for some closing remarks.
Yeah, I think there was a, what can I say, a really exciting day and first strategy session with all of you. I wanted to thank you for the trust you have brought into the management team and the people of flatexDEGIRO. It was a pleasure to be here with you today, and we are looking forward to cooperation, collaboration with you as investors and supporters of our business, and we will be there for you. Thanks for joining in today.
Thank you.
Thank you.
Thank you very much.