Okay, good morning all, and welcome to ABG Sundal Collier's Q2 Results Presentation. Some housekeeping before we start. We will, as usual, have a Q&A session after the presentation, and should you want to raise a question, please use the Q&A function in Teams, and we will answer all questions in turn. Luckily, for that purpose, amongst others, I'm also joined by our CFO, Geir Olsen. Geir, when I say that's a good question, it means it's a difficult question, and then it's time for you to step in. Let's kick off with a few general reflections before we look more into the numbers.
While stock markets have done pretty well after the US regional banks and the Credit Suisse blow-ups, as well as macro indicators having shown some signs of improvement, the confidence in terms of market participants wanting to take on more risk is yet to return. That has continued to dampen market activity, affecting the revenue line for the industry as a whole, including us. It is in times like these, we really can stand out and make a difference for our clients. We are in the business of seizing and creating opportunities for our clients, with the sole purpose of helping our clients to improve their businesses or returns.
In fact, that is the only thing we do, and as such, we need to be better than the competition, of which many peers have other revenue streams from balancing lending, for instance. Our clients know that when they partner up with us, they work with a party that tend to get things done. We have to, which is partly explaining our strong position in the market. While we will continue to further develop our new business initiatives as planned, i.e., private banking, alternative investments, we are taking further action to fight cost inflation observed across the line. We focus on increasing efficiency in our daily operations and implementing new technology.
We are improving the already high quality of our staff by intensifying our efforts, on having the right man or woman in the right place, as well as right-sizing, our operations where needed to protect profitability. We do this while we continue to hire top talent to make sure we always are in the position to give the best possible advice and execution to our clients. Thereby, we will continue to strengthen our competitiveness and our market position. With that, let's look more at the numbers, and what really happened number-wise in the quarter.
We closed the gap somewhat during the second quarter on revenue year-on-year, but not all the way, and ended up at NOK 379 million in the quarter, 7% down, and NOK 805 million in the first half versus NOK 893 million first half last year. The main reason for the decline in revenues is very much similar to the first quarter, i.e., less M&A revenues year-on-year, while most other product areas are more or less flat. Margins were negatively affected by, of course, the previously mentioned cost inflation and not least NOK depreciation, as well as operating leverage, of course, from lower revenues, resulting in the operating margin going to 18% from 27% last year.
As a consequence, EPS, earnings per share, ended up at NOK 0.19 in H1 versus NOK 0.29 in H1 last year. Looking at the next slide and talk about macro and the macro backdrop. I touched upon this previously, when looking at the headline performance of equity indices, volatility being low and trending lower during the quarter, well below 20, and seemingly interest rates flattening out. I think that Q2 could or even should have been more supportive for our business, looking at historical patterns. Looking below the headlines, we can observe that while U.S. equity indices were up by some 8% during the quarter, it was mainly a function of a rally in mega tech cap companies with less broad participation and also slightly more muted performance in the Nordic indices.
While interest rates seems to be leveling out, at obviously a much higher level than we've gotten used to as of late, inflation seems to be a bit stickier than expected, and thus it could be an indication of rates, interest rates being higher, a bit longer than expected, which probably is contributing to less conviction in the market about the future direction. What we need is a bit more time without negative surprises, and we expect a return of conviction and risk appetite to follow. Looking at the next slide, please, with the performance of our main markets, and volume-wise, starting off with the Nordic equity capital market primary volumes. Activity is clearly muted this quarter again, down by 9% year-on-year in the quarter.
Activity is especially weak within IPOs. Looking at the first half as a whole, only three conducted IPOs in our markets, and not a single one in Sweden. Primary placements, slightly less affected than IPOs, but still muted, to say the least. What held up better than the two just mentioned products, primary placements and IPOs, is rights issues. That is more of a lending bank product for various reasons I will refrain from discussing here and now.
Debt capital markets did okay in the quarter in spite of the very slow start in Q2 after spreads widening on the back of the turmoil in the financial sector in March and April, with volumes still ending up 11% down year-on-year, but underlying activity slightly improving. M&A market, on the other hand, as previously mentioned, has continued to be weak, with a number of deals down by 45% in the quarter year-on-year. Deals take significantly longer time to get done these days, but as the gap between sellers and buyers in terms of price expectations, et cetera, will shrink, and it will, we expect activity to pick up the coming six or nine months. Difficult to say exactly when.
Over to next slide and look at our performance in these markets, starting off with corporate financing, where I'd say we have done our fair share, not least ECM Norway, with an increase in market share during the first half to an impressive 25% market share year to date. However, overall, our revenues were marginally down in the quarter from NOK 137 to NOK 132 million, resulting in H1 revenues of NOK 314 million. We continue to have 100% participation in Nordic IPOs, i.e., we have participated in the 3 deals that have been done year to date in our markets.
This quarter, it was the IPO of DOF, as you can see on the right-hand side of the slide, but we also executed on several private placements, such as Andfjord, Idex, and not least, Sagax. The latter contributing to ABG having a clear market leading position on private placements by a wide margin in Sweden year to date. In debt capital markets, we have seen deals in slightly more sectors than compared to the first quarter, which we think is good and to our benefit.
Here I would, of course, like to highlight the EUR 200 million bond done to partly finance Nordic Capital's acquisition in of Foxway, where Foxway, where we acted as sole global coordinator, and where we're also flipping to the next slide, please, and looking at M&A, we're sole advisor in the M&A transaction to Nordic Capital in the just mentioned acquisition of Foxway. As you can see, volumes down for us in terms of revenues by 20% in the quarter and 33% in H1, keeping in mind transaction activity in the overall market being down by 45% in the quarter.
Another transaction I'd like to mention while on this page is Sweden State Pension Fund AP7, acquiring 33% of Stockholm CBD Urban Escape property, valued north of NOK 20 billion. It's a pure real estate transaction and something we don't do on a daily basis, but a function of the entire system, the entire platform, delivering service to our clients, regardless of what type of product it might end up with. We think we could do better in M&A in specific areas, and we think we are well-positioned to increase our share of this market going forward. Over to next slide, looking at brokerage and research operations, that has continued to deliver a solid performance....
Being up 6% year on year in the first half at NOK 313 million, and flat versus a strong second quarter last year. Backed by our highly ranked research operation, our ID-driven sales operations, combined with supreme trading flow, matching abilities, clearly contributes to making ABG a preferred counterparty to our broad Nordic and international investor base. This is further enabling us to cement our position as a trusted speaking partner with the market-leading placing power within the ECM and DCM primary segments. We also think that the trend that institutional investors are consolidating the number of broker counterparties is continuing, and that is something that is supportive for our relative position in the market. Not least, given that we have continued to invest in a very strong research operations.
With that, I'd like to leave the word over to Geir, who will talk a bit more about costs and headcount. Please, Geir, go ahead.
Thank you, Jonas. Looking at our operating costs, at the main line, they look to be in line with the first six months of last year. That is a function, however, of cost inflation and a weakening NOK on the fixed cost base. We are obviously challenging the cost inflation every day, but we are, we're not immune to what's going on in the society around us. We observe that suppliers increase costs regularly, and that's just the way it is these days. We do what we can to fight that and review contracts and try to reduce our cost base.
However, in when we have a weakening NOK, like we have seen for the first 6 months, we have seen that our costs have increased by NOK 24 million just because of weakening in Norwegian kroner. On the headcount side, headcount is up 4% year-over-year for this first 6 months. That includes also our new business areas. If looking at the underlying headcount of the existing or historical operations, we are down for the first 6 months of the year compared to the end of last year. We do what we can to challenge the inflation, and we are slimming the operation where we can. With that, Jonas, I'll leave the word back to you.
Thank you. Thank you, Geir. With that, let me summarize what we think are the key takeaways here today. We have a superior position within research and brokerage that is strongly contributing, obviously, to revenues, but also, and equally important, I think, to our capabilities when it comes to executing ECM and DCM transactions. That is paving the way for further strengthening of our market position. We are not in the business of wishing for markets to be strong and helpful. We are in the business of seizing and creating opportunities regardless of market sentiment. Now it is our time to really prove why we are a trustworthy counterparty and make a difference.
We are, as Geir mentioned, experiencing cost inflation on top of a weaker NOK, having obviously a negative impact on margins. Thus, we are intensifying our efforts on improving efficiency, not least by embracing new technology. We continue to have a strong inflow of mandates, better suited for current market conditions, and we are in very good shape to execute once market allows. And while we short term might experience setbacks in the market, name of the game, the low volatility and clear signs of a reopening of the US IPO market activity may serve as a catalyst for European and also Nordic IPOs to increase again. So with that, I'll open up the floor for any questions.
We have received a couple of questions. The first being: When will the 2 new business areas, private banking and alternative investments, start to generate revenues?
That, I can't give the exact date, so I will refrain from that, but I can give you a hunch, and that is during 2024. Obviously, since we're starting from scratch, it will be a gradual increase, but we expect revenues to start ticking from 2024 and onwards.
I understand that it is difficult to predict the transaction market, corporate and M&A revenues. I remember that you have indicated a strong pipeline of transactions in several quarters. Still, transaction revenues continue to fall. How will you assess the situation for ABG as of today with respect to M&A Corp revenues for the second half compared to last year?
A pipe is obviously a prerequisite for having revenues, but having revenues is also a function of markets working as designed, the markets, they are working, but it takes longer time. That is the main reason for the pipe taking longer time to translate into revenues, comment number one. The second one, how the pipe is looking into H2 compared to at the same period last time. I'd say we have a clearly more tilt versus M&A, and M&A is slower, but still, looking at the level of activity in absolute numbers, better than, for instance, IPO. That is almost nowhere to be found.
We have a stronger pipeline for the current market, I'd say, than we had at the same period in last year.
What are your thoughts on the IPO market going forward?
The million dollar question, of course, but we've got some indications or some signs that are encouraging, such as volatility being low and having been low for quite a time. As just mentioned, the reopening or signs of reopening of the US IPO market. I think what we need is time. We need time without negative surprises. We don't necessarily need markets to go up, but at least be predictable and having higher conviction that we have the worst behind us, or at least that it won't get any worse than expected in terms of recession and inflation. That is key, I think.
We obviously need a high quality pipe, all of us being participants in this market, with companies with a predictable performance, expected performance, and preferable assets or, and/or cash flow yielding assets. I think we are doing our fair share in terms of contributing to that pipe once the market allows for us to execute on that.
I believe that's all for the questions.
Okay. If there are no further questions, thank you for tuning in and, the interest in ABG. Should there be any follow-up questions, do not hesitate to contact either me or Geir. Thank you so much. Bye now.