Thank you. Welcome to this Q1 presentation. My name is Johan Plrom, and I'm the CEO of Vantaa. We will start to give you a business update, and I will do that part. And then afterwards, our Chief Financial Officer, Birgit Hornefelt, will take you through the financials.
Altogether, this will approximately take 20 minutes, and thereafter, we will open up for questions. If we just have a look on what happened in Q1, we had overall a very strong quarter with continued strong momentum and good growth. We saw a record high customer inflow. And only a couple of years ago, we had this number of inflows during an entire year that we just had in 1 quarter to now. Also for the customers, it was a very good quarter when it comes to activity.
And we have a total number of commissions commission notes that was growing quite a lot. Also, fund volumes increased, and we had a record higher number of brokerage generating customers. If we compare to Q4, the market activity among the amount of customers on NASDAQ, Onex, Stockholm and FirstNet was fairly flat in terms of volume, but we saw a very good increase in number of trains. If we compare to Q1 last year, we saw a contingency high trading in Fingerprints in that period, and therefore, the volume decreased when we compare it to this quarter. However, the number of trades rose quite significantly.
Altogether, this gave us a rep out of SEK 103,000,000 for the Q1 2017. Moreover, the activity was very high internally. We launched the stock generator that makes it easier for customers to select stocks. And we also improved the integration page for stock trading, and we enhanced our mobile offering in various ways with increased functionality. Also, we saw that actually twothree of the visits to Avanti site now comes through mobile devices, and almost 50% of the new customers sign up through these devices.
During the quarter, we also launched digital stock trading on a number of European markets that has been requested for long. And our customers can now trade electronically big shares in Germany, Netherlands, Belgium, Portugal and now also France and Italy. As announced earlier, we are planning for a broader mortgage offering with our customers together with Safdiello that was announced earlier this in the quarter. But just recently, we signed a cooperation agreement, and we'll get back shortly well, not shortly, but during the year with how we actually could will define that offering and have a more broad offering on mortgage levels to our customers. We see quite strong demand for that, and the indication that we have had for our private banking customers is that it's very appreciated when we could get a very good end offering in mortgage loans, and we're very excited to go from this.
Also, we are very delighted that we were 150 most visited .SE sites. And in addition to that, we got very high scores for from the Swedish site Bank Betriek, which constantly reviews Swedish banks and have under scored best among banks in all the tops with the top scores in all categories. And that is customer service and offering and technique and price and and recommendation. During the quarter, the net inflow was high with SEK 8 point 6,000,000,000 and the savings capital now totals to SEK 246,000,000,000. In the quarter, we received new market share regarding the Swedish savings market for the full year 2016, and Avanter now has a market share of 16.2% of the net inflow in Q4 and 10.9% on a 12 month rolling basis.
And this is well above our target of 9% that we communicated in the Q4 report. Overall, we now have a 5.9% market share in the Swedish population and 3.3% when it comes to the Swedish savings market. There's really a lot of things going on in the financial industry right now and also in the FinTech arena, and it's happening quite fast. During the quarter, we've seen an intensified competition on brokerage fees, and we've seen more cooperation between large established players that is more and there's a lot of fintech start ups that are more and more offering 1 product to come more product offerings to the financial market. This is nothing new, and it's really something that we have seen over the years, and we believe that we are well positioned to take care of this development.
We see it the first phase of digitization in the financial industry that's happening now when the incumbent banks offering is now being segmented by niche players. Many of these players are focusing hard on one product or one service. And in that case, it's easy for them to keep costs down and consequently price it good. Therefore, we believe that going forward, price leadership and a good position to price accordingly will be key. How this will play out, it's really hard to predict.
We have seen over the years in many other industries that the first page really encounters the bundling. But after a while, there will be a bundling in a new way. And we look much at the media and music industries where we have seen good examples of this. The first phase is that you cherry pick specialized on product services, but over time, the market will seek new ways to find new ways of bundling this to make it convenient for the customers. This is exactly where I want to add to this constraint.
We started by operating stock trading, and then we had a fund platform. We moved over to our savings account platform frame and now we will go into mortgage loans. And we believe that over time, we will develop one hub where you could have you could be the vehicle for your entire economy. And this is something that we have been building for very many years, and we believe that the course that we have is the right one for the future given the digitalization trends that we see in the financial industry. About that, the good and strong brand in Swedish society with now over 600,000 customers, And we're focused very hard on building a top notch end user experience, and we've come quite far already.
We also have the innovation culture that we are very proud of and that we think will be key going forward when we develop our offering. We have a well functioning business model that is built on cost leadership and also scalability, and this is why we could still grow and earn a lot of money while decreasing prices, and that is all based on the cost leadership and scalability strategy. Also going forward, compliance and legal will be key. We believe that we have the right position there to make this a good we'd have a good position also in those areas when it comes to the development going forward. Our strategy stands and will continue to be to offer cheaper veterans simpler product.
We're going to continue to stick close to the customer and we will stay in charge of our user experience and we believe this is key going forward. But we also need to find cooperation partners. We've done so in the past. With Trustly, it's a good example, with direct payments. And now we've just recently communicated that we work together with Spadillo and cash mortgage loans.
So I think the combination of having the online platform that you could use and In focus for the coming years to continue to drive the digitization in the financial industry, we also believe that the flexibility and security will be very important pieces. And we want to make sure that we capture all the possibility that comes with regulation to be sure that we have both the right and right set of offerings, but also that we do it in a compliant way that we always have a secure offering to our customers. Millions of people by having the cheaper better and simpler offering. And in doing so, we will have the 1 online platform so that we succeed with your economy. And by that, we mean the overall economy that our customers have.
If we look a little bit forward, we believe that we have good potential to future to capture the possibilities that emerge in the landscape. We mean that our cost position is vital and that we that by having continued cost focus will always be key. And by doing that, we will have the possibility to price our service accordingly. We continue to see a good growth potential in the changing environment, not only when it comes to digitization, light upcoming regulations that we just discussed. We also believe that in cloud to our customers and do what's best for them is what will always deliver value over time.
And if we do that, we believe that the shareholder value will come as a consequence of it. We've now seen in the quarter a very strong growth in customers and savings capital. That is also true for the years that has been for the recent years. And in the quarter, we had a record high inflow of new customers. We've done a couple of new launches in 2017, and we will continue to improve our offering as we have always done.
We will fine tune and build on customer feedback. And every 10th day, we update our size. And we don't believe in a big bang in that way, but rather a continuous evolution to always serve customers in an efficient way. Overall, our vision is to create a better future for millions of people like we just discussed, and we aim at being the online platform that serves our customers in a perfect way when it comes to the overall economy. And we really believe that we need to have that focus and, at the same time, cooperate with the right partners to deliver the full offering that we could.
Over time, we think that we have a very good position that we stand on right now, but we believe that we always need to stand on our toes in order to deliver on what the customers ask us to deliver for them. And in flow, we believe that we have the position to deliver a better future for business people. And with that, I will hand over to Birgitte to take up the financials.
Thank you, Juha. As a result of lower costs and stable revenues, operating profit increased by 3% compared to Q4 2016, giving an operating margin of 49%. Compared to the Q1 last year, the operating profit increased by 5% with both revenues and costs increasing. The revenue increase is mainly an effect of growing customer base and higher activity among our customers, and I will come back to more details later. The cost increase of 13% year on year is in line with our guidance of 15% to 20% for the full year.
If we look at the total revenues compared to the previous quarter, they remain unchanged. Revenues per savings capital ratio, however, decreased by 3 basis points to 41 due to higher savings capital. Number of brokerage generating customers were record high and number of commission notes increased. Brokerage income per turnover rose, but turnover per trade decreased. Taken together, brokerage income remained unchanged.
Fund commissions increased by 10% due to larger fund bulk volumes, which in average increased by 11% during the period. Net interest income fell by 5% mainly because of higher deposit guarantee fees and resolution fees, but also more surplus liquidity deposited with credit institutions. Increased lending made positive contribution. The repo rate remained unchanged, while LIBOR 3 months was 5 basis points higher, which have, however, had a marginal effect on NII. Other income increased by 8%, mainly due to lower income from corporate finance, which was still at a relatively high level.
During the quarter, Advanced Markets accounted for 27% of totally of other income and currency related income of 56% and income from Corporate Finance of 17%. Compared to the Q1 last year, revenues increased due to higher fund commissions and increase in other income, while lower NII and brokerage income had the opposite effect. Brokerage income decreased by 3% compared to last year. When we, as Johan already mentioned, saw high trading and especially Fingerprints. However, the number of equity transactions gained 13%, and the number of commission generating customers rose by 26%, which means that activity is increasing with more customers and a higher number of trades.
Transaction volumes, however, have lower are lower and made in lower benefit classes suited to customers' trading patterns. Income per commission note fell even though brokerage income per turnover increased by 8% compared 2016. If you put this in other words, we are attracting younger customers and customers with smaller capital that trade more but at smaller volumes. Fund commissions increased by 42%, mainly due to higher fund volumes and partially because customers have reweighted the funds with higher fees. Fund provisions accounted for 21% of total revenues.
Net interest income fell mainly as a result of negative interest rates with increased expenses for certain types of liquidity, but also expenses for the deposit guarantee fee and the solution fee. All else equal, without taking any change in customer behavior into account, a one percentage point change in interest rates with today's volume would affect full year net interest income by around €200,000,000 Other income increased mainly due to higher currency related income costs by the increased trading in foreign securities. Equity trading in foreign markets by amount of customers accounted for 6.5% of turnover in the quarter. Corporate finance income increased compared to previous year. Compared to last quarter, operating expenses decreased by 3%, mainly due to lower marketing costs.
If we compare to the Q1 last year, operating expenses increased, and this is mainly due to higher personnel costs, partially because of added IC and product development capacity. Other expenses rose due to higher expenses for external services. Cost of savings capital decreased by 3 basis points to 21% for the quarter despite increased costs. This was an effect of higher savings capital due to strong customer inflow and net capital inflow. Just over 50% of net inflow came from new customers.
Our cost guidance remains. We estimate cost to increase by 15% to 20% during 2017 and thereafter return to an annual cost growth of 0.08% to 0.10%. Moving to that. Let's take this one. So operating profit and margin.
The operating profit margin was 49% for the quarter, in line with our ambition of a margin of around 50%. Profit after tax increased by 5% year on year to $103,000,000 and that's 2% compared to 4th quarter. Both income per savings capital and cost per savings capital ratio decreased in the 1st quarter, which is in line with our scalable business model and growth strategy to attract more customers and savings capital by price and cost leadership. Given continued strong growth in customers and savings capital, we still see good opportunities to lower the cost of savings capital ratio to below 20 basis points in a few years despite the increase of cost guidance for this year. Customers' total deposits was unchanged during the quarter even though the balance sheet item has increased, mainly an effect of liquidity management in our insurance business.
Deposits amount to about 14% of total savings capital, which is slightly less than before. Loans to the public have increased both in terms of margin lending and mortgage loans. The balance sheet item loans to the public includes lending entirely covered by cash, but it's not included in lending within the savings capital. The difference between lending and savings capital and balance sheet does not affect the NII. The bond portfolio has decreased due to maturing bonds and consequently loans to credit institutions have increased.
The increase in other assets and other liabilities are mainly due to customers' securities trading receivables and liabilities. During the quarter, the dividend of $330,000,000 was paid out, which, together with the profit for the period, explains the change in equity. The risk exposure amount increased to SEK 4,800,000,000 mainly due to increased mortgage lending and higher loans to credit institutions. The capital base was unchanged in Q1 since results haven't been included. All in all, this gives us us total capital relation of 19.1% compared to the requirement, including external and internal buffers and Pillar 2 requirements of 15.45%.
The strong capital situation entitled us to continue to grow also at a quicker pace. And with that, Joanne, I think we can open up for questions.
Thank you. We first go to the line of Peter Welin of Handelsbanken. Please go ahead. Your line is now open.
Great. Thank you and good morning. I would like to start off with some questions regarding this coming announcement of your cooperation with Bieler regarding mortgages, if we could get any more color regarding this. So to start off with, will you be the only distributor of mortgages from Stabilo? And also how does Stabilo fund these mortgages?
Good morning and thanks for the question. The only thing that we've said so far is that we have invested in Sibyelo, a startup company, and we own 20%. And we today announced that we have signed a cooperation agreement with them. And then we said that during the year, we will get back with more details on exactly how the offering will look like, how it will function. And to use your words, Peter, the different colors of the offering.
Right now, it's a little bit in black and white and I can understand that, but that's how far we have come when it comes to communicating around this.
Okay. But then more coming back a bit into the business rationale behind it. If I understood you correctly during the presentation, you said that you're more or less aiming to become some kind of financial services one stop shop over time. So kind of the initiator behind this transact was this as you were out looking to find for I mean, to get some kind of broader mortgage potential base, which would not be based on your balance sheet? And you spoke with maybe several 3rd party originators?
Or how did this deal come to be?
Well, exactly like you said, I mean, we have the ambition to help our customers with the full range of their economic activities. And we constantly look for partners that could be help us and really have optimal and the cost offerings. We have trustly when it comes to direct payments. We have several cooperation partners when it comes to the Sparkon 2 plus. We believe that Fabiano is a very good partner when it comes to offering mortgage loans.
And we constantly search the market for various types of cooperation partners and vehicles and solutions. Everything that we can do to serve our customers in a better way is interesting for us. And stability is a very good example of that.
Okay. But could it be then that assuming that maybe this storm takes off fairly well that in a couple of years' time, you might have several originators that you cooperate with?
I think that over time, I mean, it's very hard to predict the future. If we look at it right now, I think we've done quite a good job when it comes to the stock trading and the overall decrease in price there with 80% to 90% over the last decade or 2. We believe that we could make a change when it comes to mortgage loans. And I think over time, we are scratching the surface there right now. So over time, I'm not taking out any options.
But we believe that we could have a really good offering together with Stabilo, and I think that's a very good Where that will take us, it's hard to see. But we believe that we could make a we believe that we could contribute in a good way to our customers' economical life together with Stabilo when it comes to mortgage loans.
Okay. Okay. So I'll guess we'll just wait for further details then. And then I'll jump to your or also something you commented on your presentation this kind of the one of the major banks price cut earlier this year on commissions. And we know that we've had the Giro in the market for several years being having a very good price offerings.
Have you seen anything in the market dynamics the last couple of months, which looks as if kind of the price competition is getting clearly more competitive than previously? Or is it business as usual the way you see it right now?
Well, we never ever think about our business as usual. We always stand on our toes every day and really like to everyday fine tune our offering. But we haven't seen any real effect so far, not in customer inflow, not in trading activity. And I think our conclusion when it comes to prices is that the importance of price is becoming marginally lower given that we have now cut sort of 80% to 90% compared to where we started off. Of course, price will continue to be really important, and I think it's very good that some of the additional players in the marketplace have understood that.
And there are still other players out there that haven't sort of the same perception on that. But the feedback that we get from customers is that other pieces of the offering, such as user experience and decision making tools and services and so forth, are becoming increasingly important. And now we're moving down to that is the actual distance is a couple of kroner or a couple of the importance of a really top notch user experience and state of the art decision making tools and customer service in world class are becoming increasingly important. So I think that's the long answer. And the short answer is that like I said, we haven't seen any real effect so far.
But we never ever consider our business as usual. We always stand on our toes every day.
Okay. Well, and then just a final question of mine, maybe a bit technical on the NII development in the quarter and also wanting to double check a bit if I understood the information in the report correctly. You state that the fees in this quarter if you add them up $4,200,000 is $6,000,000 and that's an increase of around 30 3%. I guess that's both quarter over quarter and year over year. So essentially fees which were maybe in the range 4 point something 4.5 percent slightly below that last year are now around 6% per quarter.
Is that correct interpretation?
Well, when it comes to the resolution fee, we had a 50% base of our discount last year. So the cost for resolution fees are doubled compared to last year. So that's the main difference when it comes to the fleet.
Yes. So then coming to the delta quarter over quarter from fees alone is maybe in the area of $1,500,000 or slightly more, while your decline is pretty much then fully explained by that or maybe the decline comes also from some other sources. So then it seems like the slight increase in money market rates didn't really give very much of a positive impact in this quarter and also growing lending volumes. While you repeat your sensitivity of or actually you narrow it down to around 200 instead of your previous interval, is there anything else disturbing in this quarter? And while we're talking about a similar trend in money market rates the next quarter could give a clearly more positive impact?
Or is this a more reasonable development also in the coming quarters?
Well, I would say that what's made behind the scenes as well is that our customers are increasing their loans in what we call the super loan, which is a margin lending with a little less interest rate. And in some extent, that's the part of the margin lending is increasing within the super loan and not with the full margin loan.
Okay. So it's more like a it's a mix effect, which didn't go your way this quarter?
Yes.
Okay. Great. Thank you. That's all from me for now.
Thank you.
We now go to the line of Peter Katzejkov of SVB. Please go ahead. Your line is open.
Yes. Hi. Thank you for taking the questions. A few questions on my side. Just to start off with just looking at your front page, you changed the wording going from previously saying that you have the lowest prices to now having low prices.
Is that kind of the way we should look at Avanza going forward at having the lowest prices is not necessarily the most important parts or one of the main selling points? That's my first question.
I think we will always make sure that we have the best offering, but it's not necessarily always in every individual item the lowest price when it comes to I mean, it used to be the case that the euro could have some individual price points that were lower, but we still consider that on the total level, we had a very sort of pricey offering, and I think that will be the same going forward. On the total level, price will always continue to be important, and we will make sure that we have low and really competitive prices. But there will always be or it could be some individual price points where there are other offerings that are actually lower. That is, I think, one portion of the answer. The other portion is that you have to look upon the services generated.
And we believe that when it's down to a couple of kronor or in some cases a couple of RN, the customers are willing to pay for the state of the art decision tools, the world class services and the user experience that we provide. And if you take some kind of similarity to the car industry, just tuned with
the sort
of quality ladder, we want to be the Audi that has the lowest prices, but not necessarily the SKODA to illustrate the sort of price versus quality ratio. So I think when we say that we would like to have a really pricey offering, it should be given the quality that we offer.
Okay. And then just looking at what competitors are doing now, say, if we, for instance, look at the large banks partnering up with fintechs in order to kind of narrow their gap on the product offering relative, for instance, companies like yourself. To what extent does that worry you? And to what extent does that drive kind of the additional cost or investments that you're making now? Because I guess historically, at least you've had a much bigger advantage on the product offering relative to the large banks that they're now trying to at least narrow?
There will always be I mean, we search like we have sent to the previous question. We all search for corporation partners. And right now, we see a lot of new corporations coming up. I think what is important then is that you sort of world class levels, both when it comes to the world user experience and that we think we have. And there are, of course, other people that claim that they have it, but you also need to fill it with state of the art products.
And in some of the corporations that we see, we see that you're trying to sort of link a very modern user experience with very sort of old school products that are not really priced in a competitive way. And if you have very sort of very, very expensive mortgage loans, for example, or expensive stock trading, we don't believe that it's enough to just put it in the umbrella of a good user experience. You have to have really good top notch products to sell your overall user experience with. And that's exactly what we think we are doing. And we don't believe that some of the other players have found that mix yet.
Okay. Then just in terms of product launches, when I read around some of the when you write about the product that you or the services that you launched during the quarter and what you're looking to do, I get the impression that you are or at some point, you will launch an aggregator kind of service where people in essence can see all their accounts under their Avanza app. Is it so that this is something that you will launch throughout the year? Or is it very PSD2 dependent, meaning that most likely it's in 2018 that we will see bigger product launches in that area?
To a certain extent, we already believe that we now have some track of good sort of overall vehicle to serve our customers' economy when it comes to stock trading, when it comes to savings, funds, etcetera. And I think the answer to your question is that we don't believe in sort of big banks. We believe in continuous development. And as soon as we have something that is ready, we will launch it and talk about it, and we update our both the mobile platforms and the desktop platforms every 10 day. And we will do sort of continuous updates to this.
Recently, we have talked about the stock generator that was launched in January and the digital trading European stocks and now the CLO Corporation. And that is exactly how we look upon things going forward. But we don't believe in sort of one big bang, but rather continuous development.
Okay. And then just one last question in terms of costs. You have your guidance of increasing costs 15% to 20% year on year. Costs were up 13% now in the quarter. In terms of distribution over the year, will we see cost in Q2 reaching the kind of cost growth level that you have anticipated?
Well, I think you will see the cost growth grow more and more during the year as we are adding personnel and other costs to mean, we are adding costs on almost every cost line during this year. So I would say that you would see this growth coming during the year rather than having a full cost effective on a certain quarter.
Okay. And should we think anything around that, that could potentially mean that the cost growth is closer towards 15% and 20% for the full year?
Well, as we say, our guidance is 15% to 20%, so I think that's
Okay. Okay.
That's narrow enough. Okay. Thank you very much.
Thank you.
Okay. Next question is over the line of Nicholas Macbeth at DNB Markets. Please go ahead. Your line is open.
Thank you and good morning. Actually, I think most of my questions were already But trying again if you could give any more indication about the timing of the rollout of the Stabili Corporation. Should we think about it? Is that something you look to launch more towards the end of the year or before that? And also if you could give any kind of indication how much of this higher costs growth for this year, you're saying 15% to 20% for this year, how much of that is related to your cooperation with Stabilo?
Could you give any kind of mark around that would be useful? Thank you.
Thank you. Well, I think we already said that throughout the year, this year, we will get back to exactly what the offering would look like when it comes to the BLO Corporation. And we don't to we're working continuously with it. And as soon as we have something ready, we will talk about it. But since it's I mean, since it's quite a massive thing, it's a lot of preparation that needs to take place.
And in due time, we will get back to the timing. But right now, we leave it with some time during 2017. Then when it comes to the cost guidance, I think what we've said is that it's an overall effect of various things. I mean, it's user experience and new offerings. It's in new people, of course, both IT and regulatory people when it comes to compliance and revealed any detail on exactly to what project that is all about.
I think you have to view it as a total investment in our total offering.
Okay. I understand. And then second question. It seems like you're targeting now to offer your customers an overview of their whole economy and you want to be a service that could offer the customers the tools and interface to conduct most transaction since or through your own interface. Is that your vision?
Do you have a vision to maybe within 1, 2, 3 years be able to let your customers do all their transactions and banking services through Avanxo's interface?
I think we view ourselves right now as the sort of vehicle for your whole economy. I mean, we have you could trade stocks with NASDAQ and you could have your SPARC Contour SPARC Contour Plus, your savings account with us. You could buy funds from various sources. You could buy a lot of traded products that we are fairly come fairly long on we've come quite a bit on. You could transfer money when it comes to Trustly, and now we have communicated that we'll work together with Fabiello to mention a few.
So we already think that we have such a platform. And of course, we will continue to develop it. I mean, we just talked about Stabilo. Historically, we have developed a lot of new innovations. And I'm not ruling out that we, over time, will work with new type of offerings when it comes to different various types of payments and so forth.
If and when we'll get there, we will definitely talk about this. Up until now, we haven't really found a sort of Avanza way of doing it. In order for it to be on Avanza way, it needs to be much more cost efficient than the rest of the industry. It needs to be a wow feeling for the customer when they receive it. And we want to be 100% sure that it flies in all dimensions, not the lead regulatory wise.
When and if we will find a way to work with payments in such a way, of course, we will have a look at it. Right now, we are very much focusing on other side of the other thing to break new ground when it comes to mortgage loans.
Okay. Thank you.
Thank you.
Okay. We have a further question and that's from Ulrik Zetscher at Beringer Finance. Please go ahead, Ulrik. Your line is now open.
Yes. Hello.
I was just wondering because you mentioned 2 thirds of the visits to your site are now through mobile. Is that correct?
Yes. We have a look at the numbers here. We say that twothree of the visits now come through mobile devices. And we say that 50% of the new customers sign up through these devices. Yes.
Okay. Yes, because I didn't catch the 60% sign up. Great. But okay, yes, that's great. Thanks.
You're welcome.
As there are no further questions at this stage, I might just pass it back to you for any closing comments.
Well, I'd just like to thank everybody for listening in. It's been a great quarter for Avanza. We had a record strong inflow of new customers. We believe that all of our major KPIs have been developing in a good way. We launched a couple of new services.
And all in all, the focus on satisfied for listening in. If you have any sort of further questions or comments afterwards, don't hesitate to write me or Cecilia or Birgitte Mail, and we're trying to answer your questions as good as possible. And with that, I'd just like to say thanks to everybody and wish you a good day.