People, welcome to this Nordnet Q1 interim report. We've seen a bit mixed performance in this quarter. I am really happy about the customer growth. We experienced a 13% year-on-year or 12-month customer growth. I'm super happy about the volume growth that we see in our lending products. It's like 20% on a 12-month rolling. We have also seen that the decrease in net interest income we have experienced over the quarters previously due to the increasing lower interest rates has actually flattened out. That is really good. I'm also happy about the net savings. If we exclude the Söderberg & Partners outflow, it's 9%, which is decent, and it's been a high activity in the market, where lot of exciting things has happened, we have also seen effects of our previous customer growth.
We also see a lower net commission per trade, that is due to the price change we did in the midst of last year, also different trading behavior. That gives us a pressure on revenue. Could I have the next slide, please? Revenue compared to Q1 2015 decreased by 9%. As a consequence, profit after tax decreased by 34%. We will dig deeper into the effects and the consequences and the reasons for that later. Next slide, please. Some highlights from the quarter. As I said, large fluctuations in the market and high trading activity. We see a steady growth of our personal loans business here in Sweden. The market growth is roughly 1%, and we are growing double digit with capped risk level, which is really good.
We launched the mobile app for Shareville for iOS. The Android version is coming out soon. We have carried out Nordnet Live in Stockholm as we have done four years back, also for the first time, we did Nordnet Live in Oslo. Actually, that has been the biggest savings event ever and really successful. Two things after the reporting period. We launched a mortgage aiming low, that giving us here in Sweden the best loan portfolio by far. Now we have a personal loans from interest 295. We have our Knockout loan, 0.99%, and now a mortgage, 0.79%. That's unbeatable. We have also launched an initiative, Nordnet Ventures. I will come back to that, we will launch that externally coming Saturday on Startup Day at Münchenbryggeriet. Next slide, please. Skip two slides to customer and accounts, please.
Yes, there it is. Customer growth, 13%. We have the highest growth in Denmark, as we have had the last couple of years, 34%. In Norway, 13%, Finland, 14%, and Sweden, 8%, which is decent. As we have said previously, we are focusing, we know that we can grow faster in Sweden. 2016 is the year that we shall show that. Next slide, please. When it comes to net savings, our other long driver, we are growing by 9% if we adjust to Söderberg & Partners, which is decent, we can grow faster. In Denmark, we are growing by 30%, in Norway, 20%, Finland, 2%, which is low, given the market conditions there and our historical performance and the nature of that market, it's actually quite good. Q1 is really good for net savings in Finland.
In Sweden, we have a growth of 5%. Again, we know we can do better there. Next slide, please. There you see we have the highest activity ever when it comes to trading, and that is good, and it seems like it's picked up also the last couple of days. It's impossible to actually forecast that, the market sentiment. Next slide, please. Here you see the lending, and as I said, it's a 20% growth year-on-year or 12-month rolling period. Growing both the personal loans and our margin lending business. Next quarter, we will add one bar to this slide, namely with the mortgage. Next slide, please. By that, I hand over to you, Jacob.
Thank you, Håkan. We'll go to the next slide. We'll start by looking at our revenues. Revenues total just over SEK 300 million for the first three months of 2016. That is 8.5% lower than the same quarter of 2015 and 7% lower than Q4 of last year. Despite the number of trades being up 20% year-on-year and by a couple of percent from Q4 as you saw on the previous slide, net commission income is lower in Q1, totaling SEK 153 million. The reason being lower net commission per trade. Net commission per trade is SEK 21 per trade in Q1, down from SEK 23 per trade in Q4 and SEK 27 per trade in the first quarter of 2015. A couple of factors contribute to this development. Year-on-year, the main reason for the drop is the new price plan introduced in Sweden in Q2 of last year.
Also compared to Q4, there are some lingering effects of the new price plan. When we launched the price plans in June last year, our estimates were effects on net commission per trade by SEK 2 to SEK 3 from a level then at SEK 25. The effect has been slightly larger than first expected, also trading patterns have changed as we see lower trade size during Q1. Even though number of trades is up, the traded value is not up by as much. Markets have had a bumpy start to the year, and the lower trade size is likely a sign of lower risk appetite and something that will vary over time. In addition, contributing to the lower commission per trade is a customer mix favoring the lower commission tiers.
Also in commission income are our fees from mutual funds, also here a drop of about 10% compared to the previous quarter as fund volumes during the quarter have decreased. All in all, this makes for a weaker quarter on net commission income. On a more positive note, our net interest income increases if only by SEK 1 million, still an increase from the previous quarter. It's the first quarter since the second quarter of 2014 that the NII is not decreasing. As Håkan just pointed out, we now have a portfolio of the best products in the market in personal loans, in mortgages, and also margin lending. Mortgages were launched after the end of the quarter, for both margin lending and personal loans, we continue to see good volume development during the first three months.
Rates are slightly lower, but reduction is offset by the higher volume in both products. Expectations on increases in market rates are still one to two years out in most analysts' expectations. We see no quick turnaround in NII, but possibly we have seen a bottom here. The largest part of other revenue, the yellow bar at the top, is the result of FX transactions when customers trade outside of their home market. Other revenue totals SEK 47 million in Q1, and we have seen a reduction in trading outside the home market as a consequence of lower risk appetite. I will remind you also that Q4 includes SEK 10 million related to fee sharing from the Danish CSD in this revenue item. We will see the first part of that fee for 2016 in the second quarter, that is not included in the first quarter.
Still adjusted for that, other revenue is down SEK a couple of million compared to Q4. Also there, some effect of the changes in trading pattern. To summarize revenue during the first three months, we see stabilizing development on NII while net commission is clearly pressured by the new price plan and the change in trading pattern with smaller trade sizes. Moving on to the next slide. We will have a look at our costs. Expenses including credit losses amount to SEK 212 million for the quarter. It is on the same level as the previous quarter and in line with our guidance of an increase for the full year of 6%-8% compared to 2015. As we have spoken about previously, the increase in cost base is mainly related to continued investment in IT and product development.
We believe these investments are needed to maintaining our high pace of development and continue to improve on our long-term drivers of growth. Still, as we just covered revenue and you saw it is down both year-over-year and quarter-over-quarter, should we see continued negative market development, we will have to review also our outlook on expenses, but no change on that at the moment. Our guidance stands at 6%-8% cost increase compared to previous year. Moving on to the next slide. Operating profit for the quarter is SEK 89 million. It is lower by 34% compared to the same period last year and also down from the previous quarter by 21%. Lower numbers there. Next slide, please. This slide shows our business across our four markets, and today you can see roughly 50% of our business comes from Norway, Denmark, and Finland.
Right now more than half of Nordnet's customers reside outside of Sweden, truly a Nordic operation. Looking at the operating profit share from Denmark, Norway, and Finland is increasing. For Q1 the three countries make up 43% compared to 19% during all of 2014. We saw that increase also during last year, and it continues in this quarter. We have a strong position in all markets and can continue to grow from that. We will go to the next slide for a closer look at the income statement compared to the previous same period last year. Thank you. Next slide there, yes. Revenues for the three-month period January to March 2016 are SEK 301.5 million, and that is 8.5% lower compared to the same quarter last year. We covered the main reasons for the decrease in the quarterly trend slide, I will not go over that again.
Moving down to operating expenses, we see that there's an increase compared to the same period last year of 12%. The increase lies within general administrative expenses, which includes personnel, and also within other operating expenses, which include marketing. During Q1, as Håkan mentioned, we've run two of our larger events during the year in Nordnet Live, both in Stockholm but also in Oslo this year. We have also put some extra marketing effort in Sweden compared to last year. Moving down to credit losses, they are all that's SEK 8.3 million for the quarter. It's all related to our personal loans business. That's our unsecured consumer lending. It's a good level given that we continue to grow the portfolio. Our loss rate is now around 1.6%. Tax rate for the first quarter is 19.1%, totals SEK 17.1 million.
Profit for the period, SEK 72 million, giving us an earnings per share of SEK 0.41 for the rolling 12-month period, earnings per share at SEK 1.84 per share. Next slide. There are no big changes to our balance sheet in this quarter. Total assets have increased some since one year ago to SEK 61 billion. Increase is mainly a consequence of deposits from the public increasing, also increasing assets and liabilities for policyholder risk, meaning our customers' assets in pension insurance products. Increase in deposits have affected financial assets available for sale and also financial assets held to maturity. Both those items refer to our liquidity portfolio. Also loans to the public increase since the end of Q1 last year, as you saw in earlier slides. Shareholders equity, SEK 1 billion, 958 million. On the next slide, we'll see our capital requirement.
As you may have seen in the report, there are some changes as to how capital requirement on the conglomerate level is reported. This is due to Solvency II, which has now come into effect. However, here we focus on the consolidated situation as that is where CRR regulation with capital requirements and buffers and so forth primarily affects us. Starting with our capital base, it's made up of shareholders' equity. We have not audited this report, so deducting profit for the period, also the proposed dividend and intangible asset, it brings us to a capital base of SEK 1 billion, 150 million. That's an increase compared to one year ago, even though we have bought back our subordinated debt since then. Risk exposure amounts slightly higher compared to one year ago.
Lending has increased, a little bit offset by lower risk weight in the bond portfolio. Total exposure, SEK 7 billion, 586 million. That results in a total capital ratio of 15.2%. So within the range of 14%-16% that we have communicated as a target for our capital ratio. That was the end of my prepared remarks. I'll hand back to Håkan, we'll take questions after that. Håkan, over to you.
Could we take the next slide, please? The next one, the one that says Sweden's most attractive lending products. Lending is important for us, every NOK, SEK, DKK, or EUR we can lend will give us a better situation than holding it in the liquidity portfolio. That is one of the reasons we are launching the mortgage. As I said, now here in Sweden, we have the best loan portfolio or loans offering in the market with the personal loans from 2.95%, the Knockout loan, the margin lending product from 0.99%, and now the mortgage from 0.79%. Next slide, please. What you can expect from us, we will stick to our strategy and execute on that. The growth strategy is very simple.
Super happy customer that recommends us, make maximum buzz in the market around savings so more people know about us, create awareness about Nordnet, and then we fuel that with coming out with good things for our customers. As I've said, now we launched mortgage. 2016, we will focus on the user experience, we will continue to invest in IT and product development by taking out costs from not so value-creating parts of the business and reallocate that to IT and product development. You know also that we have launched an initiative, Nordnet Ventures, which aims at collaborating and partnering up and also making it possible to invest in fintech startups. That plays also to coming out with good things for our customers at a higher pace.
Even though we are building out our capacity to do so and manufacture the things for ourselves, whether it's the user experience or new products, we have a higher ambition than that. Launching Nordnet Ventures plays to that so we can have other people building good things for our customers. When we think about that, it's not only good things for our customers, it could also be technology enhancing our platform. With that, I end there and open up for questions.
Ladies and gentlemen, if you have a question for the speakers, please press 01 on your telephone keypad. We have Peter Wallin from Handelsbanken registered for a question. Please go ahead. Your line is open.
Thank you, and good morning.
Hi, Peter.
Hi. I would like to start off with a question you touched upon already about seeing some kind of early signs of a risk appetite returning. If you could give some color of that, if it's general activity levels or if you're seeing the trade size per note going up or anything in that area.
Well it's just that we have seen some higher activity now the recent days than we actually saw in the recent weeks. That doesn't really say anything, so we don't base any forecasts on that. Anything could happen as we speak, right?
Yes. I think I can add to that. As we saw in our press release, March was a slower month activity-wise. Now we're coming into the report season, normally we see a little bit higher activity then. I think it's really these next couple of weeks determining a little bit the sentiment for the coming period. We'll see these things change quickly, based on what we saw in March, definitely lower risk appetite. Then we'll see where we come out on the other side of the report season. I think that's what we can say.
Okay. Thank you. I guess sticking to the topic, if I interpret your communication correctly, it was also like a negative mix effect in Q1 when very frequent traders with very low-fee deals constituted a larger share of trading activity. When you've had this kind of risk appetite going down, how quickly are normally the not equally active retail clients to come back?
I'd say it varies. From time to time, you see sentiment swing quite quickly, Other periods it's maybe taking a few months. We don't really have an answer for that, actually. It's fairly normal what we see now. When the market is a little bit more sluggish and maybe goes sideways As we saw quite steep drops in the beginning of the year the more frequent traders stay in the market, whereas the broader parts of the customer base become a little bit more cautious at those times. I think it's a lot determined on how market develops in the next couple of weeks, months.
Okay, great. Thank you. Then changing topic towards your most recent initiative on mortgages. Do you have a cap for how much you can take in here? Also in terms of do you think this will make a very clear footprint in the reported new clients coming into you, or is it mainly about getting a higher share of wallet of existing clients you already have?
Yes. Two parts to the question there. I think in terms of the cap, we've not communicated a firm cap, but the range that we're comfortable with is about SEK two and a half billion at this point. Then we'll see what the take-up is. Around SEK two and a half billion is the frame we're looking at right now. The initiative, of course, it's open both for new and existing customers, and naturally, we hope to attract more customers with this product in our offering. I think it's been a good start. We'll include the volumes in the monthly press releases that we send. You'll be able to follow that as we go forward.
I can add on that. It's aiming at the private banking customer segment. We expect new private banking customers coming to us, also that will boost or help out on the net savings side. The start that we have experienced now starting on Monday has actually exceeded our expectations. It looks bright.
Okay, great. Thank you. Then a final question on your consumer lending operation, which is obviously offering good resilience on income and on profits in a quarter like this. Could you comment a bit on the competitive pressure there now we're having even more of similar operations coming to the market? Also if there's any chance that you might expand this operation geographically.
Yes. Let's start with the competition. It's fierce, I think is the right way to put it, right? It's underpinned also by the pop up of even more loan brokers. Fierce and that puts pressure on interest levels. We can see other actors taking more and more risk. I've said it before, it's the easiest thing in the world to grow a business like this. It's only to take on risk. We are not doing that. We are actually seeing lower risk in the portfolio, still we can grow. That is because our analytical capabilities. We can target the right customers and select the right customers from the loan brokers, in our direct marketing efforts as well.
The second part of your question there, Peter, on the geographic expansion, we've talked about that previously, and it's something that we've considered and looked at, but we've chosen not to move ahead at the moment, and no change on that right now. Definitely we're keeping that option open. It's definitely an option in the future.
We're not working now, but we're not ruling it out for the future.
Okay, great. Thank you very much.
Thank you. Our next question comes from the line of Ricard Hellman from Nordea. Please go ahead. Your line is open.
Yes. Hi. I just had one question regarding the pressure on income, commission income per trade. As one of the main drivers for this are clients converting to different pricing plans that is more favorable to them, have you seen any trends or trend shifts in the number of clients that is converting into different price plans, or is it more or less stable quarter-over-quarter or month-over-month?
Hi, Ricard. It's not stable, I would say. We've seen a continuous shift in that since the fall and also continuing into Q1, and that's when we've said some lingering impacts of the new price plan. I think one of those is that it's easier now for customers to switch between plans, and that was an intended feature, but it was hard to exactly forecast how much of that would take place and how that would happen. I think that's part of the reason why I'm saying that the effect is a little bit higher than what we thought almost one year ago. Yeah, that continues to vary.
Just to be exactly clear, we should expect that this conversion continues, which means that it's fair to assume that the commission income per trade will continue to decline going forward, all other things being equal?
I think all other things being equal, you could say, but they won't be equal. One of the, what will determine net commission per trade is also how will the trading pattern vary, and if the market were to increase, I think in the past, we've seen trade sizes go up a little bit, and then that's got an effect. We don't have a firm forecast on the net commission per trade. The dynamic I think will continue, that customers will continue to switch to different price plans depending on how they see their trading pattern.
There is no plan to limit the possibility to change pricing plans, say like once a quarter instead of once a month or once a year or something like that?
Those are options, there's no intention to do that right now.
Have you seen any examples of clients moving frequently back and forward, or is it just adjustments since you changed the pricing plans since last summer?
More the latter. It's more that once you see that there are the new price plans, and then you make a choice, and I think you maybe adjust your trading pattern a little bit more to the new price plan than what we had in our original models.
Okay. The effect or the impact should decline even though it would still be negative going forward?
That's Yeah.
Okay. Thank you very much. Thanks.
Thank you. Our next question comes from the line of Nicklas Fhärm from SEB. Please go ahead. Your line is open.
Hi, good morning. A couple of questions. You've talked a lot recently about really trying to ramp up the growth in Sweden. In the quarter, I think you only added around 5,000 new customers in Sweden. When do you expect to see this initiative and this effort to result in higher growth figures in Sweden?
Well, as I said, we expect to see that within the year 2016. We're doing a lot of things right now. As you can understand, there's no silver bullet that we can shoot out and that will solve everything. We're doing a lot of things, and I can't give you any better prediction than within the year.
Okay. Secondly, also on Sweden, on net savings. I think you've had now outflows from Söderberg around SEK 9 billion in total, and you write in the report that there is a total of SEK 15 billion left from Söderberg, of which half could be subject to transfer. Just to be clear, does that mean that there is a risk or that you expect maybe around SEK 7 billion-SEK 8 billion in more outflows from Söderberg & Partners from here?
Yes, that's correct.
Difficulty in predicting the exact number here is that, as we've said before, the process is that Söderberg, they are having face-to-face meetings with their customers and agreeing upon that. Ultimately, it's the customer who needs to make a choice. It's difficult to exactly know that. Our forecast, jointly we set the SEK 5 billion-SEK 10 billion when we started out a little bit more than, or just about a year ago. We're now seeing that roughly half of the 15, so 7.5 is the estimate at the moment. Also just reminding you that the revenue impact from that outflow is less than It's a low margin savings capital for us. You're correct. We'll report that in the press releases as we have during this year. You'll be able to follow that.
What is the reason that the outflows have been so much larger than you first assessed? Do you think there's a risk that actually everything could be transferred? Also finally, is there other similar corporations, albeit smaller, that you also see similar risk of outflows coming from here?
To the first part of your question there. Part of that 15 is in insurance products, corporate pensions and so forth, which are not subject to be moved right now. Söderberg has not built that infrastructure at the moment. Going forward, long term, we're not ruling that out. That's more a question for Söderberg, how they choose to build their infrastructure. We haven't seen any other partners choosing to go that direction, building their own back end. I think maybe the trend, if there is one, is probably in the other direction, that different firms choose to focus on a part of the value chain.
It's nothing that keep us awake at night, actually. Again, to Jacob's point about it's a low margin savings capital that is moved out. The thing is that we get some disturbances in the stats for net savings, but that's about it, I think.
Okay. Then just finally on the timing of this additional seven and a half. Do you think those will be transferred during this year or will it be more like over a couple of years?
I would expect the majority to be during this year. I haven't seen the exact timetable, but we'll do the same as this year. We'll schedule a couple of transfers at certain dates.
Okay.
I would expect the majority this year.
Yeah. Then on mortgages also, could you give us the cost of administrating these mortgages, and is that cost included in the 6%-8% cost guidance for you?
It's included in the 6-8. That's included in our cost guidance for the year.
Could you give us the cost of administrating the mortgages?
No, we haven't broken that out as a separate product.
Okay.
Just to comment on the profitability on the product. It's low risk, of course, as you understand. We're targeting private banking customers. They have savings with us, loan to value maximum 50%. Also the fact that they have other collaterals with us gives us a really good return on equity on that product. It's even though low interest rate, but high return on equity.
Finally on Nordnet Ventures. If you could elaborate a bit on that. What kind of potential do you see? How do you view the venture compared to doing own in-house development of new fintech products? What kind of fintech companies do you currently see the most exciting potential from a Nordnet's point of view?
The idea, we usually use Shareville as an example. That was a Swedish startup, we stumbled over that and got interested, we bought parts of it. We kept the entrepreneurs. We rebuilt the thing from funny money to real money and from Sweden only to a Nordic service. Now it's super successful. What we are adding to the table is our infrastructure, our brand, good guy brand. We're adding our competence around risk and compliance, of course, half a million of customers. We believe that we should be really interested for fintech startups. Of course, we're not building a venture capital firm here. The base is a corporation, that they can provide good things for our customers. We are able to invest in them.
We are not building a vent cap fund, we are driving that as a separate part of the business. Of course, savings and investments are core. Different type of guidance tools would be super interesting. Also stuff that could enhance our operating platform, actually. Again, we will launch that on the Startup Day at Münchenbryggeriet on Saturday, I will be there myself, it'll be really fun.
Okay, thanks for all the answers.
Thanks.
As there are no further questions, I will return the conference back to you guys for closing comments.
This is Johan Hallén working with communications at Nordnet. We have some questions on the web as well, which I will read out now. You touched on them, so I will summarize them. Could you please briefly summarize the most important factors between the commission drop from 27 to 21?
Sure. We covered that briefly earlier. The biggest change year-on-year is the new price plan in Sweden. That's the majority of that change. Also, some effect in the other markets from the change in trading patterns, and that meaning that the trade sizes are smaller, which affect the commission per trade. Those are the two main things, really.
Yes.
Yeah.
On the SEB subject, is the effect bigger than what you anticipated in 2015 when the decreased cooperation was announced?
Yes, a bit, actually.
Our reasoning was then they had roughly SEK 20 billion with us. Half of it was in investeringssparkonto, and I think half of it in insurance products. As Jacob said, they have not, at least not yet, built an insurance infrastructure, but only for investeringssparkonto. We forecasted that they would move all the capital in the investeringssparkonto. Obviously, I think what is happening behind the curtain is that they move from capital endowment, savings from capital endowment to investeringssparkonto, and then making that movable, so to speak. Again, we're not sleepless over that phenomena.
Very good. On the cost side, why is your cost structure still growing? Whereas the message in 2015 was more on a stable cost structure. Jacob.
Yes, I think we haven't really said stable. I think we had guidance during last year of increase between 4% and 6% compared to the previous year, and we ended up a little higher than that, around 7%. For this year, we've said 6%-8%. Cost increase is in line with our expectations. The reason for it is during last year, it was the investment in IT and product resources which continued during this year. During last year, also the build out of the corporate pension sales force in Sweden and also some added resources in our analytical customer data analytics team. That's the reason behind the increase. I should also add which we covered last quarter, but volume on the platform is significantly higher during these two years. That's also driving some of that cost increase.
Not all of it, but a little bit. Those are the reasons. I think costs are. Going forward, as I said, we're keeping the 6%-8% guidance, but naturally we see that if we see a continued pressure on top line and the market development that's not positive, we will reevaluate that and have to look at that again, of course. For now, 6%-8% for 2016.
Very good. The last question from the web is about Nordnet Ventures. You talked about what kind of fintech startups we will invest in, Håkan, the savings, the guidance on the platforms. Could you say something about how much we will invest through Nordnet Ventures?
No, it's so case driven, but we want to do it at an early stage. Because we believe that we can provide the most value in a partnership at an early stage. We have said to ourselves, let's do two to three investments during this year as a kind of rough number, and then we have something to evaluate in. We don't have a big waterfall plan on this. We're trying to be agile. Two to three investment at early stages in fintech startups.
Yes. Maybe just to add to that, I think we see that our contribution in a partnership like that could be our knowledge of the market, our access to our customer base using our APIs.
Yeah.
Right. Thanks a lot. That was all the questions from the web. Back to Håkan for rounding off the call.
I think coming back to the ventures thing, we will also keep you informed in these calls and in other ways of how we are progressing in that initiative. If there are no other more questions, thank you very much, and I guess we will be in contact with a lot of you the coming days. Thank you very much for listening in.
Thank you.