Ladies and gentlemen, welcome to the Nordnet Year End Report 2014. Today I'm pleased to present CEO Håkan Nyberg and CFO Jacob Kaplan. For the first part of this call, all the participants will be in a listen-only mode. Afterwards, we will have a question and answer session. Speakers, please begin.
Cool. Thank you. Welcome to this Q4 and year-end 2014 report presentation. I guess you've already read the report on the web, and we are happy about how the last quarter and then the full year turned out. Next slide, please. For the quarter, our revenue increased by 8% and giving us a profit after tax for the quarter, an increase by 26%. Together with the first three quarters, that took us to a revenue increase of 10% and as a consequence, a profit after tax increase of 18%. Next slide, please. The board of directors, they will suggest or propose to the AGM an increased dividend of SEK 1. You remember we had SEK 0.85 last year, and that's 63% of the earnings per share, which is in line with the policy that we have previously communicated.
During the quarter, we launched our new communication concept around transparent banking. We know that one of the frustrations with bank customers is the lack of transparency, and we're playing towards that theme with that concept. I guess some of you have seen the movies that we have produced, and they got really good viral spin, so we are happy about that. We also launched Shareville previously. Now we have over 30,000 of our customers having, as we say, made one or several of their accounts social. Those customers represent the savings volume of roughly SEK 10 billion. Shareville is an initiative to actually inspire our customers to increase their activity. It's also a means of attracting new customers. In the end, we are aiming to help our customers to become more successful in their savings and investments.
If they are successful, we will become more successful as well. Next slide, please. You who have heard me talk about our growth ambitions previously know that we have an ambition to actually grow double-digit when it comes to customers and net savings and create that growth in a sustainable way. If we look at the growth for 2014 in terms of number of customers, we are at least if we round off 9.6% to 10, we are at double-digit growth. We are growing in all four markets. In all four markets. In Finland, we're growing 13% in terms of number of customers, Denmark 27%, Norway 8%, and Sweden 6%. When we spoke one year ago, we said that we're happy about the growth in Finland and Denmark, and we know that we can grow faster in both Sweden and Norway.
Now we're growing faster in both Sweden and Norway, and we're especially happy about the turn in the trajectory of growth in Norway. We have with the launch of the Super Funds and also Shareville, we have kind of in a positive sense, shook up the Norwegian market and started growing at a higher pace. We're especially happy about that. Next slide, please. The same goes for net savings. We have an overall growth for the year of 12% roughly, which we are growing in all markets. The least growth we experienced in Finland, but I guess that is due to the not so good economic situation in Finland. Actually, when it comes to net savings and growth of number of customers, this year, 2015 has also started as the most years started in a very good way. Next slide, please.
Number of customers, number of active customers, and net savings, we call the long drivers. The number of trades or trades are one of our short drivers, which affects our P&L momentarily. Q4 has been a strong month with high activity when it comes to trading and especially October you remember the turbulence and that as a consequence gave us a high activity in our customer base. We have also seen that high activity in Q4 being carried over also in the start of this year, which is really good. Next slide, please. When it comes to our lending, our private loans business continue to grow. In the slide there, you can't actually see that we are growing the last three quarters, but if we look at on the decimals behind, you can see the growth.
Though we're growing a bit slower on the last half year of 2014 than we did in the beginning. Margin lending is actually down in the quarter. Previously, back in the years, we have seen a very strong correlation, but the index on the stock markets and margin lending. Index down, margin lending down. Index up, margin lending up. That correlation we haven't seen during 2014. We see a large potential when it comes to margin lending, and we are planning a product launch within that concept. When it comes to private loans, if I jump back to that, we've seen a slowdown in the growth, though we're still growing. The competition is fierce, both between lenders but also between loan brokers. We have now a strategy in place to continue to grow in a risk-controlled way. Next slide, please.
I hand over to you, Jacob.
Yeah. Thank you, Håkan. Revenue development. First let's take a look at quarterly trends for revenue and expenses. Then we'll look at the profit and loss statement and balance sheet for the full year in a little bit more detail. Starting out with revenues. Revenues for the fourth quarter of this year total SEK 284.5 million. That's a 9% increase compared to the third quarter of this year. As you can see in the slide, also an increase year-on-year. Compared to the fourth quarter 2013, the increase is 8%. We've had year-on-year top line growth each quarter this year, and for the full year, the revenue increase is 10% compared to 2013. Breaking down the revenues in this quarter, net interest income, that's the green part at the bottom in each bar.
It has been fairly stable around SEK 120 million per quarter, but it drops to SEK 114 million in Q4. We've spoken about the trends within the net interest income, I think each quarter this year. The trend has been increasing volumes offsetting reduced interest rates. The story is mostly the same also this quarter. The main change from Q3 lies within our bond portfolio, our treasury portfolio, which has been affected by the reduction of government rates, especially in Sweden and Norway. Deposits have increased some during the quarter, but not enough to offset the lower rates in the market. That's the big change quarter-on-quarter when it comes to net interest income. Looking at the other two components in the NII, our consumer lending business has grown volumes steadily during the year, about 9%.
Although, as Håkan mentioned, a little bit slower during the second half of 2014. Interest rates for consumer lending have held up and been fairly stable, even though there is some pressure on rates also there. The third component of the net interest income is margin lending, which has been a little bit up and down also as Håkan spoke to earlier in terms of volumes. We end 2014 at just about the same volume as where we ended 2013. Interest rates are a little lower also here, but nothing as dramatic as the drop in market rates for bonds. All in all, a drop in net interest income due to lower market rates. We also have to conclude that the low interest rate environment continues to create some headwind going into the new year.
Looking ahead at the current year, we will buy back our debenture loan, the first part in February and the second part in September. This will reduce interest paid by about SEK 7 million for the full year. Yeah, enough crying about the interest rate environment. On to something more positive. The blue part of the bar, it represents our commission income. That's made up of commission on trading and also includes commission from mutual fund fees. In total, commission income is SEK 134 million for the quarter. That's an increase of 22% quarter-on-quarter and 21% year-on-year. The increase compared to Q3 lies within transaction-related commission. It totals SEK 104 million for the fourth quarter, up 28%. That is of course due to the high trading activity as you saw in the previous slide.
Mutual fund fees have a slight increase compared to the previous quarter, have grown steadily throughout the year and are up 36% compared to the same quarter last year. A very good finish to the year when it comes to commission income, the high activity has continued into January, which is expected as seasonally January is always one of the best months of the year. Retail savers give themselves a fresh start and a new mandate for the new year. Concluding revenue, the orange piece of the bar there, that represents our other income, where the main part comes from FX transactions resulting from when customers trade outside their home markets. Trading in foreign markets follows the overall pattern for trading activity and has also increased compared to Q3. Other income also includes license fees for trading applications and some administrative fees.
Both of those During the year. I think that's revenue. Moving on to the next slide and a look at our cost development. Expenses total SEK 189 million for the quarter. This is in line with our guidance given at the start of this year where we said that expenses would rise a little bit and be in the range of SEK 180-SEK 190. As you can see in the slide, we have increased expenses during the year to this level. Looking ahead, the next couple of quarters, we expect to remain around the current level, meaning around SEK 190 per quarter, and that number is including credit losses as previously. During the year, we have increased our resources mainly in product development, our corporate pension sales team in Sweden, and also in IT development. We have continued to invest in these areas during the fourth quarter.
During 2014, we've seen the effect of this investment through product launches such as Shareville, the social investing network, and our fee-free index funds, the Super Funds, for instance. Our aim is to continue a high pace of development also during 2015, as Håkan mentioned, we will launch a couple of new things already in Q1, hope to speak more about those when we talk in a couple of months. That's it for cost development. We'll flip to the next slide, if we add the two previous slides together, we'll get this one, the operating profit. It's SEK 95.6 million for the quarter. That's up 27% from the third quarter and up 14% from fourth quarter of 2013. In many ways, Q4, a very good finish to the year. Next slide. Thank you. A quick look at our Nordic footprint for 2014.
We see that around 40%-50% of our business measured as either savings capital, number of customers, or revenue comes from Norway, Denmark, and Finland. The share of operating profit is lower, it's growing. It's around 20% of the total coming from the same three countries for full year 2014. The reason for the lower margins is mainly lower economies of scale. We operate all four countries from a joint platform where part of that platform is a fixed cost that is allocated evenly to all countries. Hence markets with larger number of customers will also generate better margins. The exception is the Danish market where it's our smallest market in terms of number of customers, it's the second most profitable.
The reason is that we do have a really good growth rate in Denmark, as Håkan has mentioned, and also the activity in the customer base is high relative to the other countries. We have, I think, more than double the number of trades per customer in Denmark this year compared to the other markets. Good development there. All right. We'll move on and take a closer look at the income statement on the next slide. Thank you. As mentioned, revenue for the three-month period October to December 2014 totals SEK 284.5 million. For the full year, the revenue amounts to SEK 1,086 million, which is an all-time high for Nordnet, beating 2011 by about SEK 1 million. Just barely, but still a record number. It's also a 10% increase compared to 2013.
The development of the different revenue items is similar year-over-year and quarter-over-quarter. Net interest income is slightly down as lower interest rates more than offset higher volumes. Commission income is up as trading activity is higher and mutual fund volumes also increased. Other income is up mainly due to FX transactions related to trading outside the home market. A similar story year-over-year and quarter-over-quarter. Moving down, operating expenses, we see an increase by 4% for the three-month period to SEK 178.4 million, and for the full year an increase of 7.5%. As we've spoken about, the main part of the increase is within personnel expenses which is within general administrative expenses. Increased resources related to IT and product development. Further down in the P&L, we get to credit losses. They amount to SEK 10.5 million in the three-month period.
That's up compared to a year ago. All the credit losses stem from the consumer loan portfolio and as the portfolio increases in volume, so do the losses. The loss rate however is around 2.2% and that's in line with our expectations. That's the full year number. It's slightly lower in the fourth quarter. Stable development there. That takes us to tax which amounts to SEK 15.5 million for the quarter and a tax rate of 16%. It's a little lower than the full year tax rate which is 18%. Profit for the period amounts to just over SEK 80 million or actually SEK 80 million and earnings per share for the full year, SEK 1.58, an increase of 18% compared to previous year. Moving on to the next slide. Balance sheet.
Here we can see that the total assets have increased to a little bit over SEK 50 billion at the end of December. The increase since the start of 2014 is related to increase in the deposits from the public which has increased our financial assets and also both liabilities and assets where policy holders bear the risk have increased. That refers to assets in our pension and insurance products. Total equity, SEK 1.75 billion. We'll discuss the capital situation on the next slide. If you The operators, thank you Our capital base, starting from the top here, our capital base is made up of shareholders' equity. We add on 80% of our debenture loan. Since we are under transition rules, we can't count 100% of the debenture loan, and during 2015, the loans will be included with 60%.
As I mentioned earlier, we are buying back SEK 100 million in February, but only 60% of the remaining SEK 75 million will be included until that is bought back in September. We will have SEK 45 million until September in the capital base related to debenture loan. We make an adjustment for prudent valuation. It is a new item under CRR, where we qualify for what is called the simplified approach, and that requires us to reduce our assets held at fair value by 0.1%. We deduct the proposed dividend of SEK 1 per share. That works out to SEK 175 million. We also deduct intangible assets. That brings us to SEK 1,270 million as the capital base. Risk exposure amounts have increased compared to one year ago, and mainly due to increased size of our bond portfolio and also some increase in lending volumes.
Total risk exposure is a little bit below SEK 8 billion, and that results in a total capital ratio of 16%. Looking at just the Q1 ratio, it is 14.2%, taking out the debenture loan entirely. Those percentages should be compared to regulatory requirement, including buffers of 10.5% for Nordnet right now. It will increase to 11.5% later this year when the countercyclical buffer comes into effect. You can say 11.5% is the regulatory level that we have. That was the end of my prepared notes. I will hand back to Håkan for some closing words, and we will take questions later on. Thank you.
Thank you, Jacob. The next slide, please. Going forward, we will continue to market and develop our social investing network, Shareville. We will make our occupational pension effort and our beefed up sales force productive, and I expect to see the results of that during this spring. We will continue to invest and build out our capabilities when it comes to innovation and IT. During the quarter, you can expect a product launch within the margin lending area and also new mobile apps. With that, we say that we are happy about how Q4 and 2014 in full turned out. Now I think we open up for questions, operator.
Yes, thank you. Ladies and gentlemen, if you have a question for the speakers, please press zero and then one on your telephone keypad and you will enter to a queue. After you are announced, please ask a question. I remind you have to press zero and then one on the telephone keypad. Our first question is coming from Mr. Staffan Åberg from Handelsbanken. Please go ahead, sir.
Well, thank you, and hi.
Hi, Staffan.
Hi. I got two questions for you today. Let's take them one at a time. Yesterday, the inquiry of MiFID II was published. What's your thought on that, and what do you estimate will be the result from an implementation of that into Swedish law?
If I knew. The whole idea of the legislation or regulation is actually to strengthen the consumer protection, and we welcome that. That is a good thing. It is a bit hard to understand because the Finansinspektionen, the Swedish FSA, will have a mandate to actually decide on what is allowed and what is not allowed. Well, I can't actually speculate in that, but we welcome consumer protection. We think that we have a strong position because we have distribution power, and we can come to an agreement with the other parties that comply with MiFID II and the Swedish implementation of that and protect our revenues.
Okay. Just follow up on that. Do you think we will see platform fees in Sweden?
I think it's too early to say, actually. We have seen platform or account fees popped up in U.K. as a consequence of this regulation, we can't actually know how the Swedish implementation will be. I don't rule that out.
All right. Great. My second question is concerning the DeGiro entrance into Sweden. What's your thought on that, do you fear price pressure?
Well, it is a price pressurer, right? Absolutely. A global one. When you look into their offering, it's very stripped down and very lean. We are not so worried about that putting pressure on the price of our offering. At least not right now. For instance, the majority of our Swedish customers, they do their savings within some kind of shell, whether it's an insurance shell, like a pensionsförsäkring or a kapitalförsäkring, or an investeringssparkonto. That's not part of the DeGiro's offering. Tax reporting is not part of that. It's not really comparable. Having said that, we were also once upon a time a uppstickare and entrants on the market. We need to follow DeGiro very closely and take measure understanding them, if that turns out to affect our customers, we need to take measures.
They launched in Sweden a week ago or something. They launched in Denmark four or five weeks ago, and we have not had any or felt anything with our customers or any effect in the market.
Okay. Thank you, Håkan.
Thanks, Staffan.
Thanks, Staffan.
Our next question is coming from Mr. Rickard Henze from Nordea Markets. Please go ahead, sir.
Questions. Firstly, if we look at the geographical development during Q4, what stood out compared to our estimates at least was that Norway developed very strong, both in terms of activity but also in terms of underlying growth. Is the development we're seeing in Q4 driven by something special or?
It was a bit hard.
Sorry.
A bad line there actually. Could you take the question once again, Rickard, please?
Sorry. I'll try again. Norway Q4.
The development in Norway.
Yeah.
Q4. Is that a one-time effect or what's behind that? That's how I interpret the question.
Exactly.
No, the product launches that we did with the Super Funds and also Shareville, that has actually made an impact in all markets, but maybe the market where we saw the most positive impact was Norway. The growth that we experienced in Norway in Q4, it continues, carries over actually into this year. We are very optimistic about Norway.
All right. Secondly, on the net interest income, can you give any indication what you think about the development the upcoming quarters, or if you have any mitigating actions to reduce the impact from the falling interest rates?
Well, like I said, there is several moving parts. Previously during the year, we've had the increase in volumes which have offset the development in the interest rates. Looking ahead at the next quarter, rates continue to go down. When it comes to the bond portfolio, I think we will see pressure there also at least in Q1. The other products, as I mentioned, more stable. In terms of mitigating actions, I think one is we have a product launch in the margin lending area with some new packaging around that which we think will be a product that can help volumes in that area. It's hard to say. I don't have a firm forecast for Q1, definitely still pressure in the bond portfolio.
All right. Finally, have you made any more progress in the termination with the cooperation with Söderberg?
Just last word.
Sörberg.
Oh, with Söderberg. Oh, thank you. Well, progress, yes. As we spoke last quarter, Söderberg will leave with part of their business that they have with us. We are right now working with them in order to do the transfer of customers in a structured way. I think the first run will be sometime in March, then we'll do a second run sometime before summer, and it will be at a couple of fixed dates. As we said there, we'll communicate how that impacts our flows in our monthly press releases. I think March will be the first batch.
Any updates on the impact or if your assessment the same as when you press released the news?
No, I would say no change there. It's no new information. As the year goes on, we'll of course know more on what the actual volumes are. Still, the reason for the broad 25%-50% range is that ultimately it will be the customers who will need to agree to move. We'll see how that comes out, and we'll come back to it continuously throughout the year, of course.
All right. Thank you very much.
Thank you.
Thanks.
Thanks again.
Ladies and gentlemen, I remind you, if you have a question, you have to press zero and then one on your telephone keypad. Our next question is coming from Mr. Nicolas McBeath from SEB. Please go ahead, sir.
Hi, Håkan and Jacob. Most of my questions have been asked, but
On the competitive situation in retail brokerage. You are quite well above some of your competitors in terms of pricing and rates, including all the new ones. Do you think your current brokerage pricing is competitive at the moment, or do you think there's a need to cut rates in order to remain credible in the value-oriented segment? Thanks.
Yes, definitely we're always looking at our pricing and wanting to keep that accurate and relevant. During the past couple of months, we have seen some shifts, and especially in Sweden, where some of our competitors have announced changes in pricing. We're naturally looking at that as well. There you can say in certain segments, I think our pricing is absolutely competitive. As a whole, it's a topic right now for us. We'll come back when we have anything firm to say around that. You're right in observing that there has been some changes in the pricing structure among competitors in Sweden.
Should we expect changes to your pricing early this year, or could you give any more indication of that?
Not right now, really, apart from what we've just said.
Okay, thanks.
Ladies and gentlemen, I'll remind you, if you have a question, you have to press zero and then one on your telephone keypad. We have no further questions, back to your speakers.
Thank you. With that, if there are no further questions, thank you for listening, guys, and I'll see you somewhere around soon. Thanks a lot. Thanks, Lukas.