With me here today, I have our CEO, Lars-Åke Norling, and our CFO, Lennart Krän. Lars-Åke and Lennart will start off by presenting the quarterly results, and then we will have a Q&A session. During the presentation, all participants will be on mute, and then when it comes to the Q&A session, you have two alternatives to ask questions. You can either click the button at the bottom of the screen that says Raise Hand. I will then unmute you and call your name. You can also submit a question in writing through the Q&A button. Just write your question, and then I'll read it out loud. I'll go through this once again before we start the Q&A session. The presentation itself is available on our corporate website, nordnetab.com. Let's start the presentation. Lars-Åke, please go ahead.
Thank you, Marcus. We can go to next slide. We're starting with the key highlights for the quarter, and this continued uncertain macro environment that remains an overhang on trading activity. We have now more than nine months of negative markets, and the customers are uncertain about the direction from here and thereby trading less. Despite this uncertain macro, we have had an overall strong quarter with revenue profit in line with quarter three 2021. We see then a reduction in trading revenue is compensated by higher net interest income revenue. Also a good customer growth and positive net saving considering the circumstances. Costs are slightly higher in the quarter, but we expect to be in line with guidance for the full year.
We also see now really net interest income revenue kicking in with the 77% increase year-over-year. We also have, as you know, very positive interest rate sensitivity going forward, and we set to grow net interest income significantly in 2023, and we will cover that more in detail later. We also launched a mortgage for private banking in Norway, and that's an important milestone to be one-stop shop in all markets. We also have introduced savings account with interest rates and also promoting the fixed income products for customers that want to save with a lower risk profile. Go to next. Short on financial highlights, we have an underlying customer growth of 12% year-over-year. Savings capital is slightly down due to, of course, the negative markets.
Number of trades is down 16% year-on-year, and that's due to like I said that the customers are uncertain about the direction from here and are trading less than normal. Revenues is slightly up than quarter-on-quarter or year-on-year, sorry. And that's we have a slight down on trading revenue, but that's compensated by a higher net interest income. And as you know, there was a one-off of SEK 10 million impacting other income negatively, and that's due to withholding tax for dividend on international shares. Underlying the revenue was SEK 10 million higher. Operating expenses a little bit higher than year-on-year, and that's partly due to marketing.
We have higher marketing cost of our allocation funds that we launched during the summer in quarter three. We expect to meet the full year guidance on cost. An operating profit aligned with the last year, and due to still good cost control, and we see the full year profit now is SEK 1.5 billion. Go to next. Of course, the negative market climate has impacted growth in customers and net savings. Considering the circumstances, we anyway have a good inflow of customers. We have 35,000 new customers in the quarter, and we also have a good net savings of SEK 6 billion in the quarter, even though we were slightly negative in September.
We can go to next slide showing a little bit more in detail the net savings and the net flows. As you see on the top part of this graph, the inflow from our customers on to our platform is stable since quarter two, around SEK 3 billion. It's a little bit down from quarter one due to less customer inflow due to the markets. But we see in September is a higher outflow from the platform that's mainly private banking that some bigger customers has left the platform for a higher yield. We're confident that it will turn back when the market turns again because ultimately our customer base want to invest in the stock market over time.
As you know, we also introduced now rates on a savings account to also keep customers on our platform. You see in the bar graph to the right there that the net flows in September was positive for retail, but then negative for private banking and for some of the big partner customers. Can go to next. We also benefit highly from the geographical diversification that's de-risking our business model. If you look at the market development, it's been by far worse in Sweden with the stock market down with more than 30%, whilst Norway is only down 8% and Denmark and Finland somewhere in between. We see that both the savings capital is more maintained outside of Sweden, and we also have higher customer growth outside of Sweden.
Sweden is, of course, due to the very negative market here, most impacted, both on customer growth and savings capital. Go to next. We have a good diversified and resilient revenues. We see now a drop then in brokerage revenues is then well compensated by an increase in net interest income. If you look at the graph down to the left, you see also that we have a stable year-on-year growth in all the revenue streams since 2019. The 25% CAGR on net interest income, 23% CAGR on fund revenues and around 40% CAGR then on the brokerage revenue. If you look at the graph down to the right, you see the margin for each revenue stream.
On top there is a margin for deposits. That's going up quite a bit, and that is due to the increased interest rates, and that will of course continue to go up in the coming quarters. In the middle line, there is the margin on brokerage assets, and that's going down due to less trades per customer. The fund revenue is also slightly down due to a mix shift from active to passive funds and also a little bit less trading in foreign funds where we earn FX. We're gonna cover now each of the revenue streams more in detail, starting with net interest income. We can go to next, Marcus.
We see that the liquidity portfolio will generate around SEK 1.4 billion in 2023, assuming the volumes we have in the liquidity portfolio per country in Q3 2022, and also the credit spreads and the market consensus on IBOR development as we also see in this graph. This is not accounting for deposit rate we pay to customers, so I'll come back to that later. But if you look at the graph to top left, we have SEK 90 billion today in deposits. Twenty-six billion of those we lend out, and 64 billion is then in our liquidity portfolio. You see as the graph in the middle on the top here the yield on the liquidity portfolio has been very low.
It starts picking up in quarter two, higher in quarter three, and it's gonna increase further in quarter four and giving the full effect into then 2023. We go to next. This is the loan portfolio, the SEK 26 billion, and that's assumed to generate SEK 900 million in 2023. This also assuming then the quarter three volumes, but also the interest rates we see now in September 30 for mortgages versus and also the increase we had in October 1. Also here, not accounting for deposit rate we pay to customers. If you look at the volume here in the graph upper left, we are stable on the volume for our personal loans from SEK 4 billion.
We have growth in mortgage up from SEK 8 billion a year ago to SEK 10.6 billion now. We've been fairly stable on the margin lending in spite of a negative market climate, a little bit from the latest quarter, but year-on-year is fairly stable. We see then with the higher interest rates in the market, we see a pickup of the revenue from the lending portfolio, SEK 190 million in the quarter and estimated to be SEK 900 million with assumption as above in 2023. Here we of course have a potential upside. We will see higher interest rates, and we will pass through some of those rates also to the customers. Hopefully we also see some higher lending volumes overall.
Looking at the pass-through rates so far, we have passed through 90% of the interest rate increase to the personal loans, 40%-100% on margin lending, where we're 100% in Finland, 80% in Sweden, 40%-50% in Norway and Denmark. Mortgage, we passed through 100% both in Sweden and in Norway. We also have a lending portfolio with low risk. The loan-to-value is fairly low, 25%-30% on margin lending and 45% on mortgage. As you know from before, we have also very low credit losses, virtually nothing on mortgage and margin lending.
The realized profit on consumer lending or private loan business is as expected, but a little bit higher on the provisions due to IFRS 9, and taking inflation and unemployment into account. The consumer loan business is low risk. It's around 5% yield on that portfolio, which is a low-risk portfolio, and the credit losses overall are fairly low. We can go to next. As you know, we also introduced savings account with deposit rates, and we have now deposit rates in Sweden and in Norway. Of course, what we wanna do is to balance interest rates versus outflows from our platform.
We monitor this on a daily basis, both what's happening in the market, but also what happens on our platform when it comes to flows. So far it's fairly limited amount on the savings accounts. It's around SEK 2 billion, but this might of course increase over time, with yield on the accounts. We will of course have to come back to present more in detail in the coming quarters how the development in the savings accounts will look like. You can go to next. That was the net interest income. Shortly about the fund business, which is a key strategic focus area for us. We launched a new fund company during the spring. We launched our new allocation funds that have been well received.
funds overall is both important to attract the broader saver segment, but also very important for our pension business. Looking at the fund capital, of course, it's taken a hit due to the market. We see in our Nordnet funds, where we have currently SEK 37 billion, we have positive net flows during the year, which we are very proud of. Also looking at the revenue from funds in total, last twelve months is fairly resilient versus last year. Some key data, I mean, average fund capital around 170,000 SEK per customer, and 46% of our customer base own a fund. The allocation is around 40% active, and I would say overall around 40% index funds, because our Nordnet brand of funds is mainly index as well. Can go to next.
Talking a little about the brokerage revenue, we see on the graph to the left that the share of trading customers in the base is going down, and it's been slipping in during entire 2022. Of course, that's due to very negative market climate. We've increased the customer base with 80% since 2020, and thereby we still, even with the lower share, we have the absolute amount of trading customers is still high. In the graph to the right, you see that the number of trades per trading customer is still on the low side, again, due to the market.
At the bottom graph, you see that the share of cross-border trading is still good, and that's due to the country mix, where we have higher share of cross-border trading outside of Sweden. Go to next. Trading pattern is of course affected by the significant macro uncertainty we have. If you look in the graph to the right here, we see trades per customer per day in 2020, then 2021, and the blue line is average 2018 to 2019. We are below the pre-COVID level on trades per customer per day, and of course, considerably below the peak we saw in 2020 and 2021. Trading we expect to come back more to historic trends when the market turns positive again.
We have a very strong customer base, and we have onboarded a lot of good customers on our platform. Go to next. We can't control the market, but we can control and we continue to focus on our brand promise to build the best platform for savings and investments. We have overall a very high development speed and very frequent launches. This quarter, especially proud of launching the Norwegian mortgage for private banking. We know from Sweden that this is a very popular private banking product, both to attract private banking customers, but also attract the capital. Because the more capital you have on a platform, the better interest rate you get. We also launched a large number of new versions of our app with a lot of new nice features.
Our overall aim is that you should be able to live your entire life on the app as a normal customer. With that, I hand over to you a little bit to discuss also financials for quarter three. Lennart Krän.
Thank you very much, Lars-Åke. We can go to the next slide. There's a lot of uncertainty within the market, and I think, as Lars-Åke said, we have performed very well with 34,000 new customers within Q3, so that's great to see. However, the AUM or savings capital has decreased quite a lot during the year. But there is a shift also that the deposits has increased by SEK 11 billion, and that has impact on us later on, as you will see in the capital requirement side. We can take the next slide. In respect of revenues, they are on a stable level of about SEK 800 million on a quarterly basis.
The thing is here, I think it's very important to say we have the four countries which really makes it resilient, and diversification comes into good impact here, but not just on the country side, but also on the how they are distributed between streams as NII transaction and non-transaction related income. Here we can see that the non-transaction have decreased a little bit, but at the same time picked up on the net interest income. Really good to have this diversification, both country-wise and revenue stream-wise. We can go to the next. Also keeping the cost on a stable level throughout the years, around SEK 300 million. Yes, a little bit higher this quarter than before, but the expectation is, as Lars-Åke Norling said, fully in line with our targets.
Really stable cost, and that is one of the key things here for us. We can go to the next. This also leads us up to adjusted profit before tax on about just over SEK 2 billion on a last twelve month basis of the Q3. As you see, the cost has been stable 2019, but they have been stable further longer than that, as you know. We can take the next one. The correct capital requirement, which I said, yes, it has decreased a little bit or rather increased, sorry for that, due to two things. The countercyclical buffer was reintroduced or increased here at end of September.
With this SEK 11 billion more in deposits, we do invest those in interest-bearing securities, and that will require a further capital rate. That is also the reason for the leverage ratio decrease from 4.8% at year-end to 4.1% now. That is the SEK 11 billion. Also that our capital base has been affected by securities held for sale. The market valuation of those has, due to increased credit spreads, been affected. That comes into other comprehensive income and thereby affects the equity. That is about SEK 250 million. That is a thing that has those effects as we do hold those securities until maturity will come back further on.
That's not a real loss for us. It's just that it does affect our capital base and thereby our capital requirement figures here. We're quite confident with the capital situation even though it has decreased since year-end and see no reason for changing any dividend policy or anything like that due to that. We hold it onto it. Go to next. Yes, I'll leave it to you, Lars-Åke. Yeah. I think you're-
Thank you, Lennart. Let's move on to a little bit the long-term focus. Our strategic ambitions you've probably seen before, starting with having really happy customers. We build this one-stop shop for savings, savers and investors in the Nordics with a really great customer experience. Also important for us to have really passionate and talented employees, otherwise we will never have happy customers. Sustainable business is of course super important. We are in a trust business. We need to earn that trust every day, and we need to manage our risks in a good way and overall be trusted and liked brand. There's profitable growth. We have a fantastic growth potentially in the Nordics, 6% market share, ample room to grow for many years.
We'll of course continue to focus on our cost to maintain that on stable level also going forward. I'll come back to that. Can go to next. As you know, we have a very long-term growth and good growth in customers and savings capital. We see that growth accelerating from 2019 due to the big improvements we've done on the platform with the new app and web. We also now have scalability and enough customers in all countries to drive word-of-mouth growth. As I mentioned before, we've increased the customer base around 80% since 2020, and this is good customers, equally good as the customers we had before.
When the market turns, we of course expect to have an upside from the good customer base that we have. Go to next. Also lifting our eyes a little bit, I mean, overall, Nordnet is taking market share in a growing market. We have 6% market share of the population in the Nordics. We have 6% market share of the addressable market. That's SEK 13 trillion. That's a big market. That's up from 3% in 2016. We basically double our market share in five years. Going forward, we see that the addressable market will increase both from underlying market growth, but also that we open new products like pension in Denmark and wrapper in Finland.
We expect to continue to take market share in the growing market. To the right, you see, we have highest potential in the fund business and the pension business where we also put a lot of focus today. Can go to next. Cost is very important for us. We have a continued focus on cost and keeping the cost down, and we have a very scalable business overall with good cost control. This of course will be key focus area for us also going forward. As you see, we've basically been stable on cost for more than four years. The cost margin, the cost versus savings capital has constantly been moving down. Our initiatives, we talked about them before as well, but just a short recap.
As a foundation is our scalable cloud-powered tech platform that allows us to onboard a lot of new customers without driving costs. We work continuously with process simplification automation. Basically, we automate everything that we can, and that's a win-win because it's win for customer, it works better, and win for us, we scale better. We also have a highly efficient customer growth, that's mainly PR, and word-of-mouth base, so low acquisition cost. At the same time, low churn on the platform and high lifetime value, so low, very efficient growth overall. We work now very actively with third parties. We have a lot of big negotiations ongoing, not least in this climate where you have inflation clauses and other inflation pressures into the third party spend.
Can go to next. A little bit on the medium-term financial targets. We currently underlying customer growth of 12%, a little bit below the medium-term target of 15%. We know in very difficult years with macro negative markets, the customer growth reduces. We also know when the market comes back and the market is positive, we see a higher growth. Over time, we expect it to be around 15%. Average savings capital per customer is currently spot on. Of course, if the market continue to drop, this will be a bit challenged. We also know that this hopefully comes back when the market turns. When it comes to income ratio to savings capital, we're currently on target around 45 bps.
Here we will see a quite big increase in that margin due to the increase in net interest income from interest rates. When it comes to operating expenses, we see that we will meet the guidance for the year. We also see that we'll meet the medium-term guidance of mid-single- digits. Of course, 2023 is a bit more challenging due to the high inflation. We see inflation in wages, we see inflation in our vendor contracts due to inflation clauses, and also we have a very strong dollar. We work very actively now to mitigate the inflation pressures, both to speed up automation even more. We also negotiate, as I said, heavily with the vendors and be a little bit more proactive on how to use marketing going forward.
We also will reduce the planned recruitment in product and tech to only the real focus areas. As the Wrapper and the Livrente, we will not scale down there, but we will scale down the other plans that we have. The overall dividend and the guidance for 2023, I mean, it's either the upper end or mid-single-digit growth or just slightly above. If you look at the dividend payout ratio, as Lennart said, that's maintained on 70% of the net profits. With that, I think it's time to hand over for Q&A. Marcus.
Great. Yeah, thank you, Lars-Åke and Lennart. Now we'll open up for questions. Like I said before, you can click the Raise Your Hand button. I'll then unmute you, and announce your name, and then you also need to accept to be unmuted via pop up on your screen. Or you can of course write a question using the Q&A button. First question comes from, Maths Liljedahl at SEB. Please go ahead.
Yes, good morning and thank you. I hope you can hear me.
Yes, very well.
Starting a little bit with the leverage ratio now down to 4.1%, and if I look at this, the possible target of 3.9%, you write that you have a readiness to handle further SEK 54 billion. What does this mean and how should I read this? Is that a capital injection then, or how do you solve that?
I mean, first of all, I think it's important to know that the 3.9% is a guidance from the SFSA, so it's not a hard target or anything, but the 3.0 is the hard target. Going down to that one would enable us to say that, yes, we have capacity to take on, how much is it? SEK 34 billion more in before we reach that point. If that
In deep in deposits. It's new.
In deposits, yes. If that would happen, which is quite unbelievable as it would be a 50% increase of deposits, we can reduce the dividend, in that case just to save it or do a capital injection, but I don't see that as at any risk at all. I think we should look upon the 3.9, and that is where we are, and that is not the hard requirement. That is how I look upon it. I don't think if you have any further comments on that one, Lars-Åke Norling.
No, I mean, just to put it in perspective.
Yeah
With 9 months of negative markets, deposits increased SEK 11 billion, and we can absorb another SEK 34 billion before we are at 3%. We're quite confident.
Okay, thank you. One more question from my side. I'm just looking at the country. I know you have a fierce competition in Sweden, but how are you thinking? Norway looks particularly strong. If you could just elaborate on what happened there and also how you're thinking about Sweden. Is there any, not quick fixes, but how could you beat competition in Sweden going forward?
We can start with Norway. I mean, of course, Norway has been least affected by the market downturn. It was stable up till August, basically, that market, not falling at all. It's been falling in September, but it's only 8% down since the beginning of the year, while Sweden has been down more than 30%. That, of course, impacts the sentiment. It's been more trading in Norway, but we also see in Norway we have a most rapid effect on net interest income because the central bank in Norway started to increase the rates before Sweden and then Europe and Denmark. It's a very well-diversified revenue stream in Norway, and we have the same in Sweden.
We have a very well-diversified revenue mix in Sweden and overall, as we talked about before, very good customer base. We have a high savings capital customer, high income per customer as well, and we're very strong in the private banking and in the investor segments. Of course, where we put a lot of focus also in Sweden now to see how we can expand more into the broader saver segment that mainly saves in funds. That's why we also have a lot of focus on the fund business with our fund company, but not least also the pension business, where I think we have a big potential in Sweden.
Okay. Thank you. And then, one final if I may, and I know-
Yes.
we have been discussing this a lot of times, but consumer loans, I mean, of course it adds. I looked at the NII chart and it adds some NII, but it's also there where you see, in practice all credit losses.
Mm.
Is that something really you need to offer in order to have an attractive? I mean, you're a savings platform, you do mortgages and margin lending, I could understand as an add-on, but is that something? I mean, competition is fierce.
Yeah.
Fear of credit losses. Is that something you? I know you wanted to decrease it, but it's still there.
Yeah. I think it's very, you know, a low- risk portfolio. The average yield is around 5%, and the credit losses to assets is also low. We continue to manage this in a careful way, to even reduce risk going forward, and focus on profitability. It is also a product that's used by the customer base in certain cases, not least when we had IPOs to finance that, for buying shares in IPOs, but in other aspects as well. Currently we see it as part of our business, but we try to maintain it carefully, with even reducing risk over time. We don't need to have a high- risk profile in this portfolio.
We have a good yield, also managing the risk in a good way.
Okay. Thank you. That's it from me. Thank you very-
Thank you.
Okay. Next question comes from Patrick Platzer at ABG.
Thank you. Can you hear me?
Yes, very well.
Perfect. Thank you. My first question is regarding the deposit rate. Can you see that since the introduction of Savings account in Sweden that the outflows have stopped?
I think we manage this. I mean, we look at the outflows or the flows on a daily basis in all countries, and we see a more stable situation when it comes to cash.
Okay. Given the introduction of this savings account, we should not expect you to start introducing deposit rates on ISK account or capital insurance account?
No, we see those as trading accounts. If you want to save in cash, you should use a savings account. We also think that's better for the customers due also to tax reasons. It's better to save the cash outside of the tax wrappers.
Correct me if I'm wrong. Won't there be a tax if they move their money in and out of these accounts, though?
If you keep moving in and out many times, then you have a negative effect. If you just move one out and one in, then it's okay.
Okay. Thank you. Now we expect to see a rate hike probably in November in Sweden again. Can we expect that you will increase the deposit rates on these savings account by the same magnitude? Or how should we think about the dynamics here?
We, I mean, we look very carefully on the flows and the market overall. We can't say exactly how interest rate increase will impact the deposit rates. You need to see what we do in the market at that time.
Okay. A last question regarding this deposit rate then. At which level should we expect you to start introducing deposit rates in Denmark and Finland?
Yeah. I mean, now the interest rates is going up quite a bit also in Denmark and Finland. We of course look at this, but there's nothing decided yet. You will see that when it comes as well.
Okay. Is a guideline of at the level you introduced it in Norway and Sweden a fair assumption?
At least the same setup is probably a fair assumption. Exact levels we cannot discuss of course, but we'll be starting them from. I mean, Norway has been increasing the most, and that's why we also have the highest rates. Of course, you start on the lower level and move up.
Perfect. Thank you. That was all for me.
Okay. Next question comes from Ermin Keric at Carnegie. Please go ahead.
Good morning. I hope you can hear me.
Yeah, very well.
Perfect. Thank you. Thanks for taking the question. Maybe first on, in September, you obviously, showed us that the majority of the outflows were from your private banking clients.
Yeah.
Could you just give us any, disclosure or color on how much liquidity there is on those type of accounts, and how much is outside of tax wrappers?
Yeah, I don't know. It's Marcus, do you have the exact figures on that? We have numbers on it, but I don't know if you've
I mean, I think most of it is outside of any type of account that would have an obvious negative tax effect from moving it right away. Of course, you need to take into account that it makes most sense for customers that have considerably large amounts of cash to move it to get an interest rate. If you have a smaller amount of cash, the cash is most likely held in order to trade, and you don't get a very high yield in the market. It's a little tough just to look at the total balance of cash held in this type of account.
Got it. Thanks. I mean, your commission rate on the brokerage went up a little bit quarter-over-quarter. Is there any change in which type of customers are active versus Q2? Also just generally are the kind of pre-pandemic customers behaving in any way differently from the cohorts that you acquired during the pandemic?
I think the reason for slightly higher income per trade is mostly country mix, not least in August, where we had a lot of trading in Denmark and Finland and Norway as well compared to Sweden, and thereby more retail customers as well than compared to private banking. That's that effect. What was the other question? Sorry.
Just if the cohorts from before the pandemic are
Yeah, yeah. Okay. I know. No, we follow that. You have that in the appendix as well in the Q presentation. The cohorts still 2022 cohort is good. They trade on the same level as the older customers. We know also the new customers a little bit less trades per customer due to the less heavy traders. The margins are also bigger because it's more outside of Sweden and more retail trades. The net savings, more than 50% of the net savings is coming from the new customers. I would say it's a good base. We saw the same for the 2020 and 2021 cohorts.
Okay, thank you. Last question would be on the cost side. Did I get it right that you're now saying you'll probably be on the maybe upper end on this mid-single- digit-
Yeah.
maybe even above it for 2023?
Yeah. Either just the upper end or just above.
Okay. With regards to projects you can automate, is there any specific ones you could just share with us to have some color?
We put a lot of effort now on the pension transfers. We launched a new automatic pension transfer in Denmark. We're working on it in Sweden. We launch soon. We do on the fund side, fund transfers, we also have automated the front end for the customer, but we now automate the back end also for our transfer team. We put a lot of effort on all small issues that we see as well to have continuous automation. Everything that we pick up from customer service or customer operations, we try to automate as much as we can. For example, the onboarding of minors. If you were below 18, it was a manual flow.
That's now basically fully automated in Sweden and Finland, will be in the other countries. Onboarding of legal enterprises the same. Then we try to automate more than we've had before. We work on both bigger tickets, but also a lot of long tail of smaller things so we can move on quickly.
Great. That's very helpful. Thank you.
Thank you, Ermin.
Great. Next question comes from Maria Semikhatova from Citi. Please go ahead.
Yes. Hello. Thank you. Couple of questions. First of all, on net savings. Thank you so much for additional disclosure on slide five. Just surprising that the gross inflows have been so stable and just want to check with you. Do you think that the gross inflows could come down as customers are suffering from increasing energy costs and high interest rates, or your customer base is less sensitive, you have higher wealth individuals, et cetera? Just want to hear your view.
Yeah. It's of course a good question. We haven't seen any tendencies. As you said, we have a little bit of the higher end investors and traders on our platform. We also know from external studies that's been made that consumers first pull back on consumption before pulling back on savings. Now, of course, from the central banks, what they want to achieve is that customers pull back on consumption and not really savings. We don't see any effect of this yet anyway.
Understood. Then on your NII guidance on the lending portfolio, SEK 900 million, what pass-through on loans do you expect? Similar to what you achieved this year? You think there is maybe you won't be able to pass fully the further hikes?
Yeah. It's a good question. Of course, depends on both how big the hike is and the market overall. That's why we gave you pretty, I mean, transparent what we passed through so far, and you can make your assumptions.
Okay, that's clear. I don't know if you can share any growth aspirations in the region mortgages. This is a clearly very competitive offer. I don't know, maybe you can talk about your private banking customer base in Norway and what's the potential here.
I think, I mean, we of course see growth potentially in mortgage both in Sweden because we have still very attractive rates, but also not least in Norway then since we launched a new product. I won't tell you exact numbers, but, we see growth in mortgage during 2023.
Okay, fair enough. Just maybe final question from me on competitive environment. Let's say relative to the Swedish and Nordic banks. Do you see any changes in your kind of customer acquisition or overall competition with the weaker market backdrop and high interest rates?
Not really from competition. I mean, what's affecting us is the macro climate with the negative markets for nine months. We know that the customer flow is lower when the market is negative, and it's higher when the market is positive.
Okay, understood. Thank you. That's it from me.
Great.
Thank you.
Next question comes from Panos Ellinas from Morgan Stanley. Please go ahead.
Yeah, hi. Can you hear me?
Yeah. Very well.
Yeah. Just had a question on the fund business, if that's fine. You just reported 46% of the customers own a fund.
Yeah.
I think the last reported was 44%.
Yeah.
So that-
It's increasing.
Yeah. That's around, I think 70,000 additional clients owning a fund. At the same time, you showed that trading customers is down. Just want to understand the trends there are. I mean, have you seen sort of change in behavior? Maybe can you comment on the trends across geographies within the fund business? Then my second question on the funds, it also seems there is a preference for index funds.
Mm.
The AUM there is steady at around SEK 13 billion, despite the overall AUM in funds down 15%.
Mm.
What's driving that? Is it existing customers switching into index, or is it these new customers preferring index funds? That's all from me. Thank you.
Yeah. Yeah, I think, I mean, we have an ambition to grow funds in all countries, both as standalone but also part then of the pension offering. Of course, Sweden and Norway have the biggest pension market, thereby highest growth also in funds and pensions. But as you know, we're gonna open up now Livrente in Denmark over time to address that fully market for pension. And also the wrapper in Finland is also gonna be, I think, used quite heavily for funds. But we see good growth in all countries and especially, like I said, we're proud of that we have positive net flows into the Nordnet funds over the year in spite of the negative market.
Of course, impact that the savings capital down in the other types of funds. You have the mix shift from active to passive. 40% of the funds are active and 40%, give or take, are index today. I think customers are moving to cheaper index, but also the type of allocation funds that we launched now, where we have a mix of good geographical mix on shares, but also interest leg. Lower risk, but at the same at the low fee. I think many customers have been a bit disappointed with the active performance as well.
Thank you. Maybe if I may follow up just in, I think in Norway, the fund capital declined quarter-over-quarter. Is it performance driven or have you seen outflows there?
Yeah, I mean, Norway was very stable in quarter one, quarter two because the market was not impacted. They had a big hit from mid-August, I would say, when the oil price dropped and also they have the taxation on salmon companies, et cetera. Norway was very negative from mid-August and also September, both impacting the savings capital, but also some outflows from the funds. That's natural when you have a big down. It's a little bit more stable now.
Understood. Thank you.
Okay.
Thank you.
Next question comes from Enrico Bolzoni from J.P. Morgan. Please go ahead.
Hi. Good morning. Thank you for the presentation. Just a few questions from my end. One, on customer growth, clearly the target was, you know, double- digit. I look at the latest monthly prints, clearly there is a bit of a slowdown, I presume, given the current macro environment.
Yeah.
How confident are you in the ability to keep growing customers at double-digit levels in 2023, if the market environment remains challenging? That's my first question. The second question goes back to the question on funds. Again, have you ever thought about changing your pricing structure for funds to maybe be a bit less impacted by mix shift within the fund AUM? Then finally, in Norway, could you maybe give a bit of color in terms of what do you think is the opportunity from the expansion of the mortgage offer in terms of volumes, in terms of potential revenues? Any color there would be appreciated. Thank you.
Don't read what I'm writing here. Starting with the funds part and the pricing structure on funds. You know, in Norway we have a platform fee, so we're less dependent on what funds the customer have, but we have a slightly lower platform fee index compared to active. We don't currently see that we wanna change the fee model in the other countries. We look, of course, on the market of what the competitors do, but so far only platform fee in Norway.
I think it's important also we launch new kind of funds like the allocation funds that we have now, that have as a good diversification index like, but still a good fee, but still higher than just a normal index fund, which also is helping the fund margin overall. When it comes to mortgage, it's. We don't disclose figures for next year, but we see anyways a potential of SEK 3-5 billion second mortgage volume in Norway over time. Depends a little bit on the deposits.
Thank you. On customer growth?
Yeah. Sorry. That's why I couldn't read. Yeah, so customer growth is of course depending on the market. If we don't see a pickup in 2023, it will likely be a little bit lower also on growth during that year. We know that will pick up again when the market turns, and we have 6% market share of the registrable customer base in the Nordics with ample room to grow, and a very strong position, as you know, in all Nordic countries.
Thanks.
Thanks.
I got a written question from Andreas Håkansson at Danske Bank. He's asking, "How do you explain the 106 basis point margin on mortgages," which is on one of our slides, "Should it not be 270 basis point, given that your funding cost is zero?
Yeah, I mean, it's just that we haven't seen the full pickup yet in the mortgage rates. This is up to September. We made all the increases beginning of October. You will see the full effect going into quarter four.
Great. The next question comes from Jacob Kruse at Autonomous. Please go ahead. Looks like you're unmuted, so please go ahead.
I hope you can hear me now.
Yeah. Now I can hear you.
Yeah. Great. Okay. Thank you. Firstly, just on the deposit side, I think you introduced the rates, the savings rates early October. And obviously that savings account slide goes up to end of Q3.
Mm.
What did you see? Could you comment at all on what you've seen in terms of the appetite for that savings product during,
In a way, you know, we launched it before. There you see the trends also in quarter three, and we see a slight pickup. We see a slight pickup in Sweden, as well, but nothing major at this stage. Of course, this would be very interesting to follow then in the coming quarters. Don't see any major shifts to date. Of course, some increase, but nothing major.
Could I also ask, do you have an estimate of how long the average deposit stays in the normal deposit account before the savings accounts?
It's hard to tell since it was a long time we had the savings accounts and positive interest rates. I think when market turns positive again, of course, some of that money will be invested. It might be that if you have larger amount, that you still keep some of it in cash to save also in cash as a mix of your portfolio. Of course, some of it will go also into investments.
No, I mean more on the ISKs and the general brokerage accounts.
Ah.
Are those money very transient?
Oh, okay. Okay. Oh, sorry, I misunderstood you. No, we don't see that too much that is very transient. This is also very fairly stable so far.
What we can say, the only thing we do measure is the deposit rate according to savings capital, and that is on a long-term basis, yes. Since 2001, stable on 12—about 12%, between 11% and 13% around. You have some pickups and some downs, but that is where it usually is.
Yeah. No,
As a group, perspective.
You mean how much is moving out from the?
Yeah.
ISK to deposit accounts?
No. No. I guess my question is, if you take the typical deposit on an ISK-
Yeah.
From the client perspective, how long are they normally parking it there? Are we talking
Okay.
months or years or days? You know, what is the kind of
Normally it's for transactions. It's probably more months than years. We know all the customers, since we have a big customer base, customers go in and out of positions. That means we always have a fair chunk of deposits also in ISK.
Great. Thank you.
Thank you. Next question comes from Nicolas McBeath at DNB. Please go ahead.
Thank you. I was disconnected for some time, so apologies.
You missed all the questions or answers.
Just to get back to the deposit flows. If you could comment please on what's been the reception to the new rates on the savings deposits you introduced earlier this month, so we can get an understanding for the sensitivity for changes from deposits and cash on the tax wrappers into the savings products, please.
Yeah. I mean, I think the reception has been overall good. At the same time, we don't see any major flows into the savings account. Of course, some pickup, but nothing major so far. Of course, some customers appreciate it, especially customers with larger amounts. They wanna also keep the money liquid for a bit longer time, and they wanna have interest rates on that. But then, no major shifts onto the savings account so far.
Has it still been sufficient to stop the outflows from these private banking customers that you saw in September?
Yeah, I mean, we monitor both cash inflows and cash outflows on a daily basis, and I think we have a rather stable situation.
Okay. You wouldn't expect the outflow trend to continue in Q4? Could you comment on that?
No, not as we see it on pure cash. As, of course, early, I mean, it's early days still.
Sure. Also if you could give any flavor of what you've seen so far in October, please, when it comes to customer activity. Markets have been a bit more positive and October is also a month where we normally see some seasonal uptick in customer activity. If you could comment, please on you know should we expect the normal seasonal uptick to be the outcome this year as well or are there any reason for why we should be more cautious in our expectations here for October?
Yeah, I mean, I think we need to have a more clear turn in the market for real. I think there's a lot of customers still believe in this as a bear market rally again. Customers are in general more careful. Of course, you have the reportings, so that also cause extra trades on some days. I think underlying, the customers are still careful that they don't really trust that this is the bottom.
Okay, perfect. Thank you.
Thank you.
Next question comes from Jacob Hesslevik at SEB. Please go ahead.
Good morning. My first question is if you just could remind us of how the list of FX looks in your liquidity portfolio. Is it still 50% EUR, 30% SEK, and 20% NOK or has there been any changes in the quarter?
I think you have that on slide 8. No big shifts, I would say. You have the full breakdown on slide 8 in the presentation for currency.
All right. Thank you. I will look into it. Perfect. Could you also share what the median size is of your ISK users in SEK? I think you give average, but I think it would be quite interesting to see what the median size of a ISK user is.
Okay. I think, Marcus, you need to come back with that.
Will do. I can look that up offline.
All right. Thank you. Maybe one last question on growth in Sweden. I mean, looking at, in your report, number of users increased by just 3,200. What is the main reason? I mean, you have launched new funds, et cetera, but the number doesn't show that you have taken users within the savings segment. What initiatives you have increased?
I think it's still market. If you compare to Avanza, we actually taking a larger share of the flows now from the banks to digital platforms than before. Like I said, it's mainly all the focus we have on funds and pension that we expect over time to also grow the customer base. That said, we still have a very good inflow of the investor and trader segment that they're really good customers, which is why it's really important to take care of in a good way.
All right. Thanks.
Thanks.
Okay. It looks like we are out of questions, so we will wrap up there. If you have any more questions, you can reach out to me and you can, of course, also read our report and presentation at our website, nordnetab.com. Our next quarterly report is on January 31st. Have a good day. Thank you and goodbye.
Thank you.
Thank you all.
Bye-bye.
Bye.