For 2023.
This meeting is being recorded.
My name is Marcus Lindberg. I'm the Head of Investor Relations at Nordnet. With me today, I have our CEO, Lars-Åke Norling, and our CFO, Lennart Krän. Lars-Åke and Lennart will start off by presenting the results, then we'll have a Q&A session. During the presentation, all participants will be on mute. When we come to the Q&A session, you have two alternatives to ask questions. You can click the Raise Hand button, I will then unmute you, or you can write your question in the Q&A button. Presentation itself is available on our website, nordnetab.com. Okay, let's start. Lars-Åke, please go ahead.
Thank you, Marcus. We can go to the next slide. Some key highlights for the first quarter been a very strong quarter with strong financial performance with record revenue, highest revenue ever in a quarter, and the second highest profit in all this history as well. We maintain cost control with operating expenses in line with financial targets. We see a more positive momentum in customer growth and net savings stemming from a bit more positive market climate. We also see a slight recovery in trading activity despite the uncertain macro environment that we are still in. Net interest income almost tripled due to higher interest rates versus quarter one last year.
We see continued positive interest rate sensitivity into 2023 when we will get the full effect of the interest rate hikes across our Nordic footprints. We also launched several products, including Quarter integration to take part of financial reports, digital pension transfer, and also instant deposit in Norway. Overall, we have a strong capital and liquidity situation that Lennart will talk more about later in the presentation. Go to next. A little bit on the financial highlights. We have a customer growth of 8% year-on-year, but we see a clear pickup in the customer growth in Q1 versus Q4. Savings capital is about flat year-on-year.
Number of trades is down 17%, but that's due to we had a very strong Quarter one in 2022. If you compare to Quarter four, number of trades are considerably up. Revenues, I commented on up 37% and the highest revenue ever, SEK 1.1 billion in one Quarter. We see then a strong growth in net interest income compensating for a slight decline in the trading revenue. Operating expenses aligned with guidance of 7%. We had slightly higher cost due to marketing in Quarter one. As you know, we won this Bank of the Year award, and we spent marketing money to publish that result.
We see also that we continue to have a very good operating leverage in the business, and we increased the profit with close to 40%, and that's the second highest profit ever than around 800 million SEK. We go to next. We see continued growth on in customers and net saving despite the still volatile market climate we are in. We grow the customer base of 43,000 and net savings SEK 7 billion. It was a bit lower than Quarter one last year, but considerably up from Quarter four in 2022. Go to next. Our geographical diversifications de-risk the business model and enables growth.
As you see, we have higher customer growth outside of Sweden, also less impact on savings capital from negative markets also outside of Sweden. We go to next. We also, like I said, see a slight recovery than the trading activity despite the still uncertain macro environment we are in. In the graph to the right, blue line there, you see the number of trading customers are considerably up from Quarter two. We also To the graph up to the right, you see also trades per trading customer is up, and the share of cross-border trades is also on a stable level of around 25%. We go to next.
We also see, I mean, that the trades per day have doubled since 2019, and also the trading margin or the income per trade is better. If you look at the graphs to the left, the red line, you see that number of trades per customer are down versus the peak levels we saw in 2020 and 2021. We have doubled the customer base since 2019. If you look at total amount of trades per day, that's year-to-date around 225,000. That's almost double the amount of trades we had per day in 2019. We're really benefiting from our big increase in the customer base.
If you look at the graph to the right, you see also that the income per trade is increasing, and that's due to a higher share of cross-border trading, where we have a higher margin. That's due to we have more customers now in Finland, Norway, and Denmark, where they trade naturally more cross-borders since the local exchange is fairly small. So we can go to the next slide. Looking a little bit on the fund side, you see in the graph up to the left that the fund capital is about stable since 2021, but of course, this was a pretty big setback in 2022 due to negative markets.
If you look at the fund allocation in the pie chart in the middle there, you see 22% of the fund capital is Nordnet-branded funds, and that's around SEK 34 billion. We see a very positive growth overall in the Nordnet fund family. Nordnet-branded funds are mainly broad index funds. If you add then the other index funds on the platform, index funds then contribute to around 45% of the fund revenue and active funds around 36%. Fixed income is still fairly small, around 13%. We don't see that much movement yet in fixed income. Looking at the fund customers down to the left, we have now close to 800,000 customers saving in funds, and it's around 46% of our customer base.
That's a continuous increase from 39% of the customer base in 2019. As you know, the fund business is a big focus area for us. We also see positive net buy even in 2022, which was a tough year, but that's considerably picked up then, of course, now naturally in Quarter 1, which was a strong quarter. Go to next. Looking at deposit levels, we see the deposit levels decline, driven by customer net buying. If you look at the graph to the left, you see deposits in relation to the savings capital on the platform. That's historically varied between around 11%-15%, a little bit dependent on the market movement.
When the market is strong, customers are more invested, and when the market declines rapidly, they liquidate their assets, and it is more than deposits. Now we're around 10% deposits versus savings capital, so that's a little bit below average. In the graph to the right, we see that the customers are definitely taking on more risks, investing quite a lot in both shares and funds. They invested total SEK 19 billion in the market in Quarter one. Then that's compensated by net cash inflow around SEK 6 billion and also dividends SEK 5 billion. Netting all this out, deposits are down around SEK 7.5 billion in the Quarter.
We're still very, very happy that the customers invest in brokerage and funds, which is our core business and what we really drive on our platform. Can go to next. Looking a little bit on the liquidity portfolio, and a snapshot here is that the liquidity portfolio will generate around 1.6 billion SEK in 2023, assuming the volume we saw end of Quarter one in 2023, and the current allocation between the markets and the credit spreads and market consensus that we see on the STIBOR rates that you see down to the right.
In total, we have, when it come to deposits and also adding equity to that, we have around SEK 7 billion-8 billion, where SEK 50 billion of those is in our liquidity portfolio and SEK 28 billion is in our lending portfolio. As you see, we have very positive momentum in the liquidity portfolio, stemming from increasing interest rates now in across our Nordic footprint. We have increase in interest rates in all the countries. Of course, this is a snapshot, the sensitivities, of course, how deposits will develop over time, and also in what interest rate pulse we will have. This is the latest estimate. Of course, if that changes, that will impact also the snapshot. Go to next.
Also a snapshot on the loan portfolio that we with assuming the quarter one volumes and interest rates as per April one, we estimated to generate around SEK 1.2 billion in 2023. Looking at the lending volume in the graph up to the left, we see that quarter-on-quarter, personal loans is fairly stable, mortgage is stable, and a slight increase in margin lending. We see a big increase overall in the lending revenues, of course, related to the increased interest rates in the lending portfolio. Also here, the sensitivity is, of course, the volume, the lending volume, especially then the interest rate paths and interest rate movement going forward.
Overall, we have a very low-risk lending portfolio. A loan-to-value of margin lending and mortgage is around 40%. Our unsecured business is also a low-risk unsecured portfolio with fairly limited credit losses. We have no credit losses in the mortgage and margin lending portfolios. To next. Also the a snapshot on the, the deposit interest rates that we pay to the customers.
We estimate that to be around SEK 270 million, sorry, SEK 275 million in 2023, assuming then the volume that we see on interest-bearing accounts in end of the Quarter, and also again, the currency and customer comp mix that we have. We did the interest rate change in Sweden in on April 21, so we also calculated that into this number. Sensitivity here is of course how much money will be transferred to especially savings account, where we have the highest interest rates, but also of course the interest rate paths . If interest rate pass increase, we will likely also have high interest rates on the liquidity portfolio and the lending portfolio.
Today, 36% of the customer's deposits are on interest-bearing accounts. Go to next. If you look at this in summary, we have a resilient revenue then bolstered by diverse revenue streams. If you look at the graph down to the left there, you see the light red is the net interest income, which has been growing then, compensating for a slight drop in the light blue, which is transaction revenue and a fairly stable fund revenue at dark blue. If you look at the CAGRs growth average growth rate since 2019 for each of the revenue streams is actually good, 44% for net interest income, 40% for funds, and 30% give or take for the brokerage revenue.
Looking at the margins, in the graph down to the right, we see of course, increased margin on deposits due to high interest rates. The light blue we see a slightly lower margin on trading due to less trades per customer, and also a slight decline on the fund margin due to the shift then from active funds to passive funds, but also that we have a platform fee in Norway and also that the customers buy slightly less foreign funds where we also have then, the FX revenue. Go to next. To looking at the full P&L and in a little bit longer period, we have very strong revenue growth, around 30% per year since 2019.
At the same time, we have a very scalable business model and very good cost control, and costs only increased around 4% per year in the same period. Basically, the entire revenue growth ends up on the bottom line, and it's a true position of profitable growth, and we've increased the profit with around 75% per year since 2019. Go to next. A little bit on the product highlights also. I mentioned a few of them already in the introduction of a launch now a fully digital transfer process of pension in Sweden together with the company Insurely. That's has been very well-received by our customers. We also had a lot of new versions of our award-winning app.
Just mention a few that we now have earnings calls with Quarter, so you can follow both the presentations and the reports via our app and also via our web. We also introduced company logos, so logos before all the company names. It's a small thing, but it's been really appreciated by the customers. Also, we have now enabled instant deposits in Sweden but also Norway, which haven't had instant deposits before. That's also been really well received by the customers in Norway. Okay. With that, Lennart, I hand over-
Thank you very much.
... to you to talk about the capital and liquidity situation.
Yes. Thank you very much, welcome everyone, good morning. We can go to the next slide. First of all, it's very comforting to say in those turbulent times that we have a solid capital position with also strong liquidity and good credit quality. We can summarize it by saying that the Total Capital Ratio is 24%, and the requirement was 18.4%. CET1 ratio is 16.5% and the requirement 12.1%. Also the leverage ratio is 5.6% compared to 3.0%, 3.9%, whatever you choose to say.
This has been able of course with an increase in the Own Funds with SEK 500 million, partly results deducted, with the expected dividend, but also the issue of the AT1 of SEK 300 million, which was also very successful and a very good timing to it, before the turbulence hits the market by Credit Suisse, to say. Liquidity position is of course good. We have an LCR of 447%, and that is due to that we have a deposit. Even though it has decreased by SEK 7.7 billion, it's still SEK 3.5 billion, and we only lend out about SEK 28 billion. We have a loan-to-deposit ratio of 40%.
The NSFR is also the net stable funding ratio, which we are not funded in the capital market with long bonds, while that is very good of course. It's also important for us to keep a high quality in the liquidity, both regarding, it should be liquid bonds and it should be high creditworthy. Thereby we have the covered bonds, 62%, and then we have the government or equivalent on 25%, and only 8% of it in senior. It's very high liquidity and very high credit classes. That you can also see on the rating pie chart that you have to the right of that one, with most of it in triple A bonds, and 20% in double A.
It's a very good quality. It's also important for us to has as low risk as possible in respect of credit interest rate risk and credit spread risk. Why we have shown this chart for quite a long time now, where you see that the unrealized losses or result rather in the HTC, Hold to Collect, portfolio is just around 0, and that is due to that most of that is in the 6-month maturity bucket. Both regarding fixed rate, but also in HTC. The rest is actually in FRN, and most of it is in the Available for Sale portfolio, which is an unrealized result of about SEK 100 million, but that is always affected the capital base or Own Funds.
It's also always within the books. No hidden parts within that. The capacity for leverage ratio has now increased to that we have SEK 34 billion more in deposit we can take on before we reach 3.9 guidance limit. Actually SEK 69 billion more in deposit before we reach the bottom line of 3.0. We feel very secure in both the liquidity, the capital and the credit quality situation. That's very pleased to been able to feel that comfort within this first Quarter with all the turbulence that has been there. I'll leave it over to you again, Lars-Håkan.
Thank you. The balance sheet in, on one slide. Thank you, Lennart.
Yes.
A little bit on a strategic focus. You, some of you have seen those slides before, so I'm gonna move pretty fast. Starting with our strategic focus areas, which are four, starting with engaged customers. We're building this one-stop shop for savings and investment with a true, really great customer experience. And to reach this, we every day build on our platform for savings and investments to build the best platform. We also know we never have happy customers unless we have really talented and passionate staff. Here we wanna see an upward trend on employee satisfaction, which we have, and also that we can attract and retain top talent, which we can.
The bottom sustainable business, we are in a trust business, and we need to earn that trust every day. And especially need to secure that we manage the compliance risks and other risks in our business in a good way, and that we overall are a trusted and liked brand. Number four, the fourth area is profitable growth to capture the fantastic growth potential we have in the Nordics and to continue to take market share in a growing savings market. At the same time, doing this with scalability and focus on cost control to have also stable cost level going forward. Go to next. Looking then at the growth in customers and savings capital, it's been a really good long-term growth, and we saw that that also accelerated from 2019 when we launched our new platform.
We see, I mean, the reasons for the growth is, of course, that we every day enable better and better customer experience and new features and products and automation, also that we have critical mass when it comes to customers in all countries that allows for a word-of-mouth-based growth. We've doubled basically the customer base, as I said, since 2019, and we're now at 1.7, or close to 1.8 million customer across our Nordic footprint. Also good growth in savings capital, both from underlying market growth, but also net savings. We can go to the next.
This is a key slide, and that's a big reason for our strong revenue growth that we had, will hopefully continue to have, and is that we are taking market share in a growing savings market. Still we have a rather low market share, so ample room to grow for many years. We have around 6% market share of the total addressable population in the Nordics. That's currently around 28 million. We also have 6% market share of the addressable market, which is big, it's SEK 13 trillion, and that market share is up from 3% in 2016, taking market share.
We estimate the addressable market to be around 20 trillion SEK in 2026, both from underlying growth in the savings market, but also that we launch two new products, Livrente pension product in Denmark and also the endowment insurance in Finland. To the right, you see we have highest market share in shares, but lower market share in funds and pension. That's why we also put a lot of focus both on the fund area and the pension area, where we see a strong growth potential going forward. We go to next. Also very scalable business with good cost control. We've managed to maintain the cost almost on a flat level since 2019, in spite of a doubling in customer base at the same time and also revenue growth of 30%.
The reasons for this is, we talked about this before, that we have a really scalable cloud-powered tech platform that can allow us to onboard a lot of new customers and transactions without driving costs. Also that we work with the automation and simplification. That's a win-win. We scale better, but it works better for the customer. Our customer growth is very efficient, mainly based on PR and word of mouth, so low acquisition costs. We also work heavily with third parties to manage spend in a good way there as well. We go to next. Looking at the midterm financial targets, we are slightly below on the customer growth target, 8%.
Like I said, we had a pickup in quarter 1 versus quarter 4, which was good. Average savings capital per customers about around the guidance, income in relation to savings capital. This is last 12 months, but this will move up to around 55 BPS during the year, when we see the full impact of interest rate increases. The expense we talked about, we're in line with our guidance of around 7% this year. Go to next. Just to wrap up the priorities for 2023, that we're gonna launch then, the Finnish endowment wrapper, around, you know, end quarter 2, beginning quarter 3. It's gonna be a fully digital product, it's gonna be flexible.
You can go buy both funds and equity, it's gonna be low and especially transparent fees. I think, we're really gonna have a fantastic product with this in the Finnish markets. We're also laying the foundation now for the Danish Livrente product, which is a 2 trillion SEK market that we aim to launch in 2024. We work heavily with integrating Shareville, our social networking platform for investments. We integrate that now into our app and web, and we're well on our way. We of course, gonna continue to expand the Nordnet-branded fund offering in our fund company, and naturally, we're gonna continue to focus on cost control and scalability. With that, Marcus, I think I hand over to you for Q&A.
Great. Thank you, Lars and Lennart. Now we'll open up for questions. Like I said before, if you wanna ask a question, just click the Raise Hand button. I'll then announce your name and unmute you, or you can submit a question in writing using the Q&A function, or just send me an email. The first question comes from Jacob Hesslevik at SEB. Please go ahead.
Good morning. Can you hear me?
Yeah. Morning.
Good morning. Perfect. My first question is on the NII assumption for loan portfolio and deposit interest on the slides you showed us. I mean, the number you gave us for full year, is it correct that it does not include the potential rate hike from Riksbank and tomorrow and from Norway and ECB in May and June?
The, the lending guidance, correct me, Marcus, is that based on interest rate paths or just a snapshot?
No, it's just the present ones.
Okay. Sorry. Yeah.
It's.
I said wrong. Yeah, you're correct. It's based on the existing rates. Exactly. Not the interest rates paths going forward.
Okay. Perfect. If we look on deposit inflows, what is the automatic monthly savings? I mean, net savings were a bit lower during the first month during this year. I was just wondering, have more customers paused them, or have they lowered the amount, or is it due to less new customers, or is it any specific larger outflows?
No, we don't see any big change in monthly savings. As you know, we also had a one-time effect on net savings around SEK 1.7 billion related to one big customer transferred that out in one go. We didn't earn any money on that savings capital, but it impacted net savings.
Okay. Thank you. One last question. I mean, deposit cost increased from SEK 5.3 million last quarter to SEK 58.4 million this quarter. How large share of this cost is related to Sweden versus other markets?
But like I said, I mean, the interest and focus on the savings account and interest and savings account is bigger in Sweden. Majority of the cost is in Sweden today.
Okay. Thank you. That's all for me.
Great. Next question comes from Nicolas McBeath at DNB. Please go ahead.
Good morning.
Morning.
Morning.
First question on deposit competition. How do you see the competitive landscape for deposits in Sweden? Do you notice any increasing competitive pressure from banks such as SBAB, Länsförsäkringar, see any flows between Nordnet and such banks? To what extent do you think customers view such banks as substitutes for deposits compared to Nordnet?
Yeah. It's a good question. Currently, we see positive cash flows, net flows in Sweden. With the interest rates we have now on the savings account, I think we're very competitive. We're currently at 2.5%. Don't know what SBAB's latest is, but we're fairly aligned to that. We don't see any outflows due to customer chasing yield. Of course, since we have wealthy customers in Sweden that they can take out money to invest in property or on listing company and things like that, but we don't see any major outflows of cash for just having yield. I think they provide a very competitive product now and yield on our savings account.
Okay. Also a question on deposits outside of Sweden. You've previously been quite confident that you don't see any major risk that you would need to start paying high deposit rates in Denmark or Finland. How do you think about that at this point?
Of course, we monitor competition, we monitor flows, especially. Like I said, the interest of savings account is not as high outside of Sweden, as none of our countries, Norway, Denmark or Finland. We don't see at all the same focus and push and also transfer a lot of money to savings accounts neither in our bank, but as well as other banks.
Okay.
It's a different climate in Sweden for sure.
I had a question on net savings. If we disaggregate your net savings in the Quarter, it seems like there are some diverting trends in Sweden and Norway versus Denmark and Finland with lower savings in Sweden and Norway. Could you please comment what you're seeing in terms of differences of the savings behaviors across the markets, please?
Yeah. like I said, we had a big one-off in Norway of SEK 1.7 billion, or I didn't say it was Norway. Now I say it's Norway. that of course impacted the net savings quite a bit in the Quarter for Norway. in Sweden, I would say it's, I think we have both we have good inflow. of course, we have some outflows, but not to chasing yield, but it's been customers also investing in property or other unlisted companies and such.
Of course, it's very tied to customer growth, or we tend to grow a bit more, outside of Sweden. New customers bring in quite a lot of new capital.
Yeah.
Yeah. Okay. Final question on outlook for loan growth, please. I noticed your lending volumes appear to have stalled a bit over the past couple of quarters. Is it liquidity capital or demand that's holding the loan book back? What's And what's the outlook here for the next few quarters?
I think when you look at the personal loans business, we have no intentions, as you know, to grow that. We don't mind if it even decrease a bit. When it comes to mortgage lending, we have seen a pretty good pickup during the Quarter in spite of a little bit turbulence. When it comes to lending, or mortgage, sorry, it's of course, I think it's good to have a stable level. Of course, our interest rates are not sticking out in the same way in this environment. We're still the lowest, of course, relatively wise, we're a little bit less lower than we were in a lower yielding environment.
I think we're happy with having a fairly stable development now on the mortgage. Of course, we also see now over time a pickup in Norway, which is very good.
okay, perfect. Thank you.
Thank you. next question come from Ermin Keric at Carnegie. Please go ahead.
Good morning.
Morning Ermin.
Thanks for taking the question. Maybe just first one on the lending. Is there any product where you see that it will be harder to continue to have the same pass-through rates going forward? For example, on the margin lending, is there a level where clients will not think it's a relevant product at all.
Mm-hmm
the rate is too high for me?
Yeah, it's a good question. Of course, there is a limit somewhere. We have been where we have the highest margin lending rates in Denmark and Norway. We've been a little bit more careful, but I think there's still some additional possibility to pass through. Of course, we've been reaching at some point a limit, but we're probably reaching the limit of the interest rate path increase as well.
Okay. That's very helpful. Then sorry if I missed it, but did you say how much is currently in pure savings accounts now and how that has changed during Q1?
Yeah, I didn't say savings account per se. I said 26% in interest-bearing accounts overall. That's also is Kapitalförsäkring and such. I don't know if it disclosed the exact figures on savings account, Marcus.
Yeah, It's about SEK five and a half billion. It was about SEK four and a half in end of Q4. Most of the increase is in Sweden and a little bit in Denmark, too.
Perfect. Thank you. The last question would just be on the commission rates. They came up a bit in all the different countries in Q1, essentially.
Yeah
I'm just thinking, how should we see that? Is this now a normalized rate where you see a kind of normalized mix of customers which are trading? Should we look kind of on an average Q4, Q1, or is it possible to say?
It's a good question. It's of course difficult. It's about the, the customer mix. If it's more retail versus heavy traders, you have a higher commission. And also the mix between countries with a higher commission outside of Sweden. It's a little bit the country mix and the, the segment mix.
Got it. Thank you.
Thank you. next question comes from Patrik Brattelius at ABG. Please go ahead.
Thank you. My first question would be on the deposit competition topic, a little bit of a follow-up to the questions asked by Nicolas.
Mm-hmm
... earlier. You talk a lot about competition here on deposit rates. Who do you view are the price setters, and the largest players within the market that sets the rates that you follow?
In Sweden it's of course SBAB that sticks out, but then of course it's our competitor, Avanza, both on the savings account, but also the move they did on having interest rates on the tax wrappers, the ISK and the KF. When they did that, we had to follow, even though we don't think it's very beneficial to have a lot of cash on those accounts for tax reasons. In the other countries, of course, we look at both the big banks and the competitors. I'd say in Sweden it's more I mean, active, like I said.
Yeah. Thank you. I understand. Do you see more harmonized pricing between players here when the new rate decision coming up? Or do you see that competition has picked up following what has happened in the U.S., for example?
I think, I mean, probably ending some kind of end of the interest rate hike path from the central bank. It's at some point also I think, the deposit rates will level off on interest-bearing accounts.
I see.
Compared to the US, you know, I mean, they also have the liquidity funds where you can get 4-4.5% on three months government papers, which we don't have in the same way in the Nordics.
Yeah. Yeah. yeah, so it's not an intensified competition the last, couple of,
No, I wouldn't say that. No.
No. Turning to transaction income, the brokerage fee you charge to customers, it's dependent on which brokerage class you're registered to. Hence, I would assume that some customers are being charged slightly more than what could be the optimal level if they are in the right brokerage class. How would you view a product innovation that would optimize the right brokerage class for the customers immediately?
Yeah. I think it's still good if the customer choose what they want to do because of different preferences at different times. Today what we look at is perhaps that you can change a commission class a little bit more often than you can today. That's something we have on the radar going forward.
Yeah. Yeah. My, my follow-up would then be if you would have that solution that would optimize it, what, how much could the brokerage fee then drop in comparison to the current level, would you expect ballpark it?
Yeah. I don't have a number on that. I don't see a dramatic drop. I don't think you're gonna go that we automatically do it for the customer at every single point. I think it's still important the customer can choose what class he want to have. Of course, if you can choose more frequently, it might be some impact. We don't see that as material.
If competitors would go this route, would you feel obliged to follow? I know it's a hypothetical question.
Yeah. That we need to look at at that point in time.
Sure. Thank you so much. That was all for me.
Thank you. next question comes from Maria Semikhatova at Citi. Please go ahead.
Yes. Hi. Hi, everyone. Couple of questions from my side. First of all, I appreciate the disclosure that you provide on deposits. Just wanted to check with you if you are seeing continuation of trends so far in April that customers are utilizing cash to buy more equities and funds. Maybe more broadly, because you refer to the historical levels of deposits.
Mm.
relative to savings capital.
Mm.
Do you still think that a reasonable, let's say, threshold in the current rate environment or there is no reason or kind of high opportunity cost right now?
Mm.
to keep in cash?
Yeah. I mean, we have Looking at historic numbers, we have periods there as well with high interest rates. Of course the change has been perhaps more rapid this time to increasing rates. I think it's market dependent. I mean, the customers invested a lot in Quarter one, and that's why we saw an impact. If we have a weak market again, it might move in a other direction where people liquidate more of their assets. Yeah, time will tell. I think in April, I mean, it's an Easter month as well, so it's a lot of Easter holiday in all the Nordic countries, distorting the picture a little bit. Let's see for the full Quarter in Quarter two.
Okay. Thank you.
Also keep in mind that dividends flowing onto the platform has an effect, and Q2 tends to be a pretty heavy dividend quarter as well.
Yeah. That was useful that you broke down the.
Yeah.
the inflow there. maybe just kind of switching topic on the Finnish endowment wrapper. You mentioned this addressable market of EUR 40 billion. I don't know how much you can say at this point, but maybe kind of general thinking. You have a market share of around 9% in Finland. Is it a kind of fair aspiration for the future for this product as well? maybe on profitability, we know that fund margins are the lowest in Finland, kind of in terms of product economics. If there's anything-
Okay.
you can share.
Yeah, I won't guide on specific market share, but as you know, we're very strong in Finland, and if we look at the ASK account, I think we have around 65%, 70% market share. Of course that we've been extremely... market share, but it will take time to build it. But as you know, it's a very flexible product, so you can both invest in funds but also in equity, and there's a lot of demand for that. And it also gonna be some kind of wrapper fee on it as well. I think it's gonna be a very competitive product, but still a profitable product for us.
Okay. Thank you. Maybe just one minor question for Lennart. There was a higher credit loss on unsecured lending in Sweden. If you see any signs of stress or what drove that kind of higher cost of risk?
No. That increase or rather, that higher level was mainly due to provisions during due to model IFRS 9 models and also that we have a new forward flow agreement, which actually has a little bit less payment within it. No, we don't see that any change in the credit quality of that portfolio.
Okay. Thank you.
Basically don't annualize this quarterly number. If things actually not materialize, we should be at a good level and it should come back down.
That's very clear. Thank you.
Great. Next question comes from Enrico Bolzoni at JP Morgan. Please go ahead.
Hi. Good morning, all. Thanks for taking my question. Just a couple of questions from my end. One, can you give us any update in terms of the split of saving capital or deposit by type of account between the private banking, the standard accounts? I think you gave an update at the Capital Market Day a while ago, but I've not seen one since then. The second question was, I mean, in light of what happened, a very turbulent Quarter, have you reconsidered maybe exploring the possibility of offering also transactional banking? Because this is said to be one of the ways where you can increase stickiness of deposits if basically your customers could use you just for their, you know, all around banking activities. Thanks.
I think the latest split on savings capital, I don't have that in my head right now. Perhaps you can provide that Marcus, a line what we reported before.
Yeah. We'll get back to you on that.
When it comes to transactional banking, no. We focus on savings and investments to build the best platform for savings and investments, and we have a super interesting roadmap there. I think if we broaden ourselves too much and go more ahead on, you know, all aspects of the big banks, that will not benefit us. What really makes us successful is that the focus on one thing and is to build the best platform savings and investments for the private investor. That's what we're gonna continue to focus on.
Thank you.
Okay. Next question comes from Rickard Strand at Nordea. Please go ahead. Rickard?
Can you hear me?
Yes.
Yes.
Now. Can.
Now it works. Sorry about that. First, question on the deposit environment outside of Sweden, where you mentioned that you're less worried about the deposit competition outside Sweden. Just wanted to hear, is that because of competitors or competition in general being lower or is it because your customer base in these countries don't really see sort of the competitors as a viable substitute for Nordnet in these countries?
I think it's a combination. We have a very strong position, and they are on the platform to invest and they prefer to stay there and do the investments. Also in general, in the markets, it's less focused on savings account and interest rates on savings account compared to Sweden where the focus is very high.
Okay. On the, on the Finnish wrapper there where you seem quite excited about this product launch, could you share your sort of hopes here in terms of if you think that this product will primarily attract volumes, sort of new volumes from your existing client base or if it's sort of that you're hoping to acquire new customers that will primarily bring in the new flows here?
Again, I think there is a combination, both at existing customers that perhaps have an endowment wrapper with some other players since we didn't provide it. This is very efficient if you have a little bit more money. Of course, attract some savings capital that's now sitting outside that they hopefully gonna then transfer to our platform. That's one. I also think we can become more attractive to new customers, especially in the private banking segment that didn't really see us as a player because we didn't have the endowment wrapper, which you basically need to have to if you're gonna save a lot of money in a tax efficient way.
Okay, thanks. Just a final one on brokerage margin. If we exclude the sort of, the gains or income, you got from cross-border trade, it seems to be
Mm-hmm.
The margin seems to be up in basically all countries, but primarily Sweden and Norway. Just wanted to hear if you could give some more flavor on the drivers here.
Yeah.
These as sustainable going forward.
Yeah. Is especially a mix shift on more retail trading versus heavy trading. You know, the traders have a lower margin. They normally trade a lot, but this Quarter we saw retail trading quite a bit, and increase in exposure than both to funds and equity. That's. Retail has a higher margin and commission.
Yeah. Okay. Thank you. Thank you. Now we have a written question. Do you think your average trades per customer per day is structurally lower now than it was pre-COVID? Or do you think we're below the trend currently?
Yeah. I mean, if you look at the historical levels, we're definitely below the trend. Our expectation as we saw in Quarter one, now when the market is a little bit more positive, that you have a little bit stronger momentum. Of course, it's gonna be very market dependent, and I think there's a still a lot of concern out there. I mean, the customers took on risk now in Quarter one, but now I think there's concern about if it's gonna be recession and how deep it's gonna be potentially then. There's a little bit more concern right now, of course fueled a little bit with SVB and Credit Suisse, but in general a little bit concerned about the economy.
Okay, another written one. You and Avanza have fairly large share of customers of the population who own shares in Sweden. What do you think the market growth looks like? Is there still room to grow in Sweden essentially?
Yeah. I think we and Avanza together have around 10% give or take of the population in Sweden. I think definitely still room to grow both on the customer side, but also on, if you look at the savings capital or What share we have adjustable market, it's not more than 10% either in Sweden. I think that there is room to grow for sure.
Of course. We're adding new customers in the market all the time, and new young customers are probably looking for a digital bank since they're used to that type of interface.
Yeah. It's a good comment because the growth comes both from, of course, the big banks and pension companies, but also all new customers that turned then 18 and wanna invest on their own. They let's say an absolute majority of those choose a digital platform.
Great. I'm just looking through the written questions. Seems like we've answered most of them. Here's a bit different one. How have you integrated AI in your savings platform? Give some examples or potential use cases.
We, as you know, we move more and more of our environment to the cloud, and we have Google as a partner, which are of course, experts on managing data. So we today already have some personalized features. So for example, if you buy a stock, you also get some recommendation of other stocks that's bought by other customers buying similar kind of stock, for example. I think we're gonna see a lot of examples on AI. What you need to watch out for is that you maintain control of your data. We're a bank.
We need to adhere to bank secrecy and GDPR. That's why it's also very beneficial for us to be with Google Cloud because we have our own private environment. We encrypt all of our data, so we own the data fully. In that way, we, I think we can utilize a lot of AI tools in a good way, but you really need to secure your data when you use AI. You can't just send them out, send them up in any kind of AI application out there. It's one thing what we can do for the customers, but also of course there's gonna be efficiency in development as well that you can use AI, supporting the engineers in developing new code.
Great. Thanks. One about our own fund business. What's the potential for the Nordnet Fund business? What portion of the total fund AUM could it be? Are there targets, and what's the benefit of having your own funds and fund company?
Yeah. I think, I mean, it's currently SEK 34 billion and at around 22%. We see a steady growth. It's a very high interest in Nordnet-branded funds, and I think the benefit is that we can provide broad index type funds to a good price, but still have a value, okay margin on our side, and especially when we combine the funds in a portfolio like the Nordnet One portfolio, which is good for the customer, but it still gives us a good, healthy margin. I think, By having a fund company, we have much more control of the offering and the pricing to make it attractive for all parties.
Great. One final written one here. This deposit bridge that we gave on Slide 9, where you see the how the net buying and inflow and outflow affect the deposit, what would that have looked like earlier in Q4? Was it affected by net buying or was it outflows, dividends and so on?
Yeah. I mean, again, I don't have the exact numbers quarter four, but we saw we had less net savings. We had more cash coming in in quarter one onto the platform. You know, in quarter four, market was still, I mean, okay, it was a pickup, but still a lot of uncertainty in the customer base. The net investment was, wasn't even close to the SEK 19 billion that we saw in quarter one. It's a big shift in taking more risks from the customers in quarter one.
Great. I think we're out of questions for this time, so we'll wrap up there. Thanks to everyone who connected today. Our next board report is on July 25th. You can visit our website, nordnetab.com, or reach out to me if you have any questions.
Yeah.
Thank you for your interest in Nordnet, and have a great day, everyone.
Thank you. Thank you all.