Quite challenging macro.
This meeting is being recorded.
Uncertain macro environment and low volatilities in overhang on trading activity, we see the volatility index, the VIX index, being on a 4-year low. Net interest income more than doubled due to high interest rates, we see also positive interest rate sensitivity going forward, we assume to grow the net interest income significantly in 2023, when we see the full impact of interest rate increases. We also expect to meet the full year guidance on cost. It's been quite a productive quarter also when it comes to product development with improved curated lists, new landing pages, and instant deposits at Finland. We have an overall strong capital and liquidity situation, our CFO Lennart will cover that later in the presentation.
You can go to the next page. Some financial highlights for the second quarter, we've grown the customer base with 9% in 1 year. Savings capital is up 15%, and we see a clear turnaround in the markets from October last year. Number of trades is down versus quarter 2 last year with 16% due to challenging macro environment with high interest rates, high inflation, and also a weakening economy. As I mentioned, the volatility index, the volatility on the market, in the market has also been low during the quarter. The revenues are up 47% where we see slightly lower trading revenues, but that's more than well compensated by a increase in net interest income.
OpEx is up 8% from Q2 last year, so a little bit higher in our guidance of 7%-7%, but we estimate to meet the guidance, and we meet also a little bit easier comparables in H2 this year versus H1. It's also worth mentioning, underlying cost increase, if you discount the FX effect, is around 6%. As you know, the Swedish krona has depreciated quite a bit during H1. When we then convert cost in foreign currency to SEK, that of course impacts cost up. Hopefully we see a little bit calmer development in the Swedish krona in H2.
We see then that we still have very good operating leverage in the business, and we grow the profit with 74% year-on-year. You can go to next. We see continued growth in customers and net savings despite the macro environment we are in. Looking at the customer base, we have actually larger growth in customers in Q2 this year versus Q2 last year. Net savings is a little bit mixed picture. It's a little bit low in April and May, and that's mainly due to that the inflows have been low during those months, and it's related to there's been a lot of holidays, Easter and other holidays.
If you look at overall in H1 in net savings, we see a stable development in retail segments, it's been more reallocation of capital in the private banking segments, where they've done a lot of amortization on mortgage and also done alternative investments like private equity. We can go to the next page. We also continue to have positive impact from geographical diversification, that there is a business model and also enables growth. We see quite good growth in when it comes to customers in all of our countries, but we have higher growth in savings capital outside of Sweden, but it's also partly due to the FX effect when converting then the foreign currencies to weak Swedish krona. Can go to the next page. Look a little bit on trading.
As you see on the graph to the left, at the blue line, we have slightly less number of trading customers versus quarter one, that's due to a little bit worsening macro. What you see up to the right on the graph, that trades per trading customer is down quite a bit in the quarter. The dark blue line is the VIX index, the volatility index. Overall, the volatility and thereby the trading in the market has been low overall in quarter two, not just with Nordnet. We see continuous strong performance in cross-border trading, where we're slightly up versus quarter one, that's due to this higher level that we have in cross-border is due to the country mix with more customers outside of Sweden. Can go to the next page.
In spite of the lower trades per customer, we see that trades per day has almost doubled since 2019, since we also doubled the customer base from around 900,000 customers to 1.8 million customers during the same period. We also see that the income per trade is also higher than in 2019, so pre-COVID, and that's due to higher share of cross-border trading due to the country mix that customers outside of Sweden trade more on foreign exchanges than in Sweden. Can go to next. Talk a little bit about the fund business. We see a strong growth in the fund capital, close to SEK 170 billion now in fund capital on the platform.
It's both from underlying market growth, but also that we see very good net flows, as you see in the chart at the bottom, and not the least in H1. It's if you see at the mix of the fund capital is around 50%. This is index funds, external index funds, and also Nordnet funds, which are mainly index. While active funds is share is now 35%, and it's down from 48% in 2020. It's a clear shift from active to index in the customer base. Fixed income we see on a fairly stable level of 13%. There's also, as you know, been a proposal on the retrocession ban in the new risk regulation in EU.
The impact for us on that one will not be material. Fund revenues is around 10% of revenues overall, also only around 50% of the fund capital will be impacted by retrocession ban. In Norway and also in the partner business in Sweden, that's SEK 48 billion, we already have a platform fee, we pay distribution fees there, that's no problem. We have SEK 38 billion in our own funds, where we don't pay distribution fees. It's basically half left we need to address, and likely it's gonna be a platform fee model that might impact the margin slightly negatively in Sweden, we have very low margin in Denmark and Finland already, we might instead see an upside.
Fund customers is growing also, well, 46% of the customer base now own a fund on our platform. We can go to next. Coming into deposits and net interest income, looking at deposit development in the quarter has been fairly stable. We still see a strong net buy from the customers in the market, both equity and funds, SEK 13 billion in the quarter. It's a little bit lower than quarter one, but still a strong net buy. That's compensated by dividends and also net savings in cash coming onto the platform. If you look at the deposits versus savings capital on the platform in total, it's around 9% now, and that's below the average we see in the previous year. That's been around 11%-15%.
Go to next. Talk a little bit about the different components on net interest income, starting with the liquidity portfolio, where we give a then a snapshot of zooming then to second quarter volume, currency allocation, credit spreads, and market consensus estimate on rates going forward. We see a snapshot of SEK 1.7 billion in total in revenue from liquidity portfolio. The main sensitivity here is, of course, deposit and deposit development going forward. If you look at the chart up to the left, we see we currently have SEK 47 billion in the liquidity portfolio, and that's derived from SEK 73 billion in deposits, SEK 5 billion in equity and others, and then deducting SEK 30 billion that we have in lending.
We see a good growth in net interest income than from liquidity portfolio, in spite of the liquidity volume is falling a bit, and that's due to the high interest rates that we have had during the year, and we'll continue also to have some increases later this year. If you go to the next page. Looking at the loan portfolio, and assuming then the second quarter volumes and interest rate per 1st of July, we see a snapshot here of SEK 1.3 billion in revenue for 2023. Here, we might have a slight upside, because we estimate that the lending volumes is gonna increase a bit, and also the interest rates are likely gonna increase as well, later the year, in the year.
Looking at lending volume, it is currently around SEK 29 billion, where we see a stable development in personal loans and mortgage. We see growth in margin lending, but that's also partly due to the FX effect in converting margin lending volumes from DKK and EUR to SEK. We see a very good growth then in the overall, in the revenue from the lending, both from higher volumes, but also from higher interest rates. Overall, we have a low-risk lending portfolio, as you know, with a loan-to-value around 40% and also very limited credit losses, basically only related to the personal loans business. We go to the next page. Looking then at the deposit interest rates, what we need to...
What we pay them back to the customers, assuming then the interest rates we have now on our accounts and the volume, and the currency and customer account mix we have end of this quarter, we see that we estimate that we're gonna pay back around SEK 330 million in 2023. Currently, we have around 27% of the deposits, the total, on interest-bearing accounts. We see in the graph up to the right here that the big interest for savings account and interest rates is in Sweden, where we see quite a big transfer to the Swedish savings account.
while the transfer to savings account in the other countries has been very low, in spite of having fairly good interest rates, both in Norway and Denmark. The one reason for this is, of course, that they have customers with more capital in Sweden. If you want to be liquid for a while with a larger pool of cash, of course, you want to have as good yield on that capital as possible. Looking also a little bit on net savings versus interest rate on savings account, down to the right, we don't see any real correlation between interest rates on savings accounts and net savings, at least not between the countries.
We see that the 70% of the net savings are coming from Finland and Denmark in H1. You can go to the next page. Summarizing, the revenue picture, we see now that the Net Interest Income on the last 12 months is around 50% of the revenue, and the provision income from the fund-based and transaction revenue is another 50%. We see that we have diversified and a good model that's because the Net Interest Income is a little bit communicating vessel with the provision income.
If you have high interest rates that we have now, we have good development in net interest income, but we also know that high interest rates are impacting markets negatively, and less, that means less trading, and thereby less provision revenues. We know also when the interest rates drop and the activity in the markets pick up, then we have then higher provision revenues, but then a little bit lower net interest income. Very good communicative vessels between those two revenue streams. If you look at the revenue margin per product or per asset class, of course, we see very good development in the deposit due to high interest rates.
If you look at the light blue line there, it's the trading margin is going down due to less trades per customer, and also fund margin going down a bit due to the revenue shifts from or revenue mix between active and passive funds. Go to the next. All in all, we have a good operating leverage and a good growth in revenues, around 30% per year since 2019. The same time, very stable of cost, only up 4% year-on-year. Basically, the entire revenue increase ends up on the bottom line, so true position of profitable growth. Go to next.
Some highlights on the product side during the quarter, we have launched a new content management system, and that allows for a lot more dynamic content on our web pages and also in our app. We have launched now new start pages in all countries, but we will also launch new pages. The key pages on the web is going to be based on the new content management system. We also have a 50 new version of our award-winning app, so we basically launch a new app version every four days. It's both improvements in the curated list that we have, instant deposit with Trustly, and more shareable features in the app, to mention a few.
With that, I think I hand over to you, Lennart, to talk a little bit about the capital and liquidity situation.
Yes, I will be quite quick about that. You can go to the next slide, please. To sum it up, we have a very solid capital position, where we have a leverage ratio of 6.1%, according to the requirement 3.9%. That gives us a great capacity to take on new deposits. Of course, this is due to both an increase in capital base, but also the decreased deposits, as we have spoken about. Also the capital adequacy situation, where we have a total capital ratio of 25.3%, to be compared with the requirement of 19.1%. That is also due to the own funds, of course, which has increased, but also the lower deposits, but also that is a decreased risk within the portfolios.
A very strong capital situation. Regarding liquidity, we have this liquidity portfolio of SEK 47.15 billion, compared to the deposits, where we have SEK 72.5 billion. It's a strong liquidity buffer that we have here. Also on a very short maturity structure, with almost 40% maturing within 12 months and mainly within 6 months. We are always addressing the liquidity situation to have it on a short basis. And also with low credit risk, mainly AAA, AA, and A, and very few BBB rated instruments. As you can see, it's mostly covered bonds and governmental or similar parts. Senior, yes, some of financial institutions, and then it's cash. Also the liquidity position, I would say, is very strong.
That is very good to have in uncertain conditions, as we had this spring.
Now I think it's stabilized, but it's still very good to have this because this gives so much flexibility on how to handle the capital situation forwardly as well. Thank you.
Thank you, Lennart. A little bit on the strategic focus going forward. Go to the next page. As you know, we have four key strategic ambitions, starting with engaged customers, to have the most satisfied customers and being a one-stop shop for savings and investments. You as a private investor, should find everything that you need on our platform when it comes to savings and investments. To reach this ambition, we, of course, every day build on the platform for savings and investment to have the best platform. We also know we will never have happy customers unless we have really talented and professional staff, which we have.
We will also want to see an upward trend on employee satisfaction, which we do, and also that we can attract and retain top talent, which we also see that we can. The third area is sustainable business. We work in a trust business, and we need to earn that trust every day, and especially important that we manage our risks, both the compliance and other risks, and that we overall are a trusted and liked brand. Last area is profitable growth. That we capture the fantastic potential, growth potential we have in the Nordics, and continue to take market share then in a growing savings market. Also, we do this with a stable cost level, so ensure also continued scalability and cost control. Go to next.
As you know, we have long-term growth in both customers and savings capital. The customer side from continuous improving the customer experience, building the best platform, but also that we have critical mass in all countries, driving word-of-mouth growth. Savings capital is growing even more than customers, both from net savings and market growth. To next. Nordnet, we are taking market share in a growing savings market, and that's one key reason for our good revenue growth that we had the last years. We have 6% market share of the population in Nordics, with 6% market share of the addressable savings capital. That's big. That's SEK 13 trillion, and that is up from 3% market share in 2016. We're taking market share.
We estimate also the addressable market to grow to around SEK 20 trillion in 2026, both from underlying growth and also that we launch new products like the endowment wrapper in Finland and livrente pension product in Denmark. As you see in the bar graph to the right, the lowest market shares in funds and pension, where we also put a lot of effort in those areas, and we see great potential. To next. We also focus quite a lot on cost and also ensuring that we have a scalable business model. We have had stable costs since 2019, in spite of doubling the customer base from 900,000 customers to 1.8 million customers during the same periods.
We have a very good cost control and also very scalable business. The main drivers for the operating leverage is our cloud-based tech platform that can onboard a lot of customers without driving cost. We also work heavily with process simplification automation, which is a win-win, then it works better for the customer, and we scale better. Also, very good and efficient customer growth, mainly PR-based and word-of-mouth based, so low acquisition cost. We also then work, of course, heavily with the third-party spend with all the vendors that we have. To next. Looking at the quarter two performance versus our midterm financial targets, we are in line, I would say.
A little bit below on customer growth, but still considering 9% growth in this macroeconomic climate that we have is still very good. Go to the next. Looking at the key priorities for this year is to launch now the endowment wrapper in Finland, which we believe is a really exciting product. It's fully digital, it's flexible. We can both buy funds and equity, and also low and transparent fees, and we aim to launch this in quarter three this year. Also, that we lay the foundation for the Danish livrente product, so we can start developing that for really during next year. We continue to integrate the Slevo.
As you know, it's a standalone app on web today, we're now building, moving all the functionality, the Nordnet app and web, and we're well underway. We also look at expanding the Nordnet-branded fund offering, we've got successful with Nordnet-branded funds, and there will be more funds to come in the next 12 months. We're gonna focus, of course, continuously on cost control and scalability. With that, I think I hand over to you, Marcus, for starting the Q&A session.
Yes. Thank you, Lars and Lennart. We'll start the Q&A. Like I said before, just click the Raise Hand button if you want to ask a question, or submit a question in writing if you'd like. The first question comes from Jacob Hesslevik at SEB. Please go ahead.
Good morning, everyone.
Good morning.
Just trying to figure out Denmark. When I look at deposits, it's down quarter-over-quarter and down versus Q4 last year a bit. On the other hand, the brokerage savings capital has increased substantially during the same period. Could you just confirm that the decrease is due to Danish clients investing in stocks and that it's not withdrawing anything from your platform?
Yeah, it's in investing in in the market, but also it's a currency effect since the DKK has appreciated quite a bit versus the SEK in quarter two. Also when you try convert it back. Yeah. No, no, it's mainly that they invested in the market. Correct.
All right. Perfect. When I look at traded value in cash market, it is down substantially in all markets, I believe, in this quarter for the first time. Could you give any more color on your client behaviors and what has changed during this quarter?
I think the clients are more careful. We see smaller trades, so the tick size is smaller. The volatility, as you know, overall in the markets in quarter two has been low. I think they're waiting to see a little bit what's gonna happen going forward, if you go into a soft landing or a hard landing or what's gonna happen during the fall.
you haven't seen any specific mix shift between the private banking customers or heavy traders or ordinary clients?
No, I think heavy traders has been heavy trading, has been okay, a little bit, decrease in retail and private banking, but no big shifts, I would say. No.
All right, thanks. Lastly, just a comment on the competitive landscape of the different countries would be helpful. How many hikes have you done in the quarter, in each market on the savings accounts? Other than Sweden, do you see any real competition in the remaining Nordic?
I don't have the exact number of hikes, Lennart. Perhaps you do, but we've hiked both in Sweden, as you know, we've hiked in Norway, and we hiked in Denmark, I think, I believe as well. Clearly it's most focused on interest rates in Sweden, also due to the customer mix a little bit. Like I said, we have customers with larger capital here, and they're more, of course, interested in yield, if they're gonna have a portion of that as liquid. We don't see any change in behavior. I mean, as you saw on when it comes to savings capital in the savings capital in the savings accounts, it's Sweden where we see that customer transfer.
In Denmark, Norway, and Finland, it's been stable. It's even though we have fairly good rates, we don't see any inflows to the savings accounts.
All right. Thank you. That's all for me. I wish you all a great summer.
Thanks.
Thank you.
Thank you. Okay, next question comes from Ermin Keric at Carnegie. Please go ahead.
Good morning. Thanks for the presentation and taking my question. The first one, just on the balance sheet, you've had quite a big swing from treasury bills into bonds. Will that have any material impact on kind of the return on the liquidity portfolio going forward?
No. Actually, that's an effect that the deposits have fallen down and thereby maturing those bonds. We're not reinvesting, so it's not the on purpose. It's really an effect of where we have the maturities more than that.
Got it. Thanks. A little bit back to Jacob's question before. In Denmark, specifically, we see quite a big spike in the commission rate. I think it's up, like, 30% quarter-on-quarter on brokerage.
Yeah.
Is there anything specific that's driving that?
It's a few things. I think the, a little bit more retail, but a little bit more FX, but also a little bit lower cost of revenue during the quarter as well. That might even out a little bit over the year. It's those three effects in combination.
Thank you. That's very helpful. Then on if we see further rate hikes, which is likely in kind of from policy rate.
How do you see your ability to continue to pass that on to your customers in terms of lending rates, as opposed on the margin lending side, we're coming to quite high nominal rates as it is?
That's a good question. I think when it comes to mortgage and personal loans, we can definitely pass on more than lending. We need to look a little bit on the max rate there, but we also have a lot of segments, and packaging underneath the list rate, so to say. There might be some flexibility, but of course, we need to look at the absolute rate there, as well, and we are continuously doing that.
Excellent. One last question would just be on the cost savings ratio. It's been quite stable at 17 basis points, and I know you have your cost target in kind of nominal terms.
Yeah.
How would you still see the cost of savings ratio in the coming 2, 3, 4 years? Is that kind of materially declining from here, or?
Hopefully it's declining if you have a stronger market, so have a growth now in the coming years, then savings capital will grow hopefully quite a bit, both from that savings and underlying growth, while cost will, as you know, be in mid-single-digit growth. If the markets are performing as they normally do in the longer period, they will improve. Yeah.
Great. Thank you very much. Have a nice summer.
Thanks.
Thank you.
Thank you. Next question comes from Nicolas McBeath at DNB. Please go ahead.
Thank you, and good morning. First, a question on the trading activity, and I was wondering how you think about the current activity levels versus normalized levels. Granted, volatility has been a bit lower in a quarter, but at the same time, I think overall stock markets have been doing okay in the Nordics and globally, and still we're seeing rather low activity levels. First, what is needed, in your view, for trading activity to reignite? Could it be actually that this is a kind of a normal level? Looking at the chart that you showed with trades per trading customer, it seems like that's in a declining trend from 2017.
Do you think that it could be the case that this metric is actually should be declining over time because of, for instance, changing customer mix?
I think, I mean, looking at the markets, where we have the biggest decline is in Finland and Norway, and those markets really performing quite bad this year. Finland is down, Norway is plus minus zero. While Norway last year was very strong for a long time, and we had good trading there due to that. And I think the customers are a bit careful. I mean, they don't, yes, the market's been up in Sweden and Denmark, but, and in the U.S., it's still some kind of belief there. Is this sustainable? What's gonna happen now with the peak race, and what's gonna happen with the economy especially? We feel that customers are a bit more careful, definitely.
Let's see how that plays out going forward, when it perhaps a little bit more clarity, not least on, how, where the economy is moving.
All right. On growth and net inflows, we're seeing net inflows being down now in Q2 year-on-year, in all countries except Sweden, where it's up on 40% year-on-year, which I think is a bit surprising given the circumstances. What, in your view, explains these diverging trends between the different countries when it comes to net savings? Is there anything that you see in the flows in a more granular level that helps you understand.
No, not really. I mean.
Other countries are falling.
I think in quarter 2 specifically, we saw outflows quite on lower normal levels, but there were a little bit lower inflows in April and May, like I said, and then, not least in countries, also Sweden, I think it's a lot related to holidays. It was a long Easter and a number of other holidays that impacted retail a little bit. If you look at H1 inflows in total, I mean, retail has been very stable. We, we haven't seen any really effect that retail have less money to save. The effects and the swings we have is still on private banking. Not really that they're chasing yield, perhaps, like before, because we have good savings rates now.
They reallocate their capital, they amortize quite a bit on the, on the mortgages, and they buy alternatives like real estate and private equities, outside of our platform to some extent.
You're seeing more of that behavior outside of Sweden than in Sweden, or what explains the kind of divergence between Sweden and the rest?
I think in quarter two, I think Sweden was less impacted by the holidays. I think it was more impact actually outside of Sweden, where Norway almost stopped for two weeks during Easter, for example.
Right
It's more a seasonality effect on, I think the private banking effect we see across. Of course, since we have a lot of private banking customer in Sweden, we can also have, I mean, one off in the other direction, it's positive. It's fairly large flows in private banking in Sweden.
Sure. A question on the fund margin, which was down quite a bit in the quarter, which you kind of attribute to a shift into passive funds and less cross-border transactions. Could you elaborate in a bit more detail what you're seeing here, any particular segments where those trends are more pronounced? Any comments whether you expect this trend to continue
Over the next few quarters? Any view where you think the fund margin might bottom out?
Yeah, I think, I mean, we've seen a lot of the shifts probably already. I showed in the picture with a mix of about 50% now in index and 35% in active, and active is down from a peak of 48% in 2020. Of course, it might be slightly less active, but at some point, I mean, there is a demand for active funds and especially the performing funds. If it's gonna be... Then it's 30% then fixed income. Of course, you can still have some shifts to a little bit more index, but I think at some point, I mean, I doubt that the active funds will go much below 30%. Let's see. That would surprise me.
All right. Just a quick follow-up related to that, as the last question from me. Yeah, I mean, if I were to play the devil's advocate here and on revenue growth for the next couple of years, just noting that brokerage income doesn't really pick up interest rates, likely, quite near peak and fund margins coming down, it's possible to sketch a rather kind of bleak scenario for revenue growth, for a few years ahead. What gives you hope in sustained revenue growth in the next couple of years, if we talk in a kind of a specific line-by-line basis?
I mean, one is that we have continued customer growth and also net savings as a fundament. I think the fund revenue will I mean, I think we are reaching some kind of bottom on margin soon. We, as you know, we grow the fund capital quite a bit, both from market growth, but also all the initiatives we have in the fund business, both the fund business per se, and also the pension business. I believe trading is, you know, we've doubled the number of trades per day since 2019, even now with the low trades per customer, we also have higher income per trade due to across border.
We see when the interest rates will come down, we expect to see higher activity in the markets, so increase in provision and trading revenues. Like I said, we see net interest income and provision, net a little bit as communicating vessels. When we have very high interest rates and very strong NII, of course, you have a impact on provision income and vice versa.
Okay, that's fair. Thanks for the answers, and wish you a nice summer to all of you.
Thanks.
Thank you.
Thank you. Next question comes from Patrik Platelius at ABG. Please go ahead.
Thank you. A little bit of a follow-up there. If we continue on the fund income, if we look into the country specific, we can see that the fund income margin is quite low in Finland and Denmark. Can you talk about what you can do to address this?
Yeah, a few things. I mean, one is that we'll market more and more of our own funds, where we have a higher margin. That's one thing. Also with the retrocession ban, if you potentially introduce a platform fee, I think that can enable some higher margin also in Finland and Denmark. In the short term is that we have more mix of our own Nordnet funds.
If we compare them to Norway, which seems to have a slightly higher margin compared to these two countries, is that a level of ambition in also Denmark and Finland, if you were to introduce that platform fee?
It's hard to tell at this stage, of course, we have an ambition overall to increase the fund margin in Denmark and Finland. If we reach all the way to Norway, let's see. Of course, we have an ambition, and also we have a lot of experience from the fund platform model in Norway, that we can, of course, use, if we go that way in Finland and Denmark.
There is no plan to introduce it, even though there won't be any regulation change?
It's hard for me to comment on that, but of course, we look at the market continuously and also regulation. As you said, we can't launch it, of course, without regulation. It is a little bit more tricky to explain to the customers if you the only player that do that in the market. In Norway, you know, all the participants moved in the same way due to retrocession ban.
I understand. Thank you. If we look at the deposit, and compare it to the savings capital, it seems like it's the lowest share of deposit in relation to savings capital, since we have the data.
Yeah.
Can you talk a little bit about what is driving this development, and what do you expect of this ratio, looking ahead for the second half of 2023?
Like you said, we are below average. We see even though that customer is a bit more careful, we see anyway, that they buy in both quarter one and quarter two, which is, of course, ultimately good for our core business, because then they will likely trade up going forward in some way. Will have a short-term impact on let's say, net interest income, of course. How that ratio will play out during the fall, I think is very dependent or very related to how the market is performing, if it's a weak market or a strong market or a neutral market. So we'll see how will it play out due to market where market is moving, I would say.
Okay, thank you. My last question is regarding the slides, showing the strong liquidity and capital position. If you could talk a little bit, how you view your dividend policy, given these strong ratios?
We regard that as stable, as we have had for several years now. 70% of net profit is the dividend policy and see that looking forward as well. Of course, it gives us a lot of flexibility, but it's also very important for us to withhold a strong capital position and liquidity position. But the 70% is still the policy.
Got you. Thank you so much. Have a great summer.
Thank you.
Thank you. Next question comes from Alex Medhurst at Barclays. Please go ahead.
Yeah. Morning, all.
Morning
Questions. I mean, a lot have already been asked, so. Firstly, just on sort of deposit costs, how confident are you that you can sort of keep paying that 0 interest on the vast majority of our non-savings account deposit balances? I mean, obviously, customer behavior shows that deposit balances have sort of largely stabilized, but do you see any pressure from other stakeholders, like regulators or press, like we're seeing in other markets?
No. Yeah, sorry.
Secondly, sorry. Secondly, maybe a slightly news question on the platform fee model. In markets where, like Norway, where you're already paying or already have a platform fee in place.
Right
Do you make an incremental margin above the platform fee from your own funds, or are the own funds, sort of not on a platform fee model as well? Thank you.
Yeah. I think with interest rate, of course, we follow closely the flows and what's happening in the market, also competition. As we've seen, even with pretty high interest rates, I mean, the top rate in Norway is 3%. Even with that rate, we don't see any really inflow into the savings account in Norway, and likewise in Denmark. And we don't see any real pressure from the press or from competition or. I think it's a little bit due to the, like I said, customer mix.
Again, if you don't have that much capital, and you plan to invest it in the coming, six months or something, you're not really, chasing yield, in the same way as if, of course, if you have a lot of capital. We, we haven't seen any change in behavior in this, quarter, at all, outside of Sweden, I would say. When it comes to platform fee model, we, of course, we have a platform fee also for the Nordnet funds. On some of those, we also have a management fee on top of that. Some are have a management fee of 0, but it's a mix.
We have an additional upside on our own funds, if you look at the total.
Great. Thank you very much.
Thanks.
Thank you. Next question comes from Richard Strand at Nordea. Please go ahead.
Hi, good morning. Can you hear me?
Yep.
Yeah.
Yep. Starting with the cost, you reiterate your full year cost guidance, but just starting to look into next year, given that some inflationary pressure seems to be a little bit more sticky than previously anticipated, and also.
Yeah
Recent FX movements for the Swedish crown.
Yeah
Just wondering if you could give any first view on what you think the cost pressure could be comparison to your long-term cost growth ambition of 5% for next year?
Yeah, we still see that we can reach the midterm on around mid-single digits. I think, as you know, underlying this counter for FX, we are 6% growth this year, in spite of all the inflation. Of course, if the krona totally crashes, it might be a different scenario, we don't expect that. With the development we see now, we don't see any, you know, change of guidance.
Okay. On mortgages, I think it was on Ermin's question there on your ability to raise lending rates further going on. I think
Yeah
W hen it comes to mortgages, I guess there is some lag effect.
Yeah
Since you're a little bit slow to raise rates there.
Yeah.
Looking at it now, it's almost down at zero margin compared to investing the same liquidity into three months LIBOR or IBOR rates. I just want to hear your considerations here. Do you expect over time that margins will recover and perhaps to what level? If not, are there other considerations that make you sort of still want to lend this as mortgage volumes, because you fear that you.
Yeah
Might be seeing, larger outflows of savings, capital otherwise?
Yeah, I think it will, since we don't have all the hikes in there, you will see a higher margin as you from that. Also, as you know, we wanna have a low price on the mortgage because we see it as a great tool for private banking, both for attracting capital and keeping capital. Of course, we look overall what's happening in the market and how we position ourselves, not least versus Avanza and the major banks.
Still, sort of since you had lower margin to start with, you're still okay with having close to zero excess margin compared to investing it in three months?
Yeah, I think when you see the full hike, which we have, you will see a slight margin. Isn't that correct, Lennart?
Yes. I'm sorry. correct.
Okay, expecting to come back to-
This is the end.
Yes
End figures. It's average. Mm.
Yep.
Yeah.
Okay, then.
First of July, the last one, which is not within those figures. Yeah.
Yep. Then just on, follow-up clarification there on the margin lending, should we expect more flat lending rates from this point and onwards, or do you still expect that you have ability to raise it further up?
Yeah, I think we have some ability, varies a little bit for different countries. Again, it's not just the list rate. We have also a lot of discount levels underneath, we can work with a little bit. Of course, we monitor carefully also that we don't come to too high level, on absolute terms. I think that there's some room there still.
Yeah. Thanks. That's all for me.
Thanks.
Thank you. Next question comes from Enrico Bolzoni at JP Morgan. Please go ahead.
Hi, good morning. Thank you. Just a couple.
Sorry, I suggest you just click on mute again. Yes.
Can you hear me now?
Yep, yep.
Hi. Hi, thanks, good morning.
Good morning.
Just a couple. One, can you just give us some comments on how do you see the cost of living crisis developing in the northern markets? Of course, very high mortgage repayments now, inflation is still high. Have you seen any change in the behavior of your customers? Can you give some granularity maybe.
Yeah
In the different cohorts or maybe between the different countries?
Yeah.
Just to get a sense of whether, you know, flows can be maybe impacted just.
Yeah
People have less money to save.
Yeah.
The second, can you just explain me a bit more, why you have the need to actually increase the deposit remuneration outside of Sweden, if you have basically very little competition, and as you showed us, the saving deposit outside of Sweden didn't increase that much?
Yeah.
I was wondering why actually there is a need to increase the remuneration at all. For example, in Norway, it looks like you are leading, as if like you're expecting at some point, a transfer or... It was just curious to get some color from you. Thank you.
Good questions there. I think when it comes to net savings, I touched on this a little bit before, but, like I said, we don't see any impact in retail in none of the cohorts, both old, pre-corona, corona cohorts, and after corona cohorts. It's been stable inflows or net flows in H1. We haven't seen any big impact for cost of living crisis yet, anyway, in the retail segment. Where we see the movement and capital reallocation is in private banking. They, some of those customers quite aggressively advertise mortgage.
It's not only mortgage, Nordnet mortgage, but also mortgage that they have with other banks, but also that they, due to the market, also invest in alternatives, and a lot of customers buying property, real estate, because they believe it's cheap now, and also PE investments. It's more, much more movement in the private banking, not because they have less money, it's more that they reallocate their assets a little bit for return. When it comes to increase of interest rates on savings accounts outside of Sweden, I mean, there we follow the market a little bit to see that we're okay. We're not going to be leading in a market, but we, of course, need to see a little bit what's happening.
Of course, you don't know until afterwards if, what the effect is on a hike. Since it's been very low and very limited transfer to the savings account, it has not really impacted the cost for us either. I think we need to be, we at least need to look a little bit what's happening in the market. We don't need to be leading in any way, but we need to see a little bit what's going on.
Thank you.
Okay, next question comes from Jacob Kruse at Autonomous Research. Please go ahead.
Hi, thank you. Just a couple of questions. Firstly, on the NII, I think if I add up your guidances for the year on the lending and the liquidity on the deposit side, I get to about just below SEK 2.7 billion of NII. I think consensus is just about SEK 2.5 billion.
Yeah.
When you think about the trends that you see in terms of deposit flows, in terms of pricing dynamics, and you take that those projections you have, do you think on balance, that these other dynamic effects are more to the upside or to the downside relating to that static analysis that you provide? Secondly.
Yeah
I just wanted to ask on the Finnish endowment wrapper, if you could say anything about the kind of revenue or volume opportunity that you're looking for in, the say, next three years on that one. Thank you.
Yeah, when it comes to the snapshot on net interest income, I think there are some sensitivity in there. Of course, on the lending, we will likely see a little bit high interest rates and higher volumes, perhaps a slight upside there. When it comes to the liquidity portfolio, of course, the main sensitivity there is the deposit development, and that's an effect of how much customers then net buy in the market. That's a little bit to do with the market development during the fall. It's hard to predict a little bit. There is a sensitivity on the deposit.
On the savings account and the rates there, I mean, we likely, perhaps we have slightly higher rates in some countries, but I don't see any major impacts. I think the main thing to look at is a little bit the deposit development, and also what's happening with the lending portfolio, and the lending rates. All in all, it's hard to give a guidance on the, if it's an upside or downside. It depends on the, what's happening with the positive levels.
Okay. Sorry.
The second one was volume opportunity on the endowment wrapper. I mean, the full market there is around SEK 400 billion. I think we have a great potential, of course, like any more pension-like products, it will take time to build capital. I do see that this is gonna be a great tool for us in Finland to build additional savings capital and net savings.
Thank you very much.
Thanks.
Okay. Next question comes from Piers Salinas from Morgan Stanley. Go ahead. Let's see. You're calling in from a phone, so you have to unmute on your phone. There we go.
Hello? Yeah. Hi.
Hello.
Can you hear me?
Hey.
Yeah, can hear you now.
Hi. Yeah, thank you. I think everything was quite clear. Just maybe a couple of clarifications from my side. You mentioned earlier on the cost growth for the 1st half of the year, that included some hires in tech and product. I was just wondering, the full year guidance implies slower cost growth in the 2nd half of the year. It's just, has these roles now been filled, or do you expect more there? What's driving basically the slower growth in the 2nd half of the year compared to the 1st? That's my 1st question.
Yeah. I think, I mean, if you look at the comps also in H2 last year, we meet slightly easier comps versus H1. That's just one aspect. We also were a little bit high on marketing also in at least in Q1, where we had a specific campaign in Sweden related to the Bank of the Year. We see we can manage the 7% level unless the krona crashes totally, but I think it's crashed quite a bit already, like I said, underlying, we have a cost increase of around 6%, discounting for the FX effect for first half.
I think. Yeah, sure. Obviously, there were a few changes in country managers. I'm referring to Denmark and Norway.
Yeah.
Shall we expect any significant change in strategy in those markets, or anything new coming up?
No, I think, there's no change of strategy. We wanna be a one-stop shop for savings and investments, with a great customer experience. What we continue work within, in Denmark is, of course, the livrente product. In Norway is we basically have all the tools and components in Norway, and it's really to leverage this in a good way, both retail and private banking.
Thank you. That's very clear. On the Finnish insurance branch, I think the latest press release was referring to a second quarter launch.
Yeah.
What's the progress there? Is this now launched or?
Now we estimate to launch, like I said, in quarter three.
Okay.
Now.
Fine. Okay, I think that's all from me. Thank you so much.
Okay, thanks.
Thank you. I think we have time for one last question. We have Emil Jonsson from DNB. Please go ahead.
Hi, good morning.
Good morning.
I just have one question. I'm looking at the yields on mortgages and personal loans and margin lending and also on deposits, and I'm wondering, is there a reason to expect that the yields on any of these products will be sort of sticky if we were to get central bank rate cuts? In other words, is there a reason to think that the interest rate beta on any of these products would be different as rates go down compared to when rates went up?
I mean, I think the one that you can play a little bit more with this is margin lending, where we haven't followed exactly either up or down historically. That's, of course, we monitor a little bit the competition, what's happening there. With the mortgage, it depends, of course, on competition, but, you know, we're already very low. Let's see how we play that. Of course, we wanna have a very competitive product going forward.
All right. What about deposits?
Okay, you mean deposits? Yeah, but I think that we're gonna follow that down with the rest of the market.
All right. Just lastly, anything to say on that, on, personal loans?
Yeah, I think, of course, there's some room to maneuver there as well. I think the one that what we really need to follow the market and be leading is mortgage. The other ones, of course, we can monitor a little bit and see what's happening.
All right. Well, that's it for me. Thank you, and I wish you a pleasant summer.
Thank you. Same.
Thank you very much. That was the last question for today, so thank you for attending the presentation. Our next quarterly report will be out on October 24th. Please visit our website, nordnetab.com, or reach out to me if you have any questions. Thank you for your interest in Nordnet, and have a nice day and a nice summer. Bye-bye.
Yep, bye.
Thank you. Bye.
The recording has stopped.