Avanza Bank Holding AB (publ) (AZA) Earnings Call Transcript & Summary

Hello, and welcome to the Avanza interim report for January to September 2020. [Operator Instructions] Today, I am pleased to present Rikard Josefson, CEO; and Birgitta Hagenfeldt, CFO. Please go ahead with your meeting.

Okay. Good morning, everybody, and thank you for listening in. Before I start, I just hope you are well in this pandemic, a testing time for us and that you and your families are doing well. So let's get into the presentation. Let's start off with the customers. Of course, the quarter was a new -- very strong quarter when it comes to new clients. We added almost 80,000 new clients in the quarter. And we have added 218,000 new clients for the full year of 2020. And that means that we now have surpassed 1.2 million clients on the platform. But also to note is that we have a churn of 1.3%, which means that on average, our clients actually will be on the platform for 77 years, if you do the math on that. And we can also show that we have still strong customer satisfaction, strong growth in number of clients and also, we have been marketing ourselves a bit more on television, banners, on social media, which also, of course, helped over recognizing us as the #1 choice for clients. We have also in the quarter, which I believe we have enhanced number of clients, also made it easier to become a client and less friction in registration on the platform. If you go to the next slide, which is, I believe, very important going forward because the net inflow is, of course, what creates good things in the P&L for us. We had so far this year, SEK 57.6 billion in net inflows. And that's -- if you should compare that with '19, which we had SEK 32.6 billion for the full year. And 2019 was the best year ever and the first time we came over SEK 30 billion. So the net inflows has been fantastic so far. And for the quarter, we had SEK 16.3 billion. So very strong net inflows continuing throughout the quarter. Also when you look at the net inflows, 61% of the net inflow for the quarter was from existing clients on the platform. Changing the slide, it's a very important slide for us because we are in the business of gaining market share in the Swedish savings market. And if you look at this, you can see on a rolling 12-month basis, we have almost 20% of the net inflows in the Swedish savings market. That means that 1 out of 5 kronas will end up on the Avanza platform on a 12-month basis. Second quarter was the best second quarter average with 14.6% of the net inflows. The reason for the second quarter always being a bit lower is that there are flows into the savings market that is not addressable for Avanza. But we're still very happy with the figure of 14.6% and that we are taking 1 out of 5 new crowns. And our market share is, of course, 4.9%, and that's the target to grow that. And since we are gaining market share when it comes to net inflows, a lot above our market share of 4.9%, we know that we are taking market share as we're speaking. Going to the next slide. Of course, one -- we haven't shown this before, so this is a new slide. It's about monthly saving and premium in the pension company being paid in. We have increased monthly savings in mutual fund with 39% compared to a year ago, and we are now getting almost SEK 700 million or SEK 680 million every month in monthly savings from our clients. In combination with the net inflows of pension premiums in the pension company, which is up to almost SEK 250 million a month, we are gaining 9 -- almost SEK 900 million -- a bit more than SEK 900 million every month as getting net inflows a little bit more automatically on the platform. And this is something we are focused on. We have made improvements in the mobile apps to encourage our customers and inspire our customers to do more monthly savings and it seems like it's paying off. Next slide is the market share on the stock exchange. Now we have almost 20% of all transaction on Nasdaq OMX and First North are done through our platform. And we are the only one who are actually gaining market share if you look at the competitors. We also surpassed SEB now, and we are almost 10% of the turnover in the stock exchange go through our systems, so to speak. And that's an interesting fact also because we don't have the institutional trading, which, of course, is not part of the turnover. But on the retail side, we are gaining market share. We are performing quite well. We are very happy with that, and that's a number that we are tracking. Going to the next slide. Of course, we can see activity record high. We have over 160,000 more customers year-to-date generating brokerage income. We have monthly savings totally up 26% year-to-date, and growth on the savings capital strongly grow with income. And I want to speak about that, that the more capital we gain -- we gain in AUM, which now has surpassed SEK 500 billion, the more good things will happen in the P&L over time. So more AUM will drive income for Avanza. And I think we've proven that during this year. But of course, still, always key for success for us is the employee engagement that we are still operating with a lot of distribution when it comes to staff. 60%, 70% of our people are still working from home, but we are doing that in a fantastic way. And I'm very proud of our employees who are handling the situation without delays in our innovation or without any hiccups in the processes that we have. And also, of course, we are changing our back office system, which is a project we have taken on right now. That will consume some resources from now during 2021. But I believe we can manage that in a good way, and we will still be able to innovate with new fantastic features for our clients. And with those words, I will turn over to Birgitta.

Thank you, Rikard. And as always, we start with a financial overview. And as Rikard said, the customer activity has continued in a strong pace in Q3 and is the strongest quarter in Avanza's history. As always, costs are seasonally low in Q3, but at the same time, the revenues were record high, all revenue lines improved. The revenues for the first 9 months almost doubled from last year. Operating profit increased compared to Q2 and for the 9-month period almost tripled compared to last year. Operating profit for the quarter even exceeds the profit for the whole 9-month period last year. Consequently, the operating margin for Q3 is still at a high level at 69% and 66% for the year-to-date. Income per savings capital for the 9-month period increased to 51 bps, whereas costs per savings capital have decreased to 17 bps. This clearly demonstrates the scalability of Avanza's business model. Our ambition in the last years have been to reduce the cost to savings capital ratio to 16 bps, in line with the best international peers in the industry. It looks like we will achieve this already this year. Due to the continued high revenues in the quarter, return on equity for Q3 was 55%, and earnings per share were SEK 2.15. If we look at the revenues, they were, as said, improved and up 84% compared to last year. Net brokerage income was a record high in Q3 and more than doubled compared to last year. The increase in brokerage income compared to the strong Q2 was mainly a result of 7.5 more trading days in the quarter. Although number of commission-generating notes per trading day was also higher as was the turnover. Brokerage income per SEK of turnover increased slightly to 11.4 basis points. And I will come back to brokerage in the next couple of slides. Fund commissions increased mainly due to higher average fund capital. We have seen a strong fund inflow also in this quarter. Customers also have a slightly smaller share of index and fixed income funds, which increased income per SEK of fund capital to 35 bps, although it was stable at 34 bps for the 9-month period. NII was only slightly higher than in Q2, mainly as a result of the higher-margin lending volume, but higher mortgage volume also contributed somewhat. Return on surplus liquidity decreased as a result of lower average STIBOR 3 months, but also lower volumes. The last month's credit spreads have tightened, which will affect income on surplus liquidity negatively when the bonds mature and new bonds are bought. Compared to last year, NII increased mainly due to better return on surplus liquidity as the repo rate was raised by 25 bps in January '20, but also due to larger volumes. Higher lending volumes also contributed positively together with rate hikes in connection with the increased repo rate. Other income is also very much affected by customer activity, where FX income even increased from the already high level last quarter, a result of increased trading in foreign equities. Income from Avanza markets decreased slightly due to lower trading volumes and transactions and revenues from corporate finance is seasonally low in Q3, but we saw the activity picking up in September. So if we go back and look a little bit deeper into the brokerage. Net brokerage development is, of course, connected to the last year's market volatility and higher overall turnover of the stock exchange. But also, as Rikard mentioned, our market share on Nasdaq and First North have increased. As seen on this graph, number of commission-generating customers had a very strong development during the year. Compared with the end of Q3 last year, we have seen an improvement of 63%. Since the beginning of '18, less than 3 years ago, the number almost doubled, a trend that actually started in 2015 when we got a negative interest rate for the first time in history. The aftermath of COVID-19 is, of course, hard to predict and it's not unusual for customer activity to slow off the great turbulence in the market as the market stabilizes. However, as a result of the strong growth in 2020, our view is that our lowest level has been raised. As seen in this graph, net brokerage is strongly correlated with Avanza's turnover on Nasdaq and First North. Even though foreign trading is not included, it is still a very good indicator of brokerage development. During the years, brokerage per SEK of turnover has been stable but increased slightly the last year. This is a result of higher share of brokerage income generated in lower brokerage fee classes, in line with the strong customer growth just shown. The share of brokerage income generated by private banking and pro capital customers who pay a lower brokerage fee accounted in the first 9 months of 2020 for 20% of the income compared to 26% in the first 9 months last year. This tells us that the increased trading is spread over a large number of individuals, which is according to our strategy to be relevant to larger customer groups. This also confirms our view of having raised the bar as long as we keep our customers satisfied and make sure that they have no reason to leave. If we look a little bit on the expenses as well, operating expenses are seasonally lower in Q3 due to lower personnel costs. Marketing costs increased as a result of more brand-building advertising during the summer and the TV commercial in the August as part of the autumn campaign. Depreciation increased as a result of a new lease agreement, and thus, to higher write-down of the leased assets. Other expenses increased mainly due to costs associated with moving into new facilities and due to higher cost for IT. Total moving costs amounted to SEK 13 million compared to previously estimated SEK 11 million. Moving costs are partly in effect of double rent from June to September. As previously stated, the estimated growth for 2020 of 12% includes neither these extraordinary costs associated with the move, nor the write-down of leased assets of SEK 8.3 million millions, which we made in end of '19. The cost increase for the full year is estimated at 12%, and the long-term cost growth of 9% to 12% remain unchanged. The tax rate this year has increased as the higher share of revenues was generated in the bank where the ordinary corporate tax rate applies in contrast with the insurance company where most revenues are taxed according to the laws for life insurance companies. Our capitalization is strong, with a total capital ratio of 18.7% compared with the requirement of 12%, including all buffers as well as Pillar 2 requirements. This improvement from June is mainly due to a new issue in connection with the exercise of warrants in the quarter. As stated earlier, our capitalization planning is mainly dependent on the regulatory requirement for the leverage ratio of 3% that will be affecting June next year. To maintain a satisfactory margin to the requirement, regardless of the market conditions, the Board yesterday resolved that the internal leverage ratio target will be 3.8%. The Tier 1 capital, therefore, has to be strengthened by SEK 750 million to SEK 850 million. The Board decided to handle this by lowering the dividend ratio for 2020. This should be seen as a one-off and the dividend policy to distribute at least 70% of the net profit stands. As said before, the leverage ratio can be improved to increase Tier 1 capital, either through a lower dividend ratio or by issuing additional Tier 1 capital. Due to a strong result, but also the pandemic and the prevailing uncertainty when it comes to regulators' view on dividends, we assessed lowering the dividend as the right way to go. This gives us room for maneuvering going forward and at the same time, we take the dividend debate into consideration and achieve the regulatory requirements. In the quarter, the leverage ratio was positively affected by customers' lower liquidity. And with that Rikard, I think we can open up for questions.

Absolutely.

[Operator Instructions] And our first question comes from the line of Patrik Brattelius of ABG.

My first question is just a clarification question. When you say you want to improve the Tier 1 capital with SEK 750 million to SEK 850 million, is that from the Q3 reported base level you talk about?

Well, that is what we see that we will have to increase the capital base by the end of this year or at the latest by June next summer.

Okay. And -- I understand. And my second question is with regards to this as well. And how do you view your future capital structure now? Like, how come you haven't chose to issue any AT1 capital since this decision with lowering your payout ratio, one can argue that this leads to inefficient capital structure and it would be more shareholder friendly to issue AT1 capital.

That of course can be discussed and as we see it right now, Avanza was the only bank in 2020 that actually made a dividend payout. And we have seen that there are some uncertainties on how the regulators will look at the dividend payouts for the next year as well. So we decided that we believe it's better for us not to issue an AT1 instrument now and then had to also not paying out any dividend and then being with too much capital on our balance sheet. In this way, we can still maneuver and if we decide in the future that we would like to increase the dividend and issue an AT1 instrument, we can still do so.

Okay. Yes, that I understand. Then my third and last question is regard to the securities lending. Is still the plan to launch this during 2020 and is still the guidance of SEK 20 million to SEK 30 million as an extra return for this program during the first year? Or has this changed on the back of the strong customer inflow you've seen?

No. We're actually launching it today.

Okay.

So we're launching it today, and we have no news on the strong notes revenues or...

NO. No, those stand.

We will see what happens.

Our next question comes from the line of Nicolas McBeath of DNB.

So yes, follow-up question first on the dividend for 2020. How we should think about the payout ratio? Should we think that everything you earn in net income on top of the SEK 750 million to SEK 850 million will be distributed or do you see the need to retain earnings on top of that due to kind of normal growth in the balance sheet? If you could just clarify that, please?

Well, I would say that anything that exceeds SEK 850 million is for the Board of Directors to be able to propose to the shareholders to pay out as a dividend. So it's, of course, what we plan for by the end of the year. So that is the amount that actually are discussable or up for discussion how highly dividend will be.

Okay. But should we think about everything on top of EUR 850 million as -- and then apply a normal 70% payout ratio on that? Or how should we think about that?

That's something that I cannot comment right now. What I can say is that we need to have at least SEK 100 million -- SEK 800 million -- or if you take the top of it and say, we need to have SEK 850 million more in own capital. Anything above that is up for discussion for payout. And I cannot comment on whether that should be 70% or 100% of that or something in between.

Okay. And the EUR 850 million, is that -- to follow-up on the earlier question, is that compared to the Q3 level?

That is compared -- that is for the full year.

Okay. And then, yes, a question, please, on the brokerage fees. You mentioned there is a kind of mix effect with, yes, broader trading. But if I look on the gross or also on the net commission income per trade, that's actually down a bit now, yes, in Q3, both if we look year-on-year or yes, compared to the recent quarters. Is that due to lower ticket sizes? Or are customers optimizing their pricing plans better to achieve lower pricing? Or, yes, what's your take on that?

I would say that it's lower ticket size.

Okay. And then could you say anything about what do you think about brokerage expenses from here? Do you see any potential to reduce your brokerage expenses per trade given the increasing volumes you see going through your platform on the Nasdaq?

Since we have customers who like us, we have customer satisfaction in place, we have increasing market shares. It seems that our customers are getting value for money. So we don't have any plans to reduce any prices at the moment. But who knows, that's something we always debate within the company. But at the moment, I don't see that coming.

Yes. Okay. That's good. But I was actually thinking more about your costs relative to the trading platforms. You could say anything about how these costs are structured, because I would think that the higher volumes you get, there should be a potential to reduce your cost to Nasdaq, yes, in absolute terms or per trade, if you could say anything about that potentially, if you see any changes in that in the future?

Well, I would say that we have an agreement with Nasdaq that's a ladder and for every new trade that we do on the -- I mean we are already on the top of that ladder so the prices are as low as it gets. Of course, we could always negotiate with the Nasdaq. But I would say that we have to pay a very small fee for every extra trade right now.

Okay. And then you're right a bit about the kind of new rules for pension transfers in the report with the cap on how much it can cost to transfer occupational pensions in the future. Have you attempted to quantify any near-term inflow potential due to this change in legislation?

It's always very hard to say. I mean pension is very slow moving. And even though the cost for moving a pension insurance will be lower to -- I mean very acceptable levels in -- from 1st of April next year, it's hard to predict what number that would be in net inflow for us. But of course, we will make sure that we will be a very good partner for those who want to transfer their insurances.

Absolutely. I think that the good news is the legislation, the bad news is the administration around moving pension is still going to be a hassle for a lot of clients. But of course, we'll see the opportunity. We will market ourselves. We will try to grab the opportunity. But at the same time, it's -- we still think we have a great offering. We have no capital fees. We have an extremely high variety investment opportunity in our pensions. Of course, we will the beginning of next year, talk a lot about that with our clients and inspire them to move their pension to us, but I don't think it will be like opening the floodgates or anything like that. But on the margin, of course, it's a very good opportunity for Avanza.

Okay. And then a related question here on Slide #5, as you showed the monthly savings. If you could just clarify what that monthly saving is? Is that monthly savings going into your pension company? Or what does it refer to? And then because I noticed your occupational pension inflows are still around SEK 1 billion per quarter, it hasn't changed that much. So if you could also clarify what -- where do you see this increase coming from on that -- you highlighted on that slide?

As we said, the increase is especially high in monthly savings in mutual fund in the more of ISK wrapper and not the pension. That's just normal customers who take a few thousand of their salary and put it in mutual fund on the platform automatically. The rest, the SEK 243 million, almost SEK 250 million, is the premium being paid in. And that is that has been growing, but not in the same pace as the monthly savings.

Okay. So that's also -- that's not only -- that slide is not only showing the occupational pension, it's more like -- yes, mutual funds and pension. So basically, all savings, excluding shares and securities, I guess.

Yes, you could say this all savings that people more or less automatically do every month.

Okay. Okay. And then, yes, my final question on the capital because, yes, I saw that your Tier 1 capital and your total capital, I think it decreased by just above SEK 100 million Q-on-Q. And that's despite kind of the strong earnings in Q3 and your decision to reduce the payout and also the exercise of warrants. And then also, I think you have around SEK 500 million in profits not audited in Q2, which I would have thought would have been included in the capital this quarter. So I guess my question is why did the capital not increase more in the quarter? And if you could clarify please how much you have accrued of earnings so far in the capital?

Well, we haven't included any of this year's revenue -- or profit in the capital base. So you can see that the capital base is always at the same size as it was by the end of June. And the only difference is that we had an issue of SEK 100 million connected to the warrants that were exercised in August, September. So since we are in a bit of a period where we cannot put in a correct figure for the dividend, we decided to not to include any of the profits and not deduct the assumed payout. So that's why the capital base has no increase of this year's profit.

Okay. Okay. And the reason for that is because you don't know about the dividend. So you think it's more prudent to -- okay.

Yes. It's a very special year. So we decided to not include the profits, and therefore, we don't have to take any...

Assumption about the dividend. Yes.

Assumption about the dividend.

Our next question comes from the line of Robin Rane of Kepler Cheuvreux.

So a couple of follow-up questions, I guess. So first, a clarification. So the Tier 1 capital at the end of the third quarter was SEK 1,529 million. So the SEK 750 million to SEK 850 million is on top of this figure. Am I -- have I understood it correctly then?

With that figure, you have to add the profits that we actually have done for the first 9 months and then deduct the EUR 850 million in order to see what can be paid out. But then again, we have a fourth quarter as well, that probably will give us some more increased profits. So yes, you could say that the -- anything earned above EUR 850 million plus the Q4 revenue -- or results is what the Board will have to decide on whether they should pay out or not.

Okay. Excellent. And then the leverage ratio target of 3.8%, how should we think about that going forward? Is that -- should we think about that as a minimum or a target where you can be -- which you can be around? Or, yes, how should we think about that one?

That is a target, that is not a minimum. So the minimum is, of course, 3%. And then we have different kind of internal risk appetite from the Board, of course, in order to never be below 3%. But the 3.8%, you should see as our target where we would like to be.

Okay. So if we would end up a year of, say, at say, 3.6%, you would not automatically decrease the payout ratio in a normal year?

No, we would not. We could use the 3.8% as -- it's a target. If we, 1 quarter or 1 month are at 3.7%, and we know why we are there and what actions could be done to increase it, then we will probably be comfortable with it.

Okay. All right. And then a question on the fund revenues. So we've seen, for example, in Norway, Nordnet, Handelsbanken going for to a platform fee rather than the, I mean, gathering the distribution fees from the fund companies. How do you think about this? Is this something that you think we will see more of in Sweden as well going forward and perhaps also from Avanza? Or how do you think about that?

We look at that question. Of course, we are prepared to change our business model to competitive reasons or regulatory reasons. We don't see that we need to do that right now, but we are prepared, and we believe that we will be able to do that in a constructive way. So it's nothing that I lose any sleep over. We are prepared to change if the market changes.

Our next question comes from the line of Jens Hallén of Carnegie.

I just have 3 clarifications. One, Rikard, you mentioned systems work. I just wanted to understand, are you talking about some kind of fundamental change of the back end systems? Or is this just part of your systems development?

I would say it's a bit of a bigger bite this time. We are changing the back office system within the company. We're moving from one system to another. And the reason for -- and that will give us even better prerequisites for future innovation when we're done with that project. So -- we always, from time to time have smaller challenges and larger challenges. And now we are doing a little bit larger moving from one back office systems to another.

Okay. And sort of time-wise, is this -- will you do this then 2021? Or is this you have already now, '21?

We already started the project's internal work, but we will finalize it in 2021.

Okay. Perfect. But that's also -- because you reiterated your guidance of the 9% to 12% cost increase. So presumably, this is included in that?

Well, actually, I mean we -- as I said, we state our 9% to 12% cost guidance. And of course, we are now entering into a new budget season. So if there will be any changes to that, we will come back to that in the Q4 report.

Okay. And then just a general question on costs. I mean as you mentioned, you're down to 16 basis points on cost of savings capital, best-in-class almost however you measure it. Is it possible? Or is it even desired to go below that? And desired, I mean...

A difficult question, I think.

I think absolutely, it's possible, and I absolutely think it's wise to go below that because that gives us room for being more aggressive when it comes to the prices that we have for our customers. So I mean depending on how things move in the future, I definitely think we could lower that in order to be more harder to compete with.

Okay. Perfect. Final one, on the revenue side. I think you said a few times there, bad quarter in the future will be better than a bad one in the past. And then I also see on Slide 13, you showed this, your revenues and also looking at the turnover, are you expecting here that the sort of the income to savings capital is higher than in the past? Or are you -- or were you simply talking about that's probably the same but as turnover is reducing, you have a bigger share in the future. So margin-wise, it's probably what it has been before. But what we should be looking for some normalization is trading patterns, not how much you make per trade.

I would say that -- I mean we have seen a very strong -- or I mean the income per turnover krona has been very, very -- I mean at the same level for a very long time. But if you look at the brokerage, I mean, that is hard to predict, but I would say at the total revenues per savings capital, I definitely believe we continue to decrease somewhat as we -- I mean that's the reason for decreasing the cost per savings capital in order to be even more competitive when it comes to pricing.

Okay. So for us, when we can model it, I guess, no one knows when the markets will normalize, but at some point, probably it will and then we will see it coming down.

Yes. But at the same time, we have 117,000 clients generating brokerage, more than we had a year ago. And of course, if market goes down, all of them will not stop trading and people are getting interested in the financial markets. So even though we will have more boring times in the future, I'm absolutely convinced we will perform at a higher level. And of course, the most important thing for me is, of course, the AUM, which surpassed SEK 500 billion because the more AUM we have, the more things happen in the P&L. And if it's a brokerage, so people are getting more passive and moving into mutual funds, that's okay, we will make money on that also. So we are a scalable company, more assets, more AUM will create a more resilient P&L.

Our next question comes from the line of [indiscernible] of SEB.

Just a few short follow-ups for me. You mentioned in the report that 70% of trades are done in the mobile app now. I assume that is in terms of number of transactions, could you specify how much of the volume that is made over the mobile phone?

You are correct. That's number of transactions in the mobile phone, I don't have the figure for volumes.

Okay.

It's still very high.

But it's higher than you would expect, but it's probably something below 70%.

Okay. Yes. And then another quick one, I guess, currency-related income up by 167% or 167. And I know a big part is probably just due to higher activity, but are there any other special drivers in that increase?

In the FX increase?

Yes. And the income from currency-related income.

No. I mean, if you look at our trading, I think 13% of total trading was in foreign markets. So that's combination with brokerage and FX just in group increased. And of course, things like Tesla and so forth, of course, generated a lot of trading in the U.S. market, and that, of course, is good for the FX income.

Our next question comes from the line of Adela Dashian of Handelsbanken.

Most of my questions have already been asked and answered, but I do have a question on activity levels going forward. Could you give us an indication of how that has progressed over the last 3 weeks? I mean are you starting to see a slowdown from the very high levels that you've experienced thus far in the year? Or is the strong momentum holding up?

No, I mean you have the figure for the stock exchange. I mean the turnover is still high. Activity is still high. That's the only comment I can say.

As I've shown in my graph, you can see very -- you can very easily predict our brokerage revenues. If you follow the turnover that we have on First North and Nasdaq, you can see the activity level there, and you can predict the brokerage revenue pretty close.

Our next question comes from the line of Robin Rane of Kepler Cheuvreux.

A short follow-up from my side. So you talked about the churn of customers, I think it was 1.3%. How do you define this? So is these customers that have actively closed down their accounts or just customers that are inactive, but still have their accounts and have no assets or very low assets on their accounts?

These are customers that actually have left Avanza and have no savings on their accounts anymore.

And part of those clients are actually deceased.

Okay. All right. But I would suspect that many clients that maybe leave Avanza for another platform maybe does not actively close down their account, but leave it and just move their savings. Is this something that you follow as well?

Well, if they have their account -- still have their account doesn't matter, it's what we calculate on when they move all their savings. But of course, there are customers that have savings on our platform as well as other platforms and maybe have moved half of it to somewhere else. Those number I don't have. The numbers we have is the customers that decided to take all their savings from the platform. And as Rikard said, that's mainly when you're actually deceased.

So take all the savings from the platform and close down the account or just take all the saving from the...

No. They don't have to close down their account. When they move their savings, all their savings.

When their AUM is 0.

Okay. Well, that's helpful.

But that's very, very seldom. We actually follow when people move out money. Mostly, we talk to our clients since usually real estate investment, helping kids or consumption is very seldom somebody leaves us for another platform.

[Operator Instructions] And our next question comes from the line of Nicolas McBeath of DNB.

Just 1 or 2 follow-up questions from me. Because I've been asking about this, yes, for the past few quarters to Rikard, and I think you kind of answered it, like, let's wait and see. But now again, in this quarter, you have a very high operating margin. It's 69%, which is way above your target level. And yes. I mean it seems like based on the comments you're making now, you think that the lowest level has been raised and so forth. So could you say anything about how you view this margin now compared to your target of having a 50% profit margin? Are you approaching the level or the point in time where you feel confident that the operating margin has been raised sustainably and that you maybe want to invest more into the platform to kind of give more back to the customers? Yes, please update on that.

Well, Nicolas, maybe I'll give you the same answer again, let's wait and see. But I would say that, of course, if we see these margins that we have seen for the first 3 quarters being sustainable, I would answer it like this, that's a factor that we are addressing in our business plan for next year.

Okay. And what kind of tools do you think you would look to use if you wanted to address? This, is it more on the cost base? Or is it more pricing or something else?

You have 2 options, basically, either we can lower prices and making sure that we get more growth out of that or we could invest more in people. That would mean that we could develop and innovate more. And you can also do a combination of those 2. And that's the -- I think that's how we address it.

Okay. And the new business plan, will you...

We can also incorporate marketing.

Yes. And the new business plan, will you -- can you say something about when you -- will you comment on that in the Q4 report? And the strategy for 2021 then? Or yes, when will we get to know more about that?

I think you will get more information when we release the Q4 results. As always, we had last couple of years guided 9% to 12%. We also added an actual number with our cost budget like we did this year. So we will be more precise when we come to Q4 how we view 2021.

Yes, when it comes to costs.

When it comes to costs.

Whether we would lower our prices or do anything on that part. As you know, we never tell anything before we do it. So that depends on what's happening like next year.

Absolutely.

Yes. And can you say anything about how you use the costs outlook already now, I mean given the very strong growth in customers and the high activity, should we -- do you think it's reasonable to expect maybe costs in the higher end of the guidance for 2021?

It's too early days to answer that, honestly. We write -- we just kicked off our, so to speak, cost budget process and looking what the needs are within the organization for 2021. So I wouldn't want to comment on that because it's too early days.

There are currently no further questions. I will now hand back to the speakers.

Okay. Thank you for listening in, and I wish you all a great week.

Thank you.

This now concludes our conference call. Thank you all for attending. You may disconnect your lines.