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

Good day, and thank you for standing by. Welcome to Avanza Bank Interim Report January-June 2023 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Rikard Josefson. Please go ahead, sir.

Okay. Thank you all for listening, and good morning in this beautiful summer day in Stockholm. I will start with a business update, and then I will leave it to Anna to give -- to guide you through the numbers, so to speak. If you're looking at the first slide, I think it's important to talk about the strong net inflows that we have for the first 6 months and for the quarter in itself because net inflows is building savings capital and is the most important factor for the long-term success of Avanza. And we have already, in 2023, surpassed the number for 2022 when it comes to growing with net inflows, and I will come back to that. Looking at number of new clients, it's slightly below the numbers we had for the first 6 months in 2022. But I'd like to point out that a bit more than usual this first 6 months, we have offboarded clients due to KYC reasons. So the 65.2 thousand is the net number. But as I said, we have off-boarded some clients more than normally during the first 6 months with our KYC work. Digging a bit deeper into the net inflows, it's very good news for us that it's a very solid month by month, growing the company with net inflows. So it's not one-offs. It's not particularly Private Banking or Pro customers. It's very much the standard segment. And we can also see that the net inflows has not been affected by the macro environment. I'm actually a bit positively surprised that our customers, due to our strong offering, keeps on saving and prioritizing savings in these market conditions. We can see that we have still SEK 1.5 billion in monthly savings into the platform, and that's a number that have been very steady. I think we peaked last year at SEK 1.7 billion or during the pandemic, and I would have -- I wouldn't have [indiscernible] come a bit more, but it seems that the customers are very, very much prioritizing the savings, which is, of course, good news for us. In our pension company, we also see that we have now SEK 355 million in installments to the platform by corporates every month, which is also a number that's growing quite handsomely during the year. If you also look at the first quarter, because you got the figures during the second quarter, you can see that the savings market in Sweden has grown by about SEK 75 billion, and we took 23% of the market growth in the first quarter. And that, of course, had a positive effect on our market share, which went up to 6.7%. And that's one of the highest number we have seen since the pandemic when we took 23% of the market growth. And of course, we are gaining market share with the offering that we have. Looking at transactions, which I will come back to, is very linked to our brokerage income. You can see on the left side that we actually, during the quarter, gained some market share in trading volumes on Nasdaq OMX and First North. And we usually gain market shares when there's a bit more optimistic market conditions. Looking at the right side, you can see that we lost a bit when it came to turnover, but that's affected by foreign banks and institutional trading. So the left chart is the most important for us, and then we can see that we hold and actually increase EBITDA market share in trading volumes. Trading activities were correlated with the market sentiment, and this is a comparison to brokerage-generating notes per brokerage-generating customers and the VIX quarterly average index. And we usually see that some volatility is usually good news for trading activity. If volatility becomes too high or too low, usually, customers are a bit confused what to do and they begin sitting on their hands and not trade as much as they did previously. We can also see that this chart, we have just shown, a number of brokers generating notes per trading day. And the yellow highlights the summer months because we sometimes get the question these are seasonal effects due to what time of year it is. And our conclusion is that there are no seasonal effects. I personally have an opinion that also the mobile devices, et cetera, makes it so easy to interact with the savings platform like Avanza 24/7, wherever you are. And I think that has a positive effect that the summer months now stays, or as all other months, and are affected by the market conditions. And we can also see that during the quarter, of course, Anna will come back to that, our brokerage income was down compared to Q1. But at the same time, as I said before, we are gaining market share on the stock exchange, and the brokerage income is very correlated to the turnover in the stock market. And the Swedish stock market had a poor turnover development during the quarter. And of course, that had a negative effect on our brokerage income. But most important to remember is that we are gaining market share in trading so that we are very comfortable that when trading comes back to higher volumes, whenever that will be, I have no idea, we are sure that our brokerage income also will come back in a strong manner. We often get discussion about our customers and what type of customers we have. I would like to start by saying that one of the success factors for Avanza has been that we become much more relevant to all kind of customers within the Swedish savings market. And we categorize our customers in different types. That doesn't mean that these are 5 different types of customers. These are 5 different types of behavior. And we have the beginners, the novice customers who maybe want their monthly savings in a global index fund and they don't log in as much, but they understand the need to save. We have the save type of behavior where you have need some help with Avanza Academy, our reports, our blogs, you can get more knowledge. We have the invest customers, usually more buy-to-hold types. We have the professional traders, and then we have for fun. But to underline this, you could say that an invest customer could have one portfolio with long-term holdings and another portfolio which is more for fun, or a trading client could actually have his or her pension money in an invest type of behavior. And we talk to all these type of customers and try to develop our platform so that will be suitable for all types of behavior more than all types of customers. And we believe that this is one of the strong parts of Avanza that we're quite actually good at this, if I might say so. Looking at the customer behavior in the current market situation. Of course, the good news is that our customers keep saving, and a lot of customers are saving money for being prepared for the future. We can see that the new customer we gained in 2023 are behaving like previous customers. We also see very clearly that a number of years as a customer has a very positive impact on the savings capital that customer has on the platform. We can also see in regard to the SBB, Embracer, Viaplay shares that were heavily traded down during the quarter that an absolute majority of our clients invested in these types of companies, it's a very small part of the portfolio. So it's more like you have maybe 15, 20 shares in your portfolio, and then you add some high-risk shares in that portfolio that could be SBB, Viaplay and Embracer. And that, of course, had a negative effect, but no customer was, so to speak -- very few customers were in one stock and being blown out by the downturn in these shares. We can also see that the share of liquidity of total savings capital is very stable during the quarter on the platform. And we have also, as we discussed previously, launched our own savings account, which had positive effects in many ways. One way is that our Savings Account+ partner increased their interest rate. So now the highest on the platform is 3.30%, but we also make more money on our own savings account. But the question could be, is the net inflows correlated with the savings account, and my answer would probably be no because we see extremely few clients entering the platform just to open a savings account. That is so marginal. I would say it's not even worth mentioning. So it's more Avanza clients opening savings accounts and allocating more liquidity on the platform. And the liquidity situation on the platform is also very correlated to the trading activity because when -- if we get the positive momentum in the stock market, we usually will see that the percentage liquidity in comparison to the total savings capital usually goes down. So a lot of the money on the platform that is deposited today, in my opinion, is usually money waited to be invested or just that you want to allocate some of your money in cash because we have interest rates coming back so strongly, and that means that that's more part of the portfolio than looking at it as pure deposits. Looking at some highlights from the quarter. We launched our -- another mutual fund in our bio concept by Samuelsson & Hult, which is a health care fund, also an Article 9 fund, which is our second Article 9 fund. We did some new decision-making tools, better sustainability data on stocks. We had possibility to access report and presentations through collaboration with Quartr. So that means that you can listen to this call probably on Quartr this afternoon, I would say. We also had Hackaton with 30 new product ideas and also ideas how to work with our internal efficiency, which is important to remember because that's always a focus for us. And also, we were really happy to be ranked #8 as the Most Respected Company in Sweden and #1 by financial institutions. That means that the trust is there from our customers, and the prerequisite for growing Avanza is still in place. Always a key success factor is to focus on continuous growth, customer satisfaction, strong innovation with a very, very engaged employee staff. And we see that our employee engagement index has increased during the spring. Our leadership index is at record levels. So I think that the company is well prepared for the future. Of course, we cannot affect the macro environment, but we can -- actually, the only thing that we really can control is how we treat our clients, our employees and how we work with innovation in the benefit for our clients. And I'm absolutely convinced that if we do this with 100% focus, we will create a great shareholder value over time to our shareholders. With those words, I would like to leave over to Anna.

Thank you, Rikard, and good morning, everyone. Starting with the financial overview. There is no news that we're facing a challenging macro environment and have had a slower stock market in the quarter. This has affected our income, which, however, despite this, is holding up strong and we are showing solid results. Looking at the 6-month figures, operating profit is up 30%, and net profit is 32%. This gives an operating margin of 66% for both the first half year and the second quarter. Return on equity for the quarter came in at 37% and 39% for the first half year, both above our long-term financial targets. Altogether, this gives an earnings per share of SEK 3 for the quarter and just over SEK 6 for the first half year. Operating income decreased by 4% compared to Q1, mainly due to lower trading-related income, but the NII and fund commissions increased. Brokerage income decreased due to lower trading activity, in line with the overall subdued market conditions. Also, there were over a fewer trading days in Q2 compared to Q1. However, gross brokerage income per brokerage-generating turnover increased from 10.5 to 11.1 bps. Lower customer activity was also reflected in decreased currency-related income. Trading in foreign equities accounted for 16% of the brokerage-generating turnover in the quarter and up from 14% last quarter. The fund capital in the quarter increased, whereas income per SEK of fund capital continued to fall more than 1 basis point to 27.5 bps at the end of the quarter. And this is a result of a continued increased share of capital in index funds, which was at over 42% at the end of Q2 and nearly 2 percentage points higher than in Q1. Net inflows to funds were continuously strong with SEK 6 billion in Q2, giving Avanza a market share of 20% of fund savings. And out of the SEK 228 billion invested in fund from the platform, SEK 80 billion were within our own fund company, where we see a strong growth. Other income decreased mainly due to lower activity in our Avanza Markets products and also lower income from stock lending. Going over to the NII, which is at record level. We saw an increase by 12% from last quarter, which was mainly due to higher yield on the surplus liquidity as a result of higher average STIBOR and larger volumes from stronger net inflows and our attractive savings account offering. As a result of an increased policy rate, we have also raised our interest rate for the mortgage and the margin lending in the quarter, which contributed positively after the rate hike in Q1, which had a full impact in the second quarter. Lending volumes, however, decreased during the quarter, and the average interest rate on internally financed lending increased from 3.6% to 4% in Q2. On the interest expense side, we have seen increased cost of deposits, where the volume in our own savings account has more than doubled to SEK 15 billion in the quarter and where we now pay an interest of 3.25%. And the average annualized interest rate on deposits in the quarter was 1.05%, up from 0.66%. Looking ahead, we have decided to postpone the latest rate hikes on the mortgage until the 1st of August and 1st of November. This is in line with how we have acted on previous hikes from November and February as well. When it comes to margin lending, we've come to a point where it's getting more and more difficult to increase rates without the volumes decreasing, at least when it comes to the higher rate levels where the ordinary effective rate is already at 7.75%. And when it comes to deposit rates, we have so far concentrated on having a competitive rate on the savings account, which is also our aim going forward. This, however, doesn't mean we won't have to take potential flows between the different accounts into consideration, setting the rates going forward and as well as competition, of course. Now going over to cost. Looking at the costs, operating expenses decreased by 1% compared to last quarter, mainly due to seasonally lower marketing costs. Personnel costs increased primarily as a result of slightly more employees. And as previously stated, our people plan for 2022 stands, but fluctuations may occur due to the effect of recruitments from late 2022 and employee turnover. We continue to focus on operational efficiency and cost development. And as previously communicated, costs for 2023 are not expected to exceed SEK 1,160 million, and we are comfortable that we will not exceed our cost cap. Our capitalization is very strong given our low-risk business model. The leverage ratio was in line with last quarter, meaning the profits can grow by SEK 25 billion without falling short to the 3.9% requirement and without any other measures taken into account. The leverage ratio is, in other words, well above regulatory requirements, which is comforting in this current uncertain environment. Talking about our low-risk business model, I'm very comfortable with our balance sheet in the current macro conditions. Our loan book hasn't shown any credit losses since 2011, and the LTVs are at comforting levels, at 38% for the mortgage and 27% for the margin lending. And as you know, Avanza has always valued a simple capital-efficient balance sheet with low risk. So to conclude, with the results reported, I think we are really showing the contribution of the last year's growth and that we continue to show strong resilience despite the challenging macro environment, proving the importance of a diversified customer base and different income streams. Once again, I would also like to emphasize the strong net inflows seen during the year. This and customer growth is what builds our success long term. There is a strong correlation between growth in savings capital and income growth. And with the structural changes in society and people's continued need to save, I am convinced that we have many good years of growth ahead. And with that, I think we can open up for questions.

Thank you, Anna.

[Operator Instructions] Now we're going to take our first question, and the question comes from line of Jacob Hesslevik from SEB.

You had SEK 16 billion net inflow during the second quarter, which is a strong. But could you comment on the split that is invested in ISK and how much is going into your savings account from these inflows? And also, what is the split of old ISK deposits going into savings accounts?

We have the -- I mean you have the savings account volumes. And if you -- we don't disclose exactly the split between the different tax wrappers. But if you look at the savings capital within each different customer groups, I would say the split of savings or liquidity is about the same. And then if you exclude the savings capital in our -- well, in our own savings account, that means that most of the rest or the majority is within the tax wrappers.

Purely save on your savings account, but you didn't mention anything from existing clients. So what of the inflow that have happened during the second quarter is going straight into savings account? And how much of it is invested into shares and funds?

We have seen clients net buying equity this quarter, but of course, we have seen money going from both ordinary deposits and from the external savings accounts and also from deposits from outside our platform.

But it's not possible to say that out of the SEK 16 billion went straight into savings account from existing clients and SEK 10 billion was invested or...

No, that's you making too much simplification because, I mean, the customer move around their money. So you could probably have customers who went from another bank into the savings account and, at the next day, from the savings account buying equities and, at the same time, another customer sold equities and put the deposit back to the savings account. But the most important thing, as I mentioned during the call is that extremely few clients have came to Avanza to open a savings account. So it's more that you allocate your cash part of your portfolio to our savings account.

Anything on how large the savings capital is in external savings accounts at the moment?

In the external, it's SEK 35 billion.

Okay. And is that one of the reasons why you want to close or terminate the agreement with them because your leverage ratio can only handle SEK 25 billion in deposits?

That's one reason, that we have a tap-out if we came into a stress situation, of course. But the other reason is also that you can actually have SEK 8 million in cash on the platform with state guarantee.

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

So first question on the NII. So there's been a lot of moving parts through the quarter impacting NII, both with regards to interest rates and volumes both for lending and deposits. So I was wondering if it would be possible to help us give some insight on how the NII has developed within the quarter or if you could say perhaps where the annualized NII run rate was at the end of the quarter or where lending and deposit rates were at the end of the quarter.

Just to give you a little flavor, we can say that both the interest income and the interest expense increased by the end of the quarter compared to the beginning of the quarter. But then, of course, it's very much to do with, of course, the development of the volumes on the deposit or on our savings account. But -- and then we have -- as we know, we have hikes coming through from -- on the mortgage as well, so it's hard to see. There's so many moving parts in the NII.

Yes. So that's why I'm asking that. But would you say that the end of the quarter NII is above the average quarter level?

I wouldn't say -- all I can say is that we have increased the interest rate on the savings account from the end of June [ 23, 25 ]. And of course, that will have an effect. And as you have seen in the monthly statistics, we see a quite growth pace when it comes to the volumes on the savings account. So of course, that will have an effect. But whether it will be totally offset by the increase in and the development of cyber and the mix effect on the other side, it's hard to say. And looking at, for example, we have seen a small increase when it comes to the covered bonds. And then you have the 3 months resetting effect as well.

Okay. And then a question on costs. So looking at cost to savings capital, that was up slightly year-on-year and is now at 16 basis points or just above 16 basis points. That's 35% above the level implied by your 12-basis-point ceiling. So when do you think it's reasonable to -- for yourself, to be below the ceiling within your target level? We're already having second thoughts about that ceiling. And then related to that, how do you think about the potential for efficiency improvements from restructuring?

I wouldn't say restructuring, but we always work with our efficiency. And one way of looking at that is, of course, that we copied our people plan for '22 into '23. That means that we are growing the company, we have to become more efficient, and we are becoming more efficient every day. With the strong net inflows that we have and if we believe in the future, we're quite comfortable that we will get back to the 12 basis points or below the 12 basis points when we can see some more normality when it comes to development of the market. But of course, there is a time where if this is not fixed, so to say, we'll have to act on it. But I think we will to be patient, at least for the next year or so, in my opinion.

Compared to 1 year ago, for instance, if your cost to savings capital is actually up a bit?

Yes, I know. And we are not comfortable with that. We don't like that. And that's why always we did copy the people plan trying to be more efficient, and then we have strong net inflows. And if we get the savings capital back on the growth track, we think that's the way to fix it, both with growing the company, net inflows, a bit happier stock market and, at the same time, a tight cost control that, I believe, that we have. So my point...

Savings capital is up quite a bit year-on-year, and the stock market has been doing well. So I mean market conditions have been actually, I would say, quite favorable [indiscernible]?

At the same time, I think we peaked at the savings capital of SEK 806 billion at the end of '21. So I would first like to come back to that figure.

All right. Yes. And then final question from me on brokerage and brokerage pricing. I know you earlier stated that you don't think pricing is highest priority when you ask your customers. So I was just wondering if you're still confident there is no need that you see for revising your pricing despite there as being some competitors offering lower pricing than yourself or even so-called free equity trading. And also just noting that your brokerage price plan has been pretty much intact, I think, for quite a few years now.

No, the pricing plan has been intact since 2014. So it's actually 9 years we have not changed the brokerage prices. That's something we always will consider. We always have to be aware of competition, how things are going. But at the same time, we actually gained a bit market share when it comes to a number of trades on Stockholm and First North. So we have not seen that we have been losing out because of our brokerage prices. But you never know when it's a competitive landscape. But we have seen newcomers, we have seen other banks lowering the prices below us previously during the years, and we're still gaining market share. So we're confident that the price we have creates value for our clients. But time will tell if we need to change it, but it's not in our plans right now.

And we are adding more and more information [indiscernible] [ so once again ], relatively [ speaking ], seeing that these prices have been going down.

Yes.

But will you say you would only consider revising your brokerage pricing as a consequence of competitors moving kind of aggressively rather than doing it proactively yourself, as I think maybe what you did in the past prior to 2014?

I think that's a hard question to answer because I think it has to do to that -- still, our customer believes that we are creating value for the brokers they are paying. And as long as that stays in place, I'm not that nervous for brokerage pricing. But at the same time, the competitors, they have to build not just execution, they also have to build all around the trading like we have done for several years. So right now, my answer is that we will not change our prices on brokerage. Will a competitor for us to change our prices on brokerage? Not that I see it right now, but it's impossible to say that, that will stay forever.

And the next question comes from the line of Patrik Brattelius from ABG.

Can you hear me?

Yes.

Yes.

Perfect. The latest deposit rate hikes has been done on your own savings account and not on the ISK or endowment insurance account. But regarding future deposit rate hikes, it seems to me that you have kept the door open that you might raise the deposit rates on these accounts. So in order to help me understand at least, in which type of scenarios or in which type of changed customer behavior do you see that as the right strategy to raise the deposit rate on ISK and endowment account instead of the savings account?

It's difficult to answer that. I think it has a lot to do with competition and customer expectations. But I think in the endowment account in ISK, it's even more money on the sideline waited to be invested. So people not usually hold deposits for a long period of time because you buy some fund or equity, and then next week, you sell it, and then you have cash for 3 or 4 days. That's what we see when it comes to individual customers' behavior. So we don't feel that the demand is that strong. So we have prioritized to increase on the savings account more, as I said in the call, for that when you allocate to the asset class cash, so to speak, you will get a nice interest rate from 3.20% up to 3.30%, with Savings Account+ partners. So it's not in our plans to raise those interest rates, but it's absolutely something we will consider due to competition and customer expectations. But we have not felt that the customers are disappointed that we didn't increase those interest rates in the loss rate due to the fact there is a place where they, for a bit longer term, can place money and get a decent return on that cash. Maybe not a very clear answer, but this is always something we consider when we get an interest rate increase, and it's impossible to say exactly how we've lacked in the future. But as we acted before during the last couple of rate hikes, I think it's something that we would like to do but impossible to guide for it.

Okay. Fair. I liked your slide on Page 16, very appreciated regarding the NII bridge. But my last question is regarding brokerage income per commission note. We see it's down 8% quarter-over-quarter. Can you talk about what is driving that drop?

I mean we don't really look at income per commission note. As you know, we look at the income per turnover krona, which has gone up. And income per commission note has, I would say that, that is more connected to the size of the trade and so on.

I would say that a general answer could also be that we have seen more buys themselves, but we also see that people do smaller buys and build up there. If you -- for example, if you want to buy your stock and you want to buy 1,000 shares, you buy 100 shares 10 times instead of 1,000 because people are sort of spreading out their buys in equities they want to go into it. So that would be -- that will create that effect also.

And I would say that, as I said, the income per turnover krona is a much better ratio to follow.

And the next question comes from the line of Rickard Strand from Nordea.

Can you hear me?

Yes. Loud and clear.

So starting off with a question on NII. I just wanted to hear if there were any larger items impacting the interest expense positively in Q2 versus Q1 or if there were any larger swings there between Q2 and Q1.

No. No, not really what we're seeing. No.

No? So just higher rates basically impacting it.

Yes.

Yes. And then switching over to costs. I just want to hear, I think you've previously mentioned that regarding the number of FTEs, you expected around 650 FTEs by the end of the year. And that's the level we are currently, but there has been some sort of underlying growth year-over-year. So should we expect it to be more flat from this level towards the end of the year? Or how do you expect that to develop?

I think you have to look at it that we will be around this figure. Then it could be at the end of the quarter, we have just onboarded 3 people and offboarded 3 people the week after. So there is a natural movement, I would say, between 10, 15 employees that could go either way because it has a lot to do when people are leaving, how long does it take to recruit and how long -- sometimes, we recruit somebody before somebody leaves because we want to hand over from one person to the next. So it's impossible for me to answer that question. I think you could say that around this number, I think you can expect quarter-by-quarter to be -- could go up a little bit. It could go down a little bit also.

Okay. But now a larger requirement [indiscernible] FTEs...

I think this is the figure we will be around, so to speak, for the next couple of quarters.

And then tying into that, the wage increase for the full year, I think you previously mentioned around 4% wage growth. Is that what we still should expect? Or is there anything in the composition of the FTEs that have changed your view here?

No, I think that we are around 4%. If we're going to -- we still will keep our cost target, but I wouldn't be surprised if it came in slightly above 4% due to higher prices, so to speak, for especially higher good developers. But for the time being, the 4% stands but with an outlook that it could -- might go a bit over.

Okay. And then as you mentioned in the report, the EU proposal about the ban on inducements and potential sort of changes you would need to do there in your fee structure, how do you see that from a cost perspective? And when sort of would you need to start preparing for that type of change?

It wouldn't actually cost us anything to change the business model, so to speak, on our mutual fund and third-party distribution fees. It's more how we will design our offering and how we will communicate it to our clients. We will have the option to -- we could decrease the income from mutual funds, or we could increase income from mutual funds, but -- or we could keep it flat. We have had a lot of discussion with especially U.K. players who adapted to this model several years ago. At the same time, the EU legislation will not be in place. I think it's still a few years down the road before this will actually materialize as a real regulatory requirement, so to speak. So we have a lot of plan A, B, C and D for different models that we have worked on and preparing for. And so that's what I have to say around that, but it will not affect the cost side.

Okay. But -- so no larger sort of development [ in the expense ]?

No, no. This is something we can do in-house, and we have prepared for it. So we could probably print out a new model tomorrow if we ask our people to do so. But we will see how the parliament and the EU and the Swedish government and all the stakeholders in this question will act. And I spent quite a bit of time in my comments on the Q2 report with stating my opinions around this, and I think you have a lot of answers there.

Yes. Then just noted the average margin on the funds continued down 1 basis point, I think, in the quarter. I just want to hear if there's -- is it purely due to mix changes in terms of equities versus mix funds or something else impacting it.

No. No, I would say it has totally correlated to the shift upwards in index products, which are, of course, cheaper. This is something we see also that when times are uncertain, index grow in popularity. When the stock market is strong, you always get this actively managed funds, which outperform the markets and then gather a lot of capital. So this is something we've seen before.

And just a last one. I noted in your table of other comprehensive income that you have a negative impact of SEK 21 million related to changes in values in shares and participations. Just wanted to hear if you could comment what that is related to.

Yes, we have written down, so to speak, the value of our shares in Stabelo.

[Operator Instructions] And the next question comes from the line of Enrico Bolzoni from JPMorgan.

Just a couple. One, considering the big increase in saving accounts over the quarter, do you think that most of that now is completed, is done? The average cash per client on your account is not tremendously high, so I was wondering if you start to see maybe a softening and most of the people that wanted to move cash have already done so. And the second question was on the expansion abroad. In Q1, you mentioned that you were possibly considering an expansion maybe inorganically. I just wanted to know if you have any additional color or any developments or any opportunities you are scrutinizing outside of Sweden.

No. When it comes to Avanza going outside Sweden, I have [ no ] more comments than the ones I've done previously. When it comes to growing the savings account or the cash on deposit, I think there's like SEK 2,000 billion or something in cash in the market, so I think we can grow our deposit base and attracting more clients to even put more deposits on the platform. I don't see that we are or at, so to speak, that we tapped out all the potential from our existing client base. So I think that is still going to grow for the next couple of quarters. But that has to do a lot with the macro environment, of course.

And in terms of the proportion that was on new money but, actually, was money that was already on your current accounts on the platform and migrated to saving accounts within the group, what do you expect? So but -- in other terms, I'm trying to understand the cadence so-called cash sorting, so existing client money, which is [ a trend ] that potentially can move again on -- or more on savings.

Yes, I would say that if you look at the tax wrappers, usually customers should not take out cash and put in cash back and forward because that has a negatively tax effect for them. So if you take out money from tax wrappers and put them in the savings account, then you should see that the customer more is allocating towards cash as an asset class. But of course, we probably have clients who have said that I don't believe in the stock market for the next 6 to 8 months, so I take out my money from the ISK account and put it on the savings account, and then I'm waiting for better circumstances to invest again. So that would be my answer to that. So of course, there are flows between the savings accounts and other accounts and trading accounts, but that's quite normal, actually.

Now we will take a final question. And the question comes from the line of Ermin Keric from Carnegie.

In the slide of your presentation, you alluded to that you're seeing some increased offboarding due to KYC on the customer base. Could you quantify that any more extent and what's driven it? Have you changed anything in your approach? And is there any impact on the savings capital?

No, it's no impact in savings capital. Well usually, just to give you a flavor, we have customers who maybe have 0 in holdings that has not updated KYC because they may be not use the platform anymore and then we have to offboard them. It's -- I will not give you a number, but we do this constantly every month. And my point is that during the first half year, we did a little more housekeeping when it comes to offboarding this type of clients, and that's also partly the effect that we see net number of customers, I believe, below the [ '22 ] figure for the first half year. But we have not changed anything. It's much more that we do this constantly.

Very clear. And then on the net inflows, it's of course positive with the strong inflows from the standard customers being so resilient. But in terms of the Private Banking, have you done any analysis on why we're seeing a bit more muted flows there because if the standard customer can still save, shouldn't those Private Banking customers also be able to continue to save in this macro environment?

They do save. But in the Private Banking, we had a few one-offs, which was that -- to put it this way, if you own shares for like SEK 1 billion and you sell the company, then that share will go out from the platform. And we had a few of those incidents during the quarter. So that means that the AUM in Private Banking was negatively affected by one-offs, which became outflows actually. But that -- but looking -- I analyzed this quite good. And so it's not that they leave in the platform because they're dissatisfied. It's other reasons, and it's very large holding in stock-listed companies. And actually, these equities has been on the platform for quite some time, and our income on that volume has been 0, so it has no effects on the P&L. So my point is that we are growing the Private Banking business when it comes to the gross number, but we had a few withdrawals because of selling of assets.

Got it. That's very helpful. Then a final question would just be on the deposit rates you're offering on your Savings Account+. And maybe a bigger picture in terms of your ROE is currently quite solid, also compared to your long-term target. How do you balance between kind of maybe marketing Savings Account+ less so you don't have to increase your savings rates to, thereby, expand your NII? And saying that you're already having an ROE that's above your long-term targets, you could actually just give away more of the rate upside to customers already if you want to be on the long-term target instead.

Absolutely. But I think that if you look at the market right now, I think the -- from larger players, I think 3.35% is the best interest rate in the market. We paid 3.25% of Savings Account+ rate around 3.30%, and we think that we have a competitive offering in this, and we're going to keep it competitive. That's what I have to say.

There are no further questions. And I would like now to hand the conference over to Rikard Josefson for any closing remarks.

Okay. Thank you very much for listening in, and I wish you all a great summer going from here. And take care of yourself and your families. Thank you.

That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.