Avanza Bank Holding AB (publ) ($AZA)

Good day, and thank you for standing by. Welcome to the Avanza Bank Interim Report January and March 2026 Conference Call and Webcast. [Operator Instructions] I would now like to hand the conference over to our first speaker today, Gustaf Unger, CEO. Please go ahead.

Good morning, everyone, and welcome to the presentation of Avanza's Q1 report. With me in the room in Stockholm today, I have CFO, Jonas Svarling; and Karolina Johansson from Investor Relations. I will start by quickly summarizing some highlights from the quarter and then hand over to Jonas, who will take you through the financials. After that, I will talk about the other exciting news announced this morning that we are now entering the next phase in our international expansion, establishing Avanza in Denmark by the second half of 2027. But first, some key highlights from Q1. It's safe to say that a changing world has now become the rule rather than the exception. Rapidly shifting macro factors set the agenda throughout last year and the first quarter of 2026. Despite the turmoil and geopolitical concerns, we are again reporting a fantastic quarter, the strongest in the history of Avanza. Our customers have once again had to navigate rapid terms and high market volatility. For us at Avanza, this means an environment with high trading activity, which boosted trading income. Foreign trading also held up well and, in absolute terms, it was higher than the previous quarter, although it decreased slightly as a share of total trading where our customers, especially at the beginning of the year, choose to shift their closure towards Sweden. I believe this is a natural result of our large Swedish companies being seen as a safe haven when it storms on the stock exchange, but potentially also a sign that savers were positioning themselves for hopes that the Swedish economy will finally gain momentum. We have welcomed a total of 55,400 new customers, and had net inflows of SEK 16.5 billion, although the phaseout of external savings accounts continue to have a negative impact. We're making solid progress within our strategic priorities. Regarding the Private Banking offering, we took steps along the way by further visualizing and differentiating the Private Banking offering from the general offering with a new visual design for Private Banking customers as well as a new landing page where we more clearly package everything included in the offering, i.e., a new and more exclusive look and feel. In addition to polishing the surface, we have also sharpened the content by improving our mortgage with more interest rate levels and open up for lending for holiday homes. Furthermore, we have also soft launched our digital discretionary portfolio management for a selected group of customers, a milestone on the road to a broad launch later this year. We opened up for Private Banking customers during the quarter to register interest in the product, which many did. For pensions, our great focus now lies on improving the product experience and the offering for corporate customers using Avanza's occupational pension for their employees. And here, we took the next step to strengthen the relationship with the corporate customers by having a number of our employees certified to provide advice to companies on pension and insurance-related issues. I can also announce the positive news that Jesper Bonnivier, who since 2019 has been CEO of the fund company, has been appointed COO. While Jesper takes on his new assignment, I have begun the recruitment of a new CEO for Avanza Fonder, who will continue to drive that business forward. Also, Elin Wiker was hired as a new savings profile at Avanza. Elin is a well-known profile in the Swedish financial media with experience from both journalists and asset management. She will contribute with an increased focus on stocks, company analysis and market-related content across several platforms. Last but definitely not least, we announced the exciting news this morning that we are now entering the next phase of our international expansion, establishing Avanza in Denmark by second half of 2027. I will speak a lot more about this later but will let Jonas take you through the Q1 financials first.

Thank you, Gustaf, and good morning all from sunny Stockholm. Let's start with some financials. We are today reporting fantastic results. This is the highest quarter result in the history of Avanza, once again, with strong contributions from all income streams is up 9% versus last year and 10% versus previous quarter. Costs for Q1 came in below Q4, resulting in total a record quarterly operating profit of SEK 879 million. All in all, net profit is up by 21% compared to last quarter and 7% compared to the previous year. Return on equity ended up at 40% for the quarter. If you look at the income mix, it remains healthy with strong contributions from all income streams. The volatile market environment from last year continued and accelerated into 2026 and so did the high trading activity. This positively affected brokerage income, which increased by 21% compared to Q4 and by 10% compared to Q1 last year. Income increased despite the decreased brokerage margin, which was at 10.6% in the quarter compared to 11.2% in Q4. The share of brokerage generated by Private Banking and Pro was stable at 26%. So this was a result of higher turnover per note, especially in the fixed price brokerage class, which means a lower income per krona. The relatively lower share of foreign trading also contributed to the margin decrease. However, in absolute numbers, brokerage generating turnover and foreign securities increased, and this led to a strong currency-related income, up 10% since last quarter. If we move to fund commission income, that was the only income line that decreased compared to Q4. And if you look at the fund capital by the end of the quarter, it decreased slightly compared to end of Q4 following market value changes. But if you look at average daily volume, it was higher actually than last quarter. And as the fund income is based on deal volume, this means that the small income decrease was a result of the mix in our customers fund portfolios where, in the quarter, have seen a big interest for Swedish exposure, while U.S. and tech funds, in particular, have been net sold. This has resulted in an increased share of index funds amounting to 52.5% by quarter end and a decreased fund margin at 23.3 basis points on average and 22.8 basis points by quarter end. Finally, other income more than doubled compared to Q4, and this was primarily a result of the volatile market environment which view trading activity in ETPs, and thus, Avanza Markets income. Compared to Q1 last year, other income decreased, which was mainly due to the closing of external savings accounts. But also higher other commission expenses were among other smaller commission cost items. The cost per payment commissions increased as a result of more people logging in through bank ID, which typically happens when a lot happens on the market and not necessarily leading the trade activity. It's just when people want to check in on their accounts. Zooming in a bit on the net interest income. Once again, we see a volume-driven NII increase. The policy rate was stable during the quarter and STIBOR 3-month average as well, however, with around 20 basis points pickup towards the second half of March compared to when we entered 2026. If you start by looking at the lending side, there were no changes to margin lending rates. Compared to end of Q1 to end of Q4, margin lending volume increased slightly, but we have seen higher margin lending volumes intra-quarter when market sentiment was more positive. We have an attractive Private Banking mortgage and the mortgage volume increased also this quarter. As part of our work to improve the Private Banking offering, as Gustaf talked about, in late January, we entered 3 new interest rate levels for customers with savings capital exceeding SEK 30 million, SEK 50 million and SEK 70 million, respectively. We expect, however, a very limited initial margin effect from this, but we believe it will be a good way to attract more savings capital and increase share of wallet within the wealthier customer segment. The annual average interest rate for internal finance lending was stable and amounted to 2.8%, down 1 basis point from last quarter. Our income from the surplus liquidity increased compared to Q4, primarily driven by higher deposit volumes. Deposit rate cut from October is fully reflected now in the return on treasury portfolio in Q1 since we have up to 3 months interest rate duration in the portfolio. However, as said since late March, the risk premium has increased in the interest rate market, which is reflected in slightly higher interest rates. But due to the interest rate duration, this only contributes marginally in the quarter but will benefit the return in the portfolio with a delay. On the interest cost side, interest expense for deposit increased due to higher volumes, and we made no changes to deposit interest rates and the annual average deposit rate also remained unchanged at 0.76%. 57% of customer deposits were on interest-bearing accounts by quarter end, more or less unchanged from 58% compared to end of Q4. For the policy rate, market rates development is obviously yet to be seen. And when it comes to our interest rates, our strategy remains the same, making decisions in relation to each policy rate announcement, taking both customer behavior and competition into account. This applies to margin lending on the asset side and deposits on the liability side. Private Banking mortgages are contractually linked to the Riksbank risk rate. The return on the treasury portfolio naturally moves with increasing market rates with a minor delay depending on the profile of up to 3 months. Although we hope for more stability in the market and for an economic pickup rather than higher interest rates and a delayed economic recovery, Avanza's business model can handle also an increasing interest rate environment which, all else equal, as you know, would mean an increase in NII. Moving over to costs. They came in lower than Q4 in line with what we said with some of the Q4 costs being temporarily elevated. Personnel costs were stable while other costs decreased mainly then as a result of lower cost for consultants. Also, marketing costs were elevated in Q4 due to initiatives within Private Banking, and pension came down a bit now in Q1. Our guidance of 9% and a cost increase excluding international expansion stands. In March, we carried out our second successful issuance of AT1 capital as part of our long-term work to optimize the capital structure and prepare for continued growth in savings capital. Issuance amounted to SEK 500 million and carries a coupon rate of 3-month STIBOR plus 2.85% compared to 325 basis points in last year's issues. Issuance was heavily oversubscribed, which is a sign of strength of Avanza, which is evidently seen as a secure company in a quite volatile market. The capital constraint for Avanza is the leverage ratio, and the main driver of the leverage ratio are changes in deposit flows. Strengthening the leverage ratio through additional AT1 issuance was a part of optimizing capital structure, both in light of external savings accounts being closed down and structurally internal savings accounts increasing. Deposits on our balance sheet have grown by SEK 40 billion in 1 year and partly due to the closing of external savings accounts with barely SEK 2 billion left in these accounts by end of the quarter. Deposit growth going forward with us building our overall growth in savings capital, where deposits will always constitute a natural part that is dependent on market conditions, risk appetite and how customers choose to allocate their savings. The leverage ratio requirement remains, as said, the main capital constraint for Avanza. And at the end of the period, it was 4.2%. This means that we still have a good margin for the total leverage ratio requirement, including Pillar 2 guidance of 3.5% and as we can handle increased deposits of SEK 27 billion before bridging it. However, there is slightly less room compared to Q4, which might seem odd considering the AT1 issuance and that the retained earnings for Q1 have been included in own funds. Here, we should bear in mind that March was a shaky month on the stock market for our customers, meaning that we did see net selling of securities. Also in late March, the dividend season started, which always temporarily increase deposits as it typically takes a while before customers reinvest. And this is a healthy reminder of the importance of having a prudent buffer to requirement. Having said all that related to financials, I will now hand back to you, Gustaf, as I'm sure all of you are listening are interested to hear a bit more about our international expansion.

Thank you, Jonas. This morning, we announced the exciting news that we are now entering a new phase of our international expansion. But looking back a bit. In late 2024, we announced international expansion as 1 of our 5 strategic priorities for sustained strong growth with the rationale that we, as the clear market-leading platform for savings and investment in Sweden, arguably the most developed and competitive market in Europe, should have great prospects to succeed also abroad. Although growth in Sweden is not expected to slow anytime soon, this is viewed as an important step to secure Avanza's long-term growth journey also many years from now. There is a great potential to make a difference for savers outside of Sweden, where opportunities for quality savings are often substandard. Our long-term vision is to become a leading European platform, and now we're taking the first step by expansion to Denmark. There are many markets that are interesting for Avanza. In less developed savings markets, there are bigger opportunities to have an impact, but they require a longer-term effort to reach out and change deep city behaviors. As a first step, a market with more similarities to the Swedish one became the obvious choice. Denmark is a natural fit for our first international market. It is the second largest savings market in the Nordics that resembles the Swedish one in many ways in terms of structure, competitive situation, culture and, not least, language. Furthermore, Danes, just like Swedes, have both high digital maturity and financial knowledge and willingness to switch provider when it comes to financial services. On top of this, it's a market with significant growth opportunities, where the market is about 70% of the size of the Swedish savings market according to our definition and with the population that is about twice as wealthy as the median Swede. In Sweden, with our unique customer-centric Avanza culture, we have succeeded in making investment and savings into something fun and inspiring for our customers. This is what we will also do in Denmark, and I'm convinced that Danes will also appreciate our offering. Moving on to how we're doing this. We will establish ourselves organically while ensuring that the Swedish business continues at full speed. We have decided to build a new platform using an AI-first development approach. There are several reasons to why we made the decision to build new rather than adjusting the Swedish platform. One is the enormous leaps taken in technical development in recent years. The cost of building software has decreased drastically in a short time, which now allows us to do this in a cost-efficient way. Another important reason is that it gives us full flexibility. Savings and needs look different in different countries. And by building anew, we can adapt the offering according to local savings culture where needs are different. By keeping the international platform separate, we also ensure that we maintain full speed in innovation for our Swedish customers and growth in our Swedish business while we build a scalable path into Europe as this platform will serve as a foundation also for other markets in the future. We are, as always, keeping a cost-conscious and low-risk approach. The establishment will involve an initial investment that we estimate at SEK 120 million to SEK 150 million, of which around 20% will be capitalized. This means that around SEK 50 million will impact the 2026 cost base. Now to give you a rough idea of our road map. The main priority will now be to get started on establishing a Danish branch and recruit the branch manager and create local presence. We will also start staffing up in other areas to make sure that this does not weigh on any parts of the Swedish business. We are detailing the customer offering and local branding strategy, setting up processes and procedures while, of course, working on building the new platform. We will launch during the second half of 2027, bringing our customer promise of cheaper, better and simpler savings to Denmark. The main target will, of course, be to have Denmark's most satisfied customers. After the launch in the second half of 2027, we estimate the annual cost base at SEK 80 million, which then increase over time as business grows. Additionally, we will need to work with marketing and brand building in a completely different way than we need in Sweden today. Smart marketing requires timing and flexibility. And here, we expect to spend up to SEK 60 million per year during the first 3 years, after which these costs will decrease. I am convinced that our promise of a cheaper, better and simpler way to save will be appreciated in Denmark as well. With that said, we are humble about the fact that it takes time to break into a new market. We therefore see it as reasonable to reach profitability around 5 years after launch. At the same time, as we take this exciting step to make savings and investing better for Danish customers, we'll continue with full energy in the efforts for our Swedish business, where growth will occur in the coming years. Our long-term vision is clear. We want to leverage our proven strong capabilities and become a leading European platform. Denmark is a natural fit for the first market as it bears similarities to the Swedish one in terms of structure, competition and culture, and it provides strong growth opportunities for Avanza. We will expand organically without affecting our strong and growing Swedish business at low cost with an initial investment of SEK 120 million to SEK 150 million, meaning very limited impact on the 2026 cost base. Our customer promise remains when we export our Swedish success abroad, and I look forward to offering also Danes cheaper, better and simpler savings. The Swedish business is strong and the growth prospect remains. We report a record result where the strength of our business model with several income streams is once again demonstrated. We are working at full speed with our prioritized areas, and we are now entering a new phase of our international expansion, establishing Avanza in Denmark by the second half of 2027. So to conclude, Avanza is well positioned to capture future savings market growth in Sweden and abroad. And with that, we open up for questions.

[Operator Instructions] And now we're going to take our first question, and comes from the line of Martin Ekstedt from Handelsbanken.

Can you hear me okay?

Oh, yes, we can.

Great. So to one's surprise perhaps, some questions on your Danish expansion. So breakeven in 5 years from launch. Can you share some of your scenario assumptions around this, including from margins? Simply put, I think Nordnet is currently making around 50 to 60 per trade versus the situation in Sweden, if I believe, below 20 per trade. So is there a risk that this ends up just being a race to the bottom on margins in Denmark?

I think when it comes to our forecast into the future, we, of course, have an internal business case with different scenarios landing in our external communication to reach breakeven after 5 years. When it comes to race to the bottom, I think one could have Sweden as a case example. If you look at the last number of years, our main focus would be to make savings and investments something joy and fun, to do it with our tonality to deliver on our customer promise that we have in Sweden. But we don't want to go into exactly what we will offer in the Danish market for competitive reasons.

Okay. Understood. And then so I heard from you that -- a couple of quotes like other markets in the future will use the Danish platform and the long-term vision is to become a leading European platform, et cetera. Do I sense a bit of a strategic shift here? I think your earlier strategic review concluded to take basically one more European market before 2030, but didn't say very much about what lay beyond that.

I mean, we have become more insightful now, 1.5 years after we presented the 5 strategic pillars where going abroad was one of them. What we said then was that we will by 2030 be established in at least one more European market. We see Denmark as an actual first step. It is a first step. Our ambition is to go into new markets when we see some traction in Denmark and when we have management capacity to do the next big thing. That is not here and now, but it is out in the future.

Okay. Understood. And then just quickly, if I could ask on the new platform that you're building in Denmark. And I also saw that the announcement includes some costs related to cloud. Isn't the general idea that the cloud transition makes taking new markets more plug and play for you rather than it would warrant further cloud investment? Just help me understand that.

I'm not sure I followed this cloud remark when building the Danish platform. Naturally, it will be cloud-based as we are also moving the Swedish platform into the cloud. But the cost of SEK 120 million to SEK 150 million are the cost that we foresee to -- or investment basically to build the Danish platform, to establish ourselves in Denmark with the processes, the procedures needed, the legal work to become a branch in Denmark and so on and so forth.

That's additional cloud-related costs on top of what's already communicated for the cloud transition in general. It's not a carve-out from the Swedish related cloud transition cost?

Correct. So when we communicated that we're going into the cloud with our platform in Sweden that is separate from what we're doing now. Now we're building a new international platform, of course, taking the different modules from the Swedish one. And the international platform will also be cloud-based, yes. But one should not intermix these two numbers and these two efforts. One is to move the Swedish platform from our data centers into the cloud. What we're talking about now is to build an international platform with a start in Denmark.

And the question comes line of Patrik Brattelius from ABG.

Can you hear me?

Yes, we can.

Perfect. Yes. I will also follow up on some questions on Denmark. So if we start with this reaching profitability in 5 years, could you share a little bit again your underlying thesis here about what customer base and AUM levels do you need in Denmark to reach this breakeven level?

We have a quite detailed business case internally that we will not share externally, and that rendered the external communication around reaching breakeven after 5 years. It requires a certain intake of customers and it requires a certain assumption on margin, and it requires a certain assumption where we have been given more information on the cost side.

Okay. Fair enough. But as Avanza is currently unknown in Denmark, how do you aim to differentiate yourself versus more established players like Saxo Bank or Nordnet, who's been in Denmark for quite a while in terms of price, product, user experience?

So we will use a lot of our success factors from the Swedish market when we go into Denmark. Of course, it needs to be adapted to the slightly different needs and customs in Denmark. We will need to work with marketing, as I mentioned, on a different scale compared to what we do in Sweden because in Denmark, we're not a white piece of paper when it comes to brands, but compared to in Sweden, it's a much, much, much, much less known brand. So it will require more and different work on the marketing side. But apart from that, for competitive reasons, we will not deduct what exactly our offering will look like.

Okay. Fair enough. Moving a little bit away from Denmark temporarily. So given the elevated market volatility seen here in Q1, how do you think about the sustainability of brokerage income and also FX income here in the coming quarter as volatility normalizes?

I think one interesting observation from the first quarter is that I feel that it has been a lot of uncertainty. I feel that there has been a lot of geopolitically important news. But if you look at the actual volatility, it's not that elevated. I think we peaked at 30-something, 35 or something. I mean now it's down below 20. And despite the fact that the volatility was not very high in Q1, it was slightly elevated, we saw a lot of activity. I think what the environment where our trading-related incomes thrive is directions to trade on, not necessarily just noise, which volatility can be seen as, but actually directions to trade on. And then we don't want low volatility. So when trying to project trading-related income, then one has to make some assumptions about will there be directions to trade on for our customers next quarter and will volatility be reasonable. We don't want a crazy volatility and create the uncertainty that we saw when Russia invaded Ukraine because, then, our customers rather became a little bit passive for a while.

Now we're going to take our next question, and it comes from the line of Jacob Hesslevik from SEB.

I have two questions, one in Denmark and on NII. If we start with Danish cost saving and KPIs. You guided SEK 50 million expense in 2026 and SEK 120 million to SEK 150 million in total until launch. What are the key milestones and go, no-go decision points? And how should we model cost run rate in 2027 after the launch? Should we expect you to capitalize 20% of the SEK 80 million running cost post launch as well?

So on the last question first, we have a philosophy where we try to be as transparent as possible, to put as much of our cash out as possible on the cost line and not take it on the balance sheet. Here, our assumption is, and maybe you can detail on that, but of the initial investments, up to SEK 150 million, that we will capitalize around 20% of that.

Yes, exactly. Just adding to that. That's the investments that are made up to launch, which will be sometime during second half of 2027. And then that will transition then into more ongoing running costs, which we estimate starting at around SEK 80 million and then slowly going as the business grows. Those SEK 80 million would include all running costs, but then also amortizations of capitalized costs during the start-up period, which would be part of the SEK 80 million going forward. And then the SEK 80 million will grow, as said, when the business grows and staffing increases, et cetera. And when it comes to your question regarding milestones and deadlines, just as we don't share exactly what our product offering and our target customer segments will be, we do not yet detail sort of the different milestones and the decisions that are made along the way. But we will get back to that in the forthcoming quarterly updates.

Okay. And then on NII, market rates moved a lot during Q1, which you, Jonas, talked about before from pricing in a rate cut to then pricing in rate hikes. I guess it is your bond portfolio that's linked to the 3-month STIBOR, correct?

Yes, that's correct.

Yes. So should we then expect the bond portfolio to yield more already in Q2? Or will it step up rather be in H2, if we assume current market rate stays at these levels? .

Yes. I mean since somewhat longer rates than overnight, for instance, is STIBOR 3 months, then in some cases, we have some other investments as well and we have some sort of shorter-term investments like Riksbank, certificates, et cetera. With those rates elevated, we hope to get somewhat higher returns in portfolios that are linked directly, indirectly to those types of market rates. And since the elevated market rates only apply to -- it was a little bit into March, we would expect then, given market rates remain on this level, a pickup in Q2. But we also saw a little bit of a decline towards the end of March and beginning of April. So it obviously depends on where the market rates move. We say that our interest rate term profile is up to 3 months. We have a target to keep it below 3 months. So that should imply what you say.

Yes. And then on deposit volumes, I mean, it increased in March versus February. Is this due to the dividend season starting and has not like historically developed positively in April, May, June as well when more dividends are paid out and you also get the tax refunds from the tax agency. So should we not expect a tailwind on NII from volumes as well into Q2?

What will happen in the future is always hard to answer. You are correct that we have seen a little bit of that pattern in past years. On the other hand, my feeling -- and why I say feeling and not fact is because our time here is a little bit distorted now by the phasing out of the external deposits. But my feeling is that our customers did reduce the risk levels during March. We saw that with the decrease in the margin lending exposure, and I feel that we saw that going from risk assets into cash a little bit. So the deposit volume also, as you know, depends on the risk appetite of the customer next month or the months after that.

And the next question comes the line of Andrew Lowe from Citi.

Can we please explore the decline in the gross brokerage margin this quarter in a bit more detail? I know that you flagged that the share of foreign trading is down, but it remains above the average over the past 2 years. Yet the commission margin significantly below where you've been trading in the past 2 years. So can you specifically talk through the effect from the higher turnover per note within fixed price brokerage class? So what's going on there? How does that mix compare to history? And what are your expectations going forward for the brokerage margin? I would think that your average trade size will continue to go up, and it's gone up 7% Q-on-Q in Q1. So does this affect, maybe nullify the benefit from larger trade sizes over time?

That's a good question, Andrew. I mean, now we're talking about customer behaviors out in the future, which is always difficult. But you're correct that the lower brokerage margin in Q1 was influenced by a higher typical trade on the fixed commission trades. If that will continue, I don't know, Karolina or Jonas, if you have any -- dare to have any view about the future there.

Difficult to say.

No.

Maybe then, sorry, if you don't mind me interjecting, could you just talk through how has that evolved over time as the past 2 years with the sort of mix of people doing floating rate or fixed price trading.

Maybe we will have to get back to you. I don't have that time series in my head, Andrew.

Now we'll go and take our next question. And the question comes line of Enrico Bolzoni from JPMorgan.

One, going back to the expansion in Denmark. Could you please confirm or clarify whether the offering in the Danish market will be completely equivalent to the one that you currently have in Sweden? I'm thinking about in terms of product offering as well as perhaps client segmentation. That would be helpful. Related to that, I appreciate you don't want to give too much detail, but you briefly mentioned that it's a very attractive market because the Danes have quite a lot of capital. Do you expect that the profitability of your clients in Denmark will be higher compared to the profitability of clients in Sweden on average? And then finally, I had a question on artificial intelligence. You briefly mentioned that this helps a lot, for example, when it comes to writing software. I think this is what you're referring to. But I was curious whether you are rolling out this technology in some form also within your existing platform in Sweden, whether clients can already access some AI functionalities? Or if not, whether you think this is something you'll be able to roll out in the near future.

I'll start with your first question. If you just look clinically at the Danish market and compare it to the Swedish, what do you see when it comes to margins and so on and so forth, prices are higher in Denmark. I mean the brokerage fees are higher in Denmark than in Swedish, which is natural because Sweden is more competitive. If you look at banks and compare the net interest margin, it's higher in Denmark compared to Sweden. It's a little bit more difficult to compare because it's different currencies, so different central bank rates. But apart from that, I don't want to go into our assumptions behind our breakeven estimate of around 5 years. When it comes to AI, I mean, we use that today,in our customer offering. It's not on a big scale but a little bit. We use it to enhance our development. And the third pillar where we want to use it is to improve internal efficiency in general, where classical automation is maybe not the right path forward or robotics is not the right way forward. Then AI could be the way forward. But there, we have no concrete success stories yet.

And sorry, on the offering in Denmark, will it be equivalent in terms of products?

So we don't want to go into how our offering will look like in Denmark for competitive reasons. I understand that you want to know, but I hope you respect that we need to go out with this message now for more reasons. But we don't want to give away more to the market.

And now we'll go take our next question, and the question comes line of Ermin Keric from DNB Carnegie.

Maybe starting off, you mentioned that the ambition is to be a leading European player. What do you by that? By what time? How will you measure that? Is that having most users among digital savings platforms, having the most savings capital? Or by what metric are you referring to then?

We want to state our ambition, Ermin. We will not communicate what exactly defines leading and by what time. We want to be clear to the market that we're now going into Denmark, but we also want to be clear that that's the first step. But I don't want to be more specific than that on how do we define leading and how many markets do we need to be to define leading and how many customers and so on and so forth, not yet at least.

Okay. Fair enough. Then on the platform. So you're going to build a new platform for Denmark. If you add additional countries in the future, will that be added to that platform? Or will it be a separate one for each and every geography given that you also mentioned, it makes it easier to kind of custom make the offering for local needs.

The plan is to build a platform that we will use in our international expansion. In the first phase, we will optimize it for Denmark. But we will build it in such a way that we are able to deliver on our ambition to become the leading European platform. That will come at a certain cost, but it will be smaller adjustments when going into next markets compared to now building it from scratch.

Okay. So it's fair to say that if you would add another country, it would be a lower cost than what it will be for Denmark then.

Yes. We haven't done our thorough analysis, but that's clearly my view.

Okay. Great. Then just, I mean, you don't want to answer so much about the actual offering, but could you talk a bit about your insights as to how Danes are different in their savings culture compared to the Swedes? What are the most contrasting things?

Maybe the propensity to get exposure to the fixed income markets through their, I mean, compared to the Swedish one, advanced covered bond markets. So a little bit more fixed income compared to Swedes. But on a European perspective, Danes behave similar to the Swedish ones. Another one differentiator is, of course, the appetite of foreign exposure in Denmark on the equity side, which is bigger than in the Swedish one, which stems from the fact that Danish stock exchange is, in relative terms, much smaller than the Swedish one.

Then if I may, just one final question. Going back a little bit to AI. We've seen some launches in the U.S. on kind of advice driven by AI within savings and so on. How do you see that going forward? Could you actually enter the whole advice space through AI? And how far away are we from technology being mature enough for that?

I mean, we want to build closer relationships with our customers. We want to do that without having to build up a large force of financial advisers. And the way to do that is through technology. And I think we have come a far away today compared to 10 years ago. And of course, we will be much further advanced when you look out in the future, and I think AI will play an important role there.

Now we'll go take our next question, and the question comes from the line of Haley Tam from UBS.

If I can, could I ask a couple about Denmark as well? And then, yes, so just to confirm, a very simple one. The target profitability in 5 years, can I just confirm that's the second half of 2032 that we're talking about? And then in terms of the nature of the business, I know you don't want to talk about too much detail, but just to understand. Should we be thinking about this as a trading and investments business only? Or should you also be doing lending and deposit taking? And I guess really the reason for asking that is to understand the 70% total addressable market versus Sweden. I'm just wondering how you define that given, I think, Nordnet has said their Danish addressable market is I think, 6 trillion or 7 trillion. And I think you said your is 13 trillion. So 70% would clearly make your addressable market higher. So those are some simple questions there, if I can.

The important for us is to meet customer demand. And our focus is savings and investments. We are not talking about other parts of banking products like payments or salary accounts or P&C insurance. But we're driving on the success we have in Sweden, where we have niched in on savings and investments. And that's the plan. We use that also when we go abroad. I know it's a little bit vague, Haley, but I don't want to be more specific than that.

No problem. And if I can ask again about the building of the brand new platform, do you think there might be an enhancement you could then reverse into the Swedish platform once that's done? Or is it really just about the different regulatory structure and building something truly scalable for Europe that's driving this decision? Just help us understand that a bit better.

I mean we will optimize the totality. So if what you are asking about [ reloading ] would be the case, then we will, of course, use that advantages also for the Swedish side. But that's not the focus here and now. The focus is to build a great international platform with the start in Denmark. That's the focus.

And now we're going to take our next question. And the question comes line of Ian White from Autonomous Research.

Three from my side, please. First of all, given the comments you've made around technological change enabling your cross-border expansion, what are the constraints now for Avanza or, indeed, other firms to expand across borders in the future? Do you view AI as presenting a big watershed moment for the industry, where it's much easier for firms to launch operations in new markets? That's question one. You mentioned Denmark being a natural first step, and I appreciate we don't want to get too far ahead of ourselves. But would you expect subsequent steps to be in Scandinavian countries? Or is the whole of Europe in the conversation here with respect to your longer-term expansion thought? And finally, where are you so far in terms of your goals to achieve market leadership in private banking and occupational pensions? I know those are a couple of the key initiatives that you set out previously. What KPIs would you highlight to indicate that those things are on track, please?

If we start with your first question, I think when going into new markets, one should not underestimate that you need to put procedures in place. You need to have the licenses in place. You need to have the connectivity to payment system, to tax authorities, et cetera, et cetera. So you need a lot of knowledge. And I wouldn't say it's easy to go into a new market. But what we say is that the development of software is faster and easier now, and that helps us in this case. But building software is just one part of going into a new market. The second question?

[indiscernible]

So we don't want to limit ourselves to the Nordics. So we have identified a number of interesting markets for us, and they are in Europe. But the focus right now is really on Denmark. And the third one was on progress in private banking and occupational pension and what do we measure. So we want to be, by 2030, the largest private banking player in Sweden in terms of number of customers. So internally, we track number of customers especially much. And on the occupational pension side, we want to be the largest player. And we measure that in terms of premiums space. So that's what we follow the most. I think we're doing good progress. I think we have a lot more to do and a lot of exciting things in the pipeline. And I think we had a Board meeting yesterday, and we flagged the progress on both those as good.

Okay. On the first question, would you be prepared to sort of quantify that or indicate if we say software is no longer the same sort of barrier to expansion than it was? Is that 20% of the challenge previously? Is it half of it? Is it sort of a small consideration or a big consideration in the context of those other things that you mentioned, licenses, connections to payment systems, et cetera?

If I phrase it this way, I think it's very hard for a pure tech company to go in and be successful in our industry. I think you need to know a lot about the customer behavior, how you make something that can be perceived as very scary and difficult, like long-term savings, to make that into something joyful. You need to understand and navigate in the very regulated environment. Those competencies that I just mentioned, they are just as important tomorrow as they are today. But the software side goes faster. I don't really dare to quantify what [indiscernible] is. I'm looking to Karolina and Jonas, if you're there.

And the question comes line of Oliver Carruthers from Goldman Sachs.

Oliver Carruthers from Goldman Sachs. I've got three more questions on Denmark, if that's okay. First one, I appreciate that you're not giving us the full details of the business plan, which makes sense. But one of the things that you did emphasize during the presentation at multiple points was this cheaper way to safe point. So just where do you envisage being cheaper? Any detail you can give on that would be helpful. The second point, on the new platform that you're building for international expansion. So presumably, this means that you're going to be introducing dual running costs. New product launches are going to have to come on both platforms. Just trying to follow your rationale here. Maybe a little bit of a follow-up to Haley's question, but is the idea that you'll retire the Swedish platform at some point in the future? Any color you can give on the rationale there would be helpful. And then final question. I think it's really interesting that you're talking about building this European champion. And I'm sure you saw some of the comments from the European Commission last week about the potential upcoming merger reform, which could be some of the biggest reform we've seen in Europe in over 20 years, potentially moving to a more friendly backdrop in terms of their signing off on M&A, particularly surrounding innovation and the creation of European champions. So you're obviously going for more international expansion. You're going down the organic route here. But can you just share your latest thinking in terms of why this is the optimum way for you expanding rather than looking at acquisitions and combinations, particularly given that as you expand geographically, you're going to be increasingly competing against some of the U.S. players coming to Europe.

I'll start with the last question, Oliver. I think what the European Union is talking about is not blocking these large mergers in the perspective of the large traditional banks consolidating to match the industry structure better in the U.S. I don't think that changes if we would like to make an acquisition, in my humble opinion. Why? We have been looking at 3 ways to go abroad. One is organically, which we are now doing. We have also looked at acquisitions. We've also looked at the partner route, we partner up with someone and do it together. We now decided for the organic approach but, of course, we will have our radar on if opportunities would arise on the M&A scene. Now in the room, maybe help me with the first and second question?

On the product offering, if we could elaborate anything...

Right. So we stress in our communication the philosophy that has guided us for 26 years and still guide us in Sweden, which we call better, simpler and easier. And that's how we behave in Sweden today, and we want to behave in a similar way in Denmark. So you could use Sweden as an important data point when looking at Denmark. The second question was?

The platform and if...

Yes. I mean, we're now building this international platform focused on Denmark partly because it is faster for us now and cheaper to build new and partly to save and protect the Swedish progress. We could have adjusted the Swedish platform, but it would have taken not large effort for the different teams, but it would have affected many teams a little bit. And we have so much interesting stuff in the pipeline that we don't want to slow down the development on the Swedish side. If you look far out in the future, do we like to have two platforms? No, we don't. But that's not in the cards here and now. Now the focus is to have a swift progress on our Swedish business and going into Denmark by the second half of 2027.

If I may just add to that and emphasize what you said before, Gustaf, and what we have said in all quarterly calls up to this one is that we see very strong growth potential in Sweden, and that's where we will see the most meaningful growth the coming 5 years. And that goes into the equation in terms of having the separate platforms, making sure we can really execute on the growth plan that we have in Sweden up to 2030 and beyond.

Now we're going to take our next question. And the question for line of Markus Sandgren from Kepler Cheuvreux.

Two questions from me, please. The first one, the share of trading in foreign currencies decreased this quarter. But for the past quarters, it has been trending up. In your business planning, what are you calculating with? How much do you expect to be done in foreign currencies going forward? So that's the first one. And then secondly, speaking of AI and the downsides of AI. There has been talks about the new systems will be used by criminals for cyber issues basically. Do you expect any additional cost for increasing, yes, the shields towards cyber crimes basically.

If I start with the last one, that is high up on our agenda, and cybersecurity in general is very important to us. It's not a development that is very friendly out there. The scene changed with the 2022 Russian war on on Ukraine and the Swedish support of Ukraine. We have seen more activity from the East. And with more efficient technical tools potentially in the hands of criminals, we also need to get better. And that is something that we are working on. I think we are well invested on the cyber security side. We had an update from the Head of Cybersecurity yesterday. I think he has a good plan how to counter what you referred to. I think there was a first question also.

On the foreign trading.

On the foreign trading, we believe that our customers have too much home bias. We believe that, that home bias is less prominent today compared to 5 years ago, and we believe it will be even less prominent 5 years out. But market sentiment and asset allocation will distort that trend month to month. And now especially in January, we saw an asset allocation towards Swedish equities. And next month, it may be something else, but we believe that there is an underlying trend towards bigger foreign exposure.

And now we'll go take our last question for today, and it comes from the line of Andrew Lowe from Citi.

I had a question on your net flow expectations. So consensus has come down to about 7%. When you first outlined your vision, Gustaf, the number that you gave was 10%. And you're talking more and more about international expansion. So could you just clarify, do you remain committed to that 10% figure? And could you just outline what you think the building blocks are to give the market confidence that 10% net flow growth in Sweden is the right long-term target?

Yes. We have now for 4 quarters been affected by our dismantling of our external deposits. We still have almost SEK 2 million left that will negatively affect that number. I mean, everything we do, Andrew, is to build the business long term, which we do through acquiring new customers and get net flow from new customers and existing customers. And the efforts we're doing in private banking and occupational pension, but also in our core to the whole broader segment is to gain net inflow. We have seen challenging markets now for the majority of last year and also this first quarter. And I don't have any data yet on the Swedish total market for this quarter. But last year, there was a big drop in Swedes' flows into funds. I think it was half. And on the flip side, there was more than doubling inflow into deposits. And the majority of that deposits comes from salaries that are then stacked in salary accounts with the big banks. So we hope and I hope that the Swedish economy will get going and that the geopolitical concerns reduces so that the Swedes have long-term savings higher up on the agenda than they have had for the last 4, 5 quarters.

Dear speakers, there are no further questions for today. I would now like to hand the conference over to Gustaf Unger for any closing remarks.

Well, many thanks for attending, and have a great day. Bye-bye.

This concludes conference call. Thank you for participating. You may now all disconnect. Have a nice day.