Nordnet AB (publ) (SAVE) Earnings Call Transcript & Summary

Okay, then it's 10:00. Hello, everybody, and welcome to Nordnet and the presentation of our financial report for the second quarter of 2022. My name is Johan Tidestad. I'm the Chief Communications Officer at Nordnet and I have some nice company here. As always, our CEO, Lars-Ake Norling here. Hello, Lars-Ake. Lennart Kran, our CFO, is also here. Good morning, Lennart.

Good morning.

And you who follow Nordnet, you know Lars-Ake from before, of course, but you might not know the third person we have with us today, Marcus Lindberg, our newly appointed Head of Investor Relations. Hello, Marcus.

Hello, Johan.

You've been with us now for around a month and some of the people on this call, but not all of them. So if you could please shortly introduce yourselves, Marcus?

Sure. Yes, so I was appointed Head of IR about a month ago here. Very happy to be here. Before this, I was Head of IR at Tele2, which is a Swedish telecom operator. And in the past, have also been a research analyst at Morgan Stanley, where I covered banks, among other things. So again, very happy to be here.

Thank you. So Marcus is first point of contact for IR questions going forward, and his contact details are available on our corporate website, nordnet.com. Back to the Q2 report, Lars-Ake Norling, will make a presentation of our business and financial numbers. We estimate that, that will take something around 20 minutes. And after that, we'll open up for questions. And you will all be muted during the presentation. Lars-Ake Norling will go through what they have to say first. And when we come to the Q&A session. As always, you have two alternatives to ask questions. [Operator Instructions] And of course, the presentation itself will be available on our corporate website directly after this event. Okay, then let's start the presentation. Lars-Ake, please go ahead.

Thank you, Johan. So we can go to the next slide. So first, some key highlights. As you all know, we have a considerable macro uncertainty due to the war in Ukraine, high inflation, interest hikes, but also now a fear of recession. And this has led to the first worst start in the global markets in 50 years. And of course, that was impacting the sentiment for savings and investments in general. But in spite of this, we have seen continuous growth in both customers and net savings on a monthly basis. And for the quarter, we added 30,000 new customers and SEK 8 billion in net savings. And for the full half year, it's 90,000 new customers and SEK 30 billion in net savings, which is good considering the market we see today. We also now see that higher interest rates starting to give higher results in net interest income. We're going to talk more about that later. And we have a new all-time high lending portfolio and where we have a very strong growth in the mortgage portfolio. And also, actually, we are up year-on-year on margin lending, even though we have had a rather turbulent markets. We have a positive interest rate sensitivity, both on our lending portfolio and our liquidity portfolio. Again, we're going to come back to that. Continued strong cost control. This is one of the main focus areas for us. And that we will, of course, continue with also going forward. We also launched some exciting new products in the quarter. One is trading in -- electronic trading on the London Exchange, has been very appreciated by the customers, and we also now launched the first funds in our fund company. If we go to next. So looking a little bit at financial highlights. So we increased the customer base with 15% underlying year-on-year. We've terminated our 52,000 customers in our AML cleanup project, and that project is now closed end of quarter 2. And the full savings capital impacted by this is SEK 400 million, which is very low. So as we said before, this is customers with very low activity and have no impact on our P&L as such. Savings capital flat year-on-year with a decline in the markets offset by net savings. Trades, down 20%, mainly due to the negative market sentiment. Revenue is down 30%, where we see a drop then in brokerage revenue, development in the fund business, but then an increase in net interest income. Cost control is still strong, and we are aligned with our guidance with a cost of 5%. We are slightly below that. Cost increased 4%. And this is mainly within the product and tech area, where we also said we were going to increase cost. And adjusted profit before tax is down 22%, SEK 420 million. But for the full half year, we do SEK 1 billion profit, which we think is good considering the poor market for the first half year. Can go to the next. We -- as you know, we have very strong long-term growth, both in customers and savings capital. We have increased the customer space with 80% since 2020, up to 1.6 million customers. And those customers coming in has been very good customers. I'm going to touch a little bit more on that on the coming slides. And we also, on top of that, have low churn. So even with a slight decrease in trades per customer, the big increase in the customer base gives us a new level of trading revenue in any case. And we are very well positioned also when the market turns, sentiment picks up and activity also picks up again. We can go to next. So I'm going to cover a little bit about our cohorts for 2020, 2021 and 2022. And as I said, overall, it's good customers. They're slightly younger than our average customer base, but that's always the case, but they are low churn and they age and stay with us on the platform. We also see that it's a higher share of women now coming in, 39%, of the new customers in 2022. And we're very happy with that because that means we start to address the full market. You also see in the graph down to the left that customers put in savings capital on the platform as expected. And the net savings for the first half this year is 44% is coming from the 2022 cohort and another 40% from 2020, 2021 cohorts. We also see in the last graph there to the right, that the new cohorts is slightly a little bit more invested in funds. Also, the newest cohort, 2022 cohort, they have more cash, and they are prepared to start trading once the market gets a more clear direction going forward. Move to next. We also see that the new customer, new cohorts have higher margin compared to the older cohorts, and that's due to country mix. We have more customers outside of Sweden in the new cohort, where we also have a higher margin and especially then from a higher share of cross-border trading. We see that the preferred channel with new customers is clearly the app. It was the web in the older cohorts. And we see the share of customers trading during H1 is fairly equal between the new cohort and also the pre-2022 -- 2020 cohort, a little bit higher in the 2022 cohort. But the number of trades per customer is a little bit lower in the new cohorts due to we have more active, more heavy traders in the older cohorts. Good. We can go to next. And this is showing a little bit of the long-term trends for customer growth, net savings trading per day and annualized profit per customer. And as I mentioned at the beginning, we have a very tough start in the global markets. We're starting 50 years. And this is, of course, impacted the -- some of the growth drivers. We saw that quarter 1 held up fairly okay. But if you look at quarter 2, we are clearly below the trends for customer growth, net savings and trading. And when the market turns, it gets a better direction. We expect the transitory work back to more normal levels. But in the last graph, the profit per customer that you see down to the right, it's still clearly above trend. And that's due to that we have maintained cost basically flat for more than 4 years in spite of them almost doubling the customer base. Go to the next. And this is a little bit of customer and net savings growth per month. And we saw that in quarter 1, it was fairly okay levels, but we dropped down to around 10,000 new customers per month in quarter 2 and around SEK 3 billion net savings also in quarter 2. But for the full year, we have 94,000 new customers and SEK 30 billion in net savings. And again, considering the more climate we're in, I think that's a very -- both are very strong numbers. We'll go to the next. Just want to reiterate then that we are the only Pan-Nordic digital savings investment platform at scale. We have distributed revenues going from Sweden, 20% each in other countries. Still, higher customer growth outside of Sweden, where we also have higher revenue margin. Go next. A little bit how the different markets have developed, and we see quite different performance in the markets during the first half year, where Sweden is down 30%. Norway is almost flat year-on-year. And Denmark and Finland are somewhere in between. And we benefit clearly for being diversified and being in four markets instead of just one market, both at we get, of course, an access to a bigger addressable market, almost 2.5x but also that we distribute the market risk over four markets. And clearly, now we have a stronger growth, both in savings capital and customers outside of Sweden. Go to next, and a little bit on the revenue then. We see continued high revenue driven by resilient margins and diversified income streams. If you look at the bar graph down to the left, net interest income has been growing with 20% for the last 3.5 years. Fund business -- fund revenues, 28% and the brokerage 51%. I think going forward, especially going to see then a big increase in growth rate in net interest income from increased interest rates. When it comes to revenue margin, we see the revenue margin is stable on the deposit. But here, we're going to see quite a big step up in the quarters to come and going into 2023 from the interest rate increase. We see the trading margin, the blue line in the middle, is going down due to less trade per customer, due to market sentiment. And the blue line on the bottom is the fund margin, which is fairly stable, a little bit down due to a shift from active to passive funds. We go to next. We're going to talk a little bit more about net interest income and especially around the liquidity portfolio. We see that the liquidity portfolio will generate roughly SEK 900 million in 2023 versus 0 in 2021, assuming that the quarter 2 volumes current allocation and credit spreads. If you look in the graph up to the left, we see that we have around SEK 90 billion in deposits and equity. And that -- SEK 27 billion of those is in our lending portfolio and SEK 61 billion is in our liquidity portfolio. If you look in the graph then to the right there, it's a net interest income breakdown, and we see that most of the interest income has been coming from the lending part. The red part is from securities lending, but almost nothing is coming from the liquidity portfolio. Basically, 0 in 2021. Also very low in first quarter 2022. But now, in second quarter, we see a pickup in the liquidity portfolio, and that's going to continue now with, I think, around SEK 300 million total in liquidity portfolio revenue in 2022 versus 2021, and additional then SEK 600 million in 2023. So 2023 versus then 2021 is SEK 900 million up. It's a little bit offset due to stop charging negative interest rates in Denmark that offsets with around SEK 50 million, so it's still marginal. But this is assuming that the volume that we had in deposits per country where Sweden is the largest, and then a little bit, give or take, the same level in the other countries. And the interest rate has -- that's -- was the market consensus now I think is shifting a little bit due to the SEBI hike. So this more consensus might be a little bit low. We go to next. A little bit also on the trading. Due to the very big increase, almost doubling the customer base since 2020, we have a big -- by far, a larger share of our customers' trading is going down a little bit in quarter 2, but still a lot higher than we saw in '18, '19 before we started the real customer growth. And when it comes to trades per customer, the quarter is going down a little bit this quarter due to, again, market sentiment. But the share of cross-border trading remains on a healthy level of about 25%, and that's due to the country mix. And also trading trades per customer today follows the normal seasonality where we have a high in Jan-Feb and a low point in June, July and then it goes back up again. But if you look at the 2022 trades per customer per day, follows the same pattern, but it's slightly below than the trend of '18, '19 and again due to the less trading due to the market conditions. But when the market picks up again, we foresee that trading is going to come back to more the normal trends that we saw in '18 to '19. We can go to next. And continued strong focus on cost and cost control is, of course, very important for us. We managed to keep the costs more or less flat for more than 4 years. And this is also a key focus area going forward. The initiatives I talked about, but just to reiterate, is that we can onboard a lot of new customers on a scalable cloud-powered tech platform without driving costs. Maybe work a lot of process simplification, automation, basically automate everything that we can. And that's a win-win. It's win for the customer because it works better, but a win for us because we scale better. And we have a very efficient customer growth. It's mainly driven by word of mouth and PR, so customer acquisition costs is low. Churn is low on the platform that as also a highlight on value. So lifetime value versus CAC is on very good numbers. And also, of course, we work very actively with our third parties. Go to the next. We can't really control the market, but what we can control is to deliver on our brand promise to build the best platform to savings and investments. And we've been very active this quarter with both a lot of new features in our app and web, but also a number of product launches. And one is that we've launched three allocation funds per country in a new fund company and also on top of that, a digital tool called Nordnet One for selecting funds and an easy way set up monthly savings. So it's directed at the saving segment. We also launched then the trading on the London Exchange, as I mentioned in the beginning. And then lot of new features, both in the app and the web during the quarter. So with that, I hand over to you, Lennart, to talk a little bit the financial performance.

Thank you very much. We can go to the next, directly. And I will not go very much deep into this one, as Lars-Ake already pointed out, but we still have a year-on-year growth of customers by 15%, excluding those customers dissolved by the KYC project really. So it's a good growth in this market and also the savings capital is at good level. We can continue to the next slide. And here, we can see the quarterly revenues split by revenue streams. And as we discussed before here, we have the transaction related that is decreasing due to the market sentiment, of course. But as you see on the interest side here, where we have SEK 240 million in NII for this quarter. And the difference to Q1 is actually the NII from the liquidity portfolio. And I would very much stress that during 2021, the SEK 16 billion yielded 0 and nothing in interest rates. And now we are adjusting the quarter -- first quarter, giving SEK 36 million of those. And this will increase throughout the years coming. And this is not an abnormal thing or anything like that. It's really going back to normal interest rates. We have had 0 interest rate on those for several years now. So it's a strong one coming back. That is also resilient going forward. You can go to the next one. And as we pointed out, the costs are stable. We've been able to keep it flat for 4 years and continue doing so. We are continuing looking at the cost that is why we can held this flat. But also that we do control some of it. I mean, the increases we have is mainly in taking product and that is our own choice to continue delivering on building the best platform. So that is the rule of it. Otherwise, we will look on everything to decrease them. Yes. Okay. And this is why we still have this considerable operating leverage in our business model with the revenue, with the flat cost, giving us a tremendous good effect on the profit before tax adjusted to say, with a huge growth rate throughout the years. We can go to next. And in respect of the balance sheet, we do have the deposits, and that is how we distribute it by liquidity portfolio and the lending. 1/3 of the liquidity is in lending, of course, but with very high quality. And that is where we have big growth, ending at SEK 26.7 billion in lending portfolio, mainly driven by increase in mortgage but also on the portfolio margin lending portfolio. The unsecured is on a stable level, as we have said before. And the credit losses are in line and only related to the unsecured, nothing on the margin lending or the mortgage. Yes. And the capital situation is stable with a leverage ratio, which is the constraint to say, on 4.2%. So it's also on a good level. It has decreased from year-end by -- from 4.8% due to unrealized tax in the liquidity portfolio, which only in other comprehensive result you can see there, but also that we are seeing some funds that increases. But we are on a good level with both leverage ratio and capital adequacy. We can go to the next.

Yes. Okay. Thank you, Lennart. So just a short recap of the strategic ambitions we starting with engaged customers, building the best platform savings investment, being a clear #1 on NPS, that's the target. In order to get there, we need to have really passionate and talented staff and have a good trend on staff satisfaction, which we have. Stable business. We are in a trust business. We need to earn that trust every day. So strong compliance and risk management is key and that overall is a trusted and like brand. And with the profitable growth that we captured and the fantastic growth potential we have in the Nordics with 6% market share and going to grow for many years, but also that we ensure scalability going forward, both with the cloud-based platform and also the automation initiatives that we have. We can go to the next. And when it comes to financial targets, this rolling 12 months, and we are on track so far on all targets. But when it comes to customer growth and savings capital for customer for the rest of the year, it depends a little bit then, of course, how the market is developing. And that's, of course, what to do with the inflation, interest rates and the recession. But I think to fully meet the numbers, we need a little bit clearer direction for the fall. But on the revenue margin, currently around 45 bps, we see upside potential from the big increase in margin from net interest income. And of course, we're going to continue to maintain costs according to our guidance with single-digit growth. So, we -- all in all, the picture looks quite okay for the year. If we go to the final page, just a slide to remind ourselves a little bit on the holistic picture, but Nordnet is taking market share in the growing market. We have 6% market share in an addressable market of SEK 13 trillion. And that market share has been increasing from 3% in 2016. We foresee that adjustment market is going to be around SEK 20 trillion in 2025. If we have a downturn for a couple of years, it might take a bit longer, but we will get there. And both are underlying market growth, but also we open new products, pension products in Denmark and -- in Finland. And hopefully, we can also continue to grow a little bit of market share going forward. So we're taking market share in the growing markets. Also, we talked about the customer base that we almost doubled, customer base in 2020, and there's good customers. Put a lot of savings capital on the platform, they are active. And of course, there's a big potential for us when trading starts picking up again and activity levels are picking up. So that was the last page, I think, Johan. And with that, we move to Q&A.

Yes, great. Thanks a lot, Lars-Ake and Lennart, and would like Lars-Ake said, it's time for a Q&A session. [Operator Instructions] And the first question today comes from Mr. Patrik Brattelius from ABG.

Can you hear me?

Yes, we can. Please go ahead.

Perfect. Then I would like to start off with a few questions around NII, please. You mentioned a little bit about the announcement from ECB, first off. Can you try to quantify that expected impact please in regards to your guidance there of SEK 300 million to SEK 600 million?

I think, Lars-Ake -- muted, Lars-Ake.

Lennart, do you want to take that? But of course, that means that we'll be going to start the rate increase on a higher level earlier than expected. We don't have the full number for that yet, unless you do, Lennart?

No, I do not. I come back to you, but that is, of course -- I mean, what we did expect was the Central Bank's expectations 2 weeks ago, and this was unexpected and not in the market. So you can see a parallel shift in the volumes that we have for each currency .

You see what we have in the currencies. You can look at that.

Okay. And then a little bit of a clarification here. You say SEK 300 million for 2022. And then you have seen so far, SEK 40 million, that is SEK 260 million left, but then you said a negative effect of around SEK 50 million from Denmark. Is that correct? And then the remaining SEK 210 million, what should we expect in the phasing for the last 2 quarters, please?

I think when it comes to Denmark, just to clarify, that's the full year number. So the impact is, of course, going to be less during the fall. So it depends a little bit on Denmark, or increasing their interest rate and when we shift the regime there. On the other question, Lennart, do you want to...

Sorry, I missed -- can you please repeat again, Patrik?

Yes. The SEK 300 million for full year 2022, we have seen SEK 40 million so far approximately, right? You had a little bit of a negative effect from Denmark, you mentioned, but that was an annualized number. So the remaining there, which then, I guess, will be more than SEK 210 million, which I just said, can you talk a little bit about expected phasing for the last 2 quarters, please?

Yes. You can see it on the slide. I don't have the exact numbers as those are, I mean, moving targets to say, both regarding volumes and interest rates hikes. But approximately SEK 100 million in -- a little bit more than SEK 100 million in Q3 and the rest in Q2 is a step up to say really because that is in line with the expected interest rate hikes from the central banks. So that is what it follows really. Yes. That is how you should look upon it. And then in addition to that, you also -- which is not in those SEK 900 million is that the lending portfolio will also be increased interest rates in, of course.

Okay. Then a little bit of a strategic question regarding NII. What are you thinking there regards to giving something back to the customer? Like do you have a strategy when the rate has come up to a certain point that you give some interest rate to the customers? I guess that the Norway is the country with the highest interest rate level currently. What's your strategy there, please? I know we touched upon it on Q1, but if you can.

It depends, of course, a little bit on competition as well and how the interest rates are moving. But the way we're doing it is -- I mean, in Norway, we have a special account type, as a savings account type where we currently have 20 bps interest rate, but it's very low volume. Customers don't freely move the money to that account. So it's fairly low volumes there. I think in the other countries, I think it will take definitely longer before we add the interest rates. And if we do it, it's not going to be on all account types. There's going to also in the other countries, be a specific account savings account type.

Okay. And then if you were to see a 25 bps rate hike in Norway, for example, now, would you, per definition, raise that, the interest rate on that type of account by 25 bps? So is it a lag?

No. It's a lag, definitely. And I said we have not increased very much versus the increase that's been so far. So it's definitely not a one to one. It's a little bit on the market, but also -- yes, we will not match one-to-one, the increases, in a way.

I think one should compare it to when the interest rates were decreased. We did have zero on those CRA deposit rates on the accounts as well. So really, it takes some time before this is -- actually, we did not fall with negative interest rates, except for Denmark then. So that is what will happen here as well. It will have a lag, and it will, at some point, yes, of course, increase interest rates and deposits as well. But it is the saving accounts that will be the interest-bearing account on that occasion.

On the interest levels we see now, it's not going to be material. And of course, if it shifts up even more then we start giving back. But I think in the other countries, well, the way above 1%, 1.5% before I think we do anything. But of course, we follow the market there.

As a last question, so I don't block the whole call with my questions. You talked a lot about this 15% annual customer growth target. Do you see there is anything you can do to drive further customer growth? Or are you just in the hands of the market?

Of course, market is probably what's impacting the most. But of course, what we do on building the best platform to savings and investments with really being a one-stop shop in all countries is also contributing, I think. So opening mortgage in Norway, I think it's going to be beneficial. The pension product in Denmark, definitely beneficial. The [ Diamond Trapper ] in Finland definitely beneficial. And of course, all the -- it's more partly due also with features in app and web and coupled with all the information and we constantly give to our customers savings economies and digital channels, I think that all plays out. So it's not just the market. It's also what we do in building the best platform savings investments in the clear.

A follow-up then, when is the update launch on that mortgage offering in Norway?

Yes. So it's -- the estimate is after summer.

Next person is Jacob Hesslevik from SEB.

So my first question is on your liquidity portfolio. And if I recall correctly from the Q1 presentation, you said roughly half the liquidity portfolio is linked to the euro, 30% is in CS and 20% in note. So I was just wondering if the composition has changed since this comment was made?

No, we have about the same composition as that. It's all depending on the market. Of course, what we do is we do have the deposit in one currency and thereby, we do lend in the same currency and we place it in the same currency in the liquidity portfolio. So we do reduce or rather, we do not add any FX exposure. That is why we do it that way.

You can look at Slide 12 in the presentation when it's up on the site. There, you see the full breakdown per country so there you can see how much is in the liquidity portfolio per country.

Okay. Perfect. And then my second question is on fund income. I mean it was almost in line with last quarter, just a tad weaker. So I was just wondering if the mix shift in investing as a mutual funds from the active funds have continued during Q2, whereas the big shift was made during actually the last quarter, Q1? And maybe you could also remind me what the average fee in mix is for passive versus active funds on average on your platform?

Yes. So we do see some mix shift also in quarter 2. I think it was bigger in quarter 1. But also, in the fund area, as you know, we do a lot also referring to bringing on new customers. I think the fund area is also a very important area for us to track the big saver segment. So it's also what we do in our own fund company here that's important. And with the launch of new allocation funds now per country, I think it's going to be very beneficial, but also our broad portfolio of index funds is also beneficial to us. When it comes to breakdown in fees in passive and active specifically, Lennart, I don't have it on top of my head. So we might need to come back if you want to disclose that fully.

I don't have it either.

The mix is around 32 bps.

Any difference in different countries due to platform.

Okay. And then my last question is on the Danish pension market. I was just wondering if we could get an update on the progression of setting up the insurance company in Denmark, which I guess is needed in order to access and leave them to market? And do you have any time line you could share with us?

Yes. So I mean first out now is Finland. So we're setting up now insurance company there and the plan to launch during first half of next year. And in parallel now, we're working with the livrente, but it's slightly behind in time plan. But hopefully, second half next year, we will see at least a insurance company and launch perhaps -- yes, let's see it's kind of complex. It can be end of next year but can also be beginning of 2024.

Next person up is Nicolas McBeath from DNB.

Can you hear me?

Yes.

Perfect. So a couple of questions on -- related to growth and revenue margins given the changing market environment and conditions so far this year. So first of all, on growth, looking at your annualized customer growth in Q2, it came down quite a bit versus -- recently. And -- so would be interesting to hear whether you think your 15% customer growth target is still credible, also in a higher rate environment? And do you think a more normalized market environment would be sufficient condition for your customer growth to reaccelerate again? First question, please.

Yes. I think we have -- can move back quite a bit in customer both when the markets turn positives again for sure. But we need to see a shift in the market for not just for a month. I think it needs to stabilize for perhaps a quarter before we see a trend shift. And that's both for the customer growth and also then savings capital per customer. But on the other hand, like I said, we have an upside on revenue margin from net interest income and we're going to continue to maintain costs. If you look at holistic picture, it looks quite okay, almost. Yes, it's just it differs a little bit between the targets. But we also have to remember the targets we gave is midterm, so it's average over a period. So it's not specifically just for 1 year.

Yes. So maybe just to play devil's advocate a bit. So what makes you confident that customer growth will increase when market turns? One can also make the other argument maybe that growth is actually now on a more normalized level following exceptional circumstances during the pandemic and -- with, I mean, extremely low interest rates. So what's your reasoning that makes a comfort in, that growth will recover just because market recovers?

I think we show that also on Slide 7, a little bit the long-term trends on customer growth and trading. And we see after COVID, especially from summer last year, I think the growth normalized and the trading normalized, and it was on a normalized level until quarter 1, but then it dropped quite a bit, both trading and customer growth in quarter 2. So we do assume that part of that will come back. Let's see how it exactly plays out, but we definitely will see it come back in the trends when the market turns. So you can watch -- you can look at the long-term trends also on Page 7 in the presentation that's going to be uploaded.

I think it's also important to see the historical views before 2020 and 2021, where we have a growth rate of 15% and above for several years.

Okay. And then a follow-up question also on the revenue margin. So revenue mix now seems to be shifting from commissions to net interest income with higher rates. And how do you think about the net impact on your revenue margin from this shift? Do you think it's positive, negative or neutral? And do you still think that your 45 basis point revenue margin target is reasonable in the medium term, given current market conditions?

Yes, I think it is. In the second half and also into 2023, where we see a quite positive contribution on the margin from net interest income. And I think a lot of the hit already on trading, we've already taken. So that will mean an upside for us going forward. I think in the medium term, I think it depends. I mean if you have interest rates that's forecast now around 2% on the Central Bank rates, I think that's a quite okay scenario. Of course, if inflation is not mitigated, the Central Banks need to double to 4% or 5%, then of course, is a different story, but that's not just for us.

And we have more questions coming up here. Next person up is Maria Semikhatova from Citi.

Several questions. First, on net inflows. We saw more than SEK 8 billion of net inflows in the second quarter. Maybe you could comment how that was distributed between existing customers and new customers? And actually, it's very useful, the Slide 7 that you provided. But just wanted to hear your thoughts. Do you see the risk of inflows turning into outflows once disposable income and sentiment, if they continue to be hurt by the current environment?

It's a good question. I think overall, in H1, if you look at the net inflows, our net savings was SEK 30 billion for H1 and SEK 8 billion in quarter 2, but 44% was incoming from 2022 quarter and another 40% from 2020, 2021 quarter, give or take. So new customers are putting in a lot of money on the platform and also be preferred to, I think, start trading when the market shifts, which is positive. When it comes to outflows, we have not seen any increase of outflows so far. It is very steady. We have seen a slight decrease in inflows, but that's due to that we have less new customers impacting that. But we have not seen any big shifts on outflows.

Understood. And then just maybe shifting to fund commissions. We saw the headline that there is a ban on kickback commissions in Norway. I think there was a suggestion sent to Ministry of Finance. What do you think that would mean for your fund commissions in the country?

Not really because we're already compliant. So we have full -- we don't have any kickbacks in Norway, and we have a platform fee where we charge 29 bps then for active funds and 19 bps for passive funds.

And do you see any changes across other geographies on the near-term frame?

Not currently. If it happens, we are prepared. But I think in Denmark, we already mitigated by giving some of the retrocession feedback to the customers, ensure a big customer. And Finland and Sweden is so far rather quiet.

Okay. And then maybe just on the cost side. We do understand that market environment is outside of your control. Maybe if there is -- you think that there is leverage that you can use, if customer growth don't come back near term that you can be below the 5% target?

Yes, we can. I mean it's two levers. I mean if the activity drops dramatically, we can, of course, reduce operational staff. And that doesn't need to be a big program because it's our turnover is fairly big. So it's just that we avoid replacing people that's leaving. And the other part is that we then -- because where we grow cost now is product and tech because we want to have more engineers to be able to deliver faster on our exciting road map. But of course, if the market is really poor, it was in the coming year, we can also pull that lever, of course, stop recruiting.

And then we have a couple of questions left on list ask questions. We have [ Mats ] from SEB.

A few follow-ups before we hit the summer vacation. But a little bit into the savings or fund, the launch of Nordnet One and also the -- platform here. Do you see any impact on that? Or I mean, how was the fund flows in the quarter? And do you notice any big challenger coming up here? Or Saver wants to take chunks of your fund platform? Have you noticed any change?

No, we have pretty good flows actually during the quarter. And I think the launch also of Nordnet One and allocation funds is well received. It's, of course, early days. But we also see our broad portfolio of index funds, both global index funds and local index funds is very attractive and has generated positive flows, actually the entire H1 in spite of the market turbulence. So I think the entire focus we have on funds going forward is a growth potential for us clearly.

And then we have Mr. Enrico Bolzoni from JPMorgan.

Just a couple of questions from my end. So one, I was just looking at the -- basically the average revenue per trade that basically came down quite a bit over the quarter. However, if I look at the average ticket size per order, it was actually not getting bigger, but actually coming down as well. So usually, I would think that smaller order size should lead to a higher yield. Why it has not been the case? And related to that, I also wanted to ask you, what do you think it's a floor in terms of trading activity per customer if things slowdown? Are you still confident that we will not go back maybe to much lower levels we had pre-pandemic? Or if not, can you give some color there? Another question I had was on the actual competitive landscape. So I appreciate you have the target of customer growth. Avanza, your arguably closest peer in Sweden also has a quite ambitious target there. But when I look at Swedish population, it's actually not huge clearly. And between the two of you, you already have a substantial share of the market. So can you just give some color in terms of which demographics are you targeting? Do you think still there is a lot to do with the younger part of the population? Or actually now it's about convincing all their customers maybe of traditional bank to switch? So these were my two questions, actually.

Good. I mean revenue per trade, I think, is a little bit mix between retail and private banking have trading where retail is trading a little bit less versus the heavy traders and private banking customers, and they have a lower commission. So I think it's mainly due to that. When it comes to trade per customer, as we showed also in the presentation, we are below the average -- the long-term average now on trades per customer and also below the average in '18, '19 before corona. We follow the same seasonality as before. So the low point is going to be in June, July, but we're slightly then below the average from before. So we see, of course, if the market picks up, that there is a potential to increase trades per customer again. And customer growth, I think we have currently around 6% market share in the Nordics. So for us, is that we can address the entire Nordic customer base it's around 20 million customers, 27 million even. And as you know, we grow more outside of Sweden. And I think we have plenty of room to grow on our customer base in many segments, not just young customers, but also in the mid-segments and also in the high-end segments with the products, not least. Pension products, we get the new fund products with the allocation funds and also [ Diamond Trapper ] in Finland. So I think we have a good potential across the demographics. But again, we're really benefiting from being in four countries in just -- not just being in Sweden.

Can I actually -- sorry, a follow-up, I forgot. On cost, I just wanted to ask you, if the inflation remains very high, so we have, let's say, 7%, 8% or even more, what should we expect in terms of cost growth going forward?

But so far, we maintain our guidance. And I think in the coming years, I don't see inflation spilling over one to one to sell increases because if that happens, we have huge problems. And I think the Nordics learned that last time we had big inflation. So I think in the coming years, that will not happen one-to-one. We see slower salary increases versus the inflation.

We'll take a couple of questions that have come in the writing as well. This is from [ Henrik Milton ]. Hello, can you please clarify your long-term growth targets when it comes to revenue, net interest income and return on equity?

Yes. We haven't any specific guidance on those numbers. So you have to buy our midterm targets that we have customer growth, sales capital customer revenue margin and cost, I think you can deduct most of the numbers from there.

Good. And on the theme that we have talked about before and Lars-Ake talked about I'll ask this question for the sake of it. You have a clear 5% cost growth target, which was set before revenues fell substantially. Is there a room to improve your costs, especially given that the key near-term revenue driver and net interest income does not drive costs? So what can you say about cost level?

But I think I commented that with Maria, I think. We maintain the cost guidance we have now because we want to add more resources in tech, because we want to deliver faster on our exciting road map. But of course, if the world is not improving, we can reduce the hiring in engineers and also if there's really low activity and low inflow of customers, we can also then reduce operational staff. But in the market we see now, where we are now, we will not change the cost guidance.

Okay, good. And I see we have one more personal speaker list. I think it's Ermin Keric from Carnegie. Is that correct?

Do you hear me?

Yes, very well.

Great. Thanks for the presentation. Perhaps starting on the fund side, I know you reduced your platform fees in Norway in April. Is that basically fully visible now in the numbers? Or should we expect any more or like effect into Q3?

No, it should be visible now in the numbers. So the entire base was got an over fee from 1st of April.

Great. Then on your own fund company and the launch you've done there, could you talk anything about the profitability in those products compared to general allocation funds or index funds, kind of like-for-like funds that you're just distributing?

Yes. But I think we have a slightly higher margin on both index and definitely on the allocation funds, I would say. Then again, we have attractive prices to our customers to drive flows, but I think we see better margins instead of just doing it with someone else.

That's very clear. And then the last question was just on the leverage ratio. So it has been coming down. I know, Lennart, you said you're still comfortable at 4.2%. But do you just see it as sort of you can just remedy Part B with reducing dividends or even stopping dividend for a year, if deposits continue to rise? Or are you at all considering any additional Tier 1 issues from here?

We don't regard any further issuances. I mean, if there would be anything, it would be reducing dividend. But I think it's very important to note that the 4.2% is related to two measurements. The 1 is the guidance, which is 3.9. And we can have additional, I think it's about SEK 10 billion to SEK 20 billion more in deposits without breaching that. And going down to the real requirement, which is the minimum requirement of 3.0%, we can have SEK 45 billion to SEK 65 billion more in deposits. That is why I'm quite comfortable with that. The guidance is actually not -- is a target where we do report to [ FCA ], but there are no, would you say, claims after that from them. We need to watch it. We need to be above it. But we do report it. So it's more of a soft measurement. The real one is 3.0%. But still we use all times plan to -- or do want to be above 3.9%, of course. But still, we have the SEK 20 billion in capacity.

And have you quantified any kind of buffer you want to have to the guidance?

I think it depends on the market situation, of course. But at the moment, I think this is a good buffer. This is where we know where we are about. So we have not quantified it in any limitations or anything like that. But this is a stable way. We don't mind having it further on, but it all depends on the market condition. And with this turmoil where some savers have sell-off and also put in net savings, which they haven't invested yet, I think this is a good level.

And that was it, I think. Thanks a lot for attending this session, and thank you for all the great questions. Our next report comes out late October. Before that, we will, of course, publish our monthly statistics as usual. Please don't forget to visit corporate site, nordnet.com, that is where you find all the information and the presentation from this event as well. Thanks, again, for being here today and your interest in event. Have a nice summer. Bye-bye.

Bye-bye.

Thanks, everyone. .