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

Hello, everyone, and welcome to the presentation of Nordnet's first quarter of 2023. My name is Marcus Lindberg. I'm the Head of Investor Relations at Nordnet. With me today, I have our CEO, Lars-Ake Norling; and our CFO, Lennart Kran. Lars-Ake and Lennart will start off by presenting the results, and then we'll have a Q&A session. [Operator Instructions] Presentation itself is available on our website, nordnetab.com. Okay. Let's start. Lars-Ake, please go ahead.

Thank you, Marcus. We can go to the next slide. Some key highlights for the first quarter. It's been a very strong quarter with strong financial performance with record revenue, highest revenue ever in a quarter and the second highest profit in Nordnet's history as well. We maintained cost control with operating expenses in line with financial targets. And we see a more positive momentum in customer growth and net savings, stemming from a bit more positive market climates. We also see a slight recovery in trading activity, despite the uncertain macro environment that we are still in. Net interest income almost tripled due to higher interest rates versus quarter 1 last year. And we see continued positive interest rate sensitivity in 2023, when we will get the full effect of the interest rate hikes across our Nordic footprint. We also launched several products, including Quartr integration to take part of financial reports needed for pension transfer and also an instant deposit in Norway. And overall, we have a strong capital and liquidity situation that Lennart will talk more about later in the presentation. Go to the next. A little bit of the financial highlights. We have a customer growth of 8% year-on-year, but we see a clear pickup in the customer growth in quarter 1 versus quarter 4. Savings capital is about flat year-on-year. Number of trades is down 17%, but as Q2, we had a very strong quarter 1 in 2022. But if you compare to quarter 4, the number of trades are considerably up. And revenues, I commented on, up 27% and the highest revenue ever, SEK 1.1 billion in 1 quarter. We see then a strong growth in net interest income, compensating for a slight decline in the trading revenue. Operating expenses aligned with guidance of 7%. We had slightly higher cost due to marketing in quarter 1. As you know, we won this Bank of the Year award, and we spent marketing money to publish that result. And we see also that we continue to have a very good operating leverage in the business, and we increased the profit with close to 40%, and that's the second highest profit ever then, around SEK 800 million. Go to the next. And we see continued growth in customers and net savings, despite the still volatile market climate we are in. We grow the customer base reported 3,000 and net savings, SEK 7 billion. It was a bit lower than quarter 1 last year, but considerably up from quarter 4 in 2022. Go to next. Our geographical diversifications to risk in the business model and enables growth. And as you see, we have higher customer growth outside of Sweden, also less impact on savings capital from negative markets, also outside of Sweden. You can go to next. We also, like I said, see slight recovery in trading activity despite the still uncertain macro environment we are in. And the graph to the right, the blue line there, you see a number of trading customers are considerably up from quarter 2. And we also, to the graph up to the right, you see also trades for trading customer is up, and the share of cross-border trades is also on a stable level of around 25%. Go to next. And we also see, I mean, that the trades per day have doubled since 2019 and also the trading margin or the income per trade is better. So if you look at the graph to the left, the red line, you see that number of trades per customer are down versus the peak levels we saw in 2020 and 2021. But we have doubled the customer base since 2019. So if you look at total amount of trades per day, that's year-to-date, around 225,000. That's almost double the amount of trades we have per day in 2019. So we're really benefiting from our big increase in the customer base. And if you look at the graph to the right, you see also that the income per trade is increasing, and that's due to a higher share of cross-border trading, where we have a higher margin. And thus, future, we have more customers now in Finland, Norway and Denmark, where -- and they trade naturally more cross-border since the local exchange is fairly small. So we can go to the next slide. Looking a little bit on the fund side. We see the graph up to the left, that the fund capital is about stable since 2021. But of course, this was a pretty big setback in 2022 due to negative markets. If you look at the fund allocation and the pipe sort in the middle there, you see 22% of the fund capital is Nordic-branded funds, and that's around SEK 34 billion, and we see a very positive growth overall in the Nordic fund family. And Nordnet [ prefer ] the funds that are mainly broad index funds. And if you add then the other index funds on the platform, index funds then contribute to around 45% of the fund revenue and active funds, around 36%. And fixed income is still fairly small, around 13%. We don't see that much movement yet in fixed income. Looking at the fund customers down to the left. We have now close to 800,000 customers saving funds. And it's around 46% of our customer base, and that's a continuous increase from 39% of the customer base in 2019. And as you know, the fund business is a big focus area for us. And we also see positive net buy even in 2022, which was a tough year, but that's considerably picked up then, of course, naturally in quarter 1, which was a strong quarter. Go to the next. And looking at deposit levels, we see the deposit levels declined, driven by a customer net buying. If you look at the graph to the left, you see the process in relation to the savings capital on the platform. And that's historically varied between around 11% to 15%, a little bit dependent on the market movement. When the market is strong, the customers are more invested. And when the market declines rapidly, they liquidate their assets and is more than deposits. Now we are around 10% deposits versus savings capital. So that's a little bit below average. And in the graph to the right, we see that the customers are definitely taking on more risks, investing quite a lot in both shares and funds. So they invested total SEK 19 billion in the market in quarter 1. And then that's compensated by a net cash inflow of around SEK 6 billion and also dividends, SEK 5 billion. But letting all this out, deposits are down around SEK 7.5 billion in the quarter. But we're still very happy that the customers invest in brokerage and funds, which is our core business and what we really drive on our platform. We can go to next. Looking a little bit on the liquidity portfolio. We -- and a snapshot here is that the liquidity portfolio will generate around SEK 1.6 billion in 2023, assuming that the volume we saw end of quarter 1 2023, and the currency allocation between the markets and the credit spreads and market consensus that we see on the [ cyber rates ] that you see down to the right. But in total, we have -- when it comes to deposits and also adding equity to that, we have around SEK 78 billion, where SEK 50 billion of those is in our liquidity portfolio and SEK 28 billion is in our lending portfolio. And as you see, we have very positive momentum in the liquidity portfolio then stemming from increasing interest rates now in -- across our Nordic footprint. So we have the increase in interest rates in all the countries. But of course, this is a snapshot and the sensitivity is, of course, how deposits will develop over time and also what interest rate costs we will have. This is the latest estimate. But of course, if that changes, that will impact also the snapshots. Go to next. So also a snapshot on the loan portfolio that we -- with the -- assuming the quarter 1 volumes and interest rates as per April 1, we'd be estimated to generate around SEK 1.2 billion in 2023. And looking at the lending volume in the graph up to the left, we see that quarter-on-quarter that personal loans is fairly stable, mortgage is stable and a slight increase in margin lending. But we see a big increase overall in the lending revenues, of course, related to the increased interest rates in the lending portfolio. But also here, the sensitivity is, of course, the volume -- the lending volume, but especially then the interest rate pass and interest rate movement going forward. But overall, we have a very low-risk lending portfolio, loan-to-value of margin lending and mortgage is around 40%, and our unsecured business is also no-risk unsecured portfolio with a fairly limited credit losses. And we have no credit losses in the mortgage and margin lending portfolios. So next. Also the snapshot on the deposit interest rates that we paid to the customers. We estimate that to be around SEK 270 million -- SEK 275 million in 2023, assuming then the volume that we see on interest-bearing accounts in end of the quarter and also, again, the currency customer comp mix that we have, but we did the interest rate change in Sweden on April 21. So we also calculated that into this number. Sensitivity here is, of course, how much money will be transferred to especially savings account, where we have the highest interest rates, but also, of course, the interest rate passed. But if interest rate has increased, we will likely also have high interest rates on the liquidity portfolio and the lending portfolio. And today, 26% of the customers' deposits are on interest-bearing accounts. We'll go to next. So if you look at this in summary, we have a resilient revenue then bolstered by diverse revenue streams. And if you look at the graph on to the left there, you see the light red is net interest income, which has been growing then, compensating for a slight drop in the light blue, which is transaction revenue and a fairly stable fund revenue in the dark blue. But if you look at the CAGR's growth -- average growth rate since 2019 for each of the revenue streams is actually good: 4% for net interest income; 4% for funds; and 30%, give or take, for the brokerage revenue. And looking at the margins in the graph down to the right, we see, of course, increased margin on deposits due to higher interest rates. The light blue, we see a slightly lower margin on trading due to less trades per customer and also a slight decline on the fund margin due to the shift then from active funds to passive funds, when also that we have a platform fee in Norway and also that the customers buy slightly less foreign funds, where we also have done the FX revenue. Go to next. So looking at the full P&L. And in a longer period, we have very strong revenue growth, around 30% per year since 2019. At the same time, we have a very scalable business model and very good cost control. Cost going to increase around 4% per year in the same period. So basically, the entire revenue growth ends up on the bottom line, and it's a true position of profitable growth. So we've increased the profit with around 75% per year since 2019. Go to next. A little bit on the product highlights. Also I mentioned a few of them already in the introduction. We launched a fully digital transfer process of pension in Sweden together with the company Insurely. So that has been well received by our customers. And we also had a lot of new versions of our award-winning app. Just mentioned a few that we now have earnings calls with Quartr. So you can follow both the presentations and the reports via our app and also via our web. We also introduced company logos. So in August, before all the company, [ niche ] is a small thing, but it's been really appreciated by the customers. And also that we have now enabled instant deposits in Sweden but also in Norway, which haven't had instant deposits before. So that's also been really well received by the customers in Norway. Okay. So with that, Lennart, I hand over to you to talk about the capital and liquidity situation.

Yes. Thank you very much, and welcome, everyone, and good morning. We can go to the next slide. First of all, it's very confident to say in those turbulent times that we have a solid capital position with also a strong liquidity and good credit quality. And we can summarize it by saying that the total capital ratio is 24% and the requirement was 18.4%, CET ratio is 16.5% and the requirement, 12.1%. And also the leverage ratio is 5.6% compared to 3.0% or 3.9%, whatever you choose to say. This has been able, of course, with an increase in the own funds with SEK 500 million, partly results deducted with the expected dividend, but also the issue of the AT1 of SEK 300 million, which was also very successful. I mean a very good timing to it, before the turbulence hit the market by Credit Suisse, to say. Also, the liquidity position is, of course, good. We have an LCR of 447%. And that is due to that, we have deposit. Even though it has decreased by SEK 7.7 billion, still SEK 33.5 billion, and we only lend out about SEK 28 billion. So we have a loan-to-deposit ratio of 40%. And the NSFR is also the net stable funding ratio, which we are not funded in the capital market with loan bonds, while that is very good, of course. But it's also important for us to keep a high-quality in the liquidity, both regarding -- it should be liquid bonds and it should be high creditworthy. So thereby, we have the bonds 62% and then we have the government or equivalent on 25%, and only 8% of it in senior. So very high liquidity and very, very high credit classes. And that you can also see the rating pie chart that you have to the right of that one, with most of it in AAA bonds and 20% from AA. So it's a very good quality. It's also important for us to -- has as low risk as possible in respect of interest rate risk and credit spread risk, while we have shown this shot for quite a long time now, where you see that the unrealized losses or result rather in the HTC, hold-to-collect portfolio is just around 0, and that is due to that most of that is in the 0- to 6-month maturity bucket, both regarding fixed rate, but also in HTC. The rest is actually in FRM, and most of it is in the available-for-sale portfolio, which is an unrealized result of about SEK 100 million, but that is always affected the capital base of owned funds. So it's also always within the books. So no hidden parts within that. The capacity for leverage ratio has now increased to that, we have SEK 34 billion more in deposits we can take on before we reached 3.9 guidance limit, and actually, SEK 69 billion more in deposits before we reached the bottom line of 3.0. So we feel very secure in both the liquidity, the capital and the credit quality situation. And that's very pleased to have been able to feel that comfort within this first quarter with all the turbulence that has been there. I'll leave it over to you again, Lars-Ake.

Thank you. The balance sheet on one slide. Thank you, Lennart. A little bit of a strategic focus. Some of you have seen those slides before, so I'm going to move pretty fast. But starting with our strategic focus areas, which are 4, starting with engaged customers. We're building this one-stop shop for savings investment with a true really great customer experience. And to reach this, we, every day, build on our platform for savings and investments to build the best platform. But we also know we never have happy customers, unless we have really talented and passionate staff. And we want to see an upward trend on PE satisfaction, which we have and also that we can attract and retain top talent, which we can. And the bottom sustainable business, we are in a trust business. We need to earn our trust everyday and especially need to secure that we manage the compliance risk and other risks in a business in a good way and that we, overall, are trusted and liked brands. And number four, the fourth area is profitable growth to capture the fantastic growth potential we have in the Nordics and to continue to take market share in the growing savings market. But at the same time, doing this with scalability and focus on cost control to have also a stable cost level going forward. Go to next. And looking then at the growth in customers and savings capital, there's been a really good long-term growth. And we saw that, that also accelerated from 2019 when we launched our new platform. But we see -- I mean, the reason for the growth is, of course, that the EBITDA enable better and better customer experience, the new features and products and automation but also that we have critical mass when it comes to customers in all countries that last for a word-of-mouth-based growth. And we've doubled basically the customer base, as I said, since 2019, and we're now at 1.7 -- or close to 1.8 million customer across our Nordic footprint, and also good growth in savings capital, both from underlying market growth but also net savings. Go to the next. And this is a key slide, and that's a big reason for our strong revenue growth that we had and will hopefully continue to have and that we are taking market share in a growing savings market. But still, we have a rather low market share, so ample to grow for many years. We have around 6% market share of the total addressable population in the Nordics. That's currently around SEK 28 million. We also have 6% market share of the addressable market, which is big, it's SEK 13 trillion, and that market share is up from 3% in 2016, so taking market share. And we estimate the adjustment market to be around SEK 20 trillion in 2026, both from underlying growth in the savings market, but also that we launched 2 new products, livrente pension product in Denmark and also the endowment insurance in Finland. And to the right, you see we have highest market share in shares, but lower market share in funds and pension. And that's why we also put a lot of focus, both in the fund area and the pension area, where we see a strong growth potential going forward. We go to next. Also a very scalable business with good cost control. We've managed to maintain the cost almost on a flat level since 2019, in spite of a doubling in customer base at the same time and also revenue growth of 30%. And the reasons for this is we talked about this before, that we have a really scalable cloud-powered tech platform that can allow us to onboard a lot of new customers and transactions without driving costs, also that we work with automation and simplification. That's a win-win. We scale better, but it works better for the customers. And our customer growth is very efficient, mainly based on PR and word of mouth, so low acquisition costs. And we also work heavily with third parties to manage spend in a good way there as well. We go to next. Looking at the midterm financial targets. We are slightly below the customer growth target, 8%. But like I said, we had a pickup in quarter 1 versus quarter 4, which was good. Average savings capital per customer is about -- around the guidance in relation to sales capital. And this is the last 12 months, but this will move up to around 55 bps during the year when we see the full impact of the interest rate increases. And the expenses we talked about were in line with our guidance of around 7% this year. Go to next. So just to wrap up the priorities for 2023, that we're going to launch then the Finnish endowment wrapper, around -- in quarter 2, beginning quarter 3. And it's going to be a fully digital product, and it's going to be flexible. You can both -- buy both funds and equity, and there's going to be low and especially transparent fees. So I think we're really going to have a fantastic product with this in the Finnish markets. We're also laying the foundation now for the Danish livrente product, which is a SEK 2 trillion market that we aim to launch in 2024. We work heavily with integrating Shareville, our social networking platform for investments. We integrate that now into our app and web, and we're well on our way. And of course, we're going to continue to expand the Nordic brand of fund offering in our fund company. And naturally, we're going to continue to focus on cost control and scalability. So with that, Marcus, I think I hand over to you for Q&A.

Great. Thank you, Lars-Ake and Lennart. So now we'll open up for questions. [Operator Instructions] So the first question comes from Jacob Hesslevik at SEB.

Can you hear me?

Yes.

Perfect. So my first question is on the NII assumptions, the loan portfolio and deposit interest on the slides you showed us. I mean the number you gave us for the full year, is it correct that it does not include the potential rate hike from Riksbank and Tomorrow and from Norway and ECB in May and June?

The lending guidance, correct then, Marcus, is that based on the interest rate path or it's just...

No. It's based just the present one.

Okay. Sorry. Yes. So I said wrong. Yes, you're correct. It's based on the existing rates exactly, not the interfaced paths going forward.

Okay. Perfect. And if we look on deposit inflows, what is the automatic monthly savings? And I mean net savings were a bit lower during the first month during this year. So I was just wondering how more customers pause them? Or have they lowered the amount? Or is it due to less new customers? Or is it any specific larger outflows?

No. We don't see any big change in monthly savings. And as you know, we also had a onetime effect on net savings, around SEK 1.7 billion here related to 1 big customer, transferred that out in Huang gong. It was not -- we didn't earn any money on that, saves capital, so it didn't impact revenue, but it impacted net savings.

Okay. And one last question. I mean deposit costs increased from SEK 5.3 million last quarter to SEK 58.4 million this quarter. How large share of this cost is related to Sweden versus other markets?

Like I said, I mean, the interest and focus on the savings account and interest on savings account is bigger in Sweden. So a majority of the cost is in Sweden today.

Next question comes from Nicolas McBeath at DNB.

First question on deposit competition. So how do you see the competitive landscape for deposits in Sweden? Do you notice any increasing competitive pressure from banks such as SBAB, Danske [ Politikere ]? See any flows between Nordnet and such banks? And to what extent do you think customers view such banks as a substitute for deposits compared to Nordnet?

It's a good question. I mean, currently, we see positive cash flows -- net flows in Sweden. And with the interest rates we have now on the savings account, I think we're very competitive. We are currently at 2.5%. So I don't know what's SBAB's latest is, but we're fairly aligned to that. So we don't see any outflows due to customer chasing yield. Of course, since we have wealthy customers in Sweden, they can take up money to invest in property or unlisted company and things like that, but we don't see any major outflows of cash for just having yield. I think provide a very competitive product now and yield on our savings account.

Okay. And then also a question on deposits outside of Sweden. So I think you've previously been quite confident that you don't see any major risk that you would need to start paying high deposit rates in Denmark or Finland. How do you think about that at this point?

And of course, we monitor competition, we monitor flows, especially. But like I said, the interest of savings account is not as high outside of Sweden is one of our countries, Norway, Denmark or Finland. So we don't see at all the same focus and push and also transfer a lot of money to savings accounts neither in our bank, but as well as other banks. It's different climate in Sweden, for sure.

Okay. And then I had a question on net savings. So if we disaggregate your net earnings in the quarter, it seems like there are some diverting trends in Sweden and Norway versus Denmark and Finland with lower savings in Sweden and Norway. So could you just comment what you're seeing in terms of differences of the savings behaviors across the markets, please?

Yes. Like I said, we had a big one-off in Norway of SEK 1.7 billion or I didn't say it was Norway, now I say it was Norway. So that, of course, impacted the net savings quite a bit in the quarter for Norway. But in Sweden, I would say, it's -- I think we have both. We have good inflow. Of course, we have some outflows, but not for chasing yield, but it's been customers also investing in property or other -- at least that compensates and such.

Of course, it's very tied to customer growth so we tend to grow a bit more outside of Sweden. New customers bring in quite a lot of the new capital.

Yes.

Yes. Okay. And then final question on the outlook for loan growth, please. So I noticed there is -- the lending volumes appear to have stalled a bit over the past couple of quarters. Is it liquidity capital or demand that's holding the loan book back? Or what's -- and what's the outlook here for the next few quarters?

Yes. I think when you look at the personal loans business, we have no intention, as you know, to grow that. We don't mind if it even decrease a bit. When it comes to margin lending, we have seen a pretty good pickup during the quarter in spite of a little bit of turbulence. When it comes to lending or mortgage -- sorry, it's -- of course, I think it's good to have a stable level. But of course, we know our interest rates are not sticking out in the same way in this environment. We still did the lowest, but of course, relatively wise, it's bit less lower than we were in a lower-yielding environment. But I think we are happy with having a fairly stable development now on the mortgage. But of course, we also see over time a pickup in Norway, which is very good.

Next question comes from Ermin Keric at Carnegie.

So maybe just first one on the lending. Is there any product where you see that it will be harder to continue to have the same pass-through rate going forward? For example, on the margin lending, is there a level where clients will not think it's a relevant product at all if the rate is too high simply?

Yes. It's a good question. Of course, there is a limit somewhere, and we have been -- where we have the highest margin lending rates in Denmark and Norway, you've been a little bit more careful. But I think there's still some additional possibility to pass through. But of course, we're reaching at some point, a limit, but we're probably reaching the limit of the interest rate path increase as well, so...

Okay. That's very helpful. And then sorry if I missed it, but did you say how much is currently in pure savings accounts now and how that has changed in Q1?

Yes. I didn't say savings account per se, I said 26% in interest-bearing accounts overall. That's also the ISK and such. But I don't know if you disclose the exact figures on savings account, Marcus?

Yes, we -- it's about SEK 5.5 billion. It was about SEK 4.5 billion in end of Q4, most of the increases in Sweden and a little bit in Denmark, too.

Perfect. Then the last question would just be on the commission rates. They came up a bit in all the different countries in Q1 essentially. And I'm just thinking, how should we see that? Is this now a normalized rate where you see a kind of normalized mix of customers which are trading? Or should we look kind of on an average for Q1 or because that...

It's, of course, difficult. It's about the customer mix. If it's more retail versus heavy traders, you have a higher commission and also the mix between countries where a higher commission outside of Sweden compared to -- so it's a little bit the country mix and the segment mix.

Next question comes from Patrik Brattelius at ABG.

My first question would be on the deposit competition topic, a little bit of a follow-up to the questions asked by Nicolas earlier. So who -- you talk a lot about competition here on deposit rates. So who do you view are the price sectors and the largest players within the market that sets the rates that you follow?

Yes. But in Sweden is -- of course, SBAB that sticks out. But then, of course, it's our competitor Avanza both on the savings account but also the move they did on having interest rates on the tax wrappers, the ISK and the KF. When they did that, they had to follow even though we don't think it's very beneficial to have a lot of cash and also accounts for tax reasons. In the other countries, of course, we look at both the big banks and the competitors. But I'd say, Sweden is more, I mean, active, like I said.

Yes. I understand. Do you see more harmonized pricing between players here with the new rate decision coming up? Or do you see that competition has picked up following what has happened in the U.S., for example?

I think, I mean, probably ending some kind of -- end of the interest rate hike capacity from the Central Bank. So at some point also, I think the deposit rates will level off on interest-bearing accounts. When compared to the U.S., I mean, they also have the liquidity funds where you can get 4% or 4.5% on 3 months government papers, which we don't have in the same way in the Nordics.

Yes. But yes, so it's not earning intensified competition in the last couple of quarter?

No, I wouldn't say that. No.

Turning to transaction income. The brokerage fee you charge to customers, it's dependent on which broker class you registered to. Hence, I would assume that some customers are being charged slightly more than what could be the optimal level if they are in the right brokerage class. How would you view product innovation that would optimize the right brokerage class for the customers immediately?

Yes. I think it's still good if a customer choose what they want to do because they've different preferences at different times. But today, we -- what we look at is perhaps that you can change commission class a little bit more often than you can today. So that's something we have on the radar going forward.

Yes. Because my follow-up would then be, if you would have that solution, that would optimize it, what -- how much could the brokerage fee then drop in comparison to the current level would you expect, ballpark?

I don't have a number on that, but I don't see a dramatic drop. I don't think they're going to go to -- that we automatically do it all the customer at every single point. I think it's still important that customer can choose what class you want to have. Of course, if you can choose more frequently, it might be some impact, but we don't see that as material.

And if competitors would go this route, would you feel obliged to follow? I know it's a...

Yes. Now we need to look at that point in time.

Next question comes from Maria Semikhatova at Citi.

Couple of questions from my side. First of all, I appreciate the disclosure that you provide on deposits. Just wanted to check with you, if you are seeing continuation of trends so far in April, that customers are utilizing cash to buy more equities and funds? And maybe more broadly, because you refer to the historical levels of deposits relative to savings capital. There's still things that are reasonable, let's say, threshold in the current rate environment or there is no reason or kind of high opportunity costs right, right now to keep on cash.

Yes. I mean we are looking at historic numbers, we have periods there as well with high interest rates. Of course, the change has been perhaps more rapid this time to increasing rates. But I think it's market-dependent. I mean, the customers invested a lot in quarter 1, and that's where we saw an impact. If we have the weak market, again, it might move in the other direction where people liquidate more of their assets. So yes, time will tell. I think, in April, I mean, it's a little bit -- I mean it's an Easter month as well. There's a lot of Easter holiday in all the Nordic countries, distorting the picture a little bit. So let's see for the full quarter, quarter 2.

And also, keep in mind that dividends flowing onto the platform has an effect, and Q2 tends to be a pretty heavy dividend quarter as well.

Yes. That was useful that you broke down the inflow there. And then maybe just kind of switching topic on the Finnish endowment wrapper. You mentioned this addressable market of EUR 40 billion. I don't know how much you can say at this point, but maybe kind of general thinking. You have a market share of around 9% in Finland. Is it kind of fair acceleration for the future for this product as well? And maybe on profitability, we know that bond margins are the lowest in Finland kind of in terms of product economics, if there's anything you can share.

Yes, I won't guide on specific market share. But as you know, we are very, very strong in Finland. And if we look at the ASK account, I think we have around 65% to 70% market share. So of course, we've been extremely [Audio Gap] market share. But it will take time to build it. But as you know, it's a very flexible product. So you can both invest in funds, but also in equity. And there's a lot of demand for that, also going to be some kind of wrapper fee on it as well. So I think it's going to be a very competitive product, but still a profitable product for us.

Okay. And maybe just one minor question for Lennart. There was a higher credit loss on unsecured lending in Sweden, if you see any signs of stress? What drove that kind of higher cost of risk?

No, that increase or rather that higher level was mainly due to provisions during -- due to model IFRS 9 models and also that we have a new forward flow agreement, which actually has a little bit less payment within it. So no, we don't see that, any change in the credit quality of that portfolio.

So we basically don't annualize this quarterly number. If things don't -- if things actually not materialize, it should -- we should be at a good level and it should come back down. Next question comes from Enrico Bolzoni at JPMorgan.

Just a couple of questions from my end. One, can you give us any update in terms of the split of selling capital or deposit by type of account between -- for the private banking and the standard accounts? I think you gave an update at the Capital Market Day a while ago, and I'm not seeing one since then. And the second question was, I mean, in light of what happened, a very turbulent quarter, have you reconsidered maybe exploring the possibility of offering also transactional banking? Because this is said to be one of the ways where you can increase stickiness of deposits if basically your customers could use you just for their all-around banking activities.

I think the latest split on savings capital, I don't have that in my head right now. Perhaps you can provide that, Marcus, in line what we reported before.

Yes. Hold you back on that.

When it comes to transactional banking, no, we focus on savings and investments to build the best platform for savings and investments. And we have a super interesting road map there. And I think if we broaden ourselves too much and go more ahead on all aspects of big banks, that will not benefit us. What really makes us successful is that we focus on one thing, and it's to build the best platform savings and investments for the private investor. That's what we're going to continue to focus on.

Okay. Next question comes from Rickard Strand at Nordea.

Can you hear me?

Yes.

Yes. No, of course. Sorry about that. So first, a question on the deposit environment outside of Sweden, where you mentioned that you're less worried about the deposit competition outside Sweden. Just wanted to hear, is that because of competitors or competition in general being lower? Or is it because your customer base in these countries down to really see sort of the competitors as a viable substitute for Nordnet in these countries?

I think it's a combination. We have a very strong position, and they are on our platform to invest and we prefer to stay there and do the investments. But also, in general, in the markets, it's less focused on savings accounting, interest rates and savings account compared to Sweden where the focus is very, very high.

Okay. And then on the Finnish wrapper there, where you seem quite excited about this product launch. But could you share your sort of hopes here in terms of if you think that this product will primarily attract volumes, sort of new volumes from your existing client base? Or if it's sort of that you're hoping to acquire new customers that will primarily bring in the new flows here?

Yes. But again, I think there is a combination, both at existing customers that perhaps have an endowment wrapper with some other players as we didn't provide it. This is very efficient if you have a little bit more money. So of course, it tracks down savings capital that's now sitting outside that they hopefully want to then transfer to our platform. That's one. But also I think we can become more attractive to new customers, especially in the Private Banking segment that didn't really see us as a player because we didn't have the endowment wrapper, which you basically need to have to -- if you're going to save a lot of money in a tax-efficient way.

Okay. And then just a final one on brokerage margin. If we exclude the sort of the gains or income you got from cross-border trade, it seems to be -- the margin seems to be up in basically all countries, but primarily Sweden and Norway. Just wanted to hear if you could give some more flavor on the drivers here? And if you see these as sustainable going forward?

Yes. It's especially a mix shift and more retail trading versus heavy trading. So the heavy traders that have a lower margin, it normally trade a lot. But this quarter, we saw retail trading quite a bit and increase in exposure in both funds and equity. So that's -- and retail has a higher margin and commission.

Now we have a written question. Do you think your average trades per customer per day is structurally lower now than it was pre-COVID? What do you think we're below the trend currently?

Yes. If you look at historical levels, we definitely know the trends. So our expectation, as you saw in quarter 1, now when the market is a little bit more positive that you have a little bit stronger momentum. But of course, it's going to be very market-dependent. And I think there's still a lot of concern out there. I mean the customers took on risks on quarter 1. But now I think it's concern, but which is going to be a recession and how deep is going to be potentially done, it's a little bit more concern right now and was due a little bit we ask to being better Swiss, but in general, a little bit concerned about the economy.

I don't know. Okay, another written one. So Juen asked, I have a fairly large share of customers of the population on shares in Sweden. What do you think the market growth looks like? And is there still room to grow in Sweden essentially?

Yes. I think we and [indiscernible] together at around 10%, give or take, of the population in Sweden. I think that still to grow both on the customer side, but also if you look at the savings capital or how much share the addressable market is not more than 10% either in Sweden. So I think that there is room to grow for sure.

And of course, there, we're adding new customers in the market all the time. And new young customers are probably looking for a digital bank since they're used to that type of interface.

It's a good comment because the growth comes both from, of course, the big banks and pension companies, but also all new customers that turn 18 and want to invest on their own, they have, I would say, an absolute majority of those, they'd choose a digital platform.

Great. I'm just looking through the written questions. It seems like we've answered most of them. It's a bit different one. How have you integrated AI in your savings platform? Give some examples or potential use cases?

Yes. So we -- as you know, I mean, we move more and more of our environment to the cloud. And we have Google as a partner, which are, of course, experts on managing data. So we today already have some personalized features. So for example, if you buy a stock, you also get some recommendation of other stocks that's bought by other customers buying similar kind of stock, for example. But I think we're going to see a lot of examples on AI. But what you need to watch out for is that you maintain control of your data. We're a bank. We need to adhere to bank secrecy and GDPR. And that's why it's also very beneficial for us to be with Google Cloud because we have our own private environment. We encrypt all of our data. So we own the data fully. So in that way, I think we can utilize a lot of AI tools in a good way, but you really need to secure your data when you use AI. You can contest and send them up in any kind of AI application after. But it's one thing what we can do for the customers, but of course, also there's going to be efficiency in development as well, but you can use AI supporting the engineers and developing new code.

Great. Thanks. Then what about our own fund business? So what's the potential for the Nordic fund business? How -- what portion of the total fund AM could it be other targets? And what's the benefit of having your own funds at fund company?

Yes, I think, I mean, it's currently SEK 34 billion and around 22%, but we see a steady growth. It's a very high interest in a Nordic funds. And I think the benefit is that we can provide broad index type funds to good price but still have a fairly okay margin on our side, especially when we combine the funds in a portfolio like the Nordic One portfolio, which is good for the customer, but it still gives us a good healthy margin. So I think we have much more -- by having a fund company, we have much more control of the offering and the pricing to make it attractive for all parties.

Great. And then one final one here. So this deposit bridge that we gave on Slide 9, where you see the other net buying and inflow and outflow effect to deposit, how would that -- what would that have looked like earlier in Q4? Was it affected by net buying? Or was it outflows, dividends and so on?

Yes. I mean, again, I don't have the exact numbers quarter 4, but we saw -- we had less net savings with more cash coming in, in quarter 1 on to the platform. But in quarter 4, market was still -- I mean, okay. It was a pickup, but still a lot of uncertainty in the customer base. So the net investment wasn't even close. I assume to the SEK 19 billion that we saw in quarter 1. So it's a big shift in taking more risks from the customers in quarter 1.

Okay. Great. I think -- yes, I think we're out of questions for this time. So we'll wrap up there. Thanks to everyone who connected today. Our next full report is on July 25. You can visit our website, nordnetab.com or reach out to me if you have any questions.

Yes.

So thank you for your interest in Nordnet and have a great day, everyone.

Thank you.

Thank you all.