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

[Operator Instructions] The presentation itself is available on our corporate website nordnetab.com. Okay. Let's start the presentation. Lars-Ake, please go ahead.

Thank you, Marcus. So we can go to the next page, just some key highlights. It's been a good quarter with strong financial performance with revenue growing 50% versus quarter 2 last year end profit up 75%. Also good customer growth and positive net savings in spite of quite challenging macro, but uncertain macro environment and low volatilities and overhang on trading activity, we see the volatility index, the VIX Index being on a 4-year low. Net interest income more than double due to higher interest rates. And we see also positive interest rate sensitivity going forward. And we assume to grow the net interest income significantly in 2023 when we see the full impact of interest rate increases. We also expect to meet the full year guidance on cost. There's been quite a productive quarter also when it comes to product development with improved curated lists, new landing pages and instant deposits in Finland. And we have an overall strong capital and liquidity situation, and our CFO, Lennart will cover that later in the presentation. I can go to next page. So some financial highlights for the second quarter. We have grown the customer base with 9% in 1 year. Savings capital is up 15%. And we see a clear turnaround in the markets from October last year. Number of trades is down versus quarter 2 last year with 16% due to a challenging macro environment with high interest rates, high inflation and it was a weakening economy. And as I mentioned, the volatility index -- volatility on the market -- in the market has also been low during the quarter. The revenues are up 47% where we see slightly lower trading revenues, but that's more than well compensated by increase in net interest income. Operating expenses is up 8% from quarter 2 last year's, a little bit higher in our guidance of 7%, but we estimate to meet the guidance and we meet also a little bit easier comparables in H2 this year versus H1. But it's also worth mentioning underlying cost increase. If you discount the FX effect, it's around 6%. As you know, the Swedish krona has depreciated quite a bit during H1. And when we then convert costs in foreign currency to SEK, that, of course, impacts cost up. So hopefully, we see a little bit calmer development in the Swedish krona in H2. And we see that we still have very good operating leverage in the business, we grow the profit with 74% year-on-year. You can go to next. And we see continued growth in customers and net savings despite the macro environment we are in. And looking at the customer base, we have actually a larger growth in customers in quarter 2 this year versus quarter 2 last year. Net savings is a little bit mixed picture. It's a little bit low in April and May and that's mainly due to that the inflows have been low during those months, and it's related to there's been a lot of holidays, Easter and other holidays. But if you look at overall in H1 in net savings, we see a stable development in retail segments, but it's been more reallocation of capital in the private banking segment where they've done a lot of amortization of mortgage and also done alternative investments like real estate and private equity. We can go to next page. We also continued to have positive impact from geographical diversification, but there is a business model and also enables growth. We see quite good growth when it comes to customers in all of our countries. But we have higher growth in savings capital outside of Sweden, but also partly due to the FX effect when converting then the foreign currencies to weak Swedish krona. You can go to the next page. Looking a little bit on trading. As you see on the graph to the left, the blue line, we have slightly less number of trading customers versus quarter 1. That's due to a little bit worsening macro. But what you see up to the right in the graph, the trades per trading customer, is down quite a bit in the quarter. And the dark blue line is the VIX index, the volatility index, overall the volatility and thereby the trading in the markets has been low overall in quarter 2, not just with Nordnet. But we see continued strong performance in cross-border trading where we're slightly up versus quarter 1. And that's due to this higher level that we have on cross-borders due to the country mix with more customers outside of Sweden. We can go to next page. But in spite of then lower trades per customer, we see that trades per day has almost doubled since 2019 since we also doubled the customer base from around 900,000 customers to 1.8 million customers during the same period. We also see that the income per trade is also higher than in 2019, so pre-COVID and that's due to higher share of cross-border trading due to the country mix that the customers outside of Sweden trade more on foreign exchanges than in Sweden. We can go to next. Talking a little bit about the fund business. We see a strong growth in the fund capital, close to SEK 170 billion now in fund capital on the platform. It's both from underlying market growth, but also that we see very good net flows as you see in the chart at the bottom and not the least in H1. And if you see the mix of the fund, capital is around 50%. This is index funds, external index funds, and also Nordnet funds, which are mainly index. While active funds share is about 35%, and it's down from 48% in 2020. So it's a clear shift from active to index in the customer base. While fixed income, we see on a fairly stable level of 13%. And then there's also, as you know, been a proposal on the retrocession ban in a new risk regulation in EU, but the impact for us on that one will not be material. Fund revenue is around 10% of revenues overall and also only around 50% of the fund capital will be impacted by a retrocession ban. It was in Norway and also in the partner business in Sweden, that's SEK 48 billion. We already have a platform fee that we pay, distribution fees there. So that's no problem. And then we have SEK 38 billion in our own funds where we don't pay distribution fees. And then it's basically half left we need to address and likely it's going to be a platform T-model that might impact the margin slightly negative in Sweden, but we have very low margin in Denmark and Finland already so that we might instead see an upside. Fund customers is growing also well and 46% of the customer base Nordnet fund on our platform. We can go to next. Coming into deposits and net interest income. Looking at deposit development in the quarter, it's been fairly stable. But we still see a strong net buy from the customers in the market, both equity and funds, SEK 13 billion in the quarter. It's a little bit lower than quarter 1, but still a strong net buy. And that's compensated by dividends and also less savings in cash coming on to the platform. But if you look at deposits versus savings capital on the platform in total, it's around 9% now. And that's below the average we've seen the previous year, that's been around 11% to 15%. We go to next. So talking a little bit about the different components of net interest income, starting with the liquidity portfolio where we give then a snapshot of assuming then second quarter volume, currency allocation, credit spreads and market consensus estimates on rates going forward. we see a snapshot of SEK 1.7 billion in total revenue from liquidity portfolio. The main sensitivity here is, of course, deposit and deposit development going forward. If you look at the chart up to the left, we see we currently have SEK 47 billion in the liquidity portfolio, and that's derived from SEK 73 billion in deposits, SEK 5 billion in equity and others and then deducting SEK 30 billion that we have in lending. And we see a good growth in net interest income then from liquidity portfolio and in spite of the liquidity volume is falling a bit, that's due to the high interest rates that we have had during the year and we will continue also to have some increases later this year. If we go on to the next page. Looking at the loan portfolio and assuming then that the second quarter volumes and interest rate per first of July, we see a snapshot here of SEK 1.3 billion in revenue for 2023. Here, we might have a slight upside because we estimate that the lending volumes is going to increase a bit and also the interest rates are likely going to increase as well later in the year. But looking at lending volume, it's currently around SEK 39 billion, where we see stable development in personal loans and mortgage. We see growth in margin lending, but that's also partly due to the FX effect when converting more lending volumes from DKK and euro to SEK. But we see a very good growth overall in the revenue from the lending, both from higher volumes, but also from higher interest rates. And overall, we have a low-risk lending portfolio, as you know, with loan-to-value of around 40% and also very limited credit losses, basically only related to the personal loans business. We go to the next page. Looking then at the deposit interest rates, what we need to -- what we pay them, back to the customers, assuming then the interest rates we have now on our accounts and the volume and the currency and customer account mix we have end of this quarter. We see that -- we estimate that we're going to pay back ground SEK 330 million in 2023. And currently, we have around 27% of the deposits, the total on interest-bearing accounts. And we see in the graph up to the right here that the big interest for savings account and interest rates in Sweden where we see quite a big transfer to the Swedish savings account while the transfer to savings accounts in the other countries being very low in spite of having fairly good interest rates both in Norway and Denmark. But one reason for this is, of course, that we have customers with more capital in Sweden. And if you want to be liquid for a while with a larger pool of cash, of course, you want to have as good yield on that capital as possible. And looking also a little bit on net savings versus interest rate on savings account down to the right, we don't see any real correlation between interest rates and savings accounts and net savings at -- at least not between the countries because you see that the 70% of the net savings are coming from Finland and Denmark in H1. And in those countries, we have the lowest interest rates on savings accounts. If you go to next page, so summarizing then the revenue picture, we see now that the net interest income on the last 12 months is around 50% of the revenue. And the provision income from the fund business transaction revenue is another 50%. And we see that we have diversified and a good model that's because the net interest income is a little bit communicating vessel with the provision income. So if you have high interest rates that we have now, we have good development in net interest income, but we also know that high interest rates are impacting markets negatively that means less trading and thereby less provision revenues. But we know also when the interest rates drop, the activity in the markets pick up. So then we have then higher provision revenues, but then a little bit lower net interest income. So very good communicated vessels between those 2 revenue streams. And if you look at the revenue margin per product or per asset class, of course, you see very good development in the deposit due to high interest rates. If you look at the light blue line there, it's the trading margin, it's going down due to less trades per customer and also fund margin going down a bit due to the revenue shift from -- or revenue mix between active and passive funds. Go to the next. So all in all, we have a good operating leverage and a good growth in revenues, around 30% per year since 2019. At the same time very stable on cost, only up 4% year-on-year. So basically, the entire revenue increase ends up on the bottom line, so a true position of profitable growth. On to next. Some highlights on the product side. During the quarter, we have launched a new content management system, and that allows for a lot more dynamic content on our web pages and also in our app. And we have launched our new start pages in all countries, but we will also launch new pages. The key pages on the web is going to be based on the new content management system. We may also have 50 new version of our award-winning apps, and we basically launch a new app version every 4 days. And it's both improvement in the curated list that we have, instant deposit with Trustly and more shareable features in the app, to mention a few. So with that, I think I hand over to you, Lennart, to talk a little bit about the capital and liquidity situation.

Yes, I will be quite quick about that. You can go to the next slide, please. And to sum it up, we have a very solid capital position, where we have a leverage ratio of 6.1% according to the requirement, 3.9%. That gives us a great capacity to take on new deposits. Of course, this is due to both an increase in capital base but also the decreased deposits as we have talked about. But also the capital actual vs req. ratio situation where we have a total capital ratio of 25.3% to be compared with the requirement of 19.1%. That is also due to the own funds, of course, which has increased, but also the lower deposits, but also that is a decreased risk within the portfolios. So a very strong capital situation. Regarding liquidity, we have this liquidity portfolio of SEK 47.5 billion compared to the deposits where we have SEK 72.5 million, so it's a strong liquidity buffer that we have here also on a very short maturity structure with almost 40% maturing within 12 months and mainly within 6 months. So we are always addressing the liquidity situation to have it on a short basis. And also with low credit risk mainly AAA, AA and A and very few BBB rated instruments. And as you can see, it's mostly covered bonds and governmental or similar parts. Senior, yes, some financial institutions and then it's cash. So also the liquidity position, I would say, is very strong and that is very good to have in uncertain conditions as we had this spring. Now I think it's stabilized, but it's still very good to have this because this gives so much flexibility on how to handle the capital situation forwardly as well. Thank you.

Thank you, Lennart. So a little bit on the strategic focus going forward. If you can go to next page. As you know, we have 4 key strategic ambitions. Starting with engaged customers, to have the most satisfied customers and being a one-stop shop for savings and investments. So you as a private investor, you should find everything that you need on our platform when it comes to savings and investments. To reach this ambition, we, of course, every day build on the platform for savings and investment to have the best platform. But we also know we will never have happy customers unless we have really talented and professional staff, which we have. And we also want to see an upward trend on employee satisfaction, which we do and also that we can attract and retain top talent, we should also see that we can. And then the third area is a sustainable business. We work in a trust business and we need to earn our trust every day and especially important that we manage our risks, both the compliance and other risks and that we overall are a trusted and liked brand. And last area is profitable growth. We captured a fantastic potential -- growth potential we have in the Nordics and continue to take market share then in the growing savings market. And also, we do this with a stable cost level and ensure also continued scalability and cost control. Go to next. As you know, we have a long-term growth in both customers and savings capital. The customer size from continuous improving the customer experience, building the best platform, but also that we have critical mass in all countries, driving word-of-mouth growth. And savings capital is growing even more the customers both from net savings and market growth. Next. And Nordnet, we are taking market share in a growing savings market, and that's one key reason for our good revenue growth we have the last years. We have 6% market share of the population in Nordics with 6% market share of the addressable savings capital. That's big, that's SEK 13 trillion. And that is up from 3% market share in 2016. So we're taking market share. We estimate also the addressable market to grow to around SEK 20 trillion in 2026, both from underlying growth and also that we launch new products like the endowment wrapper in Finland and livrente pension product in Denmark. And as you see in the bar graph to the right, lowest market shares in funds and pension where we also put a lot of effort in those areas and we see great potential. Next, we also focused quite a lot on cost and also ensuring that we have a scalable business model. We have had stable costs for -- since 2019 in spite of doubling the customer base from 900,000 customers to 1.8 million customers during the same periods. So we have a very good cost control and also a very scalable business. The main drivers for the operating leverage is our cloud-based tech platform that can onboard a lot of customers without driving cost. We also work heavily with process simplification automation, which is a win-win. Then it works better to the customer and we scale better, better. Also very good and efficient customer growth, mainly PR-based and word-of-mouth based, so low acquisition cost. And we also then work, of course, heavily with the third-party spend with all the vendors that we have. Go to next. Looking at the quarter 2 performance versus our midterm financial targets, we are in line, I would say, a little bit below on customer growth, but still consider 9% growth in this macroeconomic climate that we have is still very good. Go to the next. So looking at the key priorities for this year is to launch now the endowment wrapper in Finland, which we believe is a really exciting product. It's fully digital, it's flexible. We can both buy funds and equity and also low interest-bearing fees. And we aim to launch this in quarter 3 this year. But also that we lay the foundation for the Danish livrente product. So we can start developing that really during next year. We continue to integrate Shareville. As you know, it's a stand-alone app on web today, but we're now building -- moving all the functionality in the Nordnet app and we're well underway. And we also look at expanding the Nordnet-branded fund offering, and we've got successful with Nordnet-branded funds, and there will be more funds to come in the next 12 months. And we're going to focus, of course, continuously on cost control and scalability. So with that, I think I hand over to you, Marcus, for starting the Q&A session.

Yes. Thank you, Lars-Ake and Lennart. So we'll start the Q&A. [Operator Instructions] So the first question comes from Jacob Hesslevik at SEB.

Just trying to figure out Denmark. When I look at deposits, it's down quarter-over-quarter and down versus Q4 last year a bit. But on the other hand, the brokerage savings capital has increased substantially during the same period. So could you just confirm that the decrease is due to Danish clients investing in stocks and that is not withdrawing anything from your platform?

Yes. So it's investing in the market, but also it's a currency effect since the DKK has appreciated quite a bit versus the SEK in quarter 2. So when you try to convert it back to -- yes. No, it's mainly that invested in the market, correct.

All right. Perfect. And when I look at traded value in cash market, it is down substantially in all markets, I believe, in this quarter for the first time. So could you give any more color on your client behaviors and what has changed during this quarter?

Yes. I think the clients are more careful. We see smaller trades. So the ticket size is smaller, but then the -- and also volatility, as you know, overall in the market in quarter 2 has been low. So I think they're waiting to see a little bit at what's going to happen going forward if you go into soft landing or hard landing or what's going to happen during the fall.

But you haven't seen any specific mix shift between banking customers or heavy traders or ordinary clients?

No. I think heavy trading has been okay. A little bit decrease in retail and private banking, but no big shifts, I would say, no.

All right. And then lastly, just a comment on the competitive landscape for the different countries would be helpful. How many hikes have you done in the quarter in each market on the savings account. And other than Sweden, do you see any real competition in the remaining Nordics?

I don't have the exact number of hikes, Lennart perhaps. But we don't see any change in behavior. I mean, as you saw, when it comes to savings capital in the savings -- capital in the savings accounts, in Sweden, where we see that customer transfer, in Denmark, Norway and Finland has been stable. Even though we have fairly good rates, we don't see any inflows to the savings accounts.

Okay. Next question comes from Ermin Keric at Carnegie.

Maybe the first one, just on the balance sheet, you've had quite a big swing from treasury bills into bonds. Will that have any material impact on kind of the return on liquidity portfolio going forward?

No [Audio Gap] specific that's driving that.

As a few things. I think a little bit more retail, but a little bit more FX but also a little bit lower cost of revenue during the quarter as well. That might even out a little bit over the year. But it's those 3 effects in combination.

That's very helpful. And then on if we see further rate hikes, which is likely in kind of from policy rate side, how do you see your ability to continue to pass that on to your customers in terms of lending rates. I suppose on the margin lending side, we're coming to quite high nominal rates as it is.

That's a good question. I think when it comes to mortgage and personal loans, we can definitely pass on. More than lending, we need to look a little bit on the max rate there. but we also have a lot of segments and packaging underneath the list rate, so to say. So there might be some flexibility. But of course, we need to look at absolute rate there as well and we are continuously doing that.

Excellent. Then one last question would just be on the cost-to-savings ratio. It's been quite favorable at 17 basis points and I know you have your cost target in kind of nominal terms?

Yes.

How would you still see the cost to savings ratio in the coming 2, 3, 4 years? Is that kind of materially declining from here? Or is this.

Yes. Hopefully, is declining if we have a stronger market, so have a growth in the coming years. The savings capital will grow hopefully quite a bit, both some net savings and underlying growth, while costs will be mid-single-digit growth. So if the markets are performing as they normally do in the longer period, they will improve, yes.

Next question comes from Nicolas McBeath at DNB.

And so first, a question on trading activity. And I was wondering how you think about the current activity levels versus normalized levels. So granted volatility has been a bit lower in a quarter. But at the same time, I think overall stock markets have been doing okay in the Nordics and globally and still we're seeing rather low activity levels. So first, what is needed in your view for creating activity to rig night? Or could it be actually that is kind of a normal level? Looking at the chart that you showed with trades per trading customer, it seems like that's in a declining trend from 2017. So do you think that it could be the case that this metric is actually should be declining over time because, for instance, changing customer mix.

I think, I mean, looking at the markets where we have the biggest decline is in Finland and Norway and those markets are really performing a quite bad this year. Finland is down, Norway is plus/minus 0 while Norway last year was very strong for a long time, and we had good trading there due to that. So -- and I think the customers are a bit careful. I mean they don't -- yes, the market has been up in Sweden and Denmark and in the U.S., but there's still some kind of belief there is sustainable and what's going to happen now with decrease and what's going to happen with the economy, especially, so we feel that customers are a bit more careful definitely. So let's see how that plays out going forward when it's perhaps a little bit more clarity, not least on where the economy is moving.

All right. Then on growth and net inflows. We're seeing net inflows being down now in Q2 year-on-year in all countries except Sweden, where it's up on 40% year-on-year, which I think is a bit surprising given the circumstances. But what, in your view, explains these diverging trends between the different countries when it comes to net savings? Is there anything that you see in the flows in a more granular level that helps you understand...

Not really. I think in quarter 2, specifically, we saw outflows quite on lower normal levels, but there were a little bit lower inflows in April and May, like I said, and not least in countries outside of Sweden. I think it's much a lot related to holidays. It's been -- it was a long Easter and a number of other holidays that impacted retail a little bit. But if you look at H1 inflows in total, I mean, retail has been very stable. We haven't seen any real effect that retail have less money to save. But the effects and the swings we have is still on private banking. Not really that they're chasing yield perhaps like before because we have good savings rates now, but they reallocate their capital. They amortize quite a bit on the mortgages and they buy out alternatives like real estate and private equities outside of our platform to some extent.

And you're seeing more of that behavior outside of Sweden than in Sweden? Or what explains the kind of divergence between Sweden and the rest?

Yes. Well, I think in quarter 2, I think Sweden was less impacted by the holidays. And I think it was more impact actually outside of Sweden, where Norway almost stopped for 2 weeks during Easter, for example. So this is more a seasonality effect than I think the private banking effect is across. But of course, since we have a lot of private banking customer in Sweden, we can also have, I mean, one-offs in the other direction is positive. So it's fairly large flows in private banking in Sweden.

Sure. And then a question on the fund margin, which was down quite a bit in the quarter, which you kind of attribute to shift into passive funds and less cross-border transactions. So could you elaborate in a bit more detail what you're seeing here? Any particular segments where those trends are more pronounced? And any comments whether you expect this trend to continue over the next few quarters? Any view where you think the fund margin might bottom out?

Yes. I think -- I mean, we've seen a lot of the shifts probably already I showed in the picture with the mix we have 50%, now in index and 35% in active and active is down from a peak of 48% in 2020. So of course, it might be slightly less active. But at some point, I mean, there is a demand for active funds and especially the performing funds. So it's going to be -- and that is 30% than fixed income. So -- of course, you can still have some shifts to a little bit more index. But I think at some point, I mean, I doubt that the active funds would go much below 30%. But let's see, but that would surprise me.

All right. And then just a quick follow-up related to that, that's the last question for me. And yes, I mean, if I were to play the devil's advocate here on revenue growth for the next couple of years, just noting that brokerage income doesn't really pick up, interest rates likely quite near peak and fund margins coming down. It's possible to sketch you rather bleak scenario for revenue growth for a few years ahead. So what gives you hope in sustained revenue growth in the next couple of years if we talk in kind of a specific line-by-line basis?

Yes. I mean one is that we have continued customer growth and also net savings, it's a fundamental. I think the fund revenue will even with -- I mean, I think we are reaching some kind of bottom margin soon. And we -- as you know, we grow the fund capital quite a bit, both on market growth, but also all the initiatives we have in the fund business, both the fund business per se and also the pension business. I believe trading it is -- we've doubled the number of trades per day since 2019 even now with the low trades per customer and we also have higher income per trade due to cross-border. So we see when the interest rates will come down, we expect to see higher activity in the markets, so increase in provisioning and trading revenues. So like I said, we see net interest income and provision net a little bit as communicating vessels. When we have very high interest rates and very strong NII, of course, you have an impact on provision income and vise-versa.

Okay. That's fair.

Thank you. Next question comes from Patrik Brattelius at ABG.

A little bit of a follow-up there. If we continue on the fund income. If we look into the country specific, we can see that the fund income margin is quite low in Finland and Denmark. Can you talk about what you can do to address this?

Yes, a few things. I mean, one is that will market more and more of our own funds. So we have a higher margin. So that's one thing. And also with the retrocession ban, if you potentially introduce a platform fee, I think that can enable some higher margin also in Finland and Denmark. But in the short term, is that we have more mix of our own Nordnet funds.

So if we compare them to Norway, which seems to have a slightly higher margin compared to these 2 countries, is that level of ambition in also Denmark and Finland, if you were to introduce that platform fee?

Yes, it's hard to tell at this stage. But of course, we have a vision overall to increase the fund margin in Denmark and Finland. If we reach all the way to Norway, let's see. But of course, we have an ambition and also we have a lot of experience from the fund platform model in Norway that we can, of course, use if you go that way in Finland and Denmark.

And there is no plan to introduce it even though there won't be any regulation change?

Yes. It's hard for me to comment on that. But of course, we look at the market continuously and also regulation. But as you said, we can launch it, of course, without regulation. It's a little more tricky explain to the customers if you, the only player, that do that in the market. In Norway, the participants moved in the same way due to retrocession banner.

I understand. And if we look at the deposit and compare it to the savings capital, it seems like it's the lowest share of deposits in relation to savings capital since we have the data. Can you talk a little bit about what is driving this development? And what do you expect of this ratio looking ahead in the -- for the second half of 2023.

But like you said, we are below average. You see even though that customers are a bit more careful, we see anyway that the net buy in both quarter 1 and quarter 2 which is, of course, ultimately good for our core business because then will likely trade up going forward in some way. But then will have a short-term impact on, let's say, net interest income, of course. How that ratio would play out during the fall, I think, is very dependent or very related to how the market is performing if it's weak market or a strong market or a neutral market. So we see how it will play out to market -- where market is moving, I would say.

Okay. And my last question is regarding the slides showing the strong liquidity and capital position. If you could talk a little bit how you view your dividend policy given these strong ratios.

We regard that as stable as we have had for several years now, 70% of net profit is the dividend policy and see that looking forward as well. Of course, this gives us a lot of flexibility, but it's also very important for us to withhold a strong capital position and liquidity position. But the 70% is still the policy.

Next question comes from Alex Medhurst at Barclays.

Yes. So firstly, just on sort of deposit costs. How confident are you that you can sort of keep paying that 0 interest on the vast majority of our non-saving account deposit balances? I mean, obviously, customer behavior shows the deposit balances have sort of largely stabilized. Do you see any pressure from other stakeholders like regulators or press, let me say, in other markets? Then secondly, maybe a side, question on the platform, fee model in markets where like Norway, where you're already paying or already have a platform in place. Do you make an incremental margin above the platform fee from your own funds? Or are the own funds sort of not on a platform fee model as well?

Yes. So I think with the interest rate, of course, we follow closely the flows on what's happening in the market, also competition. But as you see, even with pretty high interest rates, I mean, it's operating Norway is 3%. Even with that rate, we don't see any really inflow into the savings account in Norway and likewise in Denmark. So -- and we don't see any real pressure from the press or from competition. And I think it's a little bit due to the, like I said, customer mix. Again, if you don't have that much capital and you plan to invest it in the coming 6 months or something, you're not really chasing yield in the same way as, of course, if you have a lot of capital. So we haven't seen any change in behavior in this quarter at all outside of Sweden, I would say. When it comes to platform fee model, of course, we have a platform fee also for the Nordnet funds. And some of those, we also have a management fee on top of that and some have a management fee of 0. But it's a mix, but we have an additional upside on our own funds if you look at the total.

Next question comes from Rickard Strand at Nordea.

Can you hear me?

Yes. Yes.

So starting with the costs, you reiterate your full year cost guidance, but just starting to look into next year, given that some inflationary pressure seems to be a little bit more sticky than previously anticipated and also FX movements for the Swedish krone, just wondering if you could give any first view on what you think the cost pressure could be in comparison to your long-term cost growth ambition of 5% for next year?

Yes, we still see that we can reach the midterm on around mid-single digits. I think, as you know, underlying discount for FX, we are a 6% growth this year in spite of all the inflation. Of course, if the krona totally crashes, it might be a different scenario, but we don't expect that. So, with the development we see now, we don't see any change of guidance.

Okay. And then on mortgages, I think it was on Ermin's question there on your ability to raise lending rates further going on. I think -- when it comes to mortgages, I guess there is some lag effect since you're a little bit slow to raise rates there. But looking at it now, it's almost down at 0 margin compared to investing the same liquidity into 3 months STIBOR or IBOR rates. I just wanted to hear your considerations here. Do you expect over time that margins will recover and perhaps to what level? And if not, are there other considerations that make you sort of still want to lend this as mortgage volumes because you fear that you might be seeing larger outflows of savings capital otherwise?

I think you -- since we don't have all the hikes in there, you will see a higher margin from that. But also as you know, we want to have a low price on the mortgage because we see as a great tool for private banking and both for attracting capital and keeping capital. But of course, we look overall what's happening in the market and how we position ourselves, not least versus Avanza and the major banks.

But still sort of since you had lower margin to start with -- you're still okay with having close to 0 excess margin compared to investing it in...

Yes. But I think when you see the full hike, which we have, you will see a slight margin. Is that correct, Lennart?

Yes. Sorry. Correct.

Okay. So expecting to come back...

And figures, it's average. [indiscernible] First of July, the last one, which is not within those figures.

Yes. And then just on follow-up clarification there on the margin lending. Should we expect more flat lending rates from this point and onwards? Or do you still expect that you have the ability to raise it further up?

Yes. But I think we have some ability, it varies a little bit from different countries. But again, it's not just in this trade. We have also a lot of discount levels underneath we can work with a little bit. But of course, we monitor carefully also that we don't come to too high level on absolute terms. But I think there is some room there still, yes.

Next question comes from Enrico Bolzoni at JPMorgan.

Just a couple. So one, can you just give us some comments on how do you see the cost of living crisis developing in the Nordic market? Of course, very high mortgage repayments now, inflation is still high. Have you seen any change in the behavior of your customers? Can you give some granularity maybe in the different cohorts or maybe between the different countries. So just to get a sense of whether flows can be maybe impacted just because people have less money to save. And the second, can you just explain me a bit more why you have the need to actually increase the deposit remuneration outside of Sweden if you have basically very little competition. And as you showed us the saving deposit outside of Sweden didn't increase that much, so I was wondering why actually there is a need to increase the remuneration at all. For example, in Norway, it looks like you are leading, as if like you're expecting, at some point, a transfer. Or anyway, it was just good guess, so some color from you.

Good questions. I think when it comes to net savings, I touched on this a little bit before. But like I said, we don't see any impact in retail in none of the cohorts, both all the peak krona cohort and after krona cohort. It's been stable inflows or net flows in H1. So we haven't seen any big impact for cost of living crisis yet anyway in the retail segment. Where we see the movement in capital reallocation is in private banking and they -- some of those customers quite aggressively amortize mortgage. It's not only mortgage -- not net mortgage but also mortgage that they have with other banks, but also that they -- due to the market, also invest in alternatives. A lot of customers buying property, real estate because we believe it's cheap now and also TE investments. So it's much more movement in the private banking not because they have less money, it's more that they reallocate the assets in a bit for return. When it comes to the increase of interest rates on savings accounts outside of Sweden, I mean, there we follow the market a little bit to see that we're okay. We're not going to be leading in any market, but you, of course, need to see a little bit what's happening. But then, of course, you don't know until afterwards if it was the effect is on a hike. But since there's been very low -- very limited transfer to the savings account, it's not really impacted the cost for us either. But I think we need to be -- we at least need to look a little bit what's happening in the market. We don't need to be leading in any way, but we need to see a little bit what's going on.

Okay. Next question comes from Jacob Kruse at Autonomous.

So just a couple of questions. Firstly, on the NII, I think if I add up your guidance for the year on the lending and the liquidity and the deposit side, I get to about just below SEK 2.7 billion of NII. I think consensus is just about SEK 2.5 billion. When you think about the trends that you see in terms of deposit flows, in terms of pricing dynamics and you take that -- those projections you have, do you think, on balance, these other dynamic effects are more to the upside or to the downside relating to that static analysis that you provide. And then secondly, I just wanted to ask on the Finnish endowment wrapper, if you could say anything about the kind of revenue or volume opportunity that you're looking for in the, say, next 3 years on that one.

Yes. When it comes to the snapshot on net interest income, I think there are some sensitivities in there. Of course, on the lending, we will likely see a little bit higher interest rates and higher volumes, perhaps a slight upside there. When it comes to the liquidity portfolio, of course, the main sensitivity there is the deposit development and less in effect how much customers then net buy-in the market, and there's a little bit to do with the market development during the fall. So it's harder to predict a little bit. But there is a sensitivity on the deposits. So on the savings account and the rates there, I mean we -- yes, likely perhaps we have slightly higher rates in some countries, but I don't see any major impacts. I think the main thing to look at is a little bit of deposit development and also was starting with the lending portfolio and the lending rates. But all in all, yes, it's hard to give a guidance if it's an upside or downside. It depends on what's happening with the deposit levels. And the second one was volume opportunity on endowment wrapper. I mean the full market there is around SEK 400 billion and I think we have a great potential. Of course, like any more pension-like products and it will take time to build capital. But I do see that this is going to be a great tool for us in Finland to build the additional savings capital and net savings.

Okay. Next question comes from Panas Ellinas from Morgan Stanley.

Yes. So I think everything is quite clear. Just maybe a couple of clarifications from my side. On the -- you mentioned earlier on the cost growth for the first half of the year that included some hires in tech and product. I was just wondering the full year guidance implies lower cost growth in the second half of the year. So it's just -- has these roles now been filled? Or do you expect more there? Or what's driving basically the slower growth in the second half of the year compared to the first. That's my first question.

Yes. So I think, I mean, if you look at the comps also in H2 last year, we meet slightly easier comps versus H1, so that's one aspect. And we also were a little bit higher on marketing also, not least in quarter 1, where we had a specific campaign in Sweden related to Bank of the Year. So we see we can manage the 7% level unless the krona crashes totally. But I think it's crashed quite a bit already. So like I said, underlying, we have a cost increase of around 6% discounting for the FX effect or first half.

Yes, sure. And then obviously, there were a few changes in country managers. I'm referring to Denmark and Norway Yes. Shall we expect any significant change in strategy in those markets or anything new coming up?

No, I think there's no change in strategy. We want to be a one-stop shop for savings and investments with a great customer experience and what we continue to work within Denmark is, of course, the livrente product. And in Norway, we basically have all the tools and components in Norway and it's really to leverage this in a good way both in retail and private banking.

Very clear. And then on the Finnish insurance branch, I think the latest press release was referring to second quarter launch. What's the [indiscernible] there just now launched or...

Now estimated launch, like I said, in quarter 3.

Thank you. I think we have time for one last question. We have [indiscernible] also from DNB.

I just have one question. So I'm looking at the yields on mortgages and personal loans and margin lending and also on deposits. And I'm wondering, is there a reason to expect that the yields on any of these products will be sort of sticky if we were to get central bank rate cuts or -- in other words, is there a reason to think that the interest rate beta on any of these products would be different as rates go down compared to when rates went up?

I mean I think the one that you can play a little bit more with this is margin lending, where we see -- we haven't followed exactly either up or down historically. So that's, of course, we monitor a little bit the competition, what's happening there. With the mortgage, it depends, of course, on competition, but there we are already very low. So let's see how we play that. But of course, you want to have a very competitive product going forward.

All right. And what about deposits?

Okay. You mean deposits. Yes, but I think that we're going to follow that down with the rest of the market.

All right. And just lastly, anything to say on that on personal loans?

Yes. I think, of course, there's some room to maneuver there as well. I think the one that -- what we really need to follow the market and be leading is mortgage. The other ones, of course, we can monitor a little bit and see what was happening.

Thank you very much. So that was the last question for today. So thank you for attending the presentation. Our next quarterly report will be out on October 24. Please visit our website, nordnetab.com or reach out to me if you have any questions. So thank you for your interest in Nordnet. And have a nice day and a nice summer. Bye-bye.

Thank you. Bye-bye.

Bye-bye.