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

[Audio Gap] 2024. My name is Marcus Lindberg. I'm the Head of Investor Relations at Nordnet. With me today, I have our CEO, Lars-Åke Norling; and our CFO, Lennart Krän; Lars-Åke and Lennart will start off by presenting the results, and then we will have a Q&A session. [Operator Instructions] The presentation itself is available on our corporate website, nordnetab.com. Okay, let's start the presentation. Lars-Åke, please go ahead.

Thank you, Marcus. We can go to the next slide. Starting with the highlights, overall, a very strong quarter with an all-time high revenue and profit with growth across all of our revenue streams. And the majority of the growth is coming from our core business, the trading and the fund business. And we also see a continued strong growth in customers and net savings due to positive market sentiment. Also a very healthy trading activity and strong brokerage margin from a high share of cross-border trading and also a high share of retail trading. And very good also growth and progress in our fund business where Nordnet funds now growing by 60%, but overall, we have a good growth in the fund capital and also good growth in net fund revenues. Net interest income outlook looks stable. It's about the same as last quarter. We see a slight decline on the interest rate pass, but we have a little bit higher volumes on deposits and lending. And cost growth is expected to trend in line with guidance for the full year, and we expect the second half cost growth to be a little bit lower from ongoing savings initiatives. Also very strong capital situation where we had the dividend and also the buyback process is ongoing, waiting for approval from the SFSA. And we're done also with the migration of Shareville. So we sunset the old Shareville classic. Shareville is now fully integrated in our Nordnet web and app, and integration has also been very successful. Looking at the numbers, also good numbers. Customer growth, 11%. We're quickly closing to up to 2 million customers across the Nordic footprint. Savings capital, also very strong growth, 21%, both on underlying growth in the market, but also very strong net savings. And here, we have record numbers now, SEK 960 billion, and we're approaching also SEK 1,000 billion in savings capital on the platform. It was very positive. Also now we see that we have a positive growth in number of trades, and that's why since we saw that and, of course, from positive market sentiment momentum. Revenues, up 20%. We have a record revenue then of SEK 1.3 billion, close, and especially strong growth in the fund and the trading business. Cost is growing at 10%. But if you exclude the increase in marketing cost, it's -- the underlying growth is 7%. But as I said in the beginning, we expect to land on the guidance of mid-single-digit growth for the year. Also continued strong operating leverage in the business with the profit growing at 24% to an all-time high SEK 904 million. And also customer growth and net savings is very strong. I mean, for the quarter, it was 54,000 customers, we have almost 100,000 customers for the first half. Net savings, SEK 19 billion in the quarter and SEK 37 billion in the first half, and that's considerably higher growth rates both in customers and net savings versus last year. And our geographical diversification derisks our business model and enables growth, and we see a good development in all our markets. Sweden, a little bit lower on customer growth, but we see very strong savings capital growth. And Denmark is, of course, sticking out with both very high customer growth and savings capital growth. Go to next. Looking a little bit on our revenue stream, starting with the trading revenue. We see number of trading customers is about the same as last quarter. Trades per trading customers is also about the same. We still see, though, that the volatility in the market is low. So the VIX index is low. So with a little bit higher volatility, I think trading can pick up more. But what's very positive is the cross -- share of cross-border trading is very strong, and it's almost 30% in the quarter from both the country mix where we have a lot of foreign or cross-border trading outside of Sweden, but also that U.S. markets overall have been strong and attracting a lot of trades. Looking at trades per day in total in the graph to the right -- to the left, we see that almost double number of trades per day from now versus in '19. Even though that the trades per customer has been going down and, thus, as we said before this, because we have doubled customer base from 900,000 customers to close to 2 million now. But we also see now in this year, first half, is that the actual trades per customer is actually going up a little bit. So we've broken a negative trend, which is positive. And we also see that the income per trade is considerably higher now than in 2019, and that's due to the country mix where we have high share of cross-border trading outside of Sweden. And also here, we see an increase in the first half of the year on margin, that's because the cross-border trading is even higher and also that the retail share of trading is high. Going to the fund side, a very strong development in funds, very strong net flows. We have SEK 229 billion in the fund capital overall. And fund capital growing twice as much as total savings capital and especially strong growth in our own Nordnet-branded fund with half of the net buy goes into our Nordnet fund family. And we have now almost half of the customer base own their funds. And we also look at activity on fund buy and sell down to the right where we see that 25%, give or take, of the customer base buy or sell a fund each quarter, and that's around 500,000 customers. And we also see that the active to passive share is stable around -- with an active share of around 31% to 32%. Going to net interest income, it's still on a fairly low level on deposits versus savings capital of 7%. But we see a slight uptick in deposits from SEK 66 billion to SEK 68 billion in the quarter from both strong net savings, high dividends, but we also see that customers continue very high net buy in both equities and funds, which is, of course good for our core business over time. Go to next. So looking at the liquidity portfolio snapshot, it remains at around SEK 1.6 billion. That's assumed that the volume is on quarter 2. And also the interest rates pass, you see it down to the right, and they are a little bit lower than last quarter, like I said, but a little bit higher than deposit volumes than we saw last quarter. And the main sensitivity here is, of course, how deposit volume develops overtime. And we likely will see an upside as we are on very low levels on 7% deposits versus having sales capital where we historically have seen 12% to 15%. Go to next. Looking at the lending portfolio snapshot here, also about the same as last quarter and assuming the second quarter volumes and the IBOR interest pass we saw, but with the pass-through of mortgage and unsecured close to 100%, but margin lending, 50%. And we see that in the graph to the left there that we grow margin lending very healthily while with stable lending volume on mortgage and personal loans according to plan. And we really want to grow margin lending. It's a core lending product for us. It's used for leveraging the portfolio, it's high margins, but also less rate sensitive. We don't expect 100% pass-through, we expect 50% pass-through of interest rate changes going forward. You can move back one. Also, still a low risk on the lending portfolio and loan-to-value is around 40%, and credit losses is only on the unsecured, a little bit higher level, it's 2.5% first half, a little bit higher than last year, but that's due to the market climate. And I think it's still good in this more challenging high interest rate climate, but all are not realized losses. There's also a lot of accruals in this. And looking at the bars at the last part then, the snapshot here, SEK 600 million. If you see the volumes on the savings account at the end of quarter 2 and then the pass-through of the interest rate change is 100%. And sensitivity here is, of course, the growth in the savings -- the growth in the volumes on the savings accounts. But we have to remember also that the majority of the growth coming into savings account now is external money and it's not internal transfers. So that means that we also will get an upside on that money on the liquidity portfolio. So all in all, looking at the full revenue picture, we have a very stable, good revenue development, and we really benefit from having 3 revenue streams. And we see good growth in all of them, but as I said, especially strong growth in our core business, funds and trading. And also looking at savings capital, like I said, approaching SEK 1,000 billion, we're all-time high right now in the quarter. And looking at the margins as well, down to the right. we see then, like I said, a pickup on the trading margin from high share cross-border trading, also high share of retail trading, and we see a stabilization of the fund margin. So that means that the entire fund -- the volume increase you're seeing from, we get also on the bottom line since we have the margin stable. And we see the active to passive shift is slowing down. But also when the customers buy passive funds now, they mainly buy Nordnet funds where they have a higher margin compared to other passive funds. And all in all, a business model with great operating leverage. We've grown the revenue with 30% per year since 2019, while the cost has only been growing 5% per year. So it's a very scalable business model. So that means that we are in a good position of profitable growth with almost entire top line growth ending up on the bottom line. Go to next. Some product highlights, and the big thing is that we, like I said in the beginning, that we sunset Shareville. The old app and web are closed, and we fully integrated now Shareville into our Nordnet app and web, and the migration has been successful. I'm going to comment that in the next slide. But also continue very high release rates on the app with 24 new versions during the quarter. And we're building more and more functionality into the app so that the customer should be able to live their entire life in the app. And looking at the Shareville migration, we see quite increasing engagement as it was our aim as well when we integrated this in the Nordnet app and web. We see the posts in the different forms is increasing almost 3x. And also a big pickup in sign-ups to Shareville. And we know that Shareville is starting to differentiate us in the market. No one else has this. But we also see that Shareville customers are more active with more trades and also higher commission levels. So it's an important product for us. Then I hand over to Lennart to talk a little bit to capital and liquidity.

Thank you very much. And with those results, we still maintain a very strong capital situation, where we have a capital ratio of 25% and a CET ratio of 20%, 21%. So it's far beyond the requirement, and we feel very comfortable with that. Also the leverage level is -- ratio is 6.5%. Those are unaudited results, and thereby, we do not report those, as we've said. You see to the bottom right, where we had the regulated reporting, not very much difference, still very, very strong, but that is how we made it this time. We also have a good and solid liquidity position with a liquidity in relation to deposits over 60%, and we have less than 50% in lending out of the deposits. So we feel very comfortable with that as well. And it's very important for us to maintain that level. That is why we do not extend the lending part too much, but rather focus on the margin lending. So yes, sorry. So now we're looking into the replies from SFSA so we can start the buyback of stocks here in the fall. We expect that to be in the late summer. They have 4 months, and we submitted the application in April. So we will soon receive it and then we will start off with it.

A little bit on the strategic focus on -- we go to next. As you know, we have 4 main strategic ambitions, starting with having, of course, very satisfied and happy customers. We want to be a one-stop shop for savings and investments with really outstanding customer experience. And to get there, we are then building the best platform for savings and investments. We also know that we will never be able to have happy customers unless we have really passionate and talented staff with an upward trend on engagement and transaction within their employee base and also that we can attract and retain key employees. And we are in the trust business. We need to earn that trust every day. So driving a sustainable business is key that we manage our risks in a good way and we're overall a trusted and liked brand. And last is profitable growth. We have a fantastic growth potential in the Nordics, and we want to capture that and continue to take market share in the growing savings market, but also ensure that we continue a very scalable business model and good cost control. And we, as you see on this slide, we have a very strong long-term development in customers and savings capital. We have now a critical mass of customers in all countries to drive word-of-mouth growth, but also that the customers really like our platform with a high NPS. And we see savings capital growing more than customer base as that's also underlying market growth, but also from strong net savings. And we're taking market share in a growing savings market. We have 7% of the Nordic population on the platform and 6%, give or take, of the addressable market, which is big. It's SEK 14,000 billion or SEK 14 trillion. And that's up from 3% in 2016. So we're taking market share. But we also see that the addressable market is growing, both from underlying market growth, but also that we launch new products and the big one that's to come is the livrente pension product in Denmark. And we see to the right that we have highest market share in equities and low market share in funds and pension. That's where -- and we put a lot of effort to grow fund and pension. I mean they have a positive development in market share there, but a long growth run rate also in those areas. Also very stable cost development. I mean we doubled customer base since '19 from 900,000 customers to almost 2 million customers now with stable costs. So we have a very strong cost control, but also a very scalable business, Nordnet overall, partly from that we have now a very modern cloud-based platform. We can onboard a lot of new customers who are [ trying out cost ]. We work a lot with automation, which is a win-win, works better for the customer when we scale better. Also a very efficient customer growth, a lot of word-of-mouth PR and also that we work very actively with our third-party vendors. Looking at the financial targets, I mean, the actuals this quarter was in line with all the financial targets we have. So that looks good. We can go to next. Key priorities for 2024 then, it's not ticked off, Shareville. We updated this a little bit. But what we're working very -- a lot on now is the Danish livrente pension product. That will open up a SEK 2 trillion market for us in Denmark. And we have now a branch -- insurance branch established in Denmark with a branch manager in place, and we aim to launch end of this year or beginning of next year. We also work with -- I mean we have a very strong offering for the high-end segment, the traders and the PB, but we have exciting features on the road map to even enhance that offering even more during the fall. We also have a pretty good business working with financial advisers and local wealth managers. But the platform here has been old, and now we're rebuilding that entire platform. It's going to be a fully new web portal, so we can be more attractive for financial advisers and local wealth managers, not only in Sweden, but in the Nordics, and that can attract new capital to the platform via B2B2C offering. And also continue to strengthen brand position, and we're working now with a new brand concept. We're going to increase marketing, as we said, to drive awareness and, ultimately, customer growth. But also, of course, we maintain focus on costs on both scalability and cost control overall. So with that, I hand over to you, Marcus, for Q&A.

Great. Okay, it's time for the Q&A session. [Operator Instructions]

So the first question comes from Jacob Hesslevik from SEB.

My first question is on your capital situation. You're 200 bps above your financial target on your leverage ratio if we go with the pro forma numbers. How should we think about this going forward? Will you only use buybacks to optimize your position with the regulatory framework in the horizon that would drive any changes in your ratios? So I'm basically trying to figure out how large buybacks you can do here going forward.

You want to answer that, Lennart?

Yes, I can answer that one. I mean, first of all, the main priority for us is to be able to handle the leverage ratio in respect of deposit, and deposit is nothing that we can control. So yes, we have those 4.5% (sic) [ 4.0% ] to 4.5% as a target for leverage ratio. But we also look upon this in the respect of the deposit level, and that is very low at the moment in relationship to savings capital. But we are looking now for, I would say, about 1% of buybacks for the coming year. That is where we are aiming. And we want to adapt and gradually go down to those 4.0%, 4.5% over the couple of years. So the aim is to do that on a continuous basis, I would say.

Okay. Yes, that's very clear. And then second, on your NII, the liquidity portfolio was very strong during the quarter. Is it only due to the Finnish forward rates? Was it a higher level than you predicted in Q1? Or has there been any mix shift within deposit volumes between client types, i.e., between retail and private banking and growth?

So was it the margin you were asking about?

Yes.

The margin is that you have only starting and closing balances. So if you look on it on a more granular basis, you will see that the margins are about the same throughout the period compared to the last quarter.

As deposits came down a bit in the end of the quarter, you would probably have a bit lower than the actual average.

Okay. So you have [ yield ] maybe slightly higher than [ NII ] increasing.

Yes, yield was about flat Q-on-Q and then our deposit volumes were a bit higher in Q2 or Q1. So that's why you had a slight increase in absolute terms.

Okay. Yes, that makes sense. And then just one on your products. I mean the new web portal for financial advisers, what is the potential here? Which country do you see the largest upside, basically?

Yes. I mean the biggest business on the partner side is in Sweden, but we definitely have an upside, not least in Norway and Denmark going forward and, in part, a little bit in Finland. But we see a big potential in both Norway and Denmark, but also more upside in Sweden. I think it's around 12%, 13% of our sales capital is coming from the financial advisers. But I think we can grow this business with a better service and a better portal going forward. So that's an area we're going to focus more on in the future.

This is basically not -- it's not addressable capital today. So it's -- since we don't do advice, this is a capital that needs advising, get it through a financial adviser, and this is a way to get that capital on the platform that there's no other way to do it. So it's all upside, actually.

Okay. But the increase in cost for marketing during H2 this year, will that be excluded in this as well? Or do you think you're going to have to expand your cost?

No, no. No, not for this. So this is more that we work with the actual financial planners or local wealth managers, and they drive in the customers, not us.

Next question comes from Ermin Keric at Carnegie.

So the first question would be on the commission rate on the brokerage, it looks a bit higher during Q2. You mentioned higher cross-border trading, but I think it's fairly flat versus Q1. Is it just a higher proportion of retail trading? And if so, how much? And is it -- do you think it's sustainable for the coming future?

Well, it's a combination of the higher share of cross-border, but definitely also that retail is trading more. And I mean it depends on market sentiment. I would say, if we continue to have a positive market sentiment, I think we're going to see more cross-border and also retail trading more. To get a really lousy market, I think then they have the traders who's going to be a larger share of the trading. So yes, so the answer, it depends a little bit on the market sentiment. But we foresee still, with the interest rates going down now and with not a hard landing, that, that should fuel also the market sentiment.

Got it. Then you mentioned in the report that you've enhanced kind of digital transfers of pensions from other providers to the platform. Could you tell us a little bit about how the transfer process looks in different geographies? How seamless is it? And I know it's not solely dependent on what was your offering, but also kind of the regulatory framework.

Yes. So in Sweden, what we've done, I mean, we've done as much as we can when it comes to automation. But still, you need a signature from the old employer, which is a little bit of a hassle that slows down the transfer process, but we help the customer with that. But we built a pretty good flow on the web, and now we also enable that flow in the app. So that's a big thing this quarter. In Norway, as you know, it's a very automatic transfer. It's an external party having a transfer hub. So basically, a customer can go in and see what pensions you have, and you can basically click a button and 1 week later, it's basically transferred. It's almost like number portability in the operator world. But also in Denmark, it's not all the way to Norway, but it's fairly automatic in Denmark as well. And we work with also players there that enables automation in a good way. So we see transfers there also becoming more and more automated. And then Finland, with the endowment wrappers, you mainly transfer cash there. Yes, it doesn't need to be super automatic.

Perfect. So just if I understood it correctly then, when you launched the livrente account, it shouldn't be friction in the transfers, this should be a hurdle per se to get volumes on that one?

Yes. So it should be a more frictionless transfer process that we see in Sweden, for sure, not all the way as automatic as in Norway, but definitely better than Sweden.

Great. And then last question, just the Finnish endowment wrapper you launched earlier this year, could you give us any update how that's progressing?

Yes, it's around 2,300 accounts and, say, SEK 800 million, give or take, in net savings. And it's building nicely with time. The problem, as you know, is that the transfer side here is small because there's a tax event if you transfer your money from one wrapper to another wrapper. So we mainly take new flows on the market into our wrapper. But a very positive reception, and I think it's going to be a very important product over time for us and also important to have in our portfolio, not least versus private banking.

The next question comes from Patrik Brattelius at ABG.

So my first question is regarding fund income. So if you look at the fund capital relative to savings capital in Denmark and Finland, it's way below the level compared to Sweden and Norway. So the funding contribution from these countries are quite low. So why is this? And do you have any strategy in order to improve this the coming years?

Yes, I mean we work with the fund business across. I mean it is, of course, strong in Sweden where the fund savings started, so to say, but also a very good growth in Norway, but we see now very good growth in Finland and Denmark as well, not least from the monthly savings product we have, especially then in Denmark, that's very popular. Margins in Finland, Denmark has been a little bit lower since there's been a lot of passive funds. But also here with our Nordnet portfolio, we can also increase margin a little bit on the passive side. So we see good potential also in Finland and Denmark on the fund business. And of course, livrente will also contain a lot of funds, for sure.

So the amount of funds on the Swedish and Norwegian platforms, do they differ in comparison to the amount of funds offered in Denmark and Finland? Or is it approximately the same?

Yes. I would say, Sweden, Norway and Denmark is roughly the same. In Denmark, in order to have those almost like ETFs, that's in the [Foreign Language] where you have a lot of the local funds in that kind of instrument which they used to in Denmark, but they also buy normal funds as well. In Finland, it has been mainly our own funds on the platform before. But now we open up also funds from other banks onto the platform, but that's at least wide offering in Finland. But if you see, our Nordnet portfolio, they really like Nordnet funds in Finland. And the Nordnet portfolio has been very well received. Before, there was -- they bought more the super fund, the free fund that we don't earn any money. But now they shifted to buy a lot of our other Nordnet funds where we have a good margin.

Okay. So my next question is regarding what -- regarding the resolution fund fees. What is your expectations for the fee levels in 2025 and 2026? Will any of these fees disappear?

I think that's for you, Lennart.

Yes. No, I don't think so. And it's very hard to say. I haven't -- no, I think those are the same as they are today, I would say.

Okay. Fair enough. And then my last question is regarding the credit losses, it's up sequentially quite a lot despite the consumer loan book falling. Will this impact the transaction in any way? Or is this...

No, it will not impact the transaction. It's mainly due to new forward flow agreement. We get a little less paid for nonperforming loans. But that was part of the setup with Ikano, so that's a known entity. And then it's on our side that we have reserved a little bit more from the nonperforming loans we have on our balance sheet that we now are going to fully offload. So no impact and no big surprises, really.

And can you remind us again when the expected close of this transaction...

Yes, it's going to be in H2, but likely, hopefully, in the beginning of quarter 4. But in H2, we still need some approvals, and we work on our side to build the servicing, but it's progressing well.

But Q4 is your expectation, it sounds like?

Yes, Q4.

Next question comes from Nicolas McBeath at DNB.

So I had a question first on your deposit volumes. So as you mentioned, Lars-Åke, you still seem to expect that the current level of cash in relation to savings capital is at a depressed level. So I was just wondering, I mean, this ratio continued to fall in the quarter despite the positive markets and higher activity. So would it be possible that there are reasons to expect customers on a sustainable basis will have lower cash allocations in relation to the savings capital, albeit it could still be at the high level in nominal terms? Or what makes you confident that we should anticipate a bounce in the cash allocations within the customer base?

I think somewhat probably less deposits versus savings capital because we see more -- I mean, the fund business is growing very healthily, and that's a little bit more sticky. Trade is often in funds. But that said, we have trading in funds as well. And we are -- I mean, the 7% versus the 12% to 15%, we've seen before. So even with that trend, I think we are on low levels. But of course, it remains to be seen in the coming years, but we saw a slight increase anyway in quarter 2 from higher net savings and also dividends. But of course, it's market dependent. I mean now it's been a strong market for a while. And people -- or customers are left buying a lot both funds and equities. If you have a little bit shakeout in the market, we want to increase deposits very quickly. And that's why we also need to be prepared on the leverage ratio side for that event.

And if you look -- if you zoom in on each type of customer, the trading customer and the customers that do mainly funds and so on, even though fund customers tend to hold less cash on average, all customer types, including fund customers, have much less deposits over savings capital than they have historically. So probably all types of customers are at some kind of cyclical or some call it troughs even if there is some long-term downward trend. We should be able to come back to some kind of normalized level.

But what is supposed to drive that return to normalization? I mean, of course, if we get a severe market downturn, yes, that I understand. But previously, I think your reasoning was more that we should anticipate this ratio to go up as customers are to trade more and that risk appetite gets back on. But now we're seeing that it is still not translating into higher cash; rather the opposite, cash is actually, in relation to savings, declining. So just not sure what should change from here to drive up that...

Well, of course, there's 2 parts of this equation as well. I mean the savings capital has also increased quite a bit the last year. So of course, it's affecting deposit versus savings capital. So I think you -- of course, it's a relation, but it's also in absolute terms, you need to look clear...

Yes. So that's my thinking, maybe we should look more at absolute terms and recognize that the absolute level is actually quite high, and therefore, we may not see the increase in the percentage. But yes, let's see how that turns out...

Yes. But I'd say I think we're on a fairly low level, let me put it that way. But it remains to be seen in the coming years if it goes up.

Right. And then if you could say anything about the cost outlook for next year, if we should expect a slowdown in the cost growth as you get rid of the cost from the consumer lending business or that we should think that you should use these resources to invest in other parts of the business so that we should still expect maybe the kind of 5% cost growth or somewhere around that level despite the resources that you free up when you divest the consumer loans?

Yes. I think for us, I think you see that we're going to invest that in other areas because we have a lot of interesting stuff to do. So we will not take that out of the cost base. But it's also -- I mean, we changed the business model to earn money in different ways and then liquidity, and that is a more efficient way, so that makes also that we can invest that in other areas.

Okay. And then final question on net inflows, in particular, in Sweden where you're still lagging your other regions and then also lagging Avanza in Sweden. And you previously said that the low inflows have been partly due to some withdrawals from wealthier customer segments. So just wondering if this is still the case or some other insights on the net savings. And then what is required for them to pick up, I guess, the most upside where, from the current level, I guess, the upside potential seems to be mainly in Sweden from -- yes, given how relatively low the net inflows are in the Swedish business?

Yes, we still see some volatility in Sweden. I think the inflow is good, stable from all segments, but we have a little bit of volatility on outflows for different reasons, but it can be fairly big tickets. If this will slow down, there might be quarters where you don't have it, and you will see then a very good net savings; in other quarters, you have some volatility. But we don't lose any money -- we haven't lost any money to really impact revenue, but it's been large chunks. It can be the people have been sitting on shares from an IPO or things like that. But since we have some very big customers in Sweden, it can be a bit volatile when they move out to do other transactions.

Next question comes from Michael Macnaughton from UBS.

Just first question is on the net brokerage income per trade. So that was -- as you mentioned, it was up overall, but I think it was down about 8% in Sweden, even with cross-borders trading continuing to increase as a percentage of total trades. Any comment on the trends there? Is that just based on the customer bases that was trading? Or how are you seeing...

Yes, but it's more -- I don't have the exact figures for Sweden if you have markets, but it's likely the trading customers versus retail customers where retail has been really strong outside Sweden, but also we have the traders mainly in Sweden, and they've also been trading quite a bit now in this market.

Yes, quarter-on-quarter, you see the portion of the trades in Sweden is a bit more skewed toward heavy trader versus retail, which is not the case in the other countries.

Anything in particular that's driving that that's different between the trading groups? Is it just because of the historical mix? Or...

No, I think the historical mix where we have the main portion of the traders in Sweden, and it's a trader lot which they've done. Of course, they out-trade their retail. But overall, I think retail in Sweden also trading more, but definitely retail outside of Sweden has been trading more.

Okay. Fair enough. And then just another one, on the kind of marketing expenditures, you've done about SEK 9 million in the first half. I think you mentioned in Q1 that majority of that was focused towards Sweden. Any initial impacts of that spending? Or is it still too soon...

It's a bit too early and still mainly tactical marketing, product marketing and digital channels. So we're working on the broader brand concept that we're going to roll out in broader channels during the fall. But it's too early to tell. So -- but we're going to pick up the spending rate in H2. But we probably won't reach the full SEK 80 million this year, probably more likely around SEK 60 million. But the full -- from next year, it's going to be full on.

Next question comes from Alex Medhurst from Barclays.

Just had a quick question on the FX fees and the mix of overseas dealing fees in the period. Have you ever given an indication of what proportion of your brokerage revenues are made up by FX fees? And then also potentially a follow-on, I mean we've seen peers launching currency accounts for certain customers. Do you have any plans to follow suit on this?

Yes, I think you can find in the reporting what's the FX part.

Yes, we split it out.

So perhaps even index and matrix, you can see that. I don't have the number right now. But when it comes to currency account, I mean, we already have a currency account on the depots in all countries. And then there's a discussion in Sweden to also introduce, from some competitors, a currency account then on the wrappers. And of course, with competition, it's something we look at as well. But that might also be an upside because mainly then the traders and the high-end private banks, and they use currency accounts, if they want to trade on wrapper, they've done that elsewhere with currency account, not with us. So it's likely volume hopefully can attract back to us if we introduce a currency account on the wrappers.

And I just looked it, it's about 1/3 or 30% of the brokerage income is FX in the quarter, similar to last quarter. But just a tidbit on that, too, is that the vast majority of that is driven by retail. And so we're clearly -- if you look at the cross-border trading, retail does about 3x as many cross-border trades as the heavy traders. And they have much more heavy -- or cross-border as a percentage of the trades. And that tells us not that heavy traders do trade less cross-border, it just tells us that they do it elsewhere. So we think by making that a bit more attractive on other account types, we can actually boost the brokerage business and get business that competitors have today. And it's probably with these more niche-type players.

Got you. That's very useful color. And maybe a separate question then on the yield dynamics, just pushing a bit further on that liquidity profile question. I mean it looks like even after accounting for the spike in deposit balances in May, it still seems like the yield on the liquidity portfolio is sort of significantly north of 4%, which is higher than the average market rates weighted by your geographic exposures. Can you just comment on whether there are any other dynamics we should be paying attention to, such any ways you're enhancing the yield or any sort of maturity profiles we need to consider and how those will develop over the coming quarters?

I would say that the average yield is in line with previous periods. And it's the fluctuation of what you see, it's more that you have this opening and closing balances rather, and it's been fluctuating quite a lot within the months, I would say.

And rate changes is not overnight either. I mean it's normally 3-months paper. So the full interest rate impact is taking force within 3 months.

The next question comes from Enrico Bolzoni from JPMorgan. I thought you unmuted, but we can't hear you, so maybe it's your microphone. Okay, we'll try Enrico again later. Let's go to Nicolas Vaysselier from Exane.

Three questions for me. The first one is coming back on your funds business. I think you mentioned in the presentation that half of the flows were going into your Nordnet index funds. I was just wondering, in terms of revenue margins, you are hinting that it's accretive to the margin. I wondered, by how much? And then if I put myself on the customer side, what makes it more interesting to go with a Nordnet index fund rather than a third party?

Yes. I mean the reason we're having higher margin on those funds is that they have lower costs on our side. So this is more margin to us. When we sell an external passive fund, you split distribution 50-50 or you get the distribution fees, split the management fee 50-50. So that's lower than we get if you buy a similar Nordnet fund, even as a customer, you pay the same price. But also, we also try to be creative on the index funds to stick out a little bit. We have a tech index, which you don't find elsewhere, where we can charge a bit more. We have some leverage on our global -- or we have one global fund we leverage. We also can charge more. We have our funds on funds, which are very popular, or one funds where we can also charge a little bit more. So overall, we have both from -- that we have a high margin, but also a little bit higher price on some more creative products in our base. So overall, I can't comment exactly how much higher margin, but it's definitely higher margin than selling external passive funds.

Okay. Yes, very clear. It's interesting. Then coming back on your initiatives on private banking and pro customer segments or heavy traders, in terms of enhancing the offering, what initiatives more concretely are we talking about? And as well, I was wondering about, how does the revenue margin for these segments of customer compare to the more retail customers? Is it possible that you both have like higher volume effect due to the higher wallets, but also maybe the share -- the mix of the products that are used on your platforms, on your free revenue drivers can be different and then you also have higher margins overall?

Yes, we're looking at them. And product-wise, I mean, what we mentioned is currency account on wrappers, but we also look at a little bit more interesting information on our instrument pages. And we also look at different kind of order types like VWAP and things like that and some other exciting features also that we're currently thinking of. So it's a palette of new functions. But that said, we already have a strong offering for it and at least the trader segment. When it comes to the revenue margin, I mean it's lower, especially in the trading segment. But again, they do a lot of trades. So the absolute income is, of course, higher in the high-end segment, but the margin is not necessarily not higher versus savings capital.

And finally, my last question is we saw during the quarter, you announced a partnership with EQT to distribute their...

Nexus fund, yes.

Their retail product, yes, NEXUS. I was just wondering if you are aiming at adding other products like this in your platforms from other alternative manager providers. And if you can tell us more about the economics for you, how does it generate revenue, I guess, some sort of a distribution fee?

Yes. So it's a distribution fee on Nexus. But I think Nexus is well served towards the non-advice space that we have. It's a fairly simple product. It works like a fund, but not that many extra fees in that fund of fund business that they're driving. So it's easy to explain. And also, you can buy it in smaller tickets and also send at least quarterly. So I think it's a product that suits the PB base, the non-advice PB base. If you're going to go with other products, we haven't seen any of that simple enough basically to do this. We're, of course, evaluating, but I think EQT has found a really good packaging of their product with a fund of fund of the good funds, but also priced in a good way, but also like it works like a fund that you can buy and sell like a normal fund.

We're going to give Enrico another try. He's calling on the phone.

A couple of questions.

I think you need to shut off your laptop.

So one, going back again to the opportunity within the financial adviser, can you just remind us, please, of whether at the moment, they just bring close to the platform, but they don't generate an additional layer revenues for you? And if there is any way you can change that and try to monetize it a bit more. I'm thinking just a couple of examples. You seem to be doing very, very well with your funds. You could maybe offer them some managed portfolio services that they can use to invest in their clients' assets or alongside that, some ancillary services like reporting or touch billing. So anything else you can do to monetize this segment a bit more? And related to that, there seems to be quite a lot of interest at the moment in the space, and so by that, I mean for wealth managers. Have you ever considered maybe some inorganic expansion, not necessarily large deals, but maybe also smaller ones, just to ramp up and boost a bit your wealth management capabilities?

Yes. I think with the financial adviser or local wealth managers, we definitely have a fairly good revenue on them, both from a platform fee on the fund, but also we get the transaction fees on trading. So I think what's important now is basically we have a lot of untapped potential. We can onboard a lot of new capital and customers on the platform that needs advice basically that we don't access today. Of course, you can probably add some more products over time, for sure, to increase margin even more. But I think now it's more to get the really good platforms, we can expand that business across the Nordics. When it comes to own advice, so far, we are not doing any advice. And if we do it, we need to find a way that really scales in a good way. If that means buying someone or building it our own, that's the question, of course. But it's an area we're investigating, but we also need to see that it really scales in an efficient way. And the Nordic markets are very served as well. So yes, it's a balance.

Next question comes from Ian White from Autonomous.

Just a few short follow-ups from my side, please. Just first off, I think you said earlier that you think that the increase in marketing costs had no impact on client acquisition in 2Q, specifically. Can you just explain that in a little bit more detail, please? Obviously, the gross CAC, sort of simply measured, did increase quite a lot in the second quarter. So just interested to understand your thoughts in a bit more detail there. Secondly, in terms of the cost outlook for 2H, again, can you just explain in a bit more detail what you're expecting to drive the cost growth lower, a couple of percentage points lower year-over-year to get you down to the mid-single-digit growth guidance, please? And just finally, I wondered if you had any -- had received any sort of customer feedback, particularly I'm thinking from some of the higher-volume customers, around the changes you've made or haven't made in light of policy rate cuts? In particular, the margin lending rates have remained unchanged. Has that prompted any significant incoming from end users or also too early to tell there, please?

Yes. I think the marketing costs, I mean like we said, this is going to build awareness over time and then ultimately convert into customer growth. So it's hard to see that, I mean, if you just push a little bit 1 quarter, and it's not that much more than we had before that you get immediate effects. But now, so far, it's been more a little bit tactical marketing. I think what we really want to -- what we are after is this new brand concept we're working on now and rolling out that in broader channels starting from this fall. When it comes to the cost level, I mean it's different streams there. I mean we have a long list of savings initiatives, both on automation and procurement, and we also have a slight upside on the deduction on VAT that we've been working on. So it's no main factor, it's a mix of a number of initiatives basically that makes us anyway quite confident that we're going to meet the guidance ex the increase in marketing cost. And the customer feedback on rates, there's been no feedback basically and especially not on margin lending rates. We know it's less sensitive. But to remind ourselves, we didn't increase them all the way either with 100% pass-through, and we were not lower than 100% pass-through either. So -- but it is probably a lending product which is least sensitive to interest rates. Of course, the mortgage customers also directly are going to decrease, which we have. But otherwise, no -- we also changed the savings account rates, which the market did. There was no comments there either. So no, it's been calm.

I think we have another question from Nicolas McBeath from DNB.

So just a clarification, perhaps a quick one on the buybacks. I think you mentioned, Lennart, that you were looking for 1% buybacks over the coming years. So if you just clarify, please, does this mean that you're referring to 1% of the share count over the coming 4 quarters? Or how should we interpret that comment, please?

We haven't yet decided. I mean, first of all, we wait the reply from SFSA, of course. But we have not set the terms for this one. I would say 1% of -- for the coming 9 months about that is -- and the number of shares is what I say then, yes.

It's just to give you a ballpark and then, obviously, we'll decide when we have the final decision, but that's to give you a sort of an idea of sort of where we're aiming.

And that aim, where does that come from? Is that -- I mean it seems like it could be more...

That's more a manual adoption to -- over the years for coming down to the 4.0%, 4.5% leverage ratio level that we aim for.

And we said we don't want to do just a 1-year buyback. We want to have a multiyear buyback. I think that's better. So -- but we also need to see then if that -- where the leverage ratio evolves, but we don't want to burn everything year 1, to be frank. So it's around 1% per year.

I think we have one question left. This question comes from [ Johan Carlstrom ] from [indiscernible].

[Foreign Language]

So the question, I'll translate, is about our operating margin, which is 70%. Yes, if that is a reasonable margin?

Yes. I mean our price is very low, both for commission and also very competitive on funds. So it's a low-margin business, but it's a scale business. So as we did with the platform, if you do this correctly, you scale very well when you reach a certain number of customers and certain numbers, savings capital on the platform. And we have reached that breaking point. So we are now in a business with very good scalability even though that the margins are low per se.

But what does that high operating margins say about the competition in your industry?

Yes. But overall, I think it's a very strong competition in the industry, both from big banks, from other platforms like Avanza and other players in the other countries and also new start-ups as well. So it's a very highly competitive business. And I think what we want to differentiate is that we want to be a one-stop shop for savings and investments that you as a private investor should be able to find everything that you need on our platform when it comes to savings and investments and also coupled with a really good customer experience and, of course, overall, a very good price also for our products.

But given your high margins, I mean, shouldn't you lower your fees and interest rates to benefit your customers?

Yes. But looking at the -- I think we already have very low prices. And if you look at the interest rates specifically, I mean, we have a 3.3% rate on this savings account in Sweden, which is one of the highest. And we're also one of the absolutely lowest rates on mortgage in the market as well. So I think we are very competitive on prices in Sweden and really on the low end.

How does your model work? Is there room for customers to negotiate, try to negotiate down their fees and interests that they pay?

I mean, normally, we have standard rates, especially in mortgage as we are already basically lowest in the market. So we try to be clear on our list rate, so the customer knows what they get. So normally, we go with the list rates by trying to have low list rates instead of negotiating things like perhaps other banks.

But if customers think that you're making too much money, that your operating margin is too high, what should I do?

Yes. I mean it's a competitive market. I mean, so if you're not happy with our prices, you can look elsewhere. But like I said, we are absolutely in the low end when it comes to prices, both on commissions and also interest rates and on mortgage and also a very good rate on the savings accounts. I think our offer stands very well in the market.

Okay. Thank you, Johan. I think this is the last question for today. So thanks a lot, everyone, for listening in. If you have any questions, feel free to reach out to me. And of course, all material can be found on our corporate website, nordnetab.com. Okay. Have a great summer, everyone, and bye-bye.

Thank you. Bye-bye.

Thank you.