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

Good morning, and welcome to the presentation of Nordnet's third quarter of 2024. My name is Marcus Lindberg, and I'm the head of Investor Relations at Nordnet. With me today, we have our CEO, Lars-Ake Norling and our CFO, Lennart Kran. Lars-Ake and Lennart will start off by presenting the results, and then we'll have a Q&A session. [Operator Instructions] 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. Yes, some highlights from the quarter. It's a strong financial quarter with continued growth in the core brokerage and fund business. Highest customer growth also in 7 years, and we passed the milestone of 2 million customers in August. So we've increased the customer base from 1 million customers to 2 million customers in about 4 years. We also see healthy trading activity and strong brokerage margin, and margin is strong because of the high share of cross-border trading, but also a little bit high share of retail trading versus private banking. Very good progress on our fund-focused strategy with Nordnet funds growing 65% in 1 year, but overall fund capital is growing 42%, which is also very good. Stable outlook for NII in 2024 at SEK 2.6 billion, same as we had in quarter 2 and the same as last year. Good cost control and cost growth is expected to trend in line with guidance for the full year, excluding the extra marketing costs. And we also initiated a share buyback program. I think Lennart is going to talk more about that, but we're going to buy back SEK 500 million or up to SEK 500 million until March 2025. And a lot of product launches, enhancing app and Shareville functionality. Especially, we launched a very [indiscernible] function and that's analyst ratings and target price, and I'll come back to that. We can go to next. Some financial highlights. We see an increase in customer growth, customer base now growing 12%. Also very good growth in savings capital, up 26%, both from underlying savings capital growth, but also strong net savings. And we actually, last week, passed a milestone of SEK 1,000 billion in savings capital on the platform. Number of trades also up 13% year-on-year from stronger markets and stronger market sentiment. Revenue is up 6%, where we see a strong and good growth in our fund business and our trading business, but a slight decline in the net interest income due to lower interest rates. Good cost control. Like I said, underlying cost growth is 6%, excluding extra marketing costs. And we expect to meet the full year guidance, like I said, and also a good operating leverage still and profit growing at 6% year-on-year. We go to next. Also clear rebound and step-up in customer growth and net savings versus last year, especially a strong quarter 2 here with 75,000 new customers, also supported by the campaign we ran in September where, to celebrate 2 million customers, each new customer got SEK 200 in Nordnet Balance One fund. So we had almost 40,000 new customers in September in itself. But also very strong net savings, SEK 16 billion for the quarter, but so far SEK 54 billion in 2024, that's more than double that we saw last year. And we will continue to be supported by our geographical diversification, derisk both the business model, but also enables growth. And we see strong growth in both savings capital and customers now in all countries. But again, especially strong growth in Denmark, where we passed now 500,000 customers. And also we passed a milestone in Finland with 600,000 customers. Next, a little bit on the revenue stream, starting with the trading. Number of trading customers in the quarter is about the same as last quarter. Also trades per trading customer is about the same. And we see, I mean, at least in Nordic markets are a little bit in a holding pattern since May. So it's probably going to be some kind of breakout from here, but it's a little bit limited trading in the period, but still a step-up versus last year. But still very high cross-border trading due to the country mix where we have more customers than outside of Sweden and they trade more cross-border. But also, of course, that we have strong U.S. markets that also attracts cross-border trading. Go to next. So we see, if you look at trading overall per customer in the base, the red line to the left is stabilized now in the last 2 years. It's still a little bit lower level than we saw pre-COVID. But still, we almost have a double amount of trades per day in absolute terms due to double the customer base from 1 million to 2 million during the period. We also see a considerably higher income per trade with 44% up since pre-COVID, and that's mainly due to more high share of cross-border trading from the country mix that we have. Also, again, very proud of the development in the fund business, fund capital growing twice the savings capital and 42% up in fund capital in 1 year. Also very good performance in our own Nordnet-branded fund family, where we see 1/4 of the fund capital is in Nordnet-branded funds and half of the net buy is also going into Nordnet-branded funds, and that's a family of index funds. And half of our customer base owns funds and activity is pretty high also. So 500,000 customers did the fund buy or sell during the quarter. We see continued a little bit shift from active to passive, even though that slowed down. But we see now when the customers buy index, they mainly buy the Nordnet index funds where we have a higher margin as well. Next. So a little bit on net interest income then, starting with deposits, and deposits versus savings capital is still at a fairly low level of 7% versus the historic trend of 12% to 15%. We saw a slight increase of deposits in the quarter from strong net savings and also dividends. But we continue to see very high net buy into both funds and equity or shares, which is, of course, very good for our business long term. Looking at the liquidity portfolio snapshot, we see that's going to land around SEK 1.65 billion in 2024, assuming the volumes we see then in quarter 3, end of quarter 3, and also that we get the unsecured loan money into liquidity portfolio now in October. And then currency allocation, credit spreads, of course, market consensus estimates as per below. Two comments. I mean, of course, the sensitivity here is deposits. We are on a low level. So growing customer base and growing net savings, we likely would have an upside here over time. And then it's, of course, the interest rate passed on to the right, which is lower than we saw in quarter 2. It doesn't impact the quarter that much, but of course, it has a bigger impact in 2025. If I can go to next. Loan portfolio snapshot, SEK 1.55 billion in 2024, assuming then the third quarter volumes, but excluding the unsecured that then moved to liquidity portfolio. And with IBOR consensus estimates as per previous page and a pass-through of 100% on mortgage, but 50% on margin lending. And here also, we foresee a continuous growth in our lending portfolio, not least in margin lending, which is the product that has been growing. And that's the most profitable lending product for us. It's also a lending product that supports our core business and is also less rate-sensitive, but only estimating then 50% pass-through. And so far this year, the pass-through has been even lower than that. If I can go to next. And deposit side, I mean, we estimate SEK 600 million cost for that, assuming the volume we saw in September and interest rates is actually per October 9 with 100% pass-through estimated on Central Bank rate cuts. Sensitivity here is, of course, if the growth of deposits into the savings accounts. But we see that that growth has slowed down. And I think in an environment with lower interest rates, more money will move to transaction accounts and be used for transactions over time. But we also know when we get the new money into the savings account, the majority of that money coming from external deposits that we also then will have yield on our liquidity portfolio. So all in all, resilient revenues then supported by diversified revenue streams. So we have good growth in all the revenue streams, both NII, the fund business, and trading. But again, especially happy with the very strong growth we see in the fund business from the focus we have there, but also a good pickup in trading revenues from more positive market sentiment from the lower rates and lower inflation. Looking at the margins for trading is slightly up, down to the right, due to high share of cross-border trading and margin for fund business is stabilizing now around 25 bps from a little bit slowdown from active to passive move, but also that when a customer buy passive, they buy Nordnet passive that have a higher margin. So looking at the numbers in total then, I mean, it's the same story. It's very good revenue growth over time, almost 30% growth per year since '19. But at the same time, a very scalable business with good cost control where cost has only been growing 5% per year in the period. So almost all the top-line growth is ending up on the bottom line, so a true position of profitable growth. Next. Also shipped a lot of nice exciting features during the quarter. This is just a snapshot. We have released a number of new features in Shareville. We integrated Shareville fully into our app and web before summer. And now we have the team that can ship continuously new exciting stuff. And we see very good momentum in both sign-up to Shareville and also post in Shareville forums. We've also been very active with the app with overall 25 new versions of the app in the quarter, but we're especially proud of the launch that we did yesterday, which then have analyst data and also a target price. So Lennart?

Thank you very much. We can go to the next slide. We're pleased with continuously being able to say that this is a very strong capital situation and also the liquidity situation is very solid. All this, of course, creates a lot of flexibility. We have launched the buyback program -- share buyback program of SEK 500 million in late September, which actually withdrew SEK 500 million from their own funds and still a very good capital position. So this flexibility will give us room to continue the buybacks even after this one has exceeded, that will be done in 21st of March 2025. So we look forward with the continuous even then good capital situation. I don't think it's very much more to comment on here. It's, as I said, very solid. And we can continue, Lars-Ake.

Yes. And just a short recap on the strategic ambitions where we have 4 main focus areas, starting, of course, with having the most satisfied customers, by building a one-stop shop for savings and investments with an outstanding customer experience. But also on the employee side, we can never reach to have happy customers unless we've very passionate and talented staff. We have engagement going up and also that we can attract key talents. Then a sustainable business. We are in a trust business. We need to earn that trust every day, and we need to especially manage our risk in a good way and secure that we are a trusted and liked brand. And then it's profitable growth to capture this fantastic growth potential we have in the Nordics, to take market share in a growing savings market, and also secure that we continuously then have a stable or good scalability and good cost control also going forward. And yes, also very good growth over time in customers and savings capital. The customers really like our platform, but we also have critical mass in all countries to drive word-of-mouth based growth. We go to next. We're taking market share in a growing savings market, and this is why we have had such a good top-line growth the last years, but also hopefully, we'll have good growth in the coming years as well. We have 7% of the Nordic population on our platform. We have 6% of the addressable savings capital at the end of last year, which is big. It's SEK 14 trillion. But we also know that the savings market -- the addressable market is growing from underlying growth of capital, but also that we launched now the Livrente product. So in 2026, we're likely going to have around SEK 20 trillion addressable market. And historically, we've also taken market share in a growing market. So hopefully, we can do that also going forward. And then you see to the right, we have highest market share in equity trading, lower in funds and pension. And that's why we also put a lot of effort in the fund and pension areas with good success. And also very much focus -- a lot of focus on cost discipline, and we have limited cost growth, 5% per year since '19 in spite then of doubling the customer base from 1 million to 2 million customers during the same period. So we have good cost control and also a very scalable business model as such. The drivers we talked about that we have a really modern scalable cloud-based platform. We work a lot with process automation and simplification, which is a win-win, works better for customer. We scale better. Also very efficient customer growth. It's mainly word-of-mouth based and PR based. So low acquisition cost and also that we very much work with the third-party vendors to manage cost and cost growth. And looking at the financial targets and the actuals here, we are basically in line with all the targets. I think we can move to the next. And the key priorities for 2024 then over the last quarter now is, #1, there is the launch of the Danish Livrente pension product, and we launched this product now to a few customers, and we're planning to do a full launch in the coming weeks. So that's very exciting because it's a SEK 2 trillion market over time. And we have 500,000 customers in Denmark that we can sell this product to. So it's very exciting. We also have a very strong offering in the high-end segment, and we continuously develop that offering, both with the analyst ratings and target price we just launched. We're also going to have algorithmic trading launched very soon. So VWAP, TWAP, dark pools, dark-lit, et cetera, but also that we're going to launch currency account on the ISK and KF. What we talked about also that we're rebuilding the portal we have for our partners, so local wealth managers that use our platform for their customers. So that's going to be a clear step-up and a way to also grow the part of the business going forward. And we also, as you know, work with strengthening our brand position with spending a little bit more on marketing and overall to build a higher brand awareness for Nordnet across the Nordics. And here, we're working now with a fully new brand concept that's going to be rolled out from beginning of next year. But of course, continuous focus on cost control, scalability, and automation. So I think with that, Marcus, I hand over to you.

Yes, it's time for the Q&A session. [Operator Instructions] So the first question comes from Emil Jonsson at DNB.

I just want to start off by asking, so the fund margin, I think it was at the highest level in about 4 quarters. Is this due to some sort of mix shift that you should expect to persist into the future? Or should you sort of expect the ongoing shift into index funds to keep driving the fund margin further downwards in the near future?

I think we see that the fund margin has stabilized around 35 bps. It's been there now for close to 2 years. And between the quarters, it can be a little bit -- well, I mean, how we do accruals and things like that, so it can shift a little bit between the quarters. But we see that we can maintain a stable margin around 35 bps. I think the shift to passive has slowed down a bit. But also when customers buy passive, they normally buy our passive funds, which is very well priced to the customer, but it's higher margin for us. So -- and that means that the growing volumes will also trickle down to revenue.

And a question on your customer growth. I noticed you had quite a large spike in September. Was that just due to the Nordnet One campaign you did in September? And have there been any significant inflows from those customers? Or did they just sort of take their SEK 200…

Yes, there is and leave the platform. No, I mean, about half is from that campaign. And we're, of course, monitoring this cohort very carefully because it's a bit interesting to see how they behave. And overall, I can say a little bit younger, but not that much, a little bit less deposits than a normal customer base do as a new customer, but not that much either. So we are actually a little bit positively surprised with the campaign because, of course, the concern is what you mentioned, they just take the SEK 200 and leave, but we haven't seen that trend, a little bit lower than activity level of deposits, but not -- but still good.

And based on what you've learned from that kind of marketing push, do you see any reason to run similar campaigns in the other Nordic countries?

Yes. So the 2 million campaign we ran in all countries, where we had highest effect in Sweden and in Finland, but also good in Norway and Denmark. But it's clearly, I mean, the campaign thinking you can think about if you want to have off and on some campaigns because, of course, that makes a buzz in the market and -- and if you see that the customer base that you get in is also profitable and then it can be an option, but it doesn't need to be this kind of campaign, can be other campaigns.

And next year, I see credit markets are pricing and IBOR rates evening out at just under 2%. Consensus right now seems to be expecting about a 17% decline in your NII. If you were to do the same sort of NII snapshot exercise for next year, do you see any reason that the decline in NII would be more than those 17%? Or is there any drivers that people might be missing?

But if you keep the volume flat as per now, so same deposit volumes, same lending volumes, same savings account volume, then we'll go to 1.9 billion, so from 2.6 billion to 1.9 billion. But consensus is at 2.2 billion. And we know we're growing the customer base. We have very healthy net savings. So we will see a higher lending growth for sure and likely also a higher deposit base as well going into next year.

And consensus is pricing in, I think, a 10 billion increase in deposits until next year. So clearly, there's some margin contraction in there.

And just one final question. Your largest peer recently announced their ambition to go beyond Sweden. What can you share about the conditions for growing in the other Nordic countries from a small size?

Yes. I mean, I think the learnings, if you start a greenfield, I mean, it takes time to build your brand position and get especially critical mass in customers to drive profitable customer growth. It took us like 15 years outside of Sweden when we did that. You might be able to do a little bit faster today. But still, it's going to be a long period before you reach critical mass. On the other hand, I think the penetration outside of Sweden is a bit lower. I mean, Sweden is around 25% penetration on digital platforms. Outside of Sweden is around 10%.

Next question comes from Patrik Brattelius at ABG.

Staying on the topic of competition, you highlight increased competition in Denmark. Could you please elaborate a little bit on that? And also, how do you view M&A as a growth strategy to strengthen your position further in the Nordic countries?

Yes. I mean competition is always coming and going, and we are in a competitive market. As you know, Nordics are interesting because it's high digital literacy, but also high savings rate, a lot of savings capital. I think a little bit what we just announced now, I mean, there is a little bit more new players in Sweden and Denmark. And in Denmark specifically, I mean, it's 2 new players, Endavu is a smaller platform and also Pluto is another platform. But it's nothing strange. We've seen the same in Sweden off and on. But for us, of course, when it comes to competition, overall, I mean, we think it's good. We're challenger. We always have competition. And we can never leave back. So we are always on our toes. And what we really focus on is to be this one-stop shop for savings investment. You should be able to find everything that you need in that space. So that's why pension is also very important for us, but also coupled with an outstanding customer experience and overall, of course, a low price. But we don't see that we need to be cheapest on every single price point. I think that's proven in a number of cases.

Yes. But then on M&A growth strategy?

Yes, sorry, I forgot that. Yes. So I mean if -- definitely, if something comes up in the Nordics, we will look at it. So especially if it's smaller players, we can look at it. But it boils down to how much we need to pay them for capital customers versus organic growth. But of course, if something comes up, we can look at it, yes.

And then on to NII, where you talked a little bit about the drivers and increasing deposits. But since the start of 2022, we have seen deposits fallen while savings capital is up almost 30% since. So why do you believe that growing -- that growth in savings capital from here will drive deposit growth? Isn't it a risk that it will follow the same trend as we have seen for the past 2 years?

Yes, but it stabilized considerably in the last quarters, and it's actually been up a little bit 2 quarters now. And I think in this equation of net savings coming on to the platforms and of course, dividends, which is strong at least H1. So with the growing cost base and with more net savings, we foresee also a higher deposit base. And it's been extremely high net buyers into the market since it's been a strong market, especially in quarter 4 last year and first half. So we just know that we are on low levels now. Exactly how that will play out and when, that remains to be seen, but we see a likely upside on deposits. So, that's very clear. Same as we see an upside on the lending, of course, in at least margin lending, which is the most profitable product.

Yes, because it seems like the deposit relative to savings capital continues down and do you…

Yes. But it's also -- I mean, we've had -- I mean, the markets are up considerably in 1 year. So that's, of course, part of that equation. We also know if we have a little bit market shakeup, deposits will increase very rapidly. So that we need to be prepared for when it comes to leverage ratio. So a little bit more volatile market will also likely increase deposits.

So in order to not take all of the time on the Q&A, I end with a question on one-off impact from the divestment of the consumer loan book. What should we be aware of for the fourth quarter here?

I think it's a note there, Lennart, is it Note 11?

Yes.

Where it's all lined out, but it's -- the one-time effect is around minus SEK 40 million, a little bit up from the press release, was minus SEK 30 million, was some post-closing adjustments. But overall, it's the same story as we told in the press release. But you have all the details in Note 11.

Perfect. I missed Note 11.

Yes, most people do.

Very interesting note.

Next question comes from Ermin Keric at Carnegie.

Maybe if we start on NII again, in 2025, the 1.9 billion you mentioned, what assumptions have you made there? Is that still then 50% pass-through and 100% pass-through on the deposits? And that's including…

Yes, it is -- Yes, that's the same.

Kind of [indiscernible]?

Exactly. It's the same assumptions as we have for this year's outlook, so to say, but with the volumes that we see now.

And then I think we already touched it a little bit, but when it comes to your expectations that trading per trading customer should break out on the upside, you've been saying that for a while, but we've seen it being stable. So what gives you confidence that it will break up? And kind of is it just volatility that's needed or what?

Yes, I think it's volatility. I mean if you look at the Nordics markets, especially, they've been in some kind of a holding pattern since May. It's up a little bit, down a little bit, but it's no major movements. We see a little bit more perhaps the last days now we're reporting, but still a rather quiet market, and it's probably going to be a breakout from this holding patterns either on the downside or the upside. But that will, of course, generate more trading. U.S. markets have been a little bit stronger, as you know.

And then just this new feature with estimates from FactSet, is that going to be any big cost driver to acquire that data?

No big cost driver. That's just marginal.

And then final question. You've had the target to have the highest customer satisfaction across your 4 markets. Do you expect to win in Sweden this year? Or when are you going to be #1 in Sweden?

Yes. I think we are very clear #1 position outside of Sweden. If you look in Sweden, we're closing the gap to Avanza and the last -- we do our own measurement where we see clearly that we're close, but we also have the official measurements, the EPSI or SKI measurement last year, where we were very close to Avanza then, and we actually beat them on some parameters like price worthiness and product quality. So let's see what this year will give. But of course, we're fighting all the time to overtake and we close the gap.

Next question comes from Andy Lowe at Citi.

Mine is just on the FactSet partnership. So just curious how the partnership is structured, what are the financial implications? I appreciate you've just said it's a more…

That is not going to be any material impact or anything, but we have them -- we're going to use them as a partner for financial data. This is one track, but there's more to come, so to say. And so far, it's been a very good partner to us.

And is this available to only select customers? Or are all customers able to get it?

All customers are able to get it. They marketize savings and investments.

Yes, yes. And then just curious what made you go with FactSet over other data providers?

Two things. I mean, of course, a negotiation, but also we know and we verified also the quality of their data is good. So that's also an important parameter.

And then final question. You talk in your CEO statement about the introduction of currency accounts next year. Could you just talk through the financial implications from that?

Again, we don't foresee any major implications from that. It's mainly going to be used by the more active traders. And today, we -- most of those traders when they trade, especially in the U.S., they use other platforms where they have a currency account. So of course, our expectation is when we launch a currency account, we can attract back that trading, especially U.S. trading into our platform. So it might even be an upside over time.

And do you think that trading comes back to you with a little bit of a lag? So maybe you lose income at first and then it takes a while for customers to migrate?

Let's see. Of course, it's going to take a little bit. But we don't see any -- I mean, I don't think it's going to be any major impact because the most -- I mean, the ones that trade the most and the most international trades, they are -- they do it outside of our platform because they don't have currency account. So for the normal customers, I think most will just use automatic FX and don't do the hassle of exchanging and having foreign currency on their account. I think it might be a little bit spice to track some more trading to our platform.

And just to put a number on what we see on cross-border trading, retail, they have about twice as high sort of percentage cross-border trading as heavy traders. So that tells us that heavy traders, they probably don't do way less is that they do it somewhere else. So data looks like we should be able to capture some business. Next question comes from Jacob Hesslevik at SEB. Looks like you're muted, Jacob. Can you hear us? Okay. It looks like Jacob has some issues with this. We'll get back to you, Jacob, next after, let's see, Enrico Bolzoni from JPMorgan.

Can you hear me?

Yes, can hear you.

Yes.

So one, going back to the multicurrency account, I just wanted to get a bit of extra color there. So in terms of what cost a client has to set up these accounts, so is it free to do? I'm just trying to understand because clearly, it's great that you can avoid paying FX, and I wonder how easy and how expensive is for the average retail customer to set it up. So that's my first question. And then second question is on the FactSet partnership and offering information about analyst ratings, so on and so forth. How unique is these features in the Nordic landscape? Is it something that many other players offer or it's quite unique to Nordnet proposition at the moment? And then finally, I just wanted to ask your opinion on what implication there will be from the changes in taxation for ISK? Do you expect more clients maybe moving to this type of product? And if so, what sort of implication financially there might be for your revenues?

Yes. With the currency accounts, we haven't launched it yet. So of course, we don't have all the details exactly how it's going to look like. But we already have currency accounts on the normal depo account, so the nontax wrappers. And it's fairly easy to set up, but it's overall only used by the more active traders. The normal trader just do the odd FX where they see is no hassle and the cost is not that high. So exactly how it's going to look like on the wrappers, we will, of course, have to come back to. FactSet, yes, it's unique and it's been a very asked for feature. So we're happy to launch that now. I think it's going to support, of course, if you want to trade then that you can get the analyst view both by wholesale mix, but also the target price range.

Sorry, on this FactSet feature, by unique, you mean it's unique, the fact that you have it with FactSet, so other players don't have FactSet?

No, no.

Is quite unique, the type of product.

It is unique in itself as a product, yes. And then taxation, it's going to be in 2 steps. So the first -- next year is SEK 150,000 that you don't need to pay any fees on and next year after that is up to SEK 300,000. So I think overall, it's going to boost probably activity and start savings not in some segments. How much that's, of course, hard to tell. But it's, of course, a positive thing that we don't have to pay any fees on lower amounts on ISK and KF.

And can you remind me the profitability of an ISK account versus, let's say, an account which is not tax-wrapped? Is it the same for you?

Yes, it's about the same. So it's the same fees basically on both accounts. So it's more for the customers that's more efficient tax-wise to do it on that.

Okay. Let's try Jacob Hesslevik from SEB again. We'll try to unmute you.

Can you hear me now?

Yes, we can. Great.

Perfect. If we continue with NII, the guidance for this year is unchanged. So could you help me understand how disposing your unsecured portfolio, which has yielded plus 7%, which will now be invested in your liquidity portfolio, which yields at the Swedish 3-month forward rate do not affect your NII more negatively?

Yes. But we -- it's only going to be -- for quarter, we're also a little bit stronger on deposits compared to where we were last quarter. We also have more lending volumes than last quarter. So all in all, even though we have a little bit lower interest rates pause and a little bit lower total yield on the private loans, in sum, we're going to be on the 2.6% basically, like the quarter 2 outlook.

Okay. So it's a volume driver there?

You need to look at all the aspects, deposit volume, lending volume and…

And I think this is what Ermin asked before, but just to be crystal clear, are the calculations purely mechanical on forward rates? Or do you increase the NII sensitivity as more and more deposit rates reach 0% in future quarters?

No, correct me if I'm wrong here, Marcus, but it's more just using the assumption we have in the outlook today.

Yes, pure mechanical. So the 1.9 billion that Lars-Ake said, that's basically just taking the interest rate curve with stable volumes, not making any adjustments like that. So that's the lowest it would go assuming these rates and no volumes. And of course, there's volume upside there.

But then you could also assume that you will stop paying deposit rates or you can't lower the deposit rate on ISK accounts for private banking clients, for example, that would hurt you more, correct?

That is included in that figure.

Okay. That is included. Okay. Good. And then my final question is on cost. In the quarter, it was almost flat versus Q2 despite you mentioned in earlier reports that you would start your marketing campaign in H2 this year.

Yes.

So you're not doing the marketing or the cost back-end loaded in Q4? Or is it first in 2025, we will see the cost increase?

Overall, so far this year, there hasn't been an increase versus last year, but it's going to be a big step-up in quarter 4. And we're working on the new campaign concept that we're going to launch end of this year or beginning of next year. But we do a lot of additional other marketing things as well and not least related to the 2 million campaign that we ran in September. But I know, Marcus, the exact figure for marketing that we estimate in quarter 4 is around 50 million.

That's right. So it will be -- at the beginning of the year, we said we would end up at 120 million or so for the full year, but it's going to be then 100 million. The next question comes from Ian White at Autonomous.

Just a couple from my side, please. Firstly, in terms of the promotion you ran in August and September, just crunching through some of the numbers, SEK 11 million spent with a SEK 200 incentive got me to 55,000 clients, that's sort of ballpark. That's about the same as your entire net new customer growth in August and September. If you haven't run the promotion, maybe you've got 35,000 new clients or so based on trends we've seen year-to-date. So net-net, it looks to me like you maybe spent SEK 11 million more to get about 20,000 more clients or a CAC of about SEK 550, which is high by your standard. And per your earlier comments, it sounds like at this stage, you're not sure of the quality of that cohort versus the people that you've typically onboarded. So the first question, I guess, would just be if you could just elaborate a bit around the thinking there, please, and obviously, correct any of my thinking or assumptions that are incorrect. That's question one. And just secondly, in terms of some of the innovations that you mentioned in today's statement, the integration of the FactSet data and the new trading protocols, and I think you spoke to this in part in response to a previous question. But can you just elaborate a bit more and tell us about how those ideas and innovations have actually come about? Is it something that your clients have asked for? For example, it sounds like the analyst information is unique, less clear on the trading protocols. But just the thinking behind introducing those onto the platform, why they're important would be helpful.

Yes. I think when it comes to the 2 million campaign, I think we -- about -- it is primarily in September, where we basically doubled almost the customer intake then. So CAC is probably SEK 400, if you look at that, 50% then coming from the new campaign, but we also then have to pay for the other customers. But anyway, so far, it was a little bit of an experiment for sure, but also to drive brand awareness a little bit on Nordnet instead of just spending on media campaigns. But so far, we are a bit positively surprised actually that, like I said, a little bit younger, a little bit less deposits and a little bit less activity, but not as much as we thought actually. So far, I would say, it's been a good campaign and it's also made a little bit buzz in the market, which is also good for brand awareness. And especially in Sweden, we saw a very big take-up where we have struggled a little bit in especially the younger segments. So of course, we're going to follow this over time and take learnings. But yes, so let's see. I think different kind of campaigns can be an option, but of course, it needs to make sense financially for sure. Innovation aspect, I mean, we talk to our customers all the time, and we always have a list of things that we look at and prioritize. There's been, of course, a lot of focus on Shareville during the spring to integrate that and build a lot of new nice Shareville functions. That's been very appreciated. But then we prioritize now what we've seen, especially the analyst ratings and target price has been very asked for. And so we put that as high priority. But also the algo trading has been for the more advanced customers is something that you really want and they wanted for some time. And we will have a very good service also in cooperation with Citi to implement that. So both the normal algo, VWAP, TWAP, all of that, but also dark pool, full dark pool or dark-lit trading in different algorithms. So that's going to be very exciting. And then it's currency accounts, which has also been asked for, especially, I mean, it's mainly from the more active traders as well.

Next question comes from Bruce Hamilton at Morgan Stanley.

Just had a couple of quick ones on the sort of fund business. You talked about stability in margins helped by the fact that you're selling quite a lot of Nordnet index products. Can you remind me what sort of margins you're typically charging on that? Is it around 25 bps? And then secondly, in terms of product innovation for the fund business, how are you thinking about that? Obviously, at an industry level, there's quite a bit of focus on active ETFs on sort of private market content for wealth clients. What are you hearing from customers there? And what -- is there any area that you're kind of excited about as potentially driving positive margin mix over time?

Yes. So fund business, I mean, our own fund business, we have, I mean, especially on the index side, higher margin, then the customer would buy an index fund outside of our portfolio. I won't say exactly the margins, but the price to the customer is the same as an external index funds, but our margin is better since we produce it ourselves with the help of partners. But we also try to be innovative, as you know, on the index side. So we have the global index with some leverage in it. It's been very popular where we can price a little bit higher. We have had a tech index, which is also very popular. I think we are the only one that's having that, also price a little bit higher. And we have index of index, our One fund portfolio that's really flying and they're performing really well and where we also have a higher margin. So it's a combination that there's lower production cost for us, but also that we've been innovative in how we put the portfolios together. Product innovation, I mean, I think -- I mean, it's a lot of things happening all the time, and we have a lot of exciting things that will come out also next year. I won't talk about all of that here for competitive reasons. But of course, private market access is one area that we've been looking quite a bit on. And we have a cooperation, as you know, with EQT in Sweden with our EQT Nexus fund. That's been popular in the private banking segment. So it's a more liquid private banking fund of fund of the EQT funds. So that's -- I think it's quite a good setup actually for also getting capital from more self-serve customers into product like that.

Next question comes from Nicolas Vaysselier from Exane. Hello, Nicolas, I think you need to unmute on your side as well.

Can you hear me now?

Yes, we can.

Just one question on the dynamics in Sweden. I've seen that the flows in customer recruitment remains a bit underwhelming versus other countries. And I would like to know if you have concrete plans to address this beyond your September marketing campaign.

Yes. I mean, in Sweden, in general, we're very strong in the higher-end segments. So we have more savings capital and higher revenue per customer in Sweden. And we're going to develop that segment as well. That's why we launched a number of exciting features for that segment because it's a profitable segment. So we would never let go all that. We maintain a strong position and grow high end in Sweden. But at the same time, then we move a little bit more into the savings segment that mainly then invest in funds and pension. And as you know, we put a lot of effort both in the pension business and the fund business, and we see traction also there in Sweden. We see a lot of traction outside of Sweden, but also traction in Sweden. And not least also the SEK 2 million campaign was really successful in Sweden. So I think it's a combination then in Sweden. We will really focus on the high end and grow that segment, but we will also then take more customers in the savings segment in pension and in funds.

Wouldn't it make sense to refocus a bit the investments in the lower wallet size segment given how intense the competition seems to be in Sweden for the private banking business, for instance, with both new entrants and incumbents who seems to be…

Yes. But that we are, but still, I think the people with interest in the markets and trade quite a bit is a lot of people in Sweden. We want to be strong in that segment. We've always been strong there, and we're going to continue to be strong. But that said, we do expand into the savings segment. We have a fantastic growth in the fund business. We have really good growth in the pension business in Sweden, but also outside of Sweden. So that will continue that focus as well for sure.

And a follow-up on the private market questions. Have you imminent plans to add new asset classes or new fund provider to the platform?

Yes. Let's see how that plays out over time. But the main product we have now is EQT Nexus, it's a cooperation with EQT and their fund of fund of their EQT funds, but where you also have some liquidity in the funds. You can also sell on a quarterly basis after a certain lockup period. So it's been a very popular product so far.

Okay. And just quickly to finish, on the fund business, what I get from your comments for this quarter and the explanation of the slight uptick in the fund margin, is really the mix towards your own branded funds rather than, for instance, seeing an uptick in interest for active funds.

I think you still see that shift from active to passive. It has slowed down, though, but it's mainly by our own index funds. But I think, like I said, between the quarters, accruals and little other things can distort the picture a little bit on the margin between quarters. So you should look a little bit over the year. So over the year, we've been around 25 bps where we've been also last year.

Next question comes from Michael Macnaughton at UBS.

Can you hear me?

Yes.

We can.

Just coming back on the multicurrency accounts, if I remember from last quarter, I think you mentioned that around 30% of the brokerage income comes from kind of foreign currency-related trading. And then this quarter, you mentioned that the retail trade is about 2x as much. So about 1/3 of it is heavy traders. Does that mean that the currency accounts should impact around 10% of the current brokerage income? Or would it be a smaller selection of that because it's just the ISK’s and the [ Diamond’s ]?

Yes, I think it's going to be smaller because we've had currency account on the non-wrappers for a very long time. And outside of Sweden, a lot of trading is being done on those accounts. So the main take-up on the currency account has been the more active traders with, of course, a little bit more money traded as well, where for the retail, it's not worth the hassle. It's still good FX and it's just easy to do it automatic when you do the buy or sell. So I think we -- like I said, we potentially even have an upside with launching currency accounts on ISK, KF because those traders that there are more heavy traders want to use currency accounts on those wrappers, they're not with us, they're with other platforms. So hopefully, we can attract some of that capital back to -- or trading back to Nordnet.

But there's no kind of -- you can't share any hard number and -- or a percentage?

Yes, I can't share any hard number, but I don't think it's going to be material. It might even be slightly positive, but let's see how it plays out.

And then maybe just a follow-up to the kind of discussion around the private banking offering. Why is it that you think you are so strong in Sweden? Is that just historical? Or is there -- what do you see as your offering there that's kind of outperforming peers? And where do you see that kind of progressing as previously the competition heats up?

It's a good question. Perhaps we've been a bit positioned versus Avanza since they focus a lot on the savers. But we've been in the strong position. We have a very good platform. We have a lot of good features, very stable platform, but we have very nice features for them, and we constantly launch new features, like I talked about now, but there's more to come as well. But that said, I think we also have the potential in the savings segment in Sweden with the focus on the fund business and pension business that we have. And we saw that with the 2 million campaign, for example, where we've got a lot of traction also in Sweden on that in more younger saver segments.

And then maybe just a final one. Obviously there's chat from your peer about expanding into new markets. And I think it's fair that with your geographical distribution, it's not as big a concern for you right now. But is there an argument to be made that instead of waiting until it becomes a problem, you should be thinking about expanding outside of the Nordics? Or are you pretty happy where you are?

Yes. I mean we have 6% market share in a growing savings market [indiscernible] it's going to be around SEK 20 trillion. And we really want to compete also the one-stop shop in the Nordics with Livrente and our launch as one of the last pieces there. So the focus is going to be on the Nordics. That said, of course, we are a multi-country platform. We could open a new country like in a manageable way, but the focus here now is on the Nordics.

I think that's the last question of the day. So thanks, everyone, for calling in. Please visit our website, nordnetab.com, if you have any questions, or reach out to me. So thank you for your interest in Nordnet. Have a nice day, and goodbye.

Thank you.