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

Good morning, everyone, and welcome to the presentation of Nordnet's Fourth Quarter of 2024. My name is Marcus Lindberg, and I'm the Head of Investor Relations at Nordnet. With me today, I have our CEO, Lars-Ake Norling; and our CFO, Lennart Kran. Lars-Ake and Lennart will, as usual, 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. We can go to the next slide. So some of the highlights for the quarter. So revenue and profit record levels, both in the quarter and for the full year. We see the highest customer growth and net savings in 3 years and very strong growth in our core business, fund and trading from a growing customer base, but also positive market. Also a very successful launch of the Danish livrente pension product. And we also announced that we aim to launch now our fifth market, Germany in H2 2026. OpEx is 7.7% for the year, but that includes SEK 10 million also investment for preparing Germany. So excluding that is 6.8%, so close to our guidance. Medium targets also updated. We'll go through those and proposed dividend of SEK 8.10, up from SEK 7.2 last year. Next. Looking at some of the numbers for the quarter, very strong customer growth, 40% year-on-year, also very good growth in savings capital, up 25%, both from underlying growth on the savings capital, but also very strong net savings. And we passed SEK 1 trillion in savings capital on the platform during the quarter. Also strong trades, up 14% from then a growing customer base, but also positive markets. Looking at revenues, we had record revenues for the quarter, SEK 1.3 billion, but we see a decline here on net interest income from lower interest rates, but also that we sold the personal loans portfolio to Ikano. But very strong growth, 45% up year-on-year, both for the fund and trading business. Cost, including marketing is growing 7%, but excluding the extra marketing cost that we had in the quarter, the underlying growth was 6.8%. And also record levels on profit with SEK 900 million in the quarter. So still very good operating leverage in the business. And go to next. So a little bit the full year, of course, customer savings capital same. Number of trades for the full year is up 8%, also again, reflecting a growing customer base. Revenues is up 12%, where we see a flat year-on-year net interest income for the full year, but a good growth then in the fund and the trading business. Expenses for the full year, 12%, including marketing and 7.7% excluding extra marketing, but then including then SEK 10 million also investment in pre-study for Germany. So underlying is 6.8%, so close to our guidance. And profit before tax is also a record level, SEK 3.5 billion. So a strong year. Also revenues a record over SEK 5 billion for the year. And we see we have very strong customer growth and net savings during 2024. Customers almost 0.25 million new customers, 250,000 new customers versus last year, 150,000. And net savings was doubled versus last year or 2023, SEK 73 billion versus SEK 35 billion. Go to next. We also see here to the left and the blue graph there is trading customers. And we see that's developing nicely in line with our customer growth, but also reflecting a little bit positive markets. We see also down to the right that the share of cross-border trading is very high in the quarter, both on the country mix, but also, of course, a very strong quarter 4 in the U.S. Okay, go to next. Looking at trading overall. So trades per customer per year has stabilized since 2023, but we are on a lower level than pre-COVID in 2019. But in spite of this, we almost doubled the number of trades per day because we more than doubled the customer base during the time. We also see in the graph to the right that the income per trade is a lot up 50% versus pre-COVID in 2019, and that's from a higher share of cross-border trading from country mix where we see that customers outside of Sweden trade more cross-border, but also, of course, reflecting a strong U.S. market during 2024. Looking at our fund business, so we see very strong continuous development here with fund capital growing 1.5x the total savings capital. 1/4 of the funds are Nordnet branded funds and half of the net buying is Nordnet branded funds. More than half of the customers also around almost 1.1 million customers own funds today. And we see also that the margin in the fund business is stabilizing from a slowdown in the shift from active funds to passive funds, but also when the customers buy passive funds mainly buy the Nordnet funds where we have a higher margin. But reflecting the full net buy in the year is SEK 37 billion, which is a good number and half of that then is going to the Nordnet branded funds. Go to next. Looking a little bit on the net interest income then and a snapshot for the year, starting with the liquidity portfolio, where we see estimate SEK 1.25 billion in 2025, assuming then the quarter 4 volumes, currency allocation and also the market rates or consensus rates on the IBOR rate development. But here, clearly, the sensitivity is deposits, and we estimate that deposits will increase during the year from a growing customer base, strong net savings, but also that deposit to savings capital level is low. But looking at the volume in the quarter for the liquidity portfolio is increasing from SEK 43 billion to SEK 47 billion, that's reflecting the sell down of the personal loan business. Go to next. Looking at then the loan snapshot is SEK 1.2 billion for 2025, again, assuming quarter 4 volumes, interest rates as what we saw on January 1 and then the consensus estimates on the IBOR rates with the pass-through of margin lending of 50%, mortgage 100%. But also here, we foresee a higher margin lending volume over the year. You can also see the volume in quarter 4 versus quarter 3 for total lending is down because of the sale of the private loan portfolio. Continued low-risk loan portfolio loan-to-value for margin lending is 35% to 45%, depending on country and mortgage 45%. And credit losses is going to be on very low levels in the coming quarters or coming years from -- after we sold then the personal loans portfolio. Also looking at the margins, especially on margin lending, which is a growing product, fairly stable margins in spite of lowering Central Bank rates. Go to next. Looking at the deposit snapshot, the cost for deposits is going to be around SEK 400 million in 2025, again, then assuming quarter 4 volumes and a high 100% pass-through of the IBOR rates. But also here, I would say that we probably have an upside from the amount of the savings accounts, we see that already in quarter 4 that the amount of savings accounts will lower and we move to transaction accounts when interest rates are falling. But all in all, very good operating leverage in our business. We grow the revenue with 30% per year since '19. Cost has only been growing 6% per year. So basically, we get almost entire increase on the top line down to the bottom line. So a true position of profitable growth. Also very productive quarter when it comes to new launches. Of course, the biggest launch was the livrente product, and I'll talk a little bit more on that next slide. But also a lot of -- sorry, go back. So also a lot of new releases in our app and web. And we also launched now the new cloud-based partner web, enabling us to work even better with local wealth managers going forward. Next, a little bit start on the livrente then. So as you know, we talked about that before, the livrente launch enables SEK 2 trillion market for us. And the start has been good. It's around 1,600 customers that signed up for livrente, and they've initiated transfers of close to SEK 1.2 billion, where around SEK 400 million of that has ended up on the savings account savings capital on our platform already, but a strong start and a continued strong development. We also launched our new brand concept, The Joy of Savings, so more fun savings in stocks and funds. And here, we position savings versus shopping in a playful way where we say that savings is as fun as shopping, and we do a little bit of contrasting as well. So for example, probably a better investment than a pair of shoes to invest on the Nordnet platform. And there's been a broad takeout of this concept starting on December '23, both in print, in digital media and TV. And so far, it's been very well received. Then Lennart?

Yes. Thank you. We can go to the next slide, please. With that strong underlying result and development of the business, we also have a solid capital and liquidity situation. That includes also the sell-off of the private loans as we did in October last year, ending us up with a leverage ratio of 6.0% and a total capital ratio of 24.3%. All this enabled us to take opportunities and do things when opportunities come up here during 2025. So a very solid capital and liquidity situation after this great year. Yes.

Okay. Germany. So we announced that we're going to launch our fifth market, Germany and expect that the launch is H2 2026. So I'm going to go through a little bit of the rationale. So Germany is a very large and growing savings market. It's twice the addressable market compared to the full Nordics. We also made a market study that shows that what German savers value is a very good fit for the Nordic offering. We have a good track record of geographic expansion. We have a multi-country organization. We have a multi-country platform, and we can launch a new country with limited investments. We also now have resources available after the livrente launch. We -- historically, we've been running 1 big product development per year, so that we now continue with in Germany. So opening Germany will secure then additional long-term growth and diversification of the business, again, to limited investment that allows us also, of course, to continue to focus on the good growth runway we have in the Nordics. German market is large and also growing rapidly, not least investment in fund and stocks. If you look to the left, it's around 12 million of Germans that invest in stocks and/or funds today, that's 17% of the population compared to the Nordics, where it's 40% to 80% of the population that invest in equity and funds. So it's a developing market. But it's 500,000 new customers per year that start investing in funds and equity in Germany. So that's, of course, interesting. And we also see that the total addressed market is SEK 38 trillion. If you look at the fund and brokerage part of it, it is growing healthily and in line with the Nordic markets. Still the main way of saving in Germany is deposits, but not least in the younger population, more and more also invest more in fund and brokerage and stocks. And we also see that the digital platforms hold around 5% market share in Germany, but are growing rapidly, again, compared to the Nordics where the market share in Sweden is 25% and 10% to 15% in the other countries. So a pretty long growth runway there. Also potential with -- it will be future pension reform going from defined benefit to downtime contribution and possible tax incentive for pension savings. Yes, again, addressable market more than twice or 2.5x as big as the Nordics. And Nordic here have included also the livrente in Denmark. So long runway for growth. And as I said, we've done a market study and it's very clear that German savers value attributes where we are strong today. They value a one-stop shop and a broad offering of savings products. They value really good customer experience in the app and the web, and of course, also a low and transparent price. And, of course, with a platform that you really can trust both when it comes to stability and security. And we will export our one-stop shop playbook to Germany when it comes to brokerage, of course, our UX, not least we're going to work with more attractive and transparent pricing. Pricing today on brokerage is fairly complex in Germany. But also, we will enable more exchanges than we have today that will also benefit the Nordic customers. We're going to, of course, expand our in-house leading fund business, the Nordnet funds, but also at the same time, enhance our ETF offering. ETF is a popular savings form in Germany. Pension, not in scope initially. But again, like I talked about long-term optionality and potential forward. Margin lending, I think, is a good opportunity to introduce more modern margin lending and especially to the retail market. And mortgage will not be in scope and savings account is going to be an important driver. Net savings where we're going to have attractive rates. Go to next. So we utilize, of course, our multi-country platform. We do this in an organization that already support multi-countries. And we do this with a limited investments. Investment in 2025 is going to be SEK 60 million and ramp up to around SEK 100 million per year from 2028. What we focus on this year is, of course, to establish a branch, recruit staff, passport license and start doing full-blown tech development. And we're going to continue with tech development in 2026, finalize the go-to-market offering and then launch in H2 2026. And we have a growth phase then up to 2029, where we estimate then a critical mass of customers and breakeven sometime during 2029. So have a profitable growth from 2030 and going forward. We go to next. So in summary, then large addressable market extends growth runway with low investments, good fit versus our USPs, leveraging our strengths. And we have a track record of greenfielding new markets and complement with potential bolt-on acquisitions. When it comes to the medium-term financial targets, we also update those when it comes to the customer growth, we increased from 10% to 15% to 13% to 15%, reflecting both a higher marketing spend, but also launching Germany. Average savings capital per customer from SEK 420,000 to SEK 500,000, reflecting then both strong development in 2024, both net savings and savings capital, but also that we foresee a strong net savings going forward with the focus we have on pension on private banking and the fund business, not the least. When it comes to income in relation to savings capital, that's down from 55 basis points to 45 basis points, and that's reflecting a little bit different mix of deposits versus savings capital in total, where we foresee a lower level than historic levels. And we have a higher margin on deposits than trading and funds. And operating expenses, we adjust slightly upward from mid-single digit to around 8% per year. In 2025, this is reflecting the last part of the extra marketing spend, SEK 25 million. But in the outer years, it's more product and tech to deliver on our strategic initiatives like private banking and pension. But this is excluding Germany. Germany, we will come on top then of SEK 60 million in 2025, like I said, and wrapping up to SEK 100 million in 2028 and no change in shareholder remuneration guidelines. So in summary, 2025 then the focus areas, of course, laid the groundwork then for launch of Nordnet Germany. And realize the full potential of the livrente product and continue our focus on the fund and pension business and continue the strong net flows we see in that business -- those businesses today. Also continue to enhance the high-end offering for private banking and active trading customers. As you know, we just launched analyst ratings and coming up now is currency account on ISK and KF. It's algo execution and pre-trade in the U.S. We will continue the rollout of the new brand concepts in both in print media, TV and digital media. And ramping up then we had SEK 45 million spend in marketing in 2023, SEK 100 million in 2024, and we will have SEK 125 million spend in 2025. So the full extended marketing spend that we announced in quarter -- yes, in January last year. And, of course, we maintain focus on the underlying cost with both automation and our scalable tech platform. So with that, I hand over to you, Marcus, for Q&A.

Great. So let's start the Q&A session. [Operator Instructions] So first off, we'll take the question from Emil Jonsson at DNB.

I'd like to start off by asking a couple of questions on Germany. What do you foresee being your sort of competitive edge versus the incumbents in Germany if you compare to somebody like flatexDEGIRO, for example? Do you think you'll need to be cheaper than incumbents? How do you view this?

Yes. I think we can leverage our full strength, both with the breadth in the product offering, the one-stop shop, of course, the UX, both in app and web. Pricing, I think we can do a lot, not least on transparency, especially brokerage pricing in Germany is fairly complex. And, of course, allowing for a very good, stable and scalable platform. And we see, I mean, if you look at the incumbent banks, their digital offerings, they often have a good product offering, but not necessarily good UX and definitely not a good pricing. If you look at the digital platforms in Germany, they might have a good UX, but they often rather complex on pricing, not really up to par on customer service and also not always having the breadth on the product offering.

All right. And what's your view on the fact that the German digital infrastructure is less developed than the one, for example, in Sweden? Have you considered whether you'll need to, for example, engage with any German paper-based systems?

Not that much. Paper-based that, for example, they don't have bank ID. Yes, of course, onboarding is going to be different, but there is digital solutions for that today in Germany that we, of course, utilize. We, of course, want to do the experience is digital as possible. But I think the digital maturity is also increasing rather rapidly in Germany, not least in the younger population, same as a savings [ culture ], stocks and funds. But, of course, we will really tend to do as a digital experience as we can.

All right. And what was the rationale for choosing Germany rather than a country like the Netherlands, for example?

Yes. But we looked a lot of different parameters, of course, just the market, the growth, the savings culture, the maturity of it, how many customers are in digital platforms already digital maturity that you talked about and Germany comes out on top. I think Germany is big. It's less mature than the Nordics and Holland for sure, but it's maturing rather fast. And it gives a big long runway. And digital platforms in Germany only, like I said, have 5% market share versus, I mean, in Sweden, it's 25% market share. So I think it's a good long-term potential in Germany.

All right. And do you think you would have gone ahead with the same initiative if Avanza had not recently announced their intention to go out and claim a new country?

Yes, definitely. I mean, we started our pre-study on a new country before Avanza announced their ambition to expand outside of Sweden. So it's more related to we want to be a one-stop shop in the Nordics. And when it comes to the main products, we are there now with the livrente launch was -- when we saw that we were going to launch a livrente during the last fall, we started looking what should we do next. And natural thing is to open a new country. Livrente is almost like a new country because you passport license, you build a local organization and fully new product set. So we saw it's a good opportunity now when we are a one-stop shop in Nordics. And we normally -- we do one big -- really big product development per year. We've done that for many years. So we're used to doing that.

All right. I'll finish off with one last question on the topic of livrente. So if you include all the initiated transfers and all that, you would be at around SEK 1.5 billion in capital there, so right around 0.1% of total savings capital still. If you look at what this could become in, say, 3 years, do you think, let's say, SEK 10 billion would be an easy or a difficult level to hit?

Yes. But I'd say, I mean, we have 5% market share of the [indiscernible] market today. So I wouldn't say that we could reach around 5% market share also in livrente as well. And that will, of course, ramp up net savings now -- we have, yes, close to 2 months, around SEK 1.2 billion. And so, hopefully, we can ramp up to be definitely a higher number on a yearly basis.

The next question comes from Jacob Hesslevik at SEB.

So when you say you will break even in 2029 in Germany, meaning 3 years after launch, it's quite a quick time line as you have stated previously, it took you 10 years to get to Denmark profitable. So how confident are you in this time line actually?

Yes. But we are at a different stage now for sure. We have a good multi-country setup, both organization-wise and also platform-wise, and we replatformed, as you know as well. So we have a totally different scalability in our business today, thereby enabling a shorter time to profitability. Of course, there's always some uncertainty on this. This is based on the assumption on customer growth and net savings and activity. But we've tried anyway to be moderate on our assumptions.

Okay. And could you also explain what you mean with bolt-on acquisitions? What type of targets are you looking at? And should we expect something in the near term?

Not in the near term. But, of course, if you have a greenfield in Germany with the full product range on the platform, it's easier to buy a smaller company to then migrate those customers and those products to our platform, which we've done successfully in both Norway and Finland and partly in Sweden. So -- but it's not in the near term. We need to launch, get established first.

Okay. So it's not a bolt-on acquisition that will take you into Germany. It's rather going to be greenfield...

No. So we do greenfield first and then that can allow for future bolt-on acquisitions.

Perfect. And if we move over to your updated financial targets, what do you mean with the medium term, which you are aiming to have SEK 500,000 in savings capital per client?

I don't know if you want to answer that, Marcus.

I mean, we're closing in on that now. I think that should be seen as an average over the sort of foreseeable future in this type of macro environment we're coming into, the one we're outlining where average interest rate is 2%, average stock market growth is 5%. So let's say, the next couple of years.

But we -- as you know, we're already close to SEK 480,000 from strong markets, but also very strong net savings in 2024.

No, no, I get that point, and you look to be really close. But if you now also hike customer growth target, 13% to 15%, I mean, they're not really going to bring in SEK 500,000 per client...

But again, with the market development and net savings, it should be possible. And we had 40% growth last year. So...

Yes, having being told...

But, of course, I mean, it's depending on how the stock market develops, of course, a single year can be up or down. But over time, we should be able to reach around SEK 500,000.

No, of course, you will. But a final follow-up question. On the customer growth target of 13% to 15%, does that include Germany?

Yes, it includes Germany. But, of course, in the first year here, it's not going to be a big contribution since we're not going to launch until H2 2026. So the main reason why we pulled up the guidance now is the increased marketing spend, where we had the ambition with increased spend that we should move up into the upper range of the customer growth, where we also see that we are now. So -- but that ambition we also have in the coming years.

And keep in mind that we are up 14% this year without the marketing spend having had any effect really since we launched the new concept on December 23. Next question comes from Patrik Brattelius at ABG.

Can you hear me?

Yes.

We can.

Yes. I would also start off by some questions on Germany. So historically, you've been in the German market, but you chose to exit. Can you elaborate a little bit what has changed now when you reenter?

Yes. And there's a few reasons for that. When we exited Germany last time, we needed to focus on the Nordics. We were very small outside of Sweden, and we had a long runway to profitable growth, and we didn't have the one-stop shop. We didn't have the experience the customer expected and we need to do a full replatforming as well. So, I think it was the right choice to exit Germany and also Germany at that time, when you saw the savings culture in funds and stocks was very low, but it's increasing a lot since then. So I think the savings culture has also matured in Germany, but it's still a long growth runway compared to the Nordics.

And a follow-up to Jacob's questions where you mentioned you aim to breakeven in 2029. Can you then elaborate a little bit in your own plans, how -- what will be the peak loss per annum? And when is that expected to occur in your budgets?

Yes. We don't guide specifically on that, but we guide on the cost, you know the full downside, so SEK 60 million then in 2025, ramping up to SEK 100 million in 2028, give or take. And, of course, it's fairly limited revenue during that time, but we will definitely ramp up in the coming years. So you will know it's not going to be -- I mean, you'll know the cost side of it. We guide very clearly on that. And the upside that is, of course, the revenue.

Okay. That is fair. Just wanted to make sure. But given that you mentioned prices, have you done a study how your prices stack up to peers? And is there -- is it in the strategy to perhaps lower prices initially in order to attract clients? How do you view that?

Yes. Of course, we have done an extensive market study on, of course, pricing. So we have ideas how to price. I can't comment that here and given too much away. But it's very clear that the pricing on not least brokerage is very complex. I think there are things to do there. But you will see when we launch.

Okay. Fair enough. And then talking about Sweden because moving away from the German topic, we saw it only grew by 5,000 in 2024. Do you expect a much stronger inflow now in 2025 given the marketing? And when can we expect the Swedish market to move towards the group target in customer growth rate given it's been quite low for a number of years?

I think if you compensate for the sale of the personal loans business, it grow around 30,000 in Sweden, it's around 5%, 6%. But, of course, I mean, with the marketing spend that we do, not least in Sweden, we expect higher growth, not least in the saver segment, the segment that saves in funds and pension, where we also need to -- I mean, as you know, we're really focused on our pension and fund offering, and they're really good, but we also need to increase awareness. And that will take some time to build. But, of course, we have higher growth expectations over time. Now we can match, for example, Denmark, that's a long way to go. But I think definitely, we can increase the growth also in Sweden.

Next question comes from Ermin Keric at Carnegie.

Hope you can hear me. So maybe starting off, could you give us any kind of sense of what's the savings capital breakeven or what kind of revenue margin do you expect in Germany? And I suppose continuing on previous questions, just there are some players that offer commission-free trading and some are doing kind of selling the order flow, have you considered any of that kind of structure in Germany?

I can't comment on the margins, et cetera per se. But we're, of course, looking at the payment for order flow, but we don't see that as really transparent pricing because the customers need to pay a lot on the spread and liquidity is not really there on some of those markets. But again, overall, pricing is fairly complex on brokerage, I think we can do things there. Also the PFOF regime, I mean, Germany is the only country where it's an exception on PFOF until May 2026. So it might be that it will not be allowed in Germany also going forward. But we don't count on that, of course. I think we can compete anyway in a good way. But, of course, if PFOF is fully prevented, it's going to, I think, be good for the customer.

And did you have any savings capital breakeven for Germany?

Yes, we have, but I don't think I can comment on that. When we've done the assumptions on growth and net savings activity, we try anyway to be fairly moderate. But, of course, you never know until you start.

Thinking about kind of expenses, you clearly say you've kind of done 1 big flagship product per year. Now you don't have anything more in the Nordics. How much underlying of the 8% cost growth is going for Germany as well, given that it's going to draw a lot of resources, I suppose?

Yes. On the other, we try to have the direct German cost in the German bucket, SEK 60 million in 2025 and ramping up. So why we got a little bit higher now on cost is both that we will have even higher marketing costs in 2025 versus 2024 to go all the way up to what we said in January last year, so from SEK 100 million to SEK 125 million in marketing spend. So that's going to be part of why we grow the cost this year. In the coming years, it's more that we want to have more product and tech teams. Even though we're a one-stop shop, it's still a lot of features and other development to do in the Nordics. So we will do Germany, but of course, we will not let go focus on the Nordics in any shape or form. We have 6% market share in a growing market, and we have a lot of potential, both in private banking, in pension, in funds, et cetera.

So that leads into my next question actually. Is there anything we could read into this launch of Germany that you think your growth in the Nordics should be decelerating from here?

No, not at all. So I think we still have a fantastic growth potential in the Nordics, and we will not let our eyes off the Nordics. We're going to continue to do a lot of development for the Nordics, but we don't need to do those really big product development like livrente, which is almost like a new country. So we can focus on Nordics, but to limit the investment, still do a launch in Germany since we know we can do 1 big thing per year. We have a track record of that.

Great. And then just 1 last question. I mean, you announced the increase of marketing spend already last year, but you left the customer base growth target unchanged. And now you're hiking it due to the higher marketing. So have you seen anything already initially from the marketing that's giving you confidence that it's going to drive higher user growth?

Yes. I think if you look at the growth last year, it's 14%, partly, of course, due to a strong market, I think partly due to -- even we launched the full marketing campaign end of last year, but we still did the tactical marketing on a higher level during the year, which paid off. So in 2023, we had SEK 45 million in marketing. Last year, we had SEK 100 million, and then we go to the full SEK 125 million that we announced last year in 2025. So, of course, we see some positive signs as well.

Next question comes from Enrico Bolzoni from JPMorgan.

Can you hear me well?

Yes.

We can.

So first one, going back to Germany. I wanted to understand, I know you're mentioning the breakeven in 2029. Perhaps can you just give us some color in terms of what sort of customer number you expect by then? If I simplistically add the higher floor of 13% to your current customer base, that implies around 70,000 customers. So I appreciate maybe it's not just in Germany, but it would be interesting to know what sort of customer number you expect by that. So maybe that's my first question.

Yes. We don't want to guide on the customers on net savings activity. Of course, like I said, we have a model where we try to be moderate, but we don't want to -- we want to launch first and see where it's going before we comment on that. But I think it's still realistic to do breakeven in 2029 with the assumptions that we have. But you don't really know until you have launched.

Okay. Fair enough. So my second question also on Germany. Can you give us some sort of breakdown of the cumulative spend in Germany? Let's say, I know you target SEK 100 million run rate. But if you think about the next 3 years, how much of the cumulative cost for the expansion in Germany will be marketing?

Yes. But a fair share is going to be marketing. If you look at steady state, we probably need 40, 50 people and the additional is going to be marketing. So a fair share of the spend, not least in the outer years, is going to be marketing.

Okay. And then moving away back to the Nordics. I mean, you clearly -- you're increasing your cost growth guidance by quite a bit now. Is it fair to say that you would also target quite explicitly winning market share, for example, versus Avanza in Sweden? And can you give us some extra color? You mentioned that some of the additional costs will be in IT, some in FX. I'm just trying to understand whether this is a defensive move or actually is one...

I think it's a forward-leaning move. But to be clear, this year, the increase from 5 to around 8 is mainly due to more marketing. So the additional SEK 25 million spend to go up to the full marketing spend that we announced last year. In '26 and '27, it's more that we have more tech teams to speed up development even faster, especially in the areas of private banking, pension and fund.

Next question comes from Nicolas Vaysselier from BNP Paribas Exane.

Can you hear me?

Yes.

The first one for me would be on Germany. It's a little bit of follow-up from the previous one, but what do you see could be the risk that you need to increase that sort of SEK 100 million run rate guidance on extra costs? Because it seems to me like it's a pretty small absolute amount if you consider but you're going organic starting from nothing and probably the brand awareness there is close to 0.

I mean, the risk is, of course, to get traction on the brand awareness, brand preference over time. We don't have any specific rush since we have a really good growth run rate in the Nordics. But I think we can establish a strong brand over time, but we will not entirely know until we're there. But it might be smarter to let it go another couple of years instead of spending tons of more money on marketing. But we see when we start there. But, of course, there's a risk on brand awareness and brand preference.

And why did you choose to go the organic way rather than trying to go into new country through M&A, particularly given that you're actually well capitalized?

Yes. I think, I mean, our track record is that we're really good at greenfield and then doing bolt-on acquisitions, starting in operations and then do potential acquisitions like we've done in Norway and Finland and partly in Sweden. To buy -- of course, we looked at the assets, but to buy a big asset platform outside of Sweden, both is going to be costly. And it's going to be not that easy to integrate. That's going to be a very long project. You probably need to run the units as separate entities for quite a long time. So it's hard to see the synergy case there as well. And you can see flatexDEGIRO, for example, is still not fully integrated their platforms after the acquisition.

Yes. That makes a lot of sense. Perhaps last question and coming back a bit to the Nordics. I was just wondering, I mean, you saw the market route yesterday with the AI-driven events. I was wondering if you could tell us anything about your customers positioning into these events like you seen the big tech names/NASDAQ being like a crowded trade among your clients. And I was wondering if it was also involving some increase in leverage on such positions like, for instance, on through margin loans, which we've seen the volumes increasing a bit over the recent months or through the use of options or levered certificates, whatever?

Nothing.

It's a sense of positioning there?

Yes, nothing out of the ordinary. I mean, there's no -- and it's mainly NVIDIA that crashed yesterday for natural reasons, but there hasn't been any issues around that. Same as when Novo Nordisk took a hit in Denmark before Christmas, that was also quite okay. So, overall, our customers are fairly low risk when it comes to loan to value and exposure to big movements. So I would say that's okay. I think this volatility is, of course, short term, very good. Of course, long term, you still want the markets to be positive. So -- but I don't think this will lead to overall market crash, but a correction in some of the AI stocks.

Our next question comes from Ian White from Autonomous Research.

Just a few follow-ups from me, please. First up, on the long-term cost growth, setting aside Germany, will we ever get back to mid-single-digit growth? And if the answer to that is no, what is it that marks kind of an enduring change in the rate of cost growth compared to the sort of mid-single digits you were talking about previously? And you've given us a fair bit of detail for what happened in '25 and a bit in '26, but after that, I guess, is interesting. So that's question one. Secondly, just with respect to Germany, will it be necessary to establish a local banking operation or something like that? Basically, does this expansion present a headwind from a group capital perspective sort of over and above the obvious, I guess? Like is there anything unusual here about having to inject capital into a local subsidiary or something like that, that means it's a disproportionate drain on capital? And just the third question, there was a similar question earlier. But just in terms of the -- I guess, what makes you comfortable given the growth rate that some of the digital platforms are putting up in Germany and how quickly that market is developing? How comfortable are you that your anticipated time line for becoming significant in that market is kind of viable and appropriate? It strikes me as sort of a profitable growth from 2030 on SEK 100 million of investment means we're talking about quite a small business even in 2030. And I guess sort of what makes you comfortable that that's going to work as opposed to needing to go much harder, much faster either via M&A or much bigger marketing spend, please?

Yes, those all the questions. The long-term cost to start with that, of course, we don't know. I mean, it might go back to mid-single-digit after the 3 years now. We just see now that both with the additional market spend in 2025 and some more tech to focus on PB and pension and funds. That's why it makes sense to be a little bit higher. Can that go back? Yes, it probably can, but we don't guide on that long time in the coming 3, 4 years. When it comes to the bank in Germany, we're going to export the license we have in Sweden as a branch of the Swedish bank. So there's no additional capital requirements. But, of course, if you get more customers and more deposits, et cetera, that will, of course, affect the leverage ratio a bit. I don't know if you want to comment anything else there, Lennart.

No, I think exactly what you say, it's really just the deposit that would affect the potential of leverage ratio, but that's all within plan. So we have such a strong and solid capital situation. So we will be able to adapt to that if that happens.

I think the growth runway in Germany back to that, I think that's going to be long. Yes, the digital platforms are growing, but it's still at a fairly low level, 5% market share. Sweden is 25% market share for us in Avanza and 10% or around 15% in the other Nordic countries. So I think there is a very long growth runway and for us also to be in at this stage make that we can also do this in a sensible way.

Next question comes from Panos Ellinas from Morgan Stanley.

Can you hear me?

Yes.

Yes. Just to follow up on the cost. So the SEK 125 million in marketing, does this include also allocation for Germany on top of what you announced for the German costs?

No. So SEK 125 million is for the Nordics. So the German marketing cost is in the German cost bucket, so to say.

All right. And then in Germany, I have seen on the slides, you're saying you are offering -- you are looking to offer savings accounts as well. Is that like a tool to attract customers similar to Robinhood in the U.K. or Trade Republic was doing as well?

Yes. I think it's important to have the savings accounts with an attractive rate as we see also in Sweden and partly in the other countries, but it's going to be a way to attract the deposits to the platform.

Okay. And there's a lot of discussion around the pensions in Germany, maybe 3 years. Is this something -- thinking from your offerings, you are not offering pensions. Is this something you can...

Yes. But it's definitely very interesting for us and optionality if it's a pension reform in Germany, which it's likely going to be both moving more from defined benefit to defined contribution, but also potentially have tax incentives for private pension savings. So I think it's going to happen things in the pension market in Germany that can benefit us. As you know, we are very strong in pension in the Nordics.

Pension, however, is not included in our base case here. So that would be on top...

As an optionality. Yes.

All right. Got it. And then on the breakeven, again, a follow-up question on the breakeven. So you said 2029, you're looking for a breakeven based on the SEK 100 million cost per year, right?

Yes, correct.

Okay. So that -- so let's say, to make SEK 100,000 revenues, what -- I mean, are you expecting like 100,000 clients? What's the...

No, I don't comment clients, but it's not for the full '29. It's during 2029. It's going to be breakeven. So it's on a monthly basis. So the full year profit growth is from 2030.

Because if I look at your -- now the closest competitor in Germany, flatexDEGIRO, right, they have 0.5 million clients in Germany and they book about EUR 3.5 per trade. So to get to the SEK 100 million, you're looking for 3 million trades. And I was wondering if you attract the same sort of active trader type of client, then you're looking for about 100,000 clients or more by 2029. So that's why I'm...

Yes. But as I said, we don't comment specifically on the numbers, but we try to be anyway rather moderate when we have done the modeling. But we don't really know until we get there.

Next question comes from Andy Lowe at Citi.

Just a couple of follow-ups. One, you mentioned about the allocation away from savings accounts into transaction accounts. So I was just curious on your expectations for the investment platform cash as a share of savings, whether that starts to rise in 2025 in your kind of base case? And then I've got a second follow-up. I don't know if you want to answer that one first.

Yes. I think if you look at the deposit level, we guide as you saw on the revenue margin from 55% to 45%, reflecting a lower share of deposits versus savings capital. We are at 7% today, and it's going to be a lower level. But we're going to grow deposits in absolute terms from a growing customer base and also a high net savings. So, even though the share is a bit lower than before, the absolute number of deposits will grow. That will give a potential upside to NII.

Got it. Okay. Great. And then the point on the sort of bolt-on M&A sort of understand where you're coming from in terms of wanting to sort of build the platform first before you do that. Do you -- one of your competitors has sort of talked about entering markets via sort of potentially bolt-on M&A, just acquiring a sort of book of deposits and using that to sort of build scale. So do you think that that's a particularly attractive setup in Germany in terms of maybe the sort of opportunity to buy those types of deposit books, migrate them across? Is that sort of quite central to your growth strategy?

Not necessarily. I mean, our strategy is organic. If we get -- see potential, we can do a bolt-on acquisition, but that's not how we build the case. To buy just deposit book, the question, I mean, are those customers even interested in funds and stocks don't know. But I think doing acquisitions, we've been successful in doing greenfield and then doing bolt-on afterwards. It's always difficult to do totally new acquisition in the market and then try to integrate afterwards.

And we have one last question from Emil Jonsson from DNB again with a follow-up.

Just a quick follow-up. In the future, do you plan on reporting how much of the quarterly OpEx is attributable to Germany?

Yes, that's the plan.

Yes. So we're probably going to have some breakup of Germany like we have for the other countries.

Great. That was all the questions we have. So thank you so much for showing interest in Nordnet. If you have any follow-up questions, you can reach out to me. So thank you so much, and have a good day. Goodbye, everybody.

Thank you. Bye-bye.

Thanks, everyone. Bye.