Nordnet Ab · OMXSTO:SAVE
Nordnet Ab — Q3 2023 Earnings Presentation
38 slides from Nordnet Ab's earnings presentation, Oct 24, 2023
Slide 1: Nordnet Q3 2023 Results presentation
Nordnet Q3 2023 Results presentation
Slide 2: Key highlights third quarter 2023
Key highlights third quarter 2023 Strong financial performance with Cost in line with guidance revenue growing 42% and profit 64% Good customer growth and positive Finnish endowment wrapper launched net savings Uncertain macro environment and low Strong capital situation provides volatility is an ov
Slide 3: Financial highlights third quarter 2023
Financial highlights third quarter 2023 Customers Savings capital Number of trades Thousands SEKbn Million +9% +15% -14% 1,824 785 13.1 1,677 681 11.3 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Adjusted revenues Adjusted operating expenses Adjusted profit before tax SEKm1 SEKm1 SEKm1 +42% 1 155
Slide 4: Continued growth in customers and net savings despite uncertain macro environment
Continued growth in customers and net savings despite uncertain macro environment New customers by month1 Net savings per month Thousands SEKbn 2022 2023 128 2022 2023 35 116 27 25 9 20 6 17 16 14 5 13 12 13 13 13 13 13 4 11 12 11 12 10 10 3 34 3 3 3 8 9 3 8 3 3 2 2 2 1 1 1 Jan Feb Mar Apr May Jun J
Slide 5: Geographical diversification de-risks the business model and enables growth
Geographical diversification de-risks the business model and enables growth Sweden Norway Customers Savings capital Customers Savings capital Thousand SEKbn Thousand SEKbn +5% +9% +9% +14% 444 465 291 390 136 267 357 119 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Denmark Finland
Slide 6: Number of trading customers / Share of all customers
Share of all customers 70% 10% 100% 30% 60% 80% 90% 20% 40% 50% Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Trading customers Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Average 2017-2022 Share of all customers Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Number of trading customers Q1-23
Slide 7: Trades per day have almost doubled since 2019 and each trade drives more revenue
Trades per day have almost doubled since 2019 and each trade drives more revenue Trades per customer per trading day Total number of trades and net income/trade Trades per customer / day (LHS) Trades per day Cross border (m) Domestic (m) Net income / trade (SEK) 0.34 285,300 80 0.32 72 70 0.30 233,3
Slide 8: Leading Nordic fund supermarket
Leading Nordic fund supermarket Fund capital by country Fund capital by allocation1 ▪ Fund business is a strategic focus area SEKbn SEKbn Active Nordnet funds Other Sweden Norway Denmark Finland Index Fixed income ▪ Fund capital +30% in one year vs +15% for total savings capital 81 100 154 144 170 1
Slide 9: Deposits decline driven by customer net buying equities and mutual funds
Deposits decline driven by customer net buying equities and mutual funds Deposits/savings capital vs stock market performance Deposit development 3Q23 SEKbn SEKbn Brokerage/Funds (LHS) % Deposits (RHS) Avg % deposit range Share of Deposits (LHS) MSCI World index AuM 900 20% 9.1% 8.9% 800 18% -2.6 70
Slide 10: Liquidity portfolio snapshot: ~SEK1.7bn in 2023
Liquidity portfolio snapshot: ~SEK1.7bn in 2023* *Assuming 3Q 2023 volume, currency allocation, credit spreads and market consensus estimates for IBOR development. Volume SEKbn Deposits Lending 1 Other/equity ~SEK1,700m Net interest income 61 64 58 58 452 52 53 50 47 45 47 47 389 356 SEKm 81 85 88 8
Slide 11: Loan portfolio snapshot: ~SEK1.4bn in 2023
Loan portfolio snapshot: ~SEK1.4bn in 2023* *Assuming 3Q 2023 volumes and interest as per Oct 1st, 2023. Unsecured Mortgage Margin lending Volume1 Net interest income ~SEK1,400m SEKbn SEKm 28.8 29.1 26.7 27.3 27.9 353 25.4 26.5 26.4 24.2 3.9 3.9 320 23.2 4.1 4.0 296 74 22.1 4.1 4.0 4.1 4.1 4.1 72 4.
Slide 12: Deposit interest snapshot: SEK ~370m in 2023
Deposit interest snapshot: SEK ~370m in 2023* *Assuming 3Q 2023 volume, currency and customer account mix, and interest rates as of Sep 30, 2023 Estimated interest cost 2023 Development savings accounts SEKm SEKbn Share of deposits SE NO DK FI 9.9 % Interest cost on total deposits (bps) 70 28% 7.1 5
Slide 13: In summary: Resilient revenues bolstered by diversified revenues streams
In summary: Resilient revenues bolstered by diversified revenues streams Adjusted revenue by income type Savings capital by product SEKm1 SEKbn Brokerage Funds Deposits Net transaction related Net fund related income Net Interest income Other income² Adjusted revenue / avg. savings capital 802 785 7
Slide 14: Business model with great operating leverage
Business model with great operating leverage Adjusted revenue Adjusted operating expenses³ Adjusted profit before tax SEKm SEKm SEKm 44 61 53 46 58 32 24 17 17 17 25 59 67 63 68 4,313 3,639 3,382 2,954 2,689 2,451 2,115 1,524 1,576 1,210 1,279 1,097 1,064 1,141 377 2019 2020 2021 2022 LTM Q3 2019 20
Slide 15: Select Q3 2023 product highlights
Select Q3 2023 product highlights New innovative index fund with leverage 23 new versions of our award-winning app launched: Nordnet Global Index 125 with lots of user-friendly features and flows Shareville translations Activation: Get started checklist New native onboarding in DK FI 15
Slide 16: Successful launch of Finnish wrapper
Successful launch of Finnish wrapper Benefits for customers ▪ Finnish wrapper is a tax efficient insurance product with an inheritance plan included ▪ Savers can choose from Nordnet’s wide selection of investments including stocks, funds and ETFs ▪ Account opening and investing is completely digital
Slide 17: Capital and liquidity situation
Capital and liquidity situation
Slide 18: Solid capital position with strong liquidity and good credit quality
Solid capital position with strong liquidity and good credit quality Regulatory metrics Exposure class Portfolio rating 69.9 Consolidated situation Actual (vs req.) Requirement SEKbn Gov/Gov reg/Supr. % (S&P equivalent) Deposits in SEKbn Covered AAA AA Total capital ratio 26.4% (+10.9pp) 15.5% 23% 2
Slide 19: Strong capital situation provides optionality
Strong capital situation provides optionality Total capital requirement Total capital ratio (%) Own funds CET1 capital requirement CET1 ratio (%) CET1 capital SEKbn Total capital requirement (%) Total requirement SEKbn CET1 requirement (%) Total requirement 30% 10 10 26,4% 25% 25,3% 9 9 24,0% 25% 22
Slide 20: Strategic focus
Strategic focus Ba a
Slide 21: Key strategic ambitions
Key strategic ambitions Engaged customers Engaged customers ▪ Building the best platform for savings and investments ▪ #1 NPS & high retention ▪ Upward trend on eNPS Engaged ▪ Attract and retain top employees talent Profitable ▪ Capture Nordic growth growth potential ▪ Stable cost level ▪ Strong com
Slide 22: Strong long-term growth in customers and savings capital
Strong long-term growth in customers and savings capital Customers Savings capital Thousands SEKbn 1,824 802 785 1,708 1,601 715 564 1,221 914 395 765 669 272 286 567 235 490 200 433 367 395 166 314 344 136 193 224 90 102 90 104 157 86 103 128 21 36 49 55 39 2010 2010 2018 2018 2007 2007 2005 2020 2
Slide 23: Nordnet is taking market share in a growing market
Nordnet is taking market share in a growing market Share of total population Addressable market growth outlook1 Market share of addressable market1 December 2022 | Million Savings capital, SEKtln December 2022, SEK tln Nordnet’s share Market size current Market size extended Nordnet’s share of addre
Slide 24: Rigorous focus on cost discipline to drive operating leverage
Rigorous focus on cost discipline to drive operating leverage Key drivers of operating leverage Operating leverage drives improvement in cost margin Adjusted operating expenses1 in absolute terms and in relation to avg. savings capital (bps)2 Adjusted operating expenses (SEKm) Adjusted operating exp
Slide 25: Medium-term financial targets
Medium-term financial targets Target Customer growth Average savings capital per customer2 Dividend payout ratio % SEK (‘000) % 31% 477 416 444 427 “Deliver superior total returns to Around SEK420k per customer shareholders via a pay-out ratio 15% of 70% of statutory net income, 10%1 9% 10-15% p.a.
Slide 26: Key priorities for 2023
Key priorities for 2023 Capitalize on Finnish wrapper opportunity Lay foundation for Danish livrente pension product Integrate Shareville app and web Expand Nordnet-branded fund offering Maintain focus on cost control 26
Slide 27: Thank you
417 Nordnet
Slide 28: Financial highlights third quarter 2023
Financial highlights third quarter 2023 SEKm unless otherwise stated Q3 2023 Q2 2023 QoQ % Q3 2023 YoY % Condensed P&L1 Adjusted total income 1,155 1,071 8% 812 42% Adjusted operating expenses (324) (321) 1% (304) 7% Adjusted profit before tax 807 729 11% 491 64% KPIs New customers 37,800 35,400 7%
Slide 29: Summary P&L
Summary P&L LTM Q3 LTM Q3 SEKm Q3 2023 Q2 2023 QoQ % Q3 2022 YoY % YoY % 2023 2022 Adjusted total income 1 155 1 071 8% 812 42% 4 313 3 323 30% Adjusted operating expenses (324) (321) 1% (304) 7% (1 279) (1 196) 7% Net credit losses (22) (18) 20% (14) 57% (68) (45) 52% Imposed levies: Resolution fee
Slide 30: Items affecting comparability
Items affecting comparability YTD Q4 Q3 Q2 Q1 FY FY FY FY FY FY SEKm 2023 2022 2022 2022 2022 2022 2021 2020 2019 2018 2017 Non-recurring items – Expenses Delisting from Nasdaq (45) Acquisition of Netfonds (35) (16) Deduction right VAT 38 38 (20) (30) AML process upgrade (1) (4) (10) (4) (19) IPO re
Slide 31: Strong customer satisfaction driving market share gains
Strong customer satisfaction driving market share gains Customer satisfaction remains at high levels in all countries… NPS …which translates into increasing market shares across our geographies Market share based savings capital in relation to total addressable market 2020 2022 9,0% 8,0% 6,5% 6,8%2
Slide 32: Nordnet has a capital light business model
Nordnet has a capital light business model Nordnet’s income model Off balance sheet On balance sheet Liquidity portfolio Credit portfolio Savings capital SEK ~785bn SEK ~45bn SEK ~29bn ~69% ~22% ~9% ~48% ~39% ~13% Margin Mortgage Shares Funds Deposits Unsecured lending3 lending Net commission Net co
Slide 33: Strong cost to income ratio and attractive return on equity
Strong cost to income ratio and attractive return on equity Adjusted cost income ratio1 Adjusted return on equity1,2 90% 84% 60% 77% 80% 72% 50% 45% 70% 44% 40% 60% 40% 36% 50% 40% 30% 40% 36% 31% 30% 30% 20% 13% 20% 10% 10% 7% 10% 0% 0% 2017 2018 2019 2020 2021 2022 LTM Q3 2017 2018 2019 2020 2021
Slide 34: New customers are younger, higher share of women and own more funds
New customers are younger, higher share of women and own more funds Share of customers per cohort and age1 Share of customers by cohort and gender2 % 3Q23 | (‘000) 2 Pre 2020 2020-2021 2022 2023 1 799 849 677 164 109 6% 3% 2% 3% 3% 6,0% 2023 9% 2022 29% 35% 5,0% 38% 39% 4,0% 38% 2020-2021 3,0% 69% M
Slide 35: New customers remain active, grow net savings and drive high margins
New customers remain active, grow net savings and drive high margins Revenue margin YTD 3Q23 Share of cross-border trades YTD 3Q23 bps % | million trades 110 25.7 3.5 3.9 3.6 36.8 81 25% 30% 31% 35% 27% Cross-border 62 59 55 Pre 2020 2020-2021 2022 2023 All Pre 2020 2020-2021 2022 2023 All Share of
Slide 36: Strong cost control drives profit despite uncertain macro
40% 60% 30% 50% 0% 10% 20% 0.25 0.05 0.15 0.20 0.30 0.00 0.10 quarter 1Q11 1Q11 2Q11 2Q11 3Q11 3Q11 4Q11 4Q11 1Q12 1Q12 2Q12 2Q12 3Q12 3Q12 4Q12 4Q12 1Q13 1Q13 2Q13 2Q13 3Q13 3Q13 4Q13 4Q13 1Q14 1Q14 2Q14 2Q14 Annualised growth (LHS) 3Q14 3Q14 4Q14 4Q14 1Q15 1Q15 2Q15 2Q15 Annualised customer growth
Slide 37: Sustainability embedded in Nordnet's DNA
Sustainability embedded in Nordnet’s DNA A responsible and sustainable business ▪ Practice transparency, compliance and a high ethical standard ▪ Reduce negative impact on the environment and climate ▪ Promote physical and mental health through a good working environment Equality and diversity ▪ A b
Slide 38: Ambition: sustainable savings
Ambition: sustainable savings Share of fund capital in sustainable funds* Having a broad set of sustainable investment alternatives 83% Share of fund capital in “dark green”* funds 5% Making it easier for savers to Proportion of invest more sustainably by female customers creating user-friendly digi