Nordnet Ab · OMXSTO:SAVE
Nordnet Ab — Q3 2022 Earnings Presentation
40 slides from Nordnet Ab's earnings presentation, October 2022
Slide 1: Nordnet Q3 2022 Results presentation
Nordnet Q3 2022 Results presentation
Slide 2: Key highlights third quarter 2022
Key highlights third quarter 2022 Uncertain macro environment remains Higher interest rates drove a 77% an overhang on trading activity increase in net interest income Despite this, overall strong quarter Positive interest rate sensitivity – set with revenue and profit in line with Q3 to grow NII si
Slide 3: Financial highlights third quarter 2022
Financial highlights third quarter 2022 Customers Savings capital Number of trades Thousands SEKbn Million +12%1 -7% -16% 1 677 728 681 15.7 1,537 13.1 Q3 2021 Q3 2022 -52 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Terminated customers 2022 Adjusted revenues Adjusted operating expenses Adjusted profit before t
Slide 4: Negative market climate has impacted growth in customers and net savings
Negative market climate has impacted growth in customers and net savings New customers by month1 Net savings per month Thousands SEKbn 2021 2022 316 2021 2022 65 66 11 9 9 9 55 8 35 46 76 6 128 6 6 6 6 33 5 5 27 27 27 23 23 22 3 3 3 3 3 20 19 20 20 17 13 13 2 10 11 8 9 Jan Feb Mar Apr May Jun Jul Au
Slide 5: Inflows are stable and retail customers remain resilient
Inflows are stable and retail customers remain resilient Net savings SEKbn Net savings by segment SEKbn | September 2022 9.3 Inflow Outflow 5.4 6.5 3.4 3.2 1.7 3.1 3.4 Retail Partner Private banking -0.7 -0.7 Jan Feb Mar Apr Maj Jun Jul Aug Sep 5
Slide 6: Geographical diversification de-risks the business model
Geographical diversification de-risks the business model Sweden Norway Customers1 Savings capital Customers1 Savings capital Thousand SEKbn Thousand SEKbn +7% -13% +13% 0% 440 444 308 357 120 119 267 324 -27 Q3 2021 Q3 2022 -9 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Denmark Finland Customers
Slide 7: Resilient revenue bolstered by diversified revenue streams
Resilient revenue bolstered by diversified revenue 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 802 Adjusted revenue / avg. savings capital 74 681 565 154 88 0
Slide 8: Liquidity portfolio to generate ~SEK1.4bn in 2023
Liquidity portfolio to generate ~SEK1.4bn in 2023* *Assuming Q3 2022’s volume, currency allocation, credit spreads and market consensus on IBOR development. Not accounting for deposit rate paid to customers. Volume 1 SEKbn Lending Liquidity portfolio Lending Liquidity portfolio Other ~1400 MSEK 64 N
Slide 9: Loan portfolio to generate ~SEK900m in 2023
Loan portfolio to generate ~SEK900m in 2023* *Assuming Q3 2022 volumes and interest as per Sep 30, 2022 (margin lending, unsecured) and Oct 1, 2022 (mortgage). Not accounting for deposit rate paid to customers. Unsecured Mortgage Margin lending Volume1 Net interest income ~900 MSEK2 SEKbn 26.5 26.7
Slide 10: Savings accounts made available to retain deposits
Savings accounts made available to retain deposits Savings account development Interest offered on savings accounts SEKbn % Sweden Norway Denmark Finland 2.0 2.0 1.9 1.9 1.9 1.8 1.9 <1M >1M 0.7 0.9 0.9 0.7 0.8 0.9 0.9 0.25% 0.75% 0.5 0.4 0.5 0.75% 1.5% 0.4 0.4 0.4 0.4 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0%
Slide 11: The fund business is a key strategic focus area
The fund business is a key strategic focus area Fund capital Customer behavior1 SEKbn Sweden Norway Denmark Finland o/w 20% pension 34% 131bn AuM in funds SEK 27bn in Nordnet funds SEK 154 15 131 24 33% 14 172k 46% 100 81 22 8 39 25% 6 14 33 10 23 18 76 62 10% Avg AuM per fund of customers own a fun
Slide 12: Number of trading customers
Share of all customers 70% 10% 100% 30% 40% 80% 90% 20% 50% 60% Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Trading customers Q3-18 Q4-18 Q1-19 Q2-19 Share of all customers Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Number of trading customers Q1-22 Q2-22 Q3-22 100 000 700 000 200 000 300 0
Slide 13: Trading pattern affected by significant macro uncertainty
Trading pattern affected by significant macro uncertainty Trades per customer per trading day Index development1 % | indexed SE NO DK FI 0.34 2018-2019 2020 2021 2022 10% 0.32 5% 0.30 YTD 0% development: 0.28 0.26 -5% 0.24 -10% -8% 0.22 -15% 0.20 0.18 -20% -20% 0.16 -23% -25% 0.14 -30% 0.12 -32% 0.1
Slide 14: Select Q3 2022 product highlights
Select Q3 2022 product highlights Norwegian mortgage – launch of our popular Eight new versions of our award-winning app Private Banking mortgage in a new market with lots of user-friendly features and flows Native onboarding SE + NO Customizable widgets 14
Slide 15: Financial performance
417 Nordnet Financial performance | A
Slide 16: Continuous growth in customers and net savings
Continuous growth in customers and net savings Customers Savings capital by asset class Thousands SEKbn 20% 15% 12% 27% 34% 39% 38% 37% 31% 17% 11% 9% 404 416 426 449 463 477 479 469 455 Brokerage Funds Deposits 1,643 1,677 802 1,601 1,619 773 1,537 728 74 1,475 703 81 691 681 1,389 648 73 67 154 85
Slide 17: Resilient income from diversified revenue streams
Resilient income from diversified revenue streams… Adjusted revenue by income stream SEKm Net transaction related income Net interest income Net other provision income Net fund related income Net financial transactions Other income Full year 2020: SEK2,689m Full year 2021: SEK3,639m LTM Q3 2022 1 11
Slide 18: …with good cost control…
…with good cost control… Adjusted operating expenses SEKm General administrative expenses Depreciation and amortisation Other operating expenses Full year 2020: SEK1,064m Full year 2021: SEK1,141m LTM Q3 2022 SEK1,196m 299 297 296 304 287 280 283 278 14 22 10 11 259 260 258 14 11 14 14 43 42 44 10 6
Slide 19: …resulting in considerable operating leverage
…resulting in considerable operating leverage Adjusted revenue Adjusted operating expenses³ Adjusted profit before tax SEKm SEKm SEKm 44 61 53 45 32 24 17 16 25 59 67 62 3,639 3,323 2,689 2,451 2,070 CAGR +3% 1,524 1,576 1,097 1,141 1,196 1,064 377 2019 2020 2021 LTM Q3 2019 2020 2021 LTM Q3 2019 20
Slide 20: Maintained capital position
Maintained capital position Total capital ratio Leverage ratio % % Capital requirement Additional Tier 1 ratio Leverage ratio Requirement including P2 guidance CET1 ratio Buffer over total capital requirement Minimum requirement 4.7% 4.5% 1.6% 4.8% 4.4% 4.1% 3,9% 21.8% 21.6% 19.6% 3,0% 3.2% 6.3% 17.
Slide 21: Strategic focus
Strategic focus | A
Slide 22: 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 23: Strong long-term growth in customers and savings capital
Strong long-term growth in customers and savings capital Customers Savings capital Thousands SEKbn 1 677 802 1,601 681 1,221 565 914 765 395 669 567 272 286 490 235 367 395 433 200 314 344 166 193 224 136 128 157 90 102 90 104 86 103 49 55 39 21 36 -52 2010 2018 2007 2011 2005 2020 2008 2017 2013 20
Slide 24: 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 2021 | Million Savings capital, SEKtln December 2021, SEK bn Nordnet’s share Market size current Market size extended Nordnet’s share of addres
Slide 25: 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 26: Medium-term financial targets
Medium-term financial targets Target Customer growth Average savings capital per customer2 Dividend payout ratio % SEK (‘000) % 34% 31% 477 455 409 416 Around SEK450k “Deliver superior total returns to per customer shareholders via a pay-out ratio 13% 12%1 Around 15% p.a. of 70% of statutory net inc
Slide 27: Thank you
Thank you
Slide 28: Financial highlights third quarter 2022
Financial highlights third quarter 2022 SEKm unless otherwise stated Q3 2022 Q2 2022 QoQ % Q3 2021 YoY % Condensed P&L1 Adjusted total income 812 728 12% 797 2% Adjusted operating expenses (304) (296) 3% (278) 9% Adjusted profit before tax 491 420 17% 508 (3%) KPIs New customers2 +34,500 +30,100 15%
Slide 29: Summary P&L
Summary P&L LTM Q3 LTM Q3 SEKm Q3 2022 Q2 2022 QoQ % Q3 2021 YoY % YoY % 2022 2021 Adjusted total income 812 728 12% 797 2% 3 323 3 515 (5%) Adjusted operating expenses (304) (296) 3% (278) 9% (1 196) (1 128) 6% Net credit losses (14) (9) 59% (9) 58% (45) (31) 44% Imposed levies: Resolution fees (3)
Slide 30: Items affecting comparability
Items affecting comparability Q3 Q2 Q1 Q4 Q3 Q2 Q1 FY FY FY FY FY SEKm 2022 2022 2022 2020 2020 2020 2020 2021 2020 2019 2018 2017 Non-recurring items – Expenses Delisting from Nasdaq (45) Acquisition of Netfonds - (35) (16) Deduction right VAT 38 (9) (11) (20) (30) AML process upgrade (4) (10) (4)
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 2020A 2021E 9.7% 7.7%2 8.0% 5.6
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 ~681bn SEK ~64bn SEK ~26bn ~68% ~19% ~13% ~44% ~40% ~15% Margin Mortgage Shares Funds Deposits Unsecured lending3 lending Net commission Net c
Slide 33: Share of trading per application
Share of trading per application Distribution of trades per application 100% 8% 9% 8% 9% 9% 9% 9% 9% 8% 7% 7% 7% 6% 10% 9% 10% 11% 12% 12% 90% 15% 21% 20% 21% 19% 17% 80% 18% 18% 17% 18% 16% 28% 28% 25% 26% 31% 29% Share of total trades 31% 29% 7% 1% 70% 9% 5% 11% 10% 15% 60% 29% 31% 32% 30% 29% 31%
Slide 34: Pandemic-era customers are younger, higher share of women and own more funds
Pandemic-era customers are younger, higher share of women and own more funds Share of customers per cohort and age1 Share of customers by cohort and gender1 % (‘000) 1 2019 and older 2020 2021 2022 1 651 858 310 366 119 7% 3% 2% 2% 3% 2022 5.0% 4.5% 22% 2021 29% 34% 36% 38% 4.0% 3.5% 2020 19% 3.0% 2
Slide 35: Pandemic-era customers remain active, grow net savings and drive high margins
Pandemic-era customers remain active, grow net savings and drive high margins Revenue margin YTD Q3 2022 Share of cross-border trades YTD Q3 2022 bps % | million trades 78 32.4 4.9 4.8 1.5 43.5 25% 30% 24% 27% Cross-border 35% 50 53 44 39 Pre 2020 2020 2021 2022 All Pre 2020 2020 2021 2022 All Share
Slide 36: Strong cost control drives profit despite negative 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 Annualised growth (LHS) 2Q14 2Q14 3Q14 3Q14 4Q14 4Q14 1Q15 1Q15 Annualised customer growth 2Q15 2Q15
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: The leading Nordic platform for sustainable savings
Ambition: The leading Nordic platform for sustainable savings 38
Slide 39: How to get there
How to get there Our ambition is to become the leading Nordic platform for sustainable savings. We want to achieve that by: 1 Having a broad set of sustainable investment alternatives 2 Making it easier for savers to invest more sustainably by creating user-friendly digital tools 39
Slide 40: How to measure
How to measure We introduce KPIs on quarterly basis to increase focus on our work with sustainability: 73.5% Share of fund capital in sustainable funds* Share of fund capital in “dark green”* funds 6.0% Proportion of female customers 32.8% *EU’s definition of sustainable mutual funds article 8 “ligh