Release Date: July 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nordnet AB (publ) (STU:9JL, Financial) reported all-time high revenue and profit for Q2 2024, driven by strong performance in trading and fund businesses.
- Customer growth was robust, with an 11% increase, nearing 2 million customers across the Nordic region.
- Savings capital grew by 21%, reaching record levels of EUR 960 billion, approaching EUR 1,000 billion.
- Net interest income outlook remains stable, with higher volumes on deposits and lending.
- The company maintains a strong capital situation with a capital ratio of 25% and a leverage ratio of 6.5%, well above regulatory requirements.
Negative Points
- Cost growth is expected to trend in line with guidance, with a slight increase in marketing costs impacting overall expenses.
- The trading environment showed lower volatility, which could affect future trading activity and revenue.
- Credit losses on unsecured loans increased to 2.5%, reflecting the challenging market climate.
- The deposit-to-savings capital ratio remains low at 7%, compared to historical levels of 12-15%, indicating potential liquidity challenges.
- The company faces strong competition in the Nordic market, which could pressure margins and market share.
Q & A Highlights
Highlights of Nordnet AB (publ) (STU:9JL) Q2 2024 Earnings Call
Q: Your capital situation is 200 bps above your financial target on the leverage ratio. How should we think about this going forward? Will you use buybacks to optimize your position?
A: Our main priority is handling the leverage ratio concerning deposits, which we can't control. We aim for about 1% buybacks for the coming year, gradually reducing to 4.0-4.5 over a couple of years. (Lennart Kraen, CFO)
Q: On your NII, the liquidity portfolio was strong during the quarter. Is this due to higher forward rates or a mix shift within deposit volumes?
A: The margins are about the same throughout the period compared to last quarter. Our deposit volumes were slightly higher in Q2 versus Q1, leading to a slight increase in absolute terms. (Lennart Kraen, CFO)
Q: What is the potential of the new web portal for financial advisors, and which country has the largest upside?
A: The biggest asset on the partner side is in Sweden, but we see significant potential in Norway and Denmark. We aim to grow this business with better service and portals. (Lars-Ake Norling, Independent Director)
Q: The commission rate on brokerage looked higher in Q2. Is this due to a higher proportion of retail trading? How sustainable is this?
A: It's a combination of high cross-border trading and increased retail trading. If the positive market sentiment continues, we expect more cross-border and retail trading. (Lars-Ake Norling, Independent Director)
Q: Can you explain the transfer process for pensions in different geographies? How seamless is it?
A: In Sweden, we have automated as much as possible, but a signature from the old employer is needed. Norway has a very automatic transfer process, and Denmark is also quite automated. Finland mainly involves cash transfers. (Lars-Ake Norling, Independent Director)
Q: How is the Finnish government wrapper launched earlier this year progressing?
A: We have around 2,300 accounts and EUR800 million in savings. The product has been well received and is expected to be important over time. (Lars-Ake Norling, Independent Director)
Q: Why is the fund capital relative to savings capital lower in Denmark and Finland compared to Sweden and Norway?
A: The fund business is strong in Sweden and Norway, but we see good growth in Finland and Denmark, especially with our monthly savings product. We aim to increase margins with our own fund portfolio. (Lars-Ake Norling, Independent Director)
Q: What are your expectations for the resolution fund fee levels in 2025 and 2026? Will any of these fees disappear?
A: We expect the fees to remain the same as they are today. (Lennart Kraen, CFO)
Q: The credit losses are up sequentially despite the consumer loan book falling. Will this impact the transaction in any way?
A: No impact on the transaction. The increase is due to a new forward flow agreement with slightly less pay for non-performing loans. (Lars-Ake Norling, Independent Director)
Q: Can you explain the trends in net brokerage income per trade, particularly in Sweden?
A: The trends are influenced by the mix of trading customers versus retail customers. Heavy traders in Sweden have been trading more, affecting the overall income per trade. (Lars-Ake Norling, Independent Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
