Avanza Bank Holding AB

STO:AZA

Good day, and thank you for standing by. Welcome to the Avanza Bank Interim Report January to March 2025 Conference Call and Webcast. [Operator Instructions]

I would now like to turn the conference over to your speaker, Gustaf Unger, CEO. Please go ahead.

Good morning, and welcome to Avanza's First Quarter Results Presentation. Here in the sunny Stockholm, I have Karolina Johansson, IR Manager, with me; as well as Anna Casselblad, CFO, and myself Gustaf Unger, the CEO.

So if we start with the first real slide, this is the highest quarterly result in the history of Avanza. Increased volatility led to higher trading activity, in particularly in March, and worth to mention, I think, is that the NII remains resilient and contributing as a healthy part of revenues despite lower market rates.

We also made solid initial progress of our strategic priorities, with high-paced innovation and several appreciated launches. Our growth figures are on track for another strong year, with over 62,000 new customers, this is the strongest quarter since the pandemic, and with a net inflow of SEK 22 billion. This is in line with Q1 last year. So to sum this up, it was a strong first quarter.

We don't yet have the Swedish market data for Q1. But if we look at Q4, we took 41% of the net inflow into the market. The quarterly numbers are, as you see, quite volatile, and the rolling 12 months market share of net inflow was 20%. And that increased our back-book market share to 7.8%. That's up from 7.1% a year ago.

Our 2030 target is an annual savings capital growth of 15%. And savings capital development in Q1 was negatively affected by U.S. equity markets and the stronger Swedish krona. Looking at the waterfall chart, bottom left, we see that net inflow of SEK 22 billion provided a savings capital growth of 2% compared to Q4. On the other hand, market decline, including FX effects negatively affected savings capital by 5% or SEK 46 billion. And this resulted in a savings capital decline of 3% to SEK 931 billion. Speaking of FX effects, bottom right, you can see that our customers had a direct exposure to foreign security of 21% by the end of the quarter.

The quarter was driven by trading income. So let's look a little bit deeper into this. Top left, you see that activity correlates well with volatility. But with too high volatility, customers can become passive. As you can see in Q1 2022, when these 2 lines diverged, and that's when Russia invaded Ukraine.

If we go bottom left, we visualize the strong correlation between brokerage and turnover in brokerage-generating notes that we disclosed in our monthly statistics. And the reason for this coloration, you see bottom right, which shows that the brokerage margin is quite stable over time.

I think we're making good progress within our strategic priorities. And here, that is exemplified by a few highlights to the right. We made several product launches for our stock market enthusiasts, such as the Simply Wall Street collaboration and the new features added to the stock market screen.

And we finally launched FX accounts in endowment wrappers for Private Banking and Pro customers. We also launched a new default solution called Autopension for occupational pension customers, making our overall offering towards the employees clearly best in the market.

On the efficiency side, we have been quite busy in the quarter. We made several smaller improvements to increase operational efficiency. We had better tax filing support for our customers, which decreased calls to the customer service significantly. Proxies were digitalized, which are especially used by corporates in Sweden. And remember that if you are wealthy in Sweden, you often have your wealth wrapped in a legal entity, so this is important also for our private banking customers.

On the Stop Doing side, we are in the process towards not offering external savings accounts. It is still at an early stage with notice periods to consider vis-a-vis our 7 banking partners. It is estimated to be completed no earlier than spring 2026. And customer behaviors will ultimately decide how much deposits will be transferred to our balance sheet. Our hope is, though, that customers will still want to consolidate their savings with us.

And our cloud migration is progressing according to plan. During the quarter, we strengthened our cloud competencies. We signed the agreement with our chosen supplier Google Cloud. And we are now building the optimal cloud platform for our developers and detailing the migration plan. New developments in the cloud is planned in the second half of 2025.

So to conclude, before I hand over to Anna, I want to underline that the long-term outlook remains positive despite the near-term market turbulence. The strength of our business model with several income streams is once again proven. Avanza is a company that thrives in both higher and lower interest rate environment. We are reporting record quarterly results despite lower rates.

There are positive initiatives from regulators that could benefit the European savings market. European politician seems to have understood the value of personal savings for economic growth as the EU is now pushing towards with the savings and investment union. The Swedish savings market and Avanza serves as good examples here. We do experience geopolitical uncertainty, but the long-term need for personal savings remain.

High volatility boost activity, as we saw in Q1, but too much uncertainty may make customers passive, as we saw in Q1 2022 with the Russian invasion of Ukraine. Customers are adapting to market environment and are adjusting risk appetite, as seen by reduced margin lending positions and more cash. Households in Sweden are experiencing real wage increases as a result of lower interest rates and inflation, which creates more room for savings. And the long-term societal trend that require increased personnel savings remain.

So over to you, Anna, and the financials.

Perfect. Thank you, Gustaf, and good morning, everyone. As you heard, we are once again reporting record results, this time the highest quarterly results in the history of Avanza. Operating income rose by 8% since Q4, driven by higher trading-related income combined with NII, holding up well despite lower market rates.

Looking at operating expenses, we are coming in slightly lower than Q4 due to lower personnel costs. And the cost distribution is not perfectly even across quarters and our cost guidance of 11% for the full year still stands. Altogether, this resulted in net profit increasing by 13% compared to last quarter and 28% compared to Q1 last year. Return on equity ended up at 42%, in line with previous quarter. Earnings per share is at SEK 450 for Q1, 13% higher than last quarter and 21% higher than same quarter last year.

So having a closer look at revenues, the increase in trading activity, combined with NII, still contributing to income, resulted in our highest quarterly income. Brokerage income increased by 26% in Q4 as a result of the more favorable trading environment that led to increased brokerage-generating turnover, as well as increased number of notes.

Looking at the trading mix across the customer segments, Private Banking and Pro accounted for 28% of the brokerage, which was higher than Q4, where it was at SEK 25 million. This led to a slight decrease in the brokerage margin that was at 11.5 bps compared to 11.8 last quarter. In other words, it was quite stable, and the number of brokerage-generating customers increased overall.

The turnover in foreign securities also increased, which affected our FX income positively, although it did decrease as a share of the total turnover, and that didn't have the same positive effect on the brokerage margin. Last quarter, the margin was also positively affected by a higher share of trading in ETPs. In Q1, we still saw high activity in ETPs, but a larger share in our own Avanza market product, which affected other income positively instead. And other income was also positively affected by higher activity within Corporate Finance.

Taking a closer look at our fund-based business, the fund volume was negatively affected by the macro environment with declining stock markets and the strengthened Swedish krona. And the net fund commissions decreased slightly compared to Q4.

Looking at the fund margin, however, it remained basically unchanged at -- on average 25.2 bps compared to 25.4 bps last quarter. And the share of index funds also remained stable, around 48%.

Moving over to NII. Also, this quarter, we are seeing a good resilience despite declining market rates, largely thanks to increased deposit volumes. The policy rate cuts naturally had a negative effect on the income from the treasury portfolio, which fell by 10%. On the lending side, mortgage volumes continued to grow, while margin lending decreased some due to customers' derisking.

The average rate for internally financed lending decreased to 3.4 from 3.85, resulting in income from lending decreasing by 7%. On the cost side, our interest expenses were also lower as a result of our deposit interest rate cut. The average annualized rate on deposits decreased from 1.34% to 0.97%.

The amount of customers' deposits in interest-bearing accounts only decreased slightly to 59%, but we also saw customer's share of liquidity on noninterest-bearing accounts increased during the quarter, which also had a positive effect on our interest expenses. And all in all, NII is still a healthy contributor to our total income. And all else equal, and if the Riksbank's current forecast holds, it will continue to be so also going forward.

As already mentioned, we came in slightly lower than last quarter, which is not to draw any conclusions from. And as previously communicated, 2025 is an investment year, and costs are estimated to increase by 11% compared to 2024. And this includes our efforts to strengthen our position in private banking and pension as well as developing our core business, making sure Avanza stays in the forefront when it comes to our offering and user experience. And it also includes expenses connected to the cloud journey.

The decrease compared to last quarter is a result of lower personnel costs, and this was due to a lower average number of employees of which some were related to changes in the management team and also from the termination of the Placera's editorial team last year.

Total salary adjustment for the year is estimated at 4%, and we have a few more FTEs in our people plan connected to our prioritized areas, all included in the 11% guidance. Marketing costs are seasonally high in Q1 due to our winter campaign. And this year, we are putting extra focus on leveraging on our already strong brand. We know that the Avanza brand is already connected with simpler fund savings and investments, which is what we are pushing also in the campaign, and it's also built to be able to tweak towards pension savers and private banking customers.

Cost efficiency is a competitive advantage that we have the ambition to retain and improve. Our target is to decrease across the savings capital ratio over time. And in the quarter, the ratio amounted to 14 bps, same as in Q4 and down from 15 a year ago.

From the 1st of January, new requirements regarding risk-based capital requirements took effect. This has had a positive effect on our risk exposure amount, which decreased, mainly due to lower requirements linked to operational risk and credit risk.

This also implies that the leverage ratio once again is the most constraining requirement to us. And in addition, it is a more sensitive requirement because it is dependent on customer behavior, which we cannot control. We have seen examples of this during the quarter, where increased deposits have pressured the leverage ratio. However, we still have good headroom to the total LR requirement of 3.5%, including the Pillar 2 guidance, and we can handle increased deposits of SEK 28 billion before reaching it.

And in turbulent times like this, it is comforting to have a good buffer when it comes to the leverage ratio. And we have also audited the quarterly figures, which have strengthened the capital base. All in all, we are well positioned, both -- when it comes to both the risk-based and the non-risk-based requirements.

And with that, I would like to hand over to you, Gustaf, for some concluding remarks.

Thank you, Anna. To summarize, before we open up for questions, Avanza is well positioned for the future. The strength in our business model with several income streams, once again proven it is the strongest result in the history of Avanza. Strong growth figures, both in terms of inflows, and in particular, in terms of new customers, solid initial progress within our strategic priorities and high engagement internally to deliver on the strategy, and last but not least, the long-term societal trends that require increased personnel savings in Sweden remain. Thank you.

[Operator Instructions] We are now going to proceed with our first question, and the questions come from the line of Patrik Brattelius from ABG.

Can you hear me?

Yes.

Perfect. Yes. I would like to turn the attention to the high activity and login issues that was reported a couple of days ago when the activity was very high on the platform. Can you elaborate a little bit what the underlying issue was and if you see that there are any investment needs that needs to be done in order to address this so it doesn't occur in the future?

Thank you, Patrik, for a fair question. We had a lot of customer engagement last week, Monday morning, based on very bad new trade news during the weekend, and we have even more extraordinary customer activity on Thursday morning based on positive news on the trade war side.

The majority of our customer had a very smooth experience, but some customers had issues logging in, which is, of course, not okay. We have conflicting utility functions here with customer availability and security, and we will always prioritize security. And we have learned our lessons, and we need to fine-tune that to avoid that it happens again. I don't see a need to invest money per se. This is something that should not happen. It did happen, and we need to simply improve, but it's not based on, you guys don't have enough servers, so you don't have enough network components, that's not the problem.

Okay. Fair enough. And when the activity was this high, as you highlight, can you talk a little bit about your customer groups? Was this driven by -- was it broad-based? Or was it very heavily focused on the most active traders on the platform?

I mean we're talking about hundreds of thousands of customers. This was very broad engagement from customers wanting to check in on their portfolios, get help from our decision tools and to trade. It was very broad-based activity. What we do see in the end of the quarter is that some heavy traders that have not been very active for quite a while. They have started to step in with quite some activity.

So if we then -- if it was very broad based, that would imply very positive for the income per trade if -- is that a fair assumption?

I mean anything that happens in Q2, we will revert to with our monthly statistics in 2 weeks. But in general, when volatility is high, we see a lot of activity, as I showed in one of my slides, and we have had a lot of volatility in the first 2 weeks of April.

And then my last question is that you highlight that you launched an annual foreign change on endowment insurance account for the Private Banking and Pro customers. Have you done any calculations how much of your FX income was affected if you weren't to introduce that in the quarter, so we get a sense of the impact here? And also, do you have any updates if this will also be launched to the other customer group on the platform?

Thanks, Patrik. First of all, we're super happy to have done this launch. It was sought after -- most active customers. We have seen a slow, but steady adoption to this new product. We have also seen customers starting to use it and then feel that, oh, it was actually quite cumbersome to manage several different currency accounts and actually switched back. So it is very good that we have this offering. It's very suitable for some customers. And for the most majority of the customers, they are willing to pay for us organizing with the FX.

I think it's too early to draw any conclusions. I think this is a product that will be adopted slowly but surely over time. All else equal, I would say that our estimate that we signaled in previous quarterly results is that if everything else would be stable, i.e., statically, we would earn less foreign exchange-related income with this product, but that we believe that there are dynamic effects that will make it positive for Avanza on -- overall, namely more activity from existing customers, new customers coming in. And also, I think it will have a positive effect on our NII since customers cannot manage their cash as efficiently with 3, 4, 5, 6 currencies as with one.

And the plans to roll it out in a larger extent?

There are no plans here and now. I mean, we just launched it, and we need to see the interest broader from the Private Banking and Pro segment. So it's always on the radars to come with new launches, but it's not something that we're working on here and now.

We are now going to proceed with our next question, and the questions come from the line of Jacob Hesslevik from SEB.

If we assume the last rate cut was on January 29 and Sweden is now done, just mechanically speaking, when will the headwind fade from the lower rates and NII trough? And then, of course, it's our job to forecast where volume and margin development goes from here.

As we said, we haven't seen the full effect from lower interest rates in total this quarter. But I think I agree with you that we -- all else equal, I think we have more or less seen the bottom of the NII going down. But as you said, it's dependent on a lot of moving parts in this puzzle where we have volume effects, we have how the spreads will develop and so on. But...

But I think the run rate we should be -- my view is we should be at the bottom, so to speak, assuming no more rate cuts. But then, as Anna says, we have other effects. I mean all risk assets are associated with higher risk premiums right now, which means that the spreads also on covered bonds is widening a little bit, which is then positive for us, so -- but all else equal, I think the run rate right now should be at the bottom.

Perfect. And then if we look at deposit volumes on your own balance sheet, it increased by SEK 2.8 billion in the quarter, while external decreased by SEK 2.5 billion. Is there any reason why the majority of the remaining SEK 40 billion will not migrate to your own platform going forward?

I would love that to happen, Jacob. But we saw an outflow of the external savings account with roughly SEK 2 billion during the quarter. We should, though, remember that 1 of our 7 banking partners actively wanted to get out of this funding and actually reduced the rates firstly to 1% and then to 0%, so basically forcing customers out of their products.

I am certain that some other of our banking partners will act in a different way, the ones that are very dependent on this funding. But we do hope that customers have chosen the external savings account through us because they like Avanza and they want to gather all their savings capital in one place.

Yes. I agree. I think most should see themselves as Avanza clients and not as a client of one of the external banks. But I mean, just taking the margin difference also into consideration, you don't even need 50% of the external deposit to see your total income growing when you shut down the external deposit platform, right?

I mean, Jacob, the driver for this is basically that this product has passed its due date given the new views from the Swedish FSA. So we need to be on the customer side here, and we need to be -- also manage the 7 banking partners who, for some of them, are very dependent on this funding. So we need to do this in an orderly way. We hope that as many of these customers as possible will continue to bank with us and only with us, but it's very early to draw any conclusions, I think, because we haven't -- we're just in the early phase, Jacob.

Yes, of course. But I mean if you have earned 5 to 15 bps on the external deposit platform and you put it on your own savings platform, it's 50 bps margin to the Riksbank's policy rate. And if you use it for lending or margin lending, it should be even higher margin, I guess. And if it ends up at the ISK accounts, it should be 225 bps margin. So I guess you don't even need the full volumes in order to see your income starting to grow here going forward.

That is correct. That is absolutely correct.

We are now going to proceed with our next question, and the questions come from the line of Nicolas McBeath from DNB.

So first question on net inflow. So I was a bit surprised to see no real growth in net savings in Q1 year-on-year despite the high disposable income, as you, Gustaf, mentioned also in the CEO comments. So I was wondering here if you noticed any higher outflows to new or long-term competitors that account for lower net savings in the quarter? And then if you could also comment on the outlook that you see for positive growth in net inflows for the remainder of the year?

We haven't seen any indications of losing volumes to competitors. When just speculating, and this is purely speculating, but 2024 was a very strong year with a lot of capital gains. And if you want to avoid the fairly high interest rate towards the tax authorities, you need to pay in your tax during February. So maybe that has affected the net savings in the Swedish market in general.

When it comes to forward-looking views, I am positive in the long term, as I tried to stress in the report. Then how customers will react with the uncertainty with these trade wars and so on and so forth, I don't know. I think on the one hand, it should increase the need to save for more difficult times or uncertain times. On the other hand, too much uncertainty may make customers not moving their funds from their salary account with one of the big banks to us because they simply are not in the mood of savings, they are worried about other things. But I think that remains to be seen.

All right. And then a couple of detailed questions on the -- related to the other income line, which was quite elevated in the quarter. So first of all, on Avanza markets, could you comment on the stickiness of these revenues, which reached a new record high level in Q1? And please remind us of how much of these revenues that are transaction related versus how much are recurring.

And then secondly, related to Corporate Finance, you're right that it was a good quarter for IPO activity. If you could please comment on the pipeline that you see for the rest of the year for the Corporate Finance revenue line, please?

If I start with Corporate Finance and then hand over to Anna for the other questions, I mean, the IPO window was clearly open in Q1. We were participating in 4 IPOs. I mean, right now, I don't think any company is willing to try -- test the markets by going public. So right now, I would say it's very calm. How the situation will be in a month, I don't know, it could be very different.

Yes. And having a -- when it comes to Avanza's markets, we can see that it's very much correlated with the overall activity. But going forward, we are gaining both the fixed fee and some variable income from that part. And whether it's sustainable or not, it's really hard to see, but we have seen an increased interest in the Avanza market products over the years.

I mean the only real recurrent part of other income isn't that the securities lending program essentially. I mean the other ones are transaction related in one shape or form or...

Yes. We also have some distribution fees, of course, on the...

Yes. True. So all the distribution fees are very recurrent also, that's true. Sorry.

Yes. So that was my question actually. How much of the Avanza market's revenues are from the distribution fee versus how much is brokerage?

It's dependent on each trade. So we won't disclose anything on that. So it's dependent on...

We are now going to proceed with our next question, and the questions come from the line of Martin Ekstedt from SHB.

First one, so Anna mentioned this in passing around the index fund, but I wanted to come back to it because the share of index funds actually decreased by 0.2% quarter-on-quarter, which is, I believe, the first time this has happened at least as far back as I can recall. So I just wanted to check, is this a trend break or does it have some quarter-specific explanations of a temporary nature?

That's a good question. We saw that our customers were like divesting in global index funds and as well as U.S. funds. But it's hard to see whether it's a sustainable trend or if it's going to be there for -- going forward.

I think Q1 was a very special fund quarter if I look at the whole market. I mean, what did we see? We saw it was a weak fund quarter in general when it comes to flow. And where we saw flows were into bond funds, so corporate bond and governmental bond funds and also to short money market funds. And our customers are not very fixed income focused. So I think that this was more institutional flows. So it was a difficult fund quarter. I wouldn't extrapolate that into the future. I think it was a little bit a one-off given all the uncertainty.

And typically, fund exposure is from our -- typically from our smaller customers who maybe react a little bit more emotional than our bigger customers far more equity-focused. So, for example, since Donald Trump's famous speech last -- was it 2 weeks ago on a Wednesday evening, when he held up his trade with each country? We have seen our securities customers net buying, but our fund customers net selling. So there is a bit of a difference here.

Okay. Understood. And then second question, if I may, following up on Nicolas' question, I wanted to stay a bit in the other income line. So net result of financial transactions, it's not a large line item in the greater scheme of things. But it's generally close to 0, it swung to negative SEK 12 million in this quarter. So could you just explain to us the underlying dynamics of this? And bearing in mind it was -- I believe, during the pandemic, it was for 1 quarter positive SEK 60-plus million or so. So it can produce larger swings as well, and Q2 seems to start with quite some volatility. So I just wanted to check in front of Q2 perhaps what we should expect there.

You mentioned the OCI or...

I meant the one in other income called net results of financial transactions. It's minus SEK 12 million.

Okay.

Could we -- Martin, could we pause that question? And we will figure out during the call and revert to you later during this call.

Yes, sure. No problem. So can I have another second question? Just so if you could give us a quick update on the process to locate the new home market outside of Sweden? Have you narrowed down the candidates? Or is there anything you can give us on that?

Yes. We have narrowed it down. We have a team in place, whose target is to help us with that step. We will not disclose this market yet. It's clearly on our radar. But to be honest, we have a lot to do in Sweden right now. And I think we could not go abroad organically now without taking down our ambitions in Sweden, which we do not want to do. So we will go abroad when the timing is right, and that is not -- it's not here and now.

We are now going to proceed with our next question, and the questions come from the line of Markus Sandgren from Kepler Cheuvreux.

Congrats to a good result. I just had 2 questions regarding, one is pricing and one is deposit inflow. So starting with pricing, it seems like -- I mean, the average transaction price on commission is up 15% during the last 2 quarters. And that's driven, I guess, by this high trading activity. But what do you expect when the activity fades, as I guess it will do -- I mean, if not later in this year, maybe next year. But should we expect pricing to go back down to where it was before? Or are there any effects that you expect to remain?

On the -- so you're after the margin side on the trading side or...

Yes, exactly.

I would say it's always a mix effect depending on the size of the trades, which markets they are trading on or which list they are trading on. So it would always be a shift between the quarters depending on the interest where our clients want to invest in. So it's really hard to have a strong view on that because it would also be -- go up and down.

But when we have a risk on, Anna, we get a little bit more ETP activity. And with more risk on, we typically get a little bit more foreign trading. So all else equal, I would say, more risk on is slightly higher margin than risk offer. Would you agree, Anna?

But it also depends on -- because last year, we saw that people were doing quite small trades, and then, we're paying like the minimum brokerage fee, implying that the -- or the margins went up. So it's...

Yes. It's a customer segment effect as well.

Yes. Got you. And then on fees, on funds, it seems like a couple of years back, they were at 35 bps, and then they went down to 25, and now they've been stable for quite a while. Is that -- do you expect that to remain? Or is there the trend of falling fees? Is that passed and it has leveled off now?

We don't see falling fees per se. We see a rebalancing from our customers into lower-priced funds. And there, we lead the market. So I would say we have done the majority of the shift from active to passive. I don't think we're 100% there yet. I think our customers will increase the share of index funds a little bit more. But I think the market has a long way to go still in Sweden.

Okay. Great. And then lastly on deposits, I mean, I agree with Jacob and everyone else about the -- I also believe that you're going to get a very strong deposit inflow. Have you been thinking anything about -- or I mean, not thinking about planning anything for what to do with the deposits? Will they -- will you have roughly the same mix of lending and excess liquidity? Or will you try to increase your lending substantially in any segment?

I think it's fair to assume that lending as a percentage of the total deposit base should remain roughly the same. So if we get more deposits, we're willing to use a larger share of our asset side of the balance sheet locked in for a longer period of time, which you do for -- in particular, when we lend out mortgage.

We are now going to proceed with our next question, and the questions come from the line of Michael Macnaughton from UBS.

And maybe just the first one, just trying to gauge the impact of some of the recent market declines, is there anything you can share on how much of the brokerage income is generated on a basis point basis versus as a -- on the kind of the minimum SEK amount? Obviously, I can imagine it's quite dynamic. But anything you can share there just to help understand the actual impact of the market decline, could be useful.

Unfortunately, not. I don't have that number in my head, and Anna is also shaking her hand, so sorry.

No worries. Okay. And then maybe just a follow-up on the deposits. Obviously, as others have alluded to, the increase in internal deposit has been quite strong in the quarter outside of savings accounts. Just in the transition from external to internal, is there a transition period where people hold that money in cash before then, maybe using that to put money into your own savings accounts or into invested assets? Is there kind of that in between period that could explain some near-term pickup in the internal cash deposits? Or -- just trying to see if there's a dynamic that could play out as the transition goes forward.

No. I mean, technically, if a customer wants to move his or her funds from external savings account, he will then move it into an account with Avanza. And first, thereafter, do something with it to buy risky assets or -- yes. So there's no interim phase.

And also thanks a lot to Sofia and Anna. Good luck for the future.

Thank you.

We are now going to proceed with our next question, and the questions come from the line of Enrico Bolzoni from JPMorgan.

Going back to external savings and the internalization of some of those, do you have any insight on whether the increase you saw over the quarter in internal deposits and the outflows from external were actually connected? By that, I mean was it -- were it actually the same clients that were reducing their external through third-party banks and putting more on internal or they were unrelated, so different clients just simply taking liquidity out on one end and putting it on the other hand? So I'm just trying to understand if that switch is actually already happening.

And related to that, I also wanted to ask, if I think about the -- where this comes from, which was triggered by the Swedish regulator, that basically wants to protect a bank in the case of a liquidity event because the liquidity source through trading platform is considered to be not very sticky. So I'm just thinking it would be a bit counterintuitive to end up in a scenario where actually in light of the new regulation what these third-party banks will experience is a massive liquidity outflows because this liquidity will suddenly be internalized by their trading platforms. So can you just give any comment? Do you have any view on what the regulatory approach will be as you go through this process of closing down the external saving account offering? So that's really my only question.

So Nicolas (sic)[ Enrico ] on your last question, I can only nod my head and say that there is, of course, a concern from the Swedish FSA that with their new rules, so to speak, from September, which they made to protect the liquidity side of banks actually may have created some funding issues for the smaller consumer credit banks, so -- of course, they are following this closely and that we need to relate to.

On your first question, we clearly saw -- we saw some outflow of roughly SEK 2 billion from the external savings account. We saw an increase in our own savings account. I think the drivers here are twofold. One is our customers derisk, so they went in -- more into cash. They sold off risk assets and went into savings accounts. But also one of our partner bank actually reduced the rates so much that they kind of forced out the assets from their external savings account product. And I think that also contributed to increased volumes on our savings account.

And have you seen whether that liquidity that's left with third-party bank actually came through on Avanza or you don't have the intel to be sure that that's what happened? Just trying to think if it's the same client, so they took the money out there because they lower the yield, and they straight away put it back on Avanza.

I don't have data, but I would assume the latter. I think if you go out the savings -- the external savings account, you move it to a savings account with us. Now we just need to make sure that we have an attractive platform enough that customers will want to continue to have all their savings with us. If they really want to hunt for yield, it's hard for us to compete with this consumer credit banks who have very high rates on their credit side, and hence, can pay up on the funding side.

We are now going to proceed with our next question, and the next questions come from the line of Nicolas Vaysselier from BNP Paribas Exane.

So I just have 2 questions on the margin side again. On FX revenues, by my calculation, the FX revenue margin went up a little bit this quarter. I was wondering if you could elaborate on what might have driven this.

And on the trading side, so ex the FX, maybe just asking that question in a slightly different way, but if we set aside any mix effects from country mix and client segments, you are not seeing any structural increase in margins. Am I correct?

I mean, on the FX side, I think you can simplify it to say that regular customers pay a higher fee compared to our Private Banking and Pro customers who pay a lower fee. So if we get more activity on our bigger customers than the FX margin, if you measure that, it would be lower compared to if you have high activity among our ordinary customers. I don't think we can have any other kind of margin effects on the FX.

It could also be depending on whether they have sold or bought funds that are denominated in other than SEK denominated funds.

Okay. And on the trading side, yes, the increase in fees that you've seen over -- well, now the last 18 months is entirely driven by mix?

Can you say again, the margin?

On the -- on your brokerage income revenues, like over the last 18 months, is it fair to say that the increase in margins has been entirely driven by the mix of trading, so, i.e., clients trading more cross borders, perhaps more retail participation over the last 18 months rather than it being -- yes, okay, rather than a structural change in the fee schedule or pricing?

No. Unfortunately, not.

Okay. I just wanted to be clear. And just maybe a last question, more on the medium-term picture, so on Private Banking last year at our strategic update, you highlighted willingness to tackle more the Do It For Me or Help Me Do It segment as you framed it. Could you share with us a bit more concrete examples of what you would like to do in terms of product development for getting more traction and share of wallet with those clients?

Yes. So we announced the acquisition of a fintech company called Sigmastocks, and we sent in an application to be approved as an owner of this regulated business to Swedish FSA early in the quarter, and we're still waiting for the approval. When we get the approval, we will formally close the transaction and then own Sigmastocks. But, of course, we are head starting and already planning a lot already now. And that will be the base -- their technology will be the base to offer our customers, I think, a revolutionary discretionary mandate product that I believe a lot in.

There is quite some work for us to do to integrate it with the user experience and so on and so forth. But that's the most concrete thing that we're doing to advance in the Do It for Me segment. In the latter phase, that's Phase 2, there is a big need for portfolio solutions also without -- outside the Private Banking segment, and that is something that we will plan for in the second phase. But the first phase now is to develop this product for the Private Banking segment.

We are now going to proceed with our next question, and the next questions come from the line of Ermin Keric from Carnegie.

So maybe first, if we go back to Savings Account+, you said that you don't expect to be done with it until H1 '26 with the discontinuation of it. But do you have any more partners that are expected to be discontinued in the coming quarters or so?

We have quite long notice periods in the agreement with our 7 banking partners. And that is, of course, done so in the past to protect us and protect them to make sure that the customers -- the end customers have a good experience. So legally, we will have this agreement for quite a time.

And then the question is how fast will our customers act on the gradual news that we will discontinue this product. But from an operational efficiency point of view, we can use this team, the development team that now manages the external savings product fully to other things first in, say, a year.

Oka. That's helpful. Then generally, just we saw quite a big step-up in the customer intake you had during Q1. Was that just driven by the markets have been quite strong for a while going into Q1? Or do you see anything, any pockets where you've been able to kind of increase your reach that's driving it?

I was also positively surprised by the customer intake. One speculation that I have is that the tax-free savings on ISK and on the pension wrapper that was introduced 1st of January, may have triggered suites that did not say before to actually step in. I mean, that really took down the hurdles to get into the savings market.

On the other hand, we don't see that the new customers are smaller than new customers in previous quarters. So that maybe speaks against my speculation, but that's the only new event that we saw in January.

Excellent. And then last question. I don't know if you dismissed it before talking anything about Q2 already, but could you tell us anything about kind of the general behavior of the customers? Do you see any monthly plans being halted given the turbulence or anything like that on the net flow side?

I mean we started to see turbulence already in the latter part of Q1. And I think we saw a sound investment behavior by our customers, where they took down the risk a little bit. I have no data showing that the monthly savings have been reduced, but that's something that we, of course, will monitor going forward if we have uncertainty around us.

We are now going to proceed with our last question, and the questions come from the line of Ian White from Autonomous Research.

3 from my side, please. First of all, can you say a bit more about the cloud agreement you've signed with Google? For how many years does that agreement run for example? And what's the pricing structure that's been agreed there, please? That's question one.

Secondly, on the third-party deposits, if you internalize all of the third-party deposits, can you just confirm for us what portion of the combined balance would sit in excess of customers insured allowance, please? That's question two.

And just finally, on Private Banking, there have been a couple of quarters of strong inflow in the last couple of quarters, can you just describe a little bit what you're seeing there and how we should interpret the recent performance, please?

If we start with the middle one, I didn't quite understand it, but on the external savings account, if we would -- if customers would choose to move all SEK 40 billion from external savings account into our balance sheet, that would be very favorable for us, but it would also draw some more capital. And in that case, we will probably consider to use an AT1 to strengthen up the balance sheet.

On the cloud side, we have been concerned to have a flexible agreement from our side. Apart from that, it's pretty standard in terms of pricing apart from the fact that Avanza is a very attractive partner for a cloud provider as Google in Sweden.

On the last question on Private Banking, I think we're progressing well. A lot of the development we're doing is towards the more trading intense and larger customers in the quarter with the FX accounts on endowment wrapper is one concrete example. We're proceeding with the Sigmastocks acquisition, and we are ramping up the marketing to make sure that our brand is also connected to private banking, which has historically not been the case to a large enough extent.

Maybe if I can just clarify on a couple of them, in terms of the internalization of deposits, my question is, basically, what portion of the total combined balance, assuming you internalized everything, would sit outside of the -- I think it's just over SEK 1 million the Swedish FSA insurers per bank account, will customers then have money that is uninsured, deposits basically, if they internalize everything? And what is the amount that is uninsured? That's essentially my question.

And just on the Google agreement, when you say it's standard, what exactly do you mean? Is this an agreement that will flex with activity? Is it more subscription-based? Are there embedded sort of price increments within the terms of the agreement? Can you perhaps just say a bit more about that, please?

It's much more as with all cloud agreements irrespective of which of the 3 big providers you would choose. It's much more activity based than fixed, as we have it when we run our own data centers. I mean, then we buy our servers, we buy our network components, et cetera, et cetera. And that's basically fixed costs, whereas now we need to monitor and steer our development teams so that they build the applications in the cloud in an intelligent way, also from a fee perspective towards the cloud provider.

When it comes to the external savings account, so yes, there has been a value add for our customers that if you have, let's say, SEK 7 million, you can spread them to the 7 providers with SEK 1 million each and be fully covered by the deposit guaranteed by the Swedish state. That is not possible when we discontinue with this product. The volumes associated with, let's call it, the deposit guarantee arbitrage, is not significant of the SEK 40 billion.

We have no further questions at this time. I will now hand back to you for any closing remarks.

Many thanks for listening in, and have a great day.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a good day.