Company presentation
December 2020
Sweden's leading platform for savings and investments
• Founded in 1999
• Most satisfied savings customers in Sweden for 10 consecutive years
• 1,247,100 customers
• SEK 546 bn in savings capital
• 502 employees
• 5.4% market share of the Swedish savings market
Customer satisfaction and employee engagement create shareholder value over time
Long-term targets
● Customer satisfaction & Employee engagement
● Growth in customers and savings capital
● Scalability and cost efficiencies (top modern
IT platform)
Growth potential
● Occupational pension business
● Focus on broader customer groups
● Strong potential in existing customer base
Customer proposition
● Cheaper, better and simpler offering
● High user experience
● Broad range of product
● Information, education and decision-making tools
Revenues and costs
● More stable revenues through funds and mortgages
● High scalability
● Cost control vital
High customer satisfaction
Creating a better future for millions of people
Customer promise - more to you, less to the bank
To give our customers a better return on their savings than any other bank or pension company, due to low fees, better tools and education
Growth strategy built on scale
1. Growth in savings capital
• Customer satisfaction
• Innovation and user experience
• Customer growth
• Net inflow
2. Revenues/savings capital
• No fixed fees
• Revenues mainly based on transaction fees, net interest income (NII) and distribution fees from mutual funds
3.
• NII and transaction revenues tend to be inversely correlated
Costs/savings capital
• Mainly fixed costs, tight cost control
• High scalability
• Long-term aim to reach a cost/savings capital of 16 bps
Leading cost position
160
Basispoints
140
120
100 80 60 40
20
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Savings capitalIncome/savings capitalCost/savings capital
In 2018, cost/savings capital exclude the Swedish Financial Supervisory Authority's administrative fee of SEK 35 million on Försäkringsaktiebolaget Avanza Pension.
Savingscapital,SEKm
9M
A history of growth built on innovation
In-house development by 24 teams
Customer journey
Products
Business platform
Technical platform
Launches to make Avanza more relevant for a broader audience
Customer value with real open banking
Largest Swedish participant in stock market transactions on Nasdaq OMX and First North
Transactions
Turnover
25,0
Marketshare,%
20,0
15,0
10,0
5,0
0,0
0,0
10,0
9,0
Marketshare,%
8,0
7,0
6,0
5,0
4,0
3,0
2,0
1,0
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Q1-17
Q2-17
Q3-17
Q4-17
Q1-18
Q2-18
Q3-18
Q4-18
Q1-19
Q2-19
Q3-19
Q4-19
Q1-20
Q2-20
Q3-20
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Q1-17
Q2-17
Q3-17
Q4-17
Q1-18
Q2-18
Q3-18
Q4-18
Q1-19
Q2-19
Q3-19
Q4-19
Q1-20
Q2-20
Q3-20
• Market share of 19.9% in terms of transactions and 9.6% in turnover in Q3 2020
Customer growth drives net inflow
100 000
25 000
9M 2020:
Newcustomers
90 000
80 000
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
Netinflow,SEKm
Customer inflowNet inflow
Age distribution among new customers
4
3,5
3
Share,%
2,5
2
1,5
1
0,5
0
201920122007
0
3
6
9
12
15
18
21
24
27
30
33
36
39
42
45
48
51
54
57
60
63
66
69
72
75
78
81
84
87
90
93
96
99
Age
Strong long-term potential in existing customer base
Customers,%
4,5% 4,0% 3,5% 3,0% 2,5% 2,0% 1,5% 1,0%
0,5%
0,0%
0
3
6
9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78
1,40 1,20 1,00 0,80 0,60 0,40 0,20 0,00
Age
Savings capital by ageTotal customer baseAge distribution among new customers
Market penetration
• Total share of Swedish savings market: 5.4% as of Q3 2020
• Total share of Swedish population:
9.1% as of 1 November 2019
Savingscapital,SEKm
• ages 20-29: 15.3%
• ages 30-39: 17.8%
• ages 40-49: 13.3%
• Highest penetration in urban areas. Stockholm region, snapshot
(Women/Men) as of 1 November 2019:
• ages 20-29: 15%/25%
• ages 30-39: 19%/29%
• ages 40-49: 14%/23%
• ages 50-59: 12%/17%
• ages 60-69: 9%/13%
Savings capital grow by number of years at Avanza
600 000
500 000
Savingscapital,SEK
400 000
300 000
200 000
100 000
0 1 month 1 year 2 years 3 years 4 years 5 years 6 years 7 years 8 years 9 years 10 years
Average savings capital per customer (excluding customers with > SEK 10m in savings capital)
Significant growth potential with a 5.4% market share of the Swedish savings market
The white circles refer to Avanza's share of each savings area.
• The Swedish savings market SEK 9,547 bn
• Annual market growth of on average 9% last ten years
• An estimated 80% of the Swedish population saves in funds and 11% own shares
* An estimated 50% of the market is addressable for Avanza when collectively agreed pensions are excluded.
Market share of 19.4% rolling 12M of net savings on the Swedish savings market
Long-term target by 2025 of at least 15%
Growth potential in broader customer groups
Do it for me
Help me do it
Do it myself
Strategy for more recurring income
60%
Shareoftotalincome
50%
40%
30%
20%
10%
0%
2012
2013
2014
2015
2016
2017
2018
2019
Net brokerage incomeNet interest incomeFund commissions
Other commission income
Strong growth in occupational pension
Savingscapital,SEK
Growth drivers in the Swedish savings market
• Digitisation and open banking create new needs and customer behaviours
• More reasons for customers to take responsibility for their own savings
• Increased focus on sustainable investments
• Our focus is on attracting new and broader customer groups as well as keeping current customers happy
• Product innovation and evolution
• User experience increasingly important
• Price remains important
As always… key success factors for Avanza
• Customer satisfaction - keep the No 1 position
• Continuous growth in both number of customers and volume
• Create possibilities for continued strong innovation
Employee engagement key
Appendix
Operations 24-26
Financials 27-35
Balance sheet data 36-38
Contact details 39
Performance on targets 2019
Long-term targets | Outcome 2019 | Comments |
Sweden's most satisfied savers according to Swedish Quality Index | √ | Achieved in 2019 for the tenth consecutive year |
Engaged employees, eNPS of at least 45 | 54 | Very strong ambassadorship |
Market share of at least 10% R 12M of the total net inflow to the Swedish savings market | 15.6% | |
1 million customers 2020 | 976,400 | Target achieved in January 2020 |
Cost growth should not outpace income growth | √ | Income growth 13,8% Cost growth 10,6%, excluding fee and one-off write down |
Dividend of at least 70% of net profit for the year | 79% | Dividend SEK 2.30 per share |
New long-term targets by 2025
The new targets are still focused on customer satisfaction and employee engagement, but also on growth in savings capital. Targets connected to sustainability are added
Satisfied customers:
• Sweden's most satisfied savers according to SQI's (Swedish Quality Index) annual award
Engaged employees:
• eNPS (Employee Net Promoter Score) of at least 45
Long-term value growth:
• Market share of at least 15 per cent of the total net inflow to the Swedish savings market 2025
• Market share of nearly 7 per cent of the Swedish savings market by the end of 2025
• Return on equity of 25-30 per cent
• Dividend of at least 70 per cent of the profit of the year
Sustainability:
• Increased share of capital in sustainable investments
• Increased share of customers who save in sustainable alternatives
• Be regarded as the leading sustainable brand and the natural choice for sustainable savings
• Increase the share of female to 50 per cent of new customers
• Organisation with parity between women and men
• Become climate positive
Customer inflow of 270,700 in 2020 (+114% Y/Y)
40 000
35 000
30 000
Numberofcustomers
25 000
20 000
15 000
10 000
5 000
0
Jan-14
Okt-20
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Apr-20
Jul-20
Customer inflow
Net inflow of SEK 69,900m in 2020 (+131% Y/Y)
10 000
8 000
Netinflow,SEKm
6 000
4 000
2 000
0
-2 000
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Apr-20
Jul-20
Okt-20
Net inflow
* Net outflow in November 2017 is explained by a few withdrawals amounting to SEK 2,200m, connected to customers' M&A activities.
Financial overview
Q3 20 | Q2 20 | ∆ % | Q3 19 | ∆% | |
Operating income, SEK m | 575 | 526 | 9 | 313 | 84 |
Operating expenses, SEK m | -177 | -185 | -4 | -148 | 19 |
Operating profit, SEK m | 396 | 333 | 19 | 163 | 144 |
Operating margin, % | 69 | 63 | 6 | 52 | 17 |
Income to savings capital ratio, % | 0.48 | 0.52 | -0.04 | 0.34 | 0.14 |
Costs to savings capital ratio, % | 0.15 | 0.18 | -0.03 | 0.16 | -0.01 |
ROE, % | 55 | 56 | -1 | 33 | 23 |
EPS, SEK | 2.15 | 1.83 | 18 | 0.91 | 137 |
Relationship between long-term savings capital growth and revenue growth
700
600
500
Revenue,SEKm
400
300
200
100
0
Savings capital Q3 2 | 020: SEK 514 bn (+36 | % Y/Y) | Q3 2020 |
2012-Q3 2020 | |||
Corel=0.88 | |||
0
100 000
200 000
300 000
400 000
500 000
600 000
Savings capital, SEK m 29
Long-term revenue development
1 400
Revenue,SEKm
1 200
1 000
800
600
400
200
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
5,0
4,0
3,0
2,0
1,0
Averagereporate,%
0,0
-1,0
Net interest incomeTotal income
Net brokerage incomeOther income
Income from mutual fundsAverage repo rate
Historical correlation between low market rates and growth
25000
Netinflow,SEKm
20000
15000
10000
5000
0
Q1-03
Q3-03
Q1-04
Q3-04
Q1-05
Q3-05
Q1-06
Q3-06
Q1-07
Q3-07
Q1-08
Q3-08
Q1-09
Q3-09
Q1-10
Q3-10
Q1-11
Q3-11
Q1-12
Q3-12
Q1-13
Q3-13
Q1-14
Q3-14
Q1-15
Net inflowRepo rate
5,0
4,0
• Historical negative repo rate between 2015 and 2019. Repo rate raised to 0.00% on 8 January 2020
3,0
2,0
Reporate,%
• Low repo rate creates a good growth environment but puts pressure on NII (100 bps repo rate change affects NII by around SEK 400 m at Q3-20 volumes)
1,0
0,0
-1,0
Q3-15
Q1-16
Q3-16
Q1-17
Q3-17
Q1-18
Q3-18
Q1-19
Q3-19
Q1-20
Q3-20
Revenue development
700
Revenue,SEKm
600
500
400
300
200
100
0
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20
Total income
Net interest incomeNet brokerage incomeOther commission incomeIncome from mutual funds
Income split 9M 2020
SEK m | % of income | % of specific savings capital | % of total savings capital | |
Shares, bonds, options (transactions) | 811 | 49 | 0.45 | 0.25 |
Mutual funds | 293 | 18 | 0.34 | 0.09 |
Net interest income | 241 | 15 | 0.42 | 0.07 |
Other** | 298 | 18 | 0.09 | |
Total | 1,643 | 100 | 0.51 | 0.51 |
* Based on deposits ** Corporate finance fees, foreign exchange, AZA Markets, subscription and advertising income, additional services
Cost development
200
Operatingexpenses,SEKm
180
160
140 120 100 80 60 40 20
0
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20
Total expensesNon-reccuring itemsPersonnelMarketingDepreciationOther expenses
Q4 2018 including the Swedish Financial Supervisory Authority's administrative fee of SEK 35 million on the subsidiary Försäkringsaktiebolaget Avanza Pension Q4 2019 including one-off write-down of SEK 8.3 million
Costs 9M 2020
SEK m | % of total costs | % of total income | |
Personnel | -334 | 62 | 20 |
IT | -60 | 11 | 4 |
External services | -24 | 4 | 1 |
Marketing & Sales | -17 | 3 | 1 |
Depreciation | -50 | 9 | 3 |
Other | -56 | 10 | 3 |
Total costs before credit losses | -541 | 100 | 33 |
Credit losses, net | -5 | ||
Profit/loss from participations in associated companies | -6 |
Operating margin of 69% in Q3 2020
450
Operatingprofit,SEKm
400 350 300 250 200 150 100 50 0
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20
100 90 80 70 60 50 40 30 20 10 0
Operatingmargin,%
Operating profitOperating margin
Operating profit in Q4 2018 is affected negatively by the Swedish Financial Supervisory Authority's administrative fee of SEK 35 million on the subsidiary Försäkringsaktiebolaget Avanza Pension.
Balance sheet, 30 September 2020
• Mainly self-financed through shareholders' equity and customer deposits
Comments
Assets
SEK m
Liabilities & equity
SEK m
Lending to credit institutions*
2,654
Deposits
44,421
Lending to the public
16,226
Liabilities in insurance operations
143,312
Bonds
25,631
Other liabilities
1,230
Assets in insurance operations
143,310
Subordinated liabilities
100
Other assets
3,857
Equity
2,616
Total assets
191,678
Total liabilities and equity
191,678
• Surplus-liquidity of SEK 29,806m invested in covered bonds, at the Riksbank and O/N (including SEK 1,521m deposits in client fund accounts)
* Incl. balances at central banks and treasury bills eligible for refinancing
Capital surplus for the Group
SEK m | 30 September 2020 |
Shareholders' equity | 2,616 |
Solvency capital | 1,585 |
Less non-distributable solvency capital | -304 |
Subordinated loan | 69 |
Additional value adjustments | -8 |
Intangible assets and deferred tax receivables | -75 |
Own funds before dividend adjustment | 3,882 |
Capital requirement Pillar 1 | -1,921 |
Buffer requirement | -197 |
Capital requirement Pillar 2 | -123 |
Capital requirement | 2,241 |
Capital surplus before dividend | 1,641 |
Capital surplus per share, SEK | 10.59 |
Total capital ratio (consolidated situation), % | 18.7 |
2020-12-02
Historical financial key data 2001 - Q3 2020
is available in Excel at:
avanza.se/keydata
sofia.svavar@avanza.se+46 8-409 420 17
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Disclaimer
Avanza Bank Holding AB published this content on 02 December 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 December 2020 08:32:04 UTC