Preliminary Financial Statement 2016

2017-01-19 08:15

Silent period, 29 December - 18 January, 2017

A webcast presentation will be held at 10:00 am CET on the reporting day, and can be followed here.

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Presentations

Press release

Preliminary Financial Statement 2016

  • Customer growth remained strong in the fourth quarter. For the year in total, the number of new customers was 103,000, corresponding to a growth rate of 22 per cent. As of 2017, the target is raised to reach 1 million customers by 2020
  • Net inflow in the quarter was SEK 6,210 million, an increase of 7 per cent compared to the fourth quarter of 2015. For the full year, net inflow increased by 5 per cent. The net inflow target from 2017 has been adjusted upward to a market share of at least 9 per cent (previously 7 per cent) of the net inflow to the Swedish savings market
  • Operating income decreased by 2 per cent compared to the fourth quarter of 2015, mainly due to the record-high brokerage income in 2015. Compared to the third quarter, income rose by 12 per cent
  • Operating expenses in the fourth quarter increased by 16 per cent compared to the fourth quarter of 2015, mainly due to an increased number of employees in compliance and IT. Compared to the third quarter, expenses were 33 per cent higher, mainly due to seasonally low personnel costs in the third quarter
  • Net profit for the quarter was SEK 101 million, a decrease of 15 per cent compared to the previous year, mainly due to higher expenses. Expenses were also higher compared to the third quarter and profit decreased by 4 per cent
  • The Board of Directors proposes a dividend of SEK 10.50 (SEK10.50) per share
  • No other significant events have occurred after the end of the reporting period
Q4
2016
Q3
2016
Change% Q4
2015
Change% Jan–Dec 2016 Jan–Dec 2015 Change%
Operating income, SEK m 247 220 12 252 –2 919 904 2
Operating expenses, SEK m –130 –98 33 –112 16 –453 –420 8
Operating profit, SEK m 117 122 –4 140 –17 465 485 –4
Net profit, SEK m 101 105 –4 118 –15 399 415 –4
Earnings per share, SEK 3.39 3.53 –4 4.03 –16 13.45 14.23 –5
Operating margin, % 47 55 –8 56 –8 51 54 –3
Net inflow, SEK m 6,210 5,920 5 5,790 7 26,500 25,200 5
No. new customers (net) 29,300 24,500 20 23,700 24 103,000 96,400 7
Savings capital at the end of the period, SEK m 231,000 222,900 4 191,600 21 231,000 191,600 21

Quarterly highlights

  • Avanza’s new CEO Johan Prom assumed his position on 7 November 2016
  • Avanza received the Swedish Quality Index’s award for Sweden’s most satisfied customers in the savings category for the seventh consecutive year
  • As a result of Nasdaq’s annual review of stock market values, it was announced that the Avanza share will be traded on the exchange’s large cap list as of 2 January 2017. The list comprises companies with a market capitalisation of over EUR 1 billion 
  • Avanza Play, a new decision-making support tool with inspiring and educational videos for savings and investments, was launched

CEO comment

A unique culture of innovation with strong dedication

2016 was an eventful and exciting year in geopolitics, on the stock market and for Avanza, but also for me personally, having had the privilege to take over as CEO in November. These last months have been tremendous. My positive impression of Avanza as a company has strenghened, where I am inspired and pleased by the engagement and willingness to create change among all our employees. Our innovativeness and dedication are something we really have to care about as we grow and become larger. Moving to the Nasdaq OMX Large Cap list as of January – which is a fantastic confirmation of what we are doing – is not going to affect our flexibility and agility.

We accomplished a lot during the year to make things better for our customers. We made over 2,500 updates and improvements to our website, were first to offer free stock trading on the Stockholm Stock Exchange, expanded the functionality of our mobile apps and worked hard to strengthen the user experience. As a result, more equity transactions on the Stockholm Stock Exchange were executed via Avanza than through all the four large banks combined. Nearly 3,000 new companies chose Avanza in 2016 for their occupational pensions, and we were the fourth largest in capital transfers in the Swedish life insurance market. During the fourth quarter, we also launched Avanza Play, our new decision-making support with inspiring and educational videos for savings and investments.

Strong performance in our targeted areas in 2016

Taken together, this helped us in the fourth quarter – and for the seventh consecutive year – to receive the award for Sweden’s most satisfied savings customers, according to the Swedish Quality Index. According to YouGov’s latest ranking, we were also the most recommended Swedish brand in Sweden. We have outstanding ambassadors internally as well and surpassed by a wide margin our employee satisfaction target of an eNPS score of 51, compared with averages for the banking and IT industries of 9 and 44, respectively.

In terms of hard target figures, we added 103,000 new customers in 2016, well exceeding the target. As many as 29,300 joined in the fourth quarter. It is also gratifying that so few are leaving us, only 1.2 per cent, which indicates that customers basically stay with Avanza for a lifetime. Our market share of the net inflow in the last 12-month period was 9.9 per cent, compared to a target of at least 7 per cent. This produced a total net inflow of SEK 26.5 billion – a record year in other words – with SEK 6.2 billion coming in the last quarter.

Net profit was pressured by lower income due to the interest rate environment and turbulent market conditions, which affected both net interest income and brokerage income. Because of this, in 2016 we did not reach our long-term target that income growth will exceed growth in costs. If we look at equity trading, however, the number of commission-generating customers and number of trades were record high for 2016 as a whole as well as the fourth quarter. What did affect brokerage income year on year was instead the lower trading volumes. Equity trading picked up in the fourth quarter after a slightly weaker third quarter and we remain the largest Swedish bank on the Stockholm Stock Exchange. This resulted in strong brokerage commission income, the third best for a single quarter, but not as strong as the fourth quarter of 2015, when trading in a couple of trading intensive stocks was record high.

In November, we offered free stock trading in the US on Black Friday, resulting in a record-high number of transactions. We are seeing that interest in international stocks continue to rise, which together with international fund trading has strengthened currency-related income. Activity in corporate transactions was high, and we are seeing strong demand for our services and increased interest in our broad customer base from companies looking to diversify their ownership. Net interest income rose thanks a greater willingness among savers to take on risk as well as our attractive mortgage offers.

Timeless business model built on scalability, with a leading cost position

During the year, we managed to reduce the cost to savings capital ratio from 25 to 22 points and are nearing our ambition of getting below 20 points. This is the result of continuous refinements, adjustments and efficiency improvements. Operating expenses for the year rose by 8 per cent, on the low end of our forecast. Our guidance for 2017 of an increase of 15–20 per cent remains firm as we accelerate our rate of innovation to fully take advantage of the opportunities we see right now in digitisation and new regulations. The operating margin was 51 per cent for the full year, in line with our aim of around 50 per cent. This would not be possible without a scalable business model and our leading cost position.

In light of the above and to ensure an adequate level for future capital requirements, the Board of Directors proposes a dividend of SEK 10.50 per share.

Strong potential for growth and continued focus on core business in 2017

Continuing to do the best for our customers, with cheaper, better and simpler offers, tops our to-do list again in 2017. This is why we continue to work on our mobile offer to satisfy and attract younger and broader target groups, fine-tune our tools and website content to retain our more active traders, and scale up, increase efficiencies and improve our internal processes and systems by being even more digital. We expect growth to remain strong and are stretching our target to reach 1 million customers by 2020, at the same time that we raise the target for our share of net inflow to the savings market to at least 9 per cent.

Stockholm, 19 January 2017

Johan Prom, CEO Avanza

This information is information that Avanza Bank Holding AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out below, at 08.15 (CET) on 19 January 2017.

This Preliminary Financial Statement is published in Swedish and English. In the event of any difference between the English version and the Swedish original, the Swedish version shall prevail.