Comments from the CEO
Strong growth and unusually high trading activity during the summer
With new mobile trading services, the launch of a new digital decision support service for fund savings (the Portfolio Generator), reduced prices on foreign securities trading and the launch of Avanza Markets, we entered the summer with a more competitive customer offering than ever. The result was a net inflow of SEK 5 billion and a customer inflow of 20,400 new customers in the third quarter. The customer inflow corresponds to an increase of 59 per cent compared to the same period in the previous year.
Trading in the summer months is normally calmer, but a volatile stock market coupled with a growing customer base had an impact on our trading figures. In the third quarter, for the first time, Avanza was the largest Swedish bank on the Stockholm stock exchange in terms of turnover. August also brought a new trading record with 200,000 transactions in a single day. Total brokerage income increased by 5 per cent on the previous three-month period, which is unusual for a summer quarter.
Income pressure due to turbulent market and falling repo rate
The third quarter has been a period of an unstable and falling stock market with further declining market interest rates following the Greek crisis and broad sell-offs in the Chinese stock markets. As a result, savings capital at Avanza has remained relatively stable despite a high net inflow. Savers’ search for safe investments is noticeable in decreasing income from fund commissions as investors shift their savings away from active investments awaiting a more stable market situation. The current market environment has also been a factor behind an unusually slow start to the autumn in Corporate Finance business, where many companies are postponing their IPO´s waiting for clear sky. A continued decline in the repo rate during the period has also put further pressure on our interest income. Consequently, we did not reach up to the record earnings of the previous quarter, in spite of increased brokerage income.. Still,the operating profit was up by 54 per cent compared with the same period in 2014.
Highest level of trust among Swedish banks
Although we have recently been operating in a volatile environment, where falling market interest rates and rapid changes in customers’ investment decisions have had a short-term impact on our income, I feel very confident in our long-term growth prospects. The key factor for long-term growth in operating income is that we continue to provide tangible customer value, capture market share from the major banks and gain the confidence of new customers. That is why it is particularly satisfying to note that we achieved a new top score in our regular Net Promoter Score customer satisfaction survey in the third quarter, a survey showing customer recommendation rate. The finance magazine Privata Affärer’s survey in the summer also showed that Avanza enjoys the highest level of trust among all Swedish banks. That is a trust that we will do our very best to continue to be worthy of.
Stockholm, 20 October 2015
Martin Tivéus, CEO Avanza