| Q3 2016 |
Q2 2016 |
Change % |
Q3 2015 |
Change % |
Jan–Sep 2016 |
Jan–Sep 2015 |
Change % |
|
| Operating income, SEK m | 220 | 225 | –2 | 203 | 9 | 671 | 652 | 3 |
| Operating expenses, SEK m | –98 | –113 | –13 | –95 | 4 | –323 | –307 | 5 |
| Operating profit, SEK m | 122 | 111 | 10 | 108 | 13 | 348 | 345 | 1 |
| Net profit, SEK m | 105 | 94 | 12 | 94 | 13 | 298 | 297 | 0 |
| Earnings per share, SEK | 3.53 | 3.18 | 11 | 3.19 | 11 | 10.06 | 10.19 | –1 |
| Operating margin, % | 55 | 49 | 6 | 53 | 2 | 52 | 53 | –1 |
| Net inflow, SEK m | 5,920 | 9,430 | –37 | 5,010 | 18 | 20,300 | 19,400 | 5 |
| No. new customers (net) | 24,500 | 23,100 | 6 | 20,400 | 20 | 73,700 | 72,700 | 1 |
| Savings capital at the end of the period, SEK m | 222,900 | 199,200 | 12 | 170,700 | 31 | 222,900 | 170,700 | 31 |
Quarterly highlights
Comments of the CEO
Innovative product development an important part of our business model
Avanza began the summer with a strengthened customer offering. The mobile customer experience was improved by allowing direct deposits from other banks and the Private Banking offer was made more attractive through lower mortgage rates and a new price list. Equity trading for savers with a smaller savings capital was improved as well, through the introduction of Avanza Start. These efforts, coupled with our existing offering, paid off with a net inflow of SEK 5.9 billion and 24,500 new customers during the third quarter. This resulted in a higher profit than both the second quarter of this year and the third quarter of 2015 and underscores the strength of our business model and the importance of innovative product development.
Good customer activity and higher risk appetite
After Brexit pounded the stock market in late June, we saw a rebound in the third quarter, with the Stockholm Stock Exchange posting a 10 per cent gain. The number of Avanza customers who trade stocks stayed at record levels and impacted trading data. We consolidated our top position on the Stockholm Stock Exchange and First North with a share of transactions of over 15 per cent. Our customers were net buyers in the stock market, which is reflected in lower deposits and higher risk appetite. Margin lending as well as equity trading on foreign exchanges increased.
We were especially pleased with reaching a NPS of 70 during the quarter in our regular survey of customer satisfaction. The Net Promoter Score shows our customers’ recommendation rate. This is an extremely high result which we will continue to make the most of.
Increased profit and a strong cost position
Although lending increased during the quarter, negative interest rates continued to put pressure on net interest income. Brokerage income rose by 3 per cent during the quarter. Fund capital grew and savings gradually shifted more to equity and mixed funds, which strengthened commission income. The Portfolio Generator, Avanza’s first digital decision-making support tool for fund savings launched just over a year ago, continues to attract fund capital. Our customers have invested as much as SEK 1.3 billion in various funds through the Portfolio Generator, an increase of 30 per cent since 30 June. This encourage us to make further investment in digital decision-making support. Avanza Markets continues to develop strongly, with a market share of 67 per cent during the quarter, and now accounts for a growing share of other income. Corporate transactions were seasonally low on the other hand, but are expected to increase later in the year if the investment climate remains.
Expenses are seasonally lower in the third quarter. The previously announced rate of an increase of 8–10 per cent for the full-year 2016 remains unchanged, which means that costs for the forth quarter will increase around 20 per cent compared to the same period 2015.
Avanza’s business model is based on scalability in order to always give our customers a less expensive, better and easier offering than any other bank – more for the customer and less for the bank. This is what is driving customer inflows and growth in savings capital, which in turn generates income. Our cost position is a critical success factor and also our way to offset lower income due to changing customer behaviours and market trends. During the quarter, we further cut our costs per savings ratio. We continue to improve efficiencies and automate internal processes in order to lower costs. Our strong cost position is an important competitive advantaged, which also allows us to continue to invest to attract customers and savings capital.
We increase our efforts
The financial sector is facing major changes as a result of digitisation and regulatory changes. We see good opportunities in this regard to strengthen Avanza’s position as Sweden’s best platform for savings and investments. During the year, and especially in the third quarter, we saw confirmation that our digital decision-making support and an improved mobile user experience have a positive impact on growth. In order to raise the growth rate and further improve our customer offer we will invest greater resources during 2017, with a focus on an improved user experience. Avanza is bursting with innovation and everything we want to do to improve our savings offer while truly focusing on the customer. More resources will give us the best opportunity to develop Avanza’s offering without losing momentum in an industry where competition is increasing from new Fintech companies as well. We estimate that expenses will rise by 15–20 per cent in 2017 before returning to a rate of
8–10 per cent in 2018.
On 7 November, Johan Prom will assume his position as CEO. Personally, I will return to my role as COO and Deputy CEO. We welcome our new captain to Avanza!
Stockholm, 18 October 2016
Henrik Källén, Acting 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 (CEST) on 18 October 2016.
This Interim Report 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.
