Release Date: April 15, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Avanza Bank Holding AB (FRA:1JJA) reported the highest quarterly result in its history, driven by increased trading activity.
• The company saw a net inflow of 22 billion SEK, with over 62,000 new customers, marking the strongest quarter since the pandemic.
• Operating income rose by 8% since Q4, with net profit increasing by 13% compared to the last quarter and 28% compared to Q1 last year.
• Avanza Bank Holding AB (FRA:1JJA) made solid progress on strategic priorities, including high-paced innovation and several product launches.
• The company is well-positioned for future growth, with a strong business model that thrives in both higher and lower interest rate environments.

Negative Points

• Savings capital development in Q1 was negatively affected by US equity markets and a stronger SEK, resulting in a 3% decline to 931 billion SEK.
• The macro environment negatively impacted fund volumes, with net fund commissions decreasing slightly compared to Q4.
• The average rate for internally financed lending decreased, resulting in a 7% decrease in income from lending.
• There were issues with customer login during high activity periods, highlighting potential areas for improvement in platform stability.
• The process of discontinuing external savings accounts is still in early stages and is expected to be completed no earlier than spring 2026.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with THCH.

Q: Can you elaborate on the logging issues reported during high activity on the platform and if there are any investment needs to prevent future occurrences? A: (CEO) The issues were due to extraordinary customer activity, and while most had a smooth experience, some faced login problems. We prioritize security and have learned from this incident. No significant investment is needed; it's more about fine-tuning existing systems.

Q: Was the high activity broad-based or focused on active traders, and what does this imply for income per trade? A: (CEO) The activity was broad-based, involving hundreds of thousands of customers. Heavy traders who had been inactive also returned. This broad engagement is generally positive for income per trade.

Q: Regarding the manual foreign exchange on endowment insurance accounts, what impact does this have on income, and are there plans to expand this offering? A: (CEO) The launch was well-received by active customers, though adoption is slow. While it may reduce foreign exchange-related income, dynamic effects like increased customer activity could be positive overall. There are no immediate plans to expand this offering.

Q: With the last rate cut in January, when will the headwind from lower rates fade, and what are the expectations for volume and margin development? A: (CFO) We haven't seen the full effect of lower rates yet, but we believe we are near the bottom for MII. Future developments depend on volume effects and spread changes.

Q: Why did deposit volumes on your balance sheet increase while external deposits decreased, and what are the expectations for future migrations? A: (CEO) The increase was partly due to one banking partner reducing rates, forcing customers out. We hope customers will consolidate their savings with us, but it's early to draw conclusions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.