Avanza Bank Interim report January – September 2012

• Operating income decreased by 20 percent (+19 %) to SEK 430 million (SEK 538 m)
• The profit after tax decreased by 45 percent (+16 %) to SEK 130 million (SEK 236 m)
• Earnings per share decreased by 46 percent (+14 %) to SEK 4.54 (8.34)
• Net inflow totalled SEK 3,960 million (SEK 6,340 m), corresponding to 5 percent (8 %) of the total savings capital at the beginning of the year
• The number of accounts increased by 10 percent (+15 %) to 458,800 (417,200 as of 31st December 2011), and the total savings capital increased by 11 percent (–14 %) to SEK 82,200 million (SEK 74,200 m as of 31st December 2011)

Third quarter

• Operating income decreased by 31 percent (+32 %) to SEK 125 million (SEK 182 m)
• The profit after tax decreased by 64 percent (+44 %) to SEK 32 million (SEK 88 m)
• Earnings per share decreased by 64 percent (+42 %) to SEK 1.11 (3.10)
• Income and profit after tax was charged with SEK 9 million in respect of value adjustment of the holding in the Exchange Burgundy and non-recurring costs related to rationalization through personnel changes of SEK 3.5 million
        
  

     
Interim Report January – September 2012

Comments from the Managing Director

Interest savings ever more popular in an uncertain market
”The third quarter continues to be characterised by uncertainty on the market, leading to investors in stocks and other listed products to adopt a cautious approach, despite an upturn of 8 percent on the Stockholm Stock Exchange so far this year. A clear sign of this is the reduced level of trading activity among our customers, down 35 percent compared with the same period during the previous year, which together with reduced prime ledning rate has pushed revenues for the year. This trend applies to the entire market, although we have been able to defend our market share for trading in securities.

In a market where forecasted returns are declining, savers focus to an even greater degree on fees and high interest. Above all, we have noted a continued shift towards interest-based products, which has remained strong during the third quarter.
Savings in Sparkonto+, for example, have increased by 64 percent compared with the same period during the previous year. In order to meet the growing demand in interest savings, we are continuing to develop our offering. During the last quarter we have expanded the Sparkonto+ family with corporate accounts, as well as accounts for children and young adults, as a response to the increased demand. During the quarter, we have also raised the number of exchange-traded credit-linked notes, which have quickly become popular among savers since being launched in the spring. Exchange-traded credit-linked notes, which we trade free from brokerage fees, offer a higher interest rate than a savings account and have, thus far, attracted over SEK 460 million in savings with Avanza Bank.

We continue to display good growth in terms of both customers and capital, despite the turbulent market. Net savings during the third quarter amounted to SEK 970 million, customers opened 10,900 new accounts during the quarter and savings capital has increased by 17 percent compared with the same period during the previous year. This creates the conditions for long-term growth in income, as there exists a clear, long-term connection between growth in savings capital and growth in operating income. The prevailing low interest rates and low levels of interest in the Stock Exchange are, however, hampering growth in the short-term.

Balancing our focus on cost efficiency with investments for the future
During the year we have implemented a number of cost efficiencies, balanced by continued investments in our new internetbank, an investment that we will expense immediately. We estimate that a modernization of our internetbank and underlying systems is critical to seriously meet a wider target group, while satisfying our savers future needs. New IT systems will also eventually allow for an even greater cost efficiency and scalability as continued growth in customers and accounts, but also a prerequisite for an effective broadening of the range. This is an important part of Avanza Bank’s long-term ambition to combine the industry’s lowest fees with Sweden’s most satisfied savers for continued growth while leaving a good return to our shareholders. The project started in 2011 and is expected to close during the second quarter of 2013. The third quarter also was charged by non-recurring costs related to rationalization through personnel changes, with SEK 3.5 million and an impairment of the holding in Burgundy with SEK 9 million.

Strong growth within pension savings
At the end of September, the results of the investigation regarding life insurance were presented, proposing that it should be possible for savers to transfer their pension savings freely between insurance companies. We asses that the proposal, implying that just over half of Swedish pension capital is entitled to transfer rights, will have a positive impact on our longterm growth. Unrestricted transfer rights mean that our customers can transfer previously-earned pension savings to Avanza Bank and, thereby, reduce the fees they are charged, subsequently increasing the amount of money they have left for their pension. In anticipation of the implementation of the proposal, we continue to gain customers within pension savings. Evidence of this can be seen in our occupational pension savings offering to companies and employees, in which new savings increased by 40 percent during the third quarter compared with the same period in the previous year.

We look forward to further product launches during the fourth quarter which will further strengthen Avanza Bank’s offering and competitiveness.”

Martin Tivéus, Managing Director of Avanza Bank

 
For additional information:
Martin Tivéus, Managing Director of Avanza Bank, tel: +46(0)70 861 80 04
Birgitta Hagenfeldt, CFO of Avanza Bank, tel: +46(0)73 661 80 04

The information contained in this report comprises information both that Avanza Bank Holding AB (publ.) is obliged to provide and that it has chosen to provide in accordance with the provisions of the Swedish Securities Market Act and the Swedish Financial Instruments Trading Act. The information has been released to the market for publication at 08.15 (CET) on 11 October 2012.

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.

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