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Company presentation July 2020

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Company presentationJuly 2020

Sweden’s leading platform for savings and investments

• Founded in 1999• No 1 in stock market transactions in Sweden• Most satisfied savings customers in Sweden for 10 consecutive years• 1,115,500 customers • SEK 445 bn in savings capital• 460 employees• 4.4% market share of the Swedish savings market

2

Customer satisfaction and employee engagement create shareholder value over time

3

Long-term targets● Customer satisfaction & Employee engagement

● Growth in customers and savings capital● Scalability and cost efficiencies (top modern

IT platform)

Customer proposition● Cheaper, better and simpler offering

● High user experience ● Broad range of product

● Information, education and decision-making tools

Growth potential● Occupational pension business

● Focus on broader customer groups● Strong potential in existing customer base

Revenues and costs● More stable revenues through funds and

mortgages● High NII sensitivity

● Scalability and cost control vital

High customer satisfactionCreating a better future for millions of people

Customer promise – more to you, less to the bankTo give our customers a better return on their savings than any other bank or pension company, due to low fees, better tools and education

4

• Price leadership• Wide range of products• Decision-making tools• Best customer service

and user experience

Growth strategy built on scale

5

Growth in savings capital• Customer satisfaction

• Innovation and user experience

• Customer growth

• Net inflow

1. 2.

3.1. Savings capital

2. Revenues/savings capital

3. Costs/savings capital

Revenues/savings capital• No fixed fees

• Revenues mainly based on transaction fees, net interest income (NII) and distribution fees from mutual funds

• NII and transaction revenues tend to be inversely correlated

Costs/savings capital• Mainly fixed costs, tight cost control

• High scalability

• Long-term aim to reach a cost/savings capital of 16 bps

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Savi

ngs

capi

tal,

SEK

m

Basi

s po

ints

Savings capital Income/savings capital Cost/savings capital

73

Leading cost position

6

34

19

142

In 2018, cost/savings capital exclude the Swedish Financial Supervisory Authority’s administrative fee of SEK 35 million on Försäkringsaktiebolaget Avanza Pension.

A history of growth built on innovation

7

Activate Follow &

Improve

Find & get help

Trading Trading data &

Decision-support

tools

PensionFundsInterest rate

Data plattform

Service plattform

Deliveryplatform

Userinterface plattform

Technical plattform

Open banking

Designsystem

Trading Plattform

Mort-gages

Endow-ment

insurance

Pension plattform

BOtrans-

formation

Become a customer

Cash

Perfor-mancetesting

Being a customer

In-house development by 23 teamsCustomer journey

Products

Business plattform

Launches to make Avanza more relevant for a broader audience

9

Customer value with real open banking

10

Largest Swedish player in stock market transactions on Nasdaq OMX and First North

11

0,02,04,06,08,0

10,012,014,016,018,020,0

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Turnover

• Market share of 17.5% in terms of transactions and 8.4% in turnover in Q2 2020

Customer growth drives net inflow

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Net

inflo

w, S

EK m

New

cus

tom

ers

Customer inflow Net inflow

2013:Customers: +33,000Net inflow: 10,900

2014:Customers: +54,700Net inflow: 20,100

2015:Customers: +96,400Net inflow: 25,200

2016:Customers: +103,000Net inflow: 26,500

2017:Customers: +140,000Net inflow: 26,800

2018:Customers: +126,500Net inflow: 27,600

2019:Customers: +139,300Net inflow: 32,600

H1 2020:Customers: +139,100Net inflow: 41,300

Age distribution among new customers

13

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0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 93 96 99

Shar

e, %

Age

2019

2012

2007

Strong long-term potential in existing customer base

14

Market penetration

• Total share of Swedish savings market: 4.4% as of Q1 2020

• Total share of Swedish population:9.1% as of 1 November 2019

• ages 20-29: 15.3% • ages 30-39: 17.8% • ages 40-49: 13.3%

• Highest penetration in urban areas. Stockholm region, snapshot (Women/Men) as of 1 November 2019:

• ages 20-29: 15%/25% • ages 30-39: 19%/29%• ages 40-49: 14%/23%• ages 50-59: 12%/17%• ages 60-69: 9%/13%

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Savi

ngs

capi

tal,

SEK

m

Cust

omer

s, %

Age

Savings capital by age Total customer base Age distribution among new customers

Savings capital grow by number of years at Avanza

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1 month 1 year 2 years 3 years 4 years 5 years 6 years 7 years 8 years 9 years 10 years

Savi

ngs

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tal,

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Average savings capital per customer (excluding customers with > SEK 10m in savings capital)

Significant growth potential with a 4.4% market share of the Swedish savings market

• The Swedish savings market SEK 8,400 bn

• Annual market growth of on average 9% last ten years

• An estimated 80% of the Swedish population saves in funds and 11% own shares

16

The white circles refer to Avanza’s share of each savings area.* An estimated 50% of the market is addressable for Avanza

Market share of 17.8% rolling 12M of net savings on the Swedish savings market

17

Long-term target by 2025 of at least 15%

Growth potential in broader customer groups

18

Do it for me Do it myselfHelp me do it

Knowledge & time

InterestBegin

Save

Invest Trade

Gamble

Strategy for more recurring income

0%

10%

20%

30%

40%

50%

60%

2012 2013 2014 2015 2016 2017 2018 2019

Shar

e of

tota

l inc

ome

Net brokerage income Fund commissionsNet interest income Other commission income

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Strong growth in occupational pension

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

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ngs

capi

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SEK

Growth drivers in the Swedish savings market

• Digitisation and open banking create new needs and customer behaviours

• More reasons for customers to take responsibility for their own savings

• Increased focus on sustainable investments

• Our focus is on attracting new and broader customer groups as well as keeping current customers happy

• Product innovation and evolution

• User experience increasingly important

• Price remains important

21

As always… key success factors for Avanza

• Customer satisfaction – keep the No 1 position• Continuous growth in both number of customers and volume• Create possibilities for continued strong innovation

22

Employee engagement key

Appendix

23

Operations 24-26Financials 27-35Balance sheet data 36-37Contact details 38

Performance on targets 2019

Long-term targets Outcome 2019 Comments

Sweden’s most satisfied savers according to Swedish Quality Index

√ Achieved in 2019 for the tenth consecutive year

Engaged employees, eNPS of at least 45

54 Very strong ambassadorship

Market share of at least 10% R 12Mof the total net inflow to the Swedish savings market

15.6%

1 million customers 2020 976,400 Target achieved in January 2020

Cost growth should not outpace income growth √

Income growth 13,8%Cost growth 10,6%, excluding fee and one-off write down

Dividend of at least 70% of net profit for the year

79% Dividend SEK 2.30 per share

24

New long-term targets by 2025The new targets are still focused on customer satisfaction and employee engagement, but also on growth in savings capital. Targets connected to sustainability are added

Satisfied customers: • Sweden's most satisfied savers according to SQI’s (Swedish Quality Index) annual award

Engaged employees: • eNPS (Employee Net Promoter Score) of at least 45

Long-term value growth: • Market share of at least 15 per cent of the total net inflow to the Swedish savings market 2025 • Market share of nearly 7 per cent of the Swedish savings market by the end of 2025 • Return on equity of 25-30 per cent • Dividend of at least 70 per cent of the profit of the year

Sustainability:• Increased share of capital in sustainable investments • Increased share of customers who save in sustainable alternatives • Be seen as the leading sustainable brand and the natural choice for sustainable savings • Increase the share of female to 50 per cent of new customers • Organisation with parity between women and men • Become climate positive

Customer inflow of 139,100 in 2020 (+113% Y/Y)

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Customer inflow

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Net inflow of SEK 41,300m in 2020 (+161% Y/Y)

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Net

inflo

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Net inflow

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* Net outflow in November 2017 is explained by a few withdrawals amounting to SEK 2,200m, connected to customers’ M&A activities.

Financial overview

28

* Including one-off write-down of SEK 8.3 million

Q1 20 Q4 19 ∆ % Q1 19 ∆ %

Operating income, SEK m 542 329 65 268 102

Operating expenses, SEK m -179 -187* -4 -164 9

Operating profit, SEK m 361 140 158 100 261

Operating margin, % 67 43 24 37 29

Income to savings capital ratio, % 0.56 0.34 0.22 0.34 0.22

Costs to savings capital ratio, % 0.18 0.19 -0.01 0.21 -0.02

ROE, % 64 26 39 23 41

EPS, SEK 1.98 0.79 152 0.57 245

Relationship between long-term savings capital growth and revenue growth

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Reve

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Savings capital, SEK m

29

2001–2011Corel=0.95

2012–Q1 2020Corel=0.84

Q1 2020

Savings capital Q1 2020: SEK 368 bn (+10 % Y/Y)

Long-term revenue development

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Aver

age

repo

rate

, %

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nue,

SEK

m

Total income Net brokerage income Income from mutual fundsNet interest income Other income Average repo rate

Historical correlation between low market rates and growth

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Repo

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Net

inflo

w, S

EK m

Net inflow Repo rate

• Historical negative repo rate between 2015 and 2019 . Repo rate raised to 0.00% on 8 January 2020

• Low repo rate creates a good growth environment but puts pressure on NII (100 bps repo rate change affects NII by around SEK 500 m at Q1-20 volumes)

Revenue development

32

244 234 227

271 271244

267 267 268 284313 329

542

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nue,

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m

Total income Net brokerage income Income from mutual funds

Net interest income Other commission income

Income split Q1 2020

33

SEK m % ofincome

% of specificsavings capital

% of total savings capital

Shares, bonds, options (transactions)

268 49 0.52 0.28

Mutual funds 96 18 0.36 0.10

Net interest income 74 14 0.40 0.08

Other** 104 18 0.11

Total 542 100 0.56 0.56

* Based on deposits** Corporate finance fees, foreign exchange, AZA Markets, subscription and advertising income, additional services

Cost development

34

124131

123

157 152 153

135

155164 166

148

179 179358

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Ope

ratin

g ex

pens

es, S

EK m

Total expenses Non-reccuring items Personnel Marketing Depreciation Other expenses

Q4 2018 including the Swedish Financial Supervisory Authority’s administrative fee of SEK 35 million on the subsidiary Försäkringsaktiebolaget Avanza Pension Q4 2019 including one-off write-down of SEK 8.3 million

Costs Q1 2020

35

SEK m % of total costs

% of total income

Personnel -110 62 20

IT -19 11 3

External services -7 4 1

Marketing & Sales -8 4 1

Depreciation -14 8 3

Other -20 11 4

Total costs before credit losses -179 100 33

Credit losses, net 1

Profit/loss from participations in associated companies

-2

Operating margin of 67% in Q1 2020

36

121103 104 114 120

90

132

76100

117

163140

361

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Ope

ratin

g m

argi

n, %

Ope

ratin

g pr

ofit,

SEK

m

Operating profit Operating margin

Operating profit in Q4 2018 is affected negatively by the Swedish Financial Supervisory Authority’s administrative fee of SEK 35 million on the subsidiary Försäkringsaktiebolaget Avanza Pension.

Balance sheet, 31 March 2020

37

Assets SEK m Liabilities & equity SEK mLending to credit institutions*

2,356 Deposits 51,593

Lending to the public

13,809 Liabilities in insurance operations

104,184

Bonds and other interest bearing securities

32,725 Other liabilities 1,297

Assets in insurance operations

104,183 Subordinated liabilities 100

Other assets 5,939 Equity 1,838

Total assets 159,011 Total liabilities and equity 159,011

Comments

• Mainly self-financed through shareholders’ equity and customer deposits

• Surplus-liquidity of SEK 36,961m invested in covered bonds, at the Riksbank and O/N (including SEK 1,880 m deposits in client fund accounts)

* Incl. balances at central banks

Capital surplus for the Group

38

SEK m 31 March 2020Shareholders’ equity 1,838

Solvency capital 1,114

Less non-distributable solvency capital -161

Subordinated loan 67

Additional value adjustments -33

Intangible assets and deferred tax receivables -74

Own funds before dividend adjustment 2,750

Capital requirement Pillar 1 -1,562

Buffer requirement -189

Capital requirement Pillar 2 -119

Capital requirement 1,869

Capital surplus before dividend 881

Capital surplus per share, SEK 5.73

Total capital ratio (consolidated situation), % 18.1

Historical financial key data2001 – Q1 2020

is available in Excel at:

avanza.se/keydata

[email protected]+46 8-409 420 17

2020-07-02