Sweden's most satisfied savings customers 8 years in a row. Annual Report 2017 Avanza Bank Holding AB (publ) Contents Avanza – an overview 2 The year in brief 4 CEO's statement 5 About Avanza 8 Market conditions 9 Stakeholder dialog 12 Business model 14 Strategy 15 Targets and outcomes - an overview 16 Our customers 18 Our employees 20 Our shareholders and share information 22 Our social engagement 26 Our risk profile 28 Chairman's comment 32 Corporate governance report 34 Board of Directors and Auditors 42 Group Management 44 Administration report 47 Consolidated income statements 54 Consolidated balance sheets 55 Changes in the Group's shareholders' equity 55 Consolidated cash flow statement 56 Parent Company income statements 57 Parent Company balance sheets 57 Changes in the Parent Company's shareholder equity 58 Parent Company cash flow statements 58 Notes 59 Audit report 91 Additonal information on employees 94 Sustainability report 96 Customers and benefit levels 100 Brokerage fee classes 101 Products and range 102 Definitions 104 This Annual Report is published in Swedish and English. In the event of any differnces between the English version Annual General Meeting 106 and the Swedish original, the Swedish version shall prevail. Financial calendar 107 Avanza 2017 1 Sweden’s leading digital platform for savings and investments Avanza was founded in 1999 to offer online stock trading for individual investors at low prices. Low fees, a broad range of savings products, and education and support for invest- ment decisions have since then been the basis of Avanza’s offer. We also offer competitive occupational pension solutions and mortgage loans at the market’s lowest average rate. As a customer at Avanza, you will get a better return on your We have the savings than anywhere market’s widest else range of savings products We inspire, educate and create tools to support investment decisions Read more about our range of products and services on page 102–103. 2 Avanza 2017 Key fi gures for 2017 Sweden’s most satisfi ed savings customers Number of customers for 8 years 710,600 Source: Swedish Quality Index (570,600) Savings capital Share of the Swedish savings market SEK 273bn 3.6% (SEK 231bn) (3.2%) Market capitalisation Income SEK 10bn SEK 985m (SEK 11bn) (SEK 919m) Number of employees Cost per savings capital 390 0.21% (365) (0.22%) Operating margin Return on equity 45% 28% (51%) (33%) Figures in parentheses refer to previous year. Avanza 2017 3 The year in brief The year in brief by quarter 1 3 Digital stock trading is launched on the major Avanza Auto is launched — a simple, cheap European exchanges and the lowest brokerage and automatic way to manage savings fee is reduced to 1 euro Customers can now track the value of crypto- The Stock Generator is launched — an invest- currency investments in the account overview ment tool to filter through the wide range of The application process for margin lending stocks. Stock inspiration lists are updated is digitised as well with tools and popular lists such as “Most popular stocks in Europe” and “Analysts’ favourites” 2 4 CEO Johan Prom announces his resignation Rikard Josefson takes over as CEO Avanza wins “Best customer service in the Avanza’s mortgage offer is expanded to a broa- financial services industry” for the third consec- der customer group in partnership with Stabelo utive year Avanza wins the Swedish Quality Index’s award Digital European trading is expanded for Sweden’s most satisfied savings customers Small businesses can now obtain an occupa- for the eighth consecutive year tional pension digitally and all sales resources Quarterly record is achieved in number of new are consolidated in Gothenburg and Stockholm customers Avanza’s savings economist Claes Hemberg is Savings capital in Avanza Auto passes named Personal Finance Commentator of the SEK 1 billion Year in the Financial Awards 2017 The target of a market share of the net inflow Awards for business journalism and the year’s to the Swedish savings market is raised from best moderator are won by employees of Plac- at least 9 per cent to at least 10 per cent from era, Avanza’s subsidiary and one of Sweden’s 2018 largest financial websites 4 Avanza 2017 CEO's statement CEO's statement We will continue to harness Avanza’s innovative abilities and encourage thinking outside the box, while at the same time working to deliver a better customer experience. This will help us to grow in new product areas and in new, broader customer groups, and take us to one million customers – at least! Customer-focused culture Being CEO of Avanza is amazing, even though my time so far has been Inspiring and educating are what our sustainability work is largely short. The culture and the energy I see here are incredible. At Avanza devoted to. We want at the same time make it easier for our customers we think about our customers and how we can serve them better every to make sustainable decisions, also from an ethical perspective. For day. This means we are constantly developing. example, they can filter for sustainable funds among our wide range 2017 was distinguished by political uncertainty and questions about of choices. Heading into 2018 our aim is to take our sustainability work what Brexit will mean, what is happening in the US and what signifi- further. We see it as our mission to deliver the best services and tools to cance could North Korea get. There are many big questions facing the our customers so that they can make sustainable investment decisions. world right now. As a result, we at Avanza have to keep our ear to the ground and truly think about how we can best support our customers in their decisions. At the same time, regulation in the financial sector “ We will continue to has reached record levels. New regulations mainly affect consumer protection and financial stability, which we welcome. For as long as develop simple decision- Avanza has been in business, we have focused on how we can make the savings market even better, while also maintaining low risk. The making support, inspire new rules put consumers and citizens in the driver’s seat and will force more companies to be customer friendly. and educate" The year’s highlights and growth areas In keeping with our aim to broaden operations and deliver an even Avanza has always had ambitious goals in terms of products and ser- richer customer experience – and complement our popular mortgage vices. We listen to and place high value on what our customers say. loan for private banking customers – we launched a broader mortgage Among our accomplishments during the year there were a few things loan together with Stabelo. Despite only doing a soft launch so far to that stood out. The biggest that comes to mind is that our customers for around 2,000 customers, we have seen a fantastic response from over the eighth consecutive year voted Avanza as the bank with the highest 25,000 people who have spontaneously expressed interest. customer satisfaction in the savings area. This is very gratifying and a sign that our customers truly appreciate what we are doing. Customer Even better customer experience and stronger satisfaction is our most important target and together with innovation growth going forward is the key to growing our customer base and savings capital. In pension savings, we have a strong offering today and see major Our customers want simplicity, which is why in 2017 we introduced growth potential. That a pensioner should be able to decide over their a fully digital application process for corporate customers, minors and savings and where to invest it should be obvious. Yet it is still compli- margin lending. We also expanded digital European trading, which cated and time-consuming to transfer pension savings. This doesn’t still accounts for a small share of our customers’ total trading but is make sense if Swedish savers are going to have to feel and take important to more active traders. Small businesses can now get a new responsibility for their own financial situation. Some improvements occupational pension online, and we have made significant progress in are planned this summer to simplify transfers. This is a good start, but occupational pension transfers. In addition, we launched Avanza Auto more has to be done – especially when it comes to older pensions. Our and added more customers than we could have dreamed. This shows current pension savers have realised that they can save a lot of money that our customers want support in making decisions, but they also with Avanza, but still only a small share of them have wanted to make want to decide for themselves what to do with their savings. I believe the effort to transfer their pension. Now the rules will make it easier, that in an increasingly complex world where we all have to take greater and we will try to make it easier still. responsibility for our financial future, it is important to develop tools like Auto and to continue to inspire and educate. Avanza 2017 5 CEO's statement Rikard Josefson, CEO 6 Avanza 2017 CEO's statement We also have good growth potential in private banking. We have an offering that provides customers with excellent support and we have “ Perhaps the banking seen that our modern approach works. Today’s private banking cus- tomers are cost-conscious and want, with the help of modern tools, world’s most modern IT to make their own investment decisions. Here Avanza is a great alter- native, as also evidenced by Prospera’s latest ranking, where Avanza platform gives us great advanced to fifth place among well-respected traditional private bank- ing firms.