Swissquote meets 2022 expectations; onwards into 2023
Swissquote meets 2022 expectations; onwards into 2023EARNINGS/SALES RELEASES
Swissquote released FY 22 preliminary figures fully in line with our expectations and guidance, although net new monies and client assets were slightly lower than our bullish forecasts.
On March 16th, Swissquote will release its full financial statements as well as the dividend information. All eyes will be on the yield, the revenue contributors and the number of client accounts.
FACT
FY 22 preliminary results:
Net revenues above CHF 400m
Pre-tax profit of at least CHF 185m
Client assets of CHF 52.2bn
Net new monies of CHF 7.7bn
ANALYSIS
2022 now behind us
Swissquote’s preliminary full-year 2022 results were satisfactory, the firm is attaining its guidance objectives (CHF 400-420m net revenues and pre-tax profit of c. CHF 190m).
Note that these objectives had been revised downwards from those released at FY 21 (CHF 475m of net revenues and CHF 225m of pre-tax profit).
These numbers are fully in line with our expectations (Net revenues of CHF 400m and Pre-tax profit of CHF 186m) and should even outperform these depending on the magnitude implied in “Net revenues above CHF 400m” and “pre-tax profit of at least CHF 185m”.
We had been expecting client assets and net new monies of CHF 55bn (+5.3% vs. prelim. figures) and CHF 8.2bn (+6.5% vs. prelim. figures) respectively. The full-year presentation will unveil the number of client accounts, key for the reading of such results.
In fact, these figures imply c. CHF 2.8bn of new monies in H2 22 (-40% yoy) and a decrease of c. 6.6% yoy of client assets.
One question to be answered is whether net new monies have been fed by a constant continued growth in customer accounts or existing clients adding additional funds to their accounts. In our view it was the first option that was behind the increase in net new monies given the mixed performance of financial markets during the second half of the year, impeding individuals’ increased allocation of assets to those offered by Swissquote.
With client assets of c.CHF 51.8bn at the HY 22 and implied net new monies of c. CHF 2.8bn in H2 22, the numbers imply that the markets wiped out c. CHF 2.4bn of assets (c.4.4% of client assets) in the second half of the year (as per CHF 52.2bn of client assets for FY 22).
In contrast, since the obtention of its European license to advertise its products (resulting from the acquisition of KeyTrade Bank), the firm has been aggressively marketing its solutions across Europe and we believe this has been efficient.
An impressive start to 2023
The customer accounts figure will matter as we are believers in the potential for customers to add additional funds to their accounts as they discover the platform but also see more favourable market conditions.
As mentioned above, we see customer growth as dry powder in that we expect them to contribute additional funds under better market conditions. We also believe that, when customers join the platform, they do not directly add the whole amount of money they have allocated to financial markets but rather fund their accounts progressively.
Hence, an uptick in financial markets and a softening in a global recession vs. expected could trigger such new contributions.
Note the following performances of indices and cryptocurrencies YTD:
Stoxx 600 c. +5.5%
S&P 500 c. +4.6%
Nasdaq 100 c. +6.25%
BTC c. +24.4%
ETH c. +27.9%
A lot can obviously happen throughout the year as the markets remain febrile but any sustained recovery would be positive at least in terms of feeding in additional deposits, which will benefit the firm through interest collected.
IMPACT
Our figures are fully in line with the preliminary figures, and we will look to update our model following the publication of the full financial statements’.
Swissquote Group Holding is engaged in the provision of Online Financial Services. Co. provides online securities trading services (including custody services) and quantitative asset management services (ePrivate Banking among others) to self-directed private investors, independent asset managers, investment funds, and third party financial institutions. Co. provides access to over-the-counter FX markets through in-house technology platform to retail customers, money managers, and third-party financial institutions. In addition, Co. operates an online bank that accepts deposits in the form of current accounts and saving accounts from its customers.
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