Baader Bank Spotlight Research - Seizing benefits from the current environment

Company Highlights & Investment Case
-Baader Bank Group is a German bank headquartered near Munich with more than 35 years of experience operating on the capital markets
-The bank runs an integrated business model combining Market Making, Brokerage incl. Capital Markets, Asset Management, Banking and Research and as such offers trading, settlement and banking services within DACH region (presence in London, Ney York)
-The Baader family acts as an anchor shareholder having a track record in enabling the bank to smoothly adapt to the rapidly changing market environment and regulatory framework During 2016-2019, the bank went through a deeper restructuring process which had been triggered by weak profitability and tightening of regulatory criteria.
-Baader Bank is a small-cap stock (current MCap at EUR 310 mn) whose shares trade in the Open Market segment on eight German stock exchanges with its home market being Munich (m:access). Shares have quintupled during the last 12 months on the wings of booming trading activities and surging volatilities on stock exchanges sparked by the pandemic breakout, unprecedented state interventions across the markets and hopes on the upcoming recovery
What's hot: recent developments and financial performance
-The reported ROE for Q1-3 2020 skyrocketed to an extraordinary 32% compared to levels around 0% in the last five years (incl. a substantial drop by -25% in 2018) mainly thanks to the booming trading result.
-Baader Bank benefitted significantly from the stellar increase of trading volumes on stock markets during 2020, particularly after the uncertainties around the impact of the pandemic had increased and triggered volatility globally since March.
-During the H1 2020, Baader Bank could expand its client base in most of its key business segments
-Several Baader Bank peers have flagged strong Q4 performance, hence we reckon with record trading income for the Q4 20
-Thanks to the solid capitalisation and excellent earnings in 2020, the management plans to return to sharing profits however the final decision is conditional on the ECBs dividend recommendation (current ban in place until September 2021).