Saxo Bank Announces 2014 Results, Profits Double As Deposits Grow

Saxo Bank estimates that the maximum losses related to the Swiss National Bank's debacle will total $100 million, which will

rp_saxo_bank_logo-150x150.pngSaxo Bank has just released its latest annual report, highlighting that the company’s net profit doubled to about $51 million (DKK381 million) in 2014. The figure is higher by 135% percent when compared to the company’s 2013 figures.

Client collateral deposits have increased materially throughout the year, jumping by $2.5 billion (DKK 17.6 billion) which constitutes a rise of almost 35 percent. The number reached a record high in Danish krone terms totaling DKK 68.2 billion ($9.7 billion).

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The company outlined that throughout the first two months of 2015, the collateral deposits continued climbing, reaching DKK 73.9 billion ($10.5 billion) as of the end of February.
After the dramatically lower volatility throughout the first half of 2014, trading activity picked up dramatically after August, resulting in some of the most volatile months on major currency pairs we have seen since 2008-9.

Saxo Bank has marked 2014 as the firm’s most profitable year since 2011, with operating income reaching DKK 3,006 million ($427 million) which is higher by 5% over the DKK 2,861 million reported in 2013. The operating income for 2013 was adjusted by DKK 250 (about $46 million at the time) to cover credit risk related to a white label client.

On the retail side, while trading revenues continued to grow in the retail side of business, Saxo Bank outlined in its statement that it will continue to develop its White Label, Institutional, High Net Worth Private and Digital businesses.

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The founders and co-CEOs of Saxo Bank, Kim Fournais and Lars Seier Christensen, said in a joint statement, “The inflows of new clients as well as the increase in collateral deposits are early evidence of the potential for Saxo Bank to continue its strong growth in 2015.”

Swiss National Bank’s Event Impact

Saxo Bank outlined in its release that it was in a strong capital position with a total equity of $600 million (DKK 4,225 million). After issuing in November 2014, Saxo Bank further strengthened its Tier 1 capital base by listing notes for DKK 334.8 million ($47.7 million) on the Irish Stock Exchange.

This moved helped the firm weather through the extreme events unfolding in the aftermath of the Swiss National Bank’s decision on the 15th of January, 2015, to remove the fixed floor in the EUR/CHF currency pair.

After Saxo Bank clients accumulated negative balances as a result of the SNB action, the company currently estimates that the maximum impact from the event on its books could total $100 million (DKK700 million), when compared to initial estimates of $107 million. The firm will recognize the loss in its financial statement for 2015.

A number of clients ended up with insufficient margin collateral to cover their losses on their positions in Swiss franc. Saxo Bank estimates the maximum loss that the Group can incur in relation to this event to be DKK 0.7 billion on a net basis. As it reflects the circumstances that have arisen after the 2014 financial year, the loss will be recognized in Saxo Bank’s financial statement for 2015.

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