Saxo Bank reports 2011 results, revenues up but volumes are down

Saxo Bank showed continuance of its impressive results from 2010. Although net profit was down by 4% and volume decreased

Saxo Bank showed continuance of its impressive results from 2010. Although net profit was down by 4% and volume decreased by 14% (comparing H2 2011 to same period in 2010) its overall revenue was 6% higher and client assets have grown over 26%. Saxo’s staff increased by over 40% which may explain the drop in profitability however the drop in volume is alarming and may have continued into 2012 as reported by other large players such as ICAP and Reuters.

The founders and CEOs of Saxo Bank, Kim Fournais and Lars Seier Christensen, said in a joint statement: “The general market situation has reduced investors’ risk appetite and put a dampener on capital market activities. Therefore, we are satisfied with this year’s results, which confirm the viability of Saxo Bank’s business model.

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Saxo Bank’s operating income increased 6% in 2011 to reach DKK 3.53 billion, compared to DKK 3.34 billion in 2010. The Bank continued to invest in developing the business which meant that staff costs and administrative expenses increased 12%. Thus, net profit was DKK 618 million, down 4% from the previous record year. EBITDA of DKK 1.16 billion increased 4% compared to 2010.

Clients’ collateral deposits in Saxo Bank’s trading business increased 26% to reach DKK 26.7 billion as of 31 December 2011. Including clients’ collateral deposits relating to the trading platform offered by Saxo Bank’s retail bank, the increase was 13% from DKK 31.3 billion as of 31 December 2010 to DKK 35.3 billion as of 31 December 2011. Total assets under management in Saxo Bank’s asset management business increased 6% from DKK 31.2 billion as of 31 December 2010 to DKK 33.2 billion as of 31 December 2011.

 

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(DKK millions)20112010200920082007
      
Operating income3,526.903,338.102,227.502,518.201,564.40
Profit before tax847.9913.8269.4468.6364.9
Net Profit617.8643.5201.4339.2275.2
Total Equity3,240.002,880.002,335.101,416.701,093.10
Total Assets27,018.2022,437.7015,210.5010,456.109,996.20
Clients’ collateral deposits35,275.3031,296.9015,513.008,717.109,180.70
Assets Under Management33,170.0031,170.9018,963.00
      
avg number of employees1,4139649271,2971,011

 

Volumes: Saxo Bank’s forex volumes were down 14% in 2011 comparing to 2010. In the second half of 2011 Saxo Bank’s volumes were $267 billion per month on average.

MT4: Saxo Bank plans to launch MT4 (following the acquisition of 25% of Leverate). Saxo Bank expects to begin commercialising a co-branded Saxoleverate Mt4 offering in 2012. Saxo Bank says that its decision to offer Mt4 comes in response to increased demand from clients for automated trading solutions. Metatrader has become one of the most popular non-proprietary FX trading platforms and has opened new distribution channels as well as the possibility of integration with other trading systems. The Mt4 client segment uses algorithmic trading, expert advisors, integration with third-party tools and communities.

Lembex Acquisition: In 2011, Saxo Bank decided to also focus on the trading segments preferring an Mt4 offering and thus acquired 25% of the Israeli company Leverate and 100% of the activities of Lembex trading and Investment (subject to FSA approval) with licenses and activities out of Malta and with operational resources based in Israel. The Mt4 platform and operation will be handled out of Saxo Bank’s office in Cyprus.

Forex Magnates was aware of this acquisition for more than 3 months however didn’t report as the FSA approval was still not received. It seems that Saxo is consolidating its offshore MT4 activity in Cyprus through its new office there while using Leverate’s technology and Lembex (former Finexo team) sales know-how.

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