Saxo Bank's profit tumbles amid an ambitious expansion plan

Saxo Bank, an online trading and investment bank and Europe’s largest FX broker, has announced today its financial results for

Saxo Bank, an online trading and investment bank and Europe’s largest FX broker, has announced today its financial results for 2009. The full financial report is embedded below and it’s an interesting read of how Saxo Bank is finally awakening from its long sleep and now implements a quite ambitious expansion plan. If they keep this up I may as well eat my hat and admit I underestimated Saxo’s abilities.

All in all Saxo’s Operating Income dropped 12% while the Net Profit tumbled 40% in comparison with the previous year. Assets under management grew by about 40% and client deposits grew by 70% while overall number of employees dropped by 30%.

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Saxo divides its new strategic development into several categories (I left only the most interesting details):

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Product enhancements: A range of new products and services were introduced to the trading platform during 2009.

  • In June 2009 the Bank launched CFDs on Commodities.  Saxo Bank’s offering of CFDs on Commodities allows for investing in oil, grains, softs, energies, carbon quotes, gold and other precious metals similar to trading any other CFD product. CFDs on Commodities give traders and investors direct exposure to the underlying commodity with the trading features of a CFD.
  • The FX Option Board offers an all-in-one view providing a full market picture that prices various options based on standardised dates and strike prices, FX-spot levels and maturity dates that are all streamed into the board.
  • TradeMentor enables clients to develop practical trading experience by actively engaging in live trades.
  • TradeMaker, which is available on all Saxo Bank trading platforms, is a real-time trade idea generator for the FX and CFD trading markets. The content of the trade idea generator is based on independent investment ideas primarily from third parties.

System enhancements: A part of the professionalisation plan was to increase the commercial efficiency of the Bank. The entire client onboarding sequence was redesigned and systems are being implemented to support the client flow and enhance the client experience.

  • The online universe of the Bank was enhanced during 2009 through the face-lift of the corporate visual identity and the release of a new upgraded web presence of the Bank. By the end of 2009 Saxo Bank’s corporate web presence covered 28 different regions supported in 24 languages.
  • Another system enhancement is related to the client’s experience when deciding to become a client of Saxo Bank. The on-boarding sequence has been redesigned to facilitate an easy and simple way to become a client. (that’s so 2010! – MG)
  • Additionally, Saxo Bank introduced debit/credit card funding which makes it faster and easier for clients to fund their accounts.

Acquisitions and geographical expansion: A number of acquisitions were made during 2009 with the aim of expanding the Bank geographically and acquiring new business areas complementary to the Bank’s existing business.

  • Saxo Bank acquired the Introducing Brokers, FF Returns and Catosa in the Netherlands and subsequently launched Saxo Bank Netherlands in September 2009. To strengthen the competitive position in Japan the FX-business from the White Label Partner, Astmax, was acquired in June 2009. Subsequently Saxo Bank Japan was launched.
  • During 2009 Saxo Bank opened offices in Milan, Athens, Dubai, Prague and Madrid.
  • To strengthen the concept for the high-net-worth individuals and institutional investors in Denmark, the Bank acquired Fondsmæglerselskabet Sirius Kapitalforvaltning A/S (Sirius) in January 2009 and Capital Four Management Fondsmæglerselskab A/S (Capital Four) in June 2009. Additionally, Saxo Bank acquired a 51% stake in Global Evolution Fondsmæglerselskab A/S (Global Evolution) in June 2009. The three entities are now branded as part of Saxo Asset Management and provide financial expertise to manage client assets and portfolios.
  • The Banking and Online investment business area was launched at the start of 2009. This was manifested through the acquisition of 39% of the online investor forum, EuroInvestor. In December 2009, a further strategic step was taken when Saxo Bank acquired 25% of the Portuguese online wealth management provider, Banco Best.
  • Another strategic aim for the Banking and Online Investment business area is the broadening of the product offering of the Bank. On 3 December 2009, Saxo Bank announced the acquisition of the Nordic activities of E*Trade which will enable Saxo Bank to offer several new products, including pension products, to the Nordic market. The acquisition is expected to be completed during the first half of 2010 subject to usual closing conditions.

saxo bank annual report 2009

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