Developments witnessed by Swissquote in the 3rd quarter of 2012 were similar to those seen in the two preceding quarters: increase in the number of accounts and net new monies, stagnation of revenues and profit. Swissquote’s performance thus continues to reflect the pronounced investor uncertainty. Year-on-year, revenues decreased 14.9 percent and net profit 30.5 percent. For 2012 as a whole, Swissquote expects revenues of about CHF 112 million (USD 118.7 million).
Interest business still growing
The development of Swissquote’s revenues in the first nine months of 2012 mirrors the situation on the global capital and currency markets and above all the uncertainty and reticence that this has caused among investors. The modest mid-year glimmer of hope of an imminent end to the euro crisis unfortunately failed to materialize. Both fee and commission business and trading operations had an adverse impact on total net revenues. Only the interest business, which is a significantly smaller part of net revenues, made positive progress. At CHF 85.3 million (CHF 100.2 million), total net revenues in the first nine months of 2012 were 14.9 percent lower than in the first nine months of 2011.
As a consequence of a significant fall-off in trading activity to only 11.4 transactions per client/year (16.5 transactions), net fee and commission income declined by 22.8 percent to CHF 38.8 million (CHF 50.2 million). Because of the low volatility on the foreign exchange markets, trading and other results (eForex) declined by 12.9 percent to CHF 33.4 million (CHF 38.4 million). The eForex trading volume decreased by 16.5 percent to CHF 261.9 billion (CHF 313.6 billion). Although interest business was still not easy in light of the currency situation and the cautious investment strategy pursued by Swissquote Oust under 60 percent of the balance sheet total of CHF 2.945 billion is deposited with the Swiss National Bank), revenues were 12.7 percent higher at CHF 13.1 million (CHF 11.6 million).
Solid profit situation despite decrease
The first nine months of 2012 saw operating expenses fall 5.3 percent year-on-year to CHF 63.0 million (CHF 66.6 million), but this was not sufficient to compensate for significantly weaker total net revenues.
The reduction in expenses breaks down as follows: a CHF 0.9 million decrease in personnel costs (in spite of a slight increase in headcount), a CHF 0.5 million decline in production costs and a CHF 2.2 million fall in marketing expenses. At CHF 22.3 million (CHF 33.7 million), operating profit was down 33.9 percent. Net profit was 30.5 percent lower at CHF 18.3 million (CHF 26.3 million). The operating profit margin reached 26.1 percent (33.6 percent), and the net profit margin stood at 21.4 percent (26.2 percent). Earnings per share amounted to CHF 1.26 (CHF 1.83). The balance sheet total grew by 13.1 percent to CHF 2.945 billion, and total equity was 6.1 percent higher at CHF 237.7 million (CHF 224.1 million). The core capital ratio (tier 1) was at 21.6 percent.
Further growth in client numbers and net new monies
As before, the decline in revenues and profit as a result of prevailing conditions contrasts with continuing growth in client numbers. The total number of accounts rose year-on-year by 9.2 percent to 201,357 in the first nine months of 2012. The breakdown is 159,803 trading accounts (+2.3 percent), 30,012 saving accounts (+74.8 percent), 10,779 eForex accounts (+3.0 percent), and 763 ePrivate Banking accounts (+23.9 percent). At CHF 8.571 billion (CHF 7.280 billion), assets under custody were 17.7 percent higher than in the first nine months of 2011. As at 30 September 2012, assets of CHF 7.946 billion were held in trading accounts, CHF 476.7 million in saving accounts, CHF 125.9 million in eForex accounts, and CHF 23.6 million in ePrivate Banking accounts. At CHF 805.3 million (CHF 799.3 million), net new monies in the first nine months of 2012 were 0.8 percent higher than in the first nine months of 2011.
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Swiss DOTS meets investor need
The Swiss DOTS (Swiss Derivatives OTC Trading System) segment launched at the end of May 2012 by Swissquote in cooperation with Goldman Sachs and UBS is witnessing a continual increase in volumes.
7,600 transactions were executed in October alone, representing 15 percent of all transactions with leveraged products on Scoach. Given the successful start, the offering is to be expanded and the platform opened to further issuers and clients. This means that in future non-Swissquote clients will also be able to benefit from the Swiss DOTS offering. Today clients already have access to a range of more than 33,000 leveraged products on the Swissquote platform (Scoach: 23,000 leveraged products). The rapid development confirms not only that Swiss DOTS meets a genuine investor need but also that Switzerland is large enough to accommodate such an offering in addition to the Scoach products.
Swiss DOTS produces a significant additional volume for Swissquote without any reduction in the volume settled with Scoach.
Demand for online mortgages growing
For just over a year now, Swissquote has been offering online mortgages under a cooperative venture with Basellandschaftliche Kantonalbank (BLKB). The demand for these products is rising continually.
The mortgage loan portfolio currently totals CHF 100 million. The two partners plan to expand existing services in order to accelerate growth.
Swissquote Europe opened in Malta
Inline with its cautious policy of expansion, in October Swissquote opened an office in Malta, its second location outside Switzerland. The Malta Financial Services Authorities (MFSA) have given Swissquote Europe a category 3 license, which, under the EU passporting rules, allows it to market its forex services in all EU member states without restriction. Swissquote Europe has a team of five working in Malta; the operating business is handled by Swissquote Bank Ltd. in Switzerland. The two foreign locations in
Malta and Dubai (cat. 4 license) will enable Swissquote to rapidly establish a foothold in European markets as well as in the Middle East and Asia, and to generate revenues accordingly.