Swissquote shows a dramatic decrease in forex trading volumes in Q1 2012 and this is reported by almost all brokers in the market. Some brokers report as much as 50-60% decrease in trading volumes and attribute this to lack of volatility. While Swissquote’s forex accounts grew by 16.8% in Q1 2012 when comparing to same period in 2011, the value of the accounts dropped 17.3% to CHF 121.1 million and its trading volumes plummeted by 34.1%.
Should this trend continue for couple more quarters we will see a massive exodus of forex brokers from this market, substantial layoffs and increased consolidation.
On the other hand, the smaller brokers were almost unaffected as global trends have less impact on them and they are specifically less affected by institutional trading volumes – which were the ones to take the biggest hit.
Media information Gland/Zurich, 7 May 2012
Results for the 1st quarter of 2012
Swissquote sees substantial inflow of net new monies
Despite a slight increase in total net revenues versus the 4th quarter of 2011, Swissquote posted a 19.9 percent year-on-year decrease in revenues to CHF 29.2 million. Since operating expenses did not go down to the same extent (-6.8 percent), net profit was 40.9 percent lower at CHF 6.3 million. The number of accounts grew by 13.1 percent, passing the 200,000 mark for the first time. Total assets under custody rose by 1.1 percent to CHF 8.5 billion, and net new monies stood at CHF 536.6 million, up 83.0 percent on the year-back figure.
Interest business making progress
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The revenue trend reflects the situation on the global capital and currency markets as well as the general uncertainty and reticence that this has caused among investors. Both net fee and commission income as well as trading operations contributed to the decline in total net revenues to CHF 29.2 million (CHF 36.5 million) reported by Swissquote in the 1st quarter of 2012. While significantly smaller in terms of volume, interest business was the only sector to make a positive contribution.
As a consequence of a significant fall-off in trading activity to only 12.6 transactions per client/year (16.3 transactions), net fee and commission income was down by 25.3 percent to CHF 14.1 million (CHF 18.9 million). Having consistently shown robust growth in the past, trading operations (eForex) recorded a first-time loss owing to weak volatility on the currency markets. The trading results were 20.9 percent lower at CHF 10.8 million (CHF 13.7 million). The eForex trading volume decreased by 34.1 percent to CHF 67.2 billion (CHF 101.9 billion). Although interest business remained challenging in the 1st quarter of 2012 in light of the currency situation and the cautious investment strategy pursued by Swissquote, net interest income was up by 9.3 percent to CHF 4.2 million (CHF 3.9 million).
Weaker profit figures
As the 6.8 percent reduction in operating expenses to CHF 21.3 million (CHF 22.8 million) was not sufficient to offset the significant decline in total net revenues, operating profit was down 42.0 percent year-on-year to CHF 7.9 million (CHF 13.6 million). Net profit decreased correspondingly by 40.9 percent to CHF 6.3 million (CHF 10.7 million). The operating profit margin reached 27.1 percent (37.4 percent), and the net profit margin stood at 21.6 percent (29.2 percent).
Earnings per share amounted to CHF 0.44 (CHF 0.74). The balance sheet total grew by 13.2 percent to CHF 2.714 billion, and total equity was 12.9 percent higher at CHF 238.2 million (CHF 211.1 million). The core capital ratio (tier 1) was at 21.5 percent. Increase in number of accounts and assets under custody Compared with the corresponding year-back period, the total number of accounts rose by 13.1 percent to 200,140. The breakdown is 159,592 trading accounts (+5.3 percent), 28,840 saving accounts (+86.6 percent), 11,023 eForex accounts (+16.8 percent), and 685 ePrivate Banking accounts (+41.5 percent). At CHF 8.478 billion (CHF 8.382 billion), assets under custody were 1.1 percent higher than in the 1st quarter of 2011. At the end of the 1st quarter of 2012, assets of CHF 7.855 billion were held in trading accounts, CHF 479.5 million in saving accounts, CHF 121.1 million in eForex accounts, and CHF 22.6 million in ePrivate Banking accounts. The trend in net new monies was very encouraging in the 1st quarter, 83.0 percent higher at CHF 536.6 million (CHF 293.3 million).
Swissquote launches oil trading
The latest Swissquote product addresses a wish expressed by numerous clients to be able to trade oil directly in real time on the various Swissquote platforms (FXBook, Advanced Trader, MetaTrader 4). Clients can now trade commission-free in West Texas Intermediate (WTI) crude oil, the most traded energy product worldwide. With a leverage effect of up to 30:1, high liquidity, narrow spreads and a minimum volume of only one barrel, this provides an alternative to futures contracts.
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