XTB Allocates 2017 First-Half Profits to Boost Capital Reserves

XTB recently found itself under the scrutiny of regulatory authorities.

Publicly listed Polish FX and CFDs brokerage XTB today tried to end its run of bad news as it unveiled a new measure to allocate its first half profits – PLN 24.5 million (USD 6.9 million) – to boost its tier 1 capital reserves, which consist of shareholders’ equity and retained earnings.

Following the decision, XTB expects a sharp rise in its core capital ratio after making use of higher profits and proceeds from the H1 activities to bolster its finances. It added that the decision will facilitate the implementation of its growth strategy, particularly in terms of expanding business to new markets and catering to institutional segments.

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The Polish broker also seems keen to ease investor concerns about its ability to build the new capital buffers, which it expects to be hiked as early as January 2018. This comes after the company recently found itself under the scrutiny of regulatory authorities, on the hook for over a dozen client infringements collectively totalling millions of dollars.

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Nonetheless, the decision may not hurt XTB’s plans for dividend payments as the company has seen pronounced gains in its financial figures during the third quarter of 2017. More specifically, during Q3 2017 XTB disclosed a total operating revenue of $20.2 million (PLN 73.06 million), which was up 70.7 percent year-over-year from $11.9 million (PLN 42.8 million) in Q3 2016.

In terms of its net profit, the figure rose sizeably to $8.67 million (PLN 31.3 million) in Q3 2017, up 640 percent year-over-year from $1.16 million (PLN 4.2 million) in Q3 2016. This solid performance was also seen across a YTD timetable, with the first 9 months of the year showing a profit of $16.8 million (PLN 60.7 million), compared to $7.5 million (PLN 27.2 million) in the year prior.

At time, the legal setback caused an abrupt collapse of share prices which dropped by more than 35 percent, with forced stock exchange authorities to temporarily suspend trading.

The Polish Financial Supervision Authority estimates this to be in the range of PLN 8 million ($2.2 million) to upwards of PLN 23.5 million ($6.5 million). News surrounding the regulator’s decision has sent shock waves through XTB’s share prices.

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