XTB Reports Weak Financial Results for Q3, but YTD Metrics Retain Advance

XTB’s Q3 results were adjusted to reflect the imposition of a $2.7 million fine.

Publicly listed Polish FX and CFDs brokerage XTB has reported its preliminary results for Q3 2018 and the nine-month period ending on September 30, 2018.

The group has disclosed a decline across a number of different metrics during the last three months, including its revenues and net income. However, the latest report shows positive figures across key components of its business on a year-to-date basis, per an XTB financial disclosure.

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XTB’s Q3 results were adjusted to reflect a one-off event, which was the imposition of an administrative fine. Poland’s financial regulatory body, the Polish Financial Supervision Authority (KNF), in July punished X-Trade Brokers with a PLN 9.9 million ($2.7 million) fine for “irregularities in the execution of client orders,” a statement from the regulator said.

Compared to a period of strong growth in the third quarter of 2017, XTB has seen a pronounced retreat in its financial figures. More specifically, during Q3 2018 XTB disclosed a total operating revenue of $12.6 million (PLN 47.6 million), which was down 35 percent year-over-year from $20.2 million (PLN 73.06 million) in Q3 2017.

Looking at its total revenues for the January-September period, however, XTB posted a figure of $65 million ‎(PLN 245.5 million)‎, a gain of 23.7 percent relative to $52.5 million ‎(PLN 198.4 million)‎ in the previous fiscal year.

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The largest change across XTB’s financial results came in terms of its net profit, which showed a net loss of $768,000 (PLN 2.9 million) in Q3 2018, compared to a profit of $8.67 million (PLN 31.3 million) in Q3 2017. Excluding the impact from the one-off fine, the company generated a positive figure for its bottom line at $1.65 million (PLN 6.24 million), yet five times lower than the income of the same period a year ago.

Deposits and Accounts Number Up

This weak performance was reversed across a YTD timetable, with the previous three quarters showing a profit of $28.3 million (PLN 107.14 million), up nearly 76.5 percent compared to $16 million (PLN 60.7 million) in the year prior.

Coupled with this advance, XTB has registered an increasing number of active accounts with 22,259 as of Q3 2018, growing steadily from 20,549 in Q3 2017, or 8.3 percent year-over-year. New accounts were also on the uptick, growing 16 percent on a comparable basis to 4,884 in Q3 2018, relative to just 4,201 accounts in Q3 2017.

One of the group’s most noteworthy findings was its net deposits, which despite the weak overall financials, fell to $20 million (PLN 75.16 million), up 33 percent year-over-year from  $15.7 million (PLN 56.8 million) in Q3 2017.

Finally, XTB said its operating revenues were primarily influenced by the commodity CFDs segment as the asset class generated 59 percent of the company’s total revenue compared to only 7.5 percent a year earlier. Meanwhile, revenues from FX CFDs amounted to 22.0 percent of total revenues relative to 40 percent in 2017. The USDTRY currency pair was the most popular instrument among XTB clients

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