KVB Kunlun Financial Group Ltd. (HKG: 8077), the Hong-Kong focused Retail Fx broker has reported its unaudited consolidated financial results for the year 2017. The year was quite turbulent for the forex brokerage industry factored by slowing trading volumes and tightening of regulations but KVB managed to pull a strong performance majorly contributed by group’s leveraged foreign exchange (FX) trading.
The group reported revenues of HK$514.9 million (USD $65.6 million), a rise of 42 percent compared to previous year. In the Q4, the group revenues slowed down by 25 percent from Q3, coming in at HK$136 million (USD $17.4 million). The net profits recorded were sharply lower relative to a year ago. In the Q4, the group managed to break even on the net profit at HK$3.1 million (USD $400,000) and for the full year, it recorded a decrease of 29.3 percent at HK$27.4 million ($3.5 million) compared to a profit of HK$38.7 million ($4.99 million) in 2016.
The leveraged Fx and other trading income contributed almost 80 percent to the group’s revenue at HK$397.03 million ($50.6 million) during 2017, an increase of 29 percent year-on-year from HK$306.03 million ($39.4 million) in 2016. The Fee and Commission income during the year increased by almost 100 percent at HK$108.8 ($7.12 million) from HK$55.35 ($7.12 million) in 2016.
The group expended more than half of the group’s revenue in form of Referral Expenses at HK$299 million or 58 percent. As per KNB, the increase in its revenue and client trading activity was mostly contributed due to an increase in clients referred by services providers. The consolidated operating expense during the year was 55 percent higher than a year ago at HK$478 million. Furthermore, the group’s diluted earnings per share (EPS) during the year is down by almost 30 percent year-on-year at HK$1.35 from HK$1.90 a year ago.
KVB stated: “The company during the year experienced a period of ‘unfavorable trading conditions’, due to the low market volatility throughout the year. The company’s total revenue increased with an increase in the clients’ trading volume during the year, in comparison to 2016.”
“The year started off with the ‘Trump trade’, with the expectation of strong performance of USD and equity markets, since the US economic data had reasonable positive feedback along with Federal Open Market Committee interest rate hike several times. The market also experienced unexpected swings due to geopolitics events, such as Brexit negotiation, the North Korea crisis, and ‘Trump-Russia Ties’. In general, in periods of elevated volatility, customer trading volumes tend to increase. However, significant swings in market volatility can also result in increased customer trading losses and higher turnover.”
KVB Kunlun Financial Group Limited is registered in the Cayman Islands and headquartered in Kowloon, Hong Kong, It provides various financial products and investment services in New Zealand, Australia, and Hong Kong. The company owned by China’s CITIC Securities Company Limited (SHA:600030) has raised HK$200 million (USD $26 million) in capital at the end of 2017 financial year led by Chinese investment and insurance giant Ping An Insurance (Grp) Co.
