Strong 2016 numbers should continue into 2017 for Swissquote.
Last week, the FX/CFD broker released their 2016 figures with growth in both revenue and earnings.
“Swissquote’s confirmed the revised forecast for 2016, with net revenues at CHF 150.2 million (previous year CHF 146.6 million) and pre-tax profits at CHF 23.2 million (CHF 24.5 million. At CHF 20.8 million, net profit was 900% from the previous year (CHF 2.1 million),” according to a press release from the company.
The future looks bright for the company, per their media relations manager, Nadja Keller.
“We have set clear growth strategies for the different business areas for the next years to come (until 2020). All business areas will contribute to it. Especially we aim to drive further growth by offering technology and broker functions (“white label products”) as well as the development of digital solutions in order to become the strongest digital bank in Switzerland. We are targeting an increase in number of client accounts of 100’000 by 2020 over all segments and since the robust growth of over 60% in the ePrivate Banking segment showed the potential of this business we plan to build up assets under custody to over CHF 1 billion by 2010 (in this segment),” Keller said in an email to The Industry Spread.
Who is Swissquote?
Started in 1990 by Marc Bürki and Paolo Buzzi, the company was originally called Marvel Communications and changed its name to Swissquote in 1996.
The company provides on-line services specializing in trading of foreign exchange currency as well as contracts for differences. It also offers stocks, mutual funds, and bonds for its customers. It has 545 employees world-wide with offices all over Europe, Malta, Dubai, as well as Hong Kong.
The company also has a banking division which provides checking accounts
The company went public on May 29, 2000, trading on the Swiss Exchange under the symbol SQN. It currently trades at around 25 CHF per share.
According to its last press release, Swissquote plans to introduce a dividend .13 CHF per share; that proposal still needs board approval.
Swissquote and the SNB event
Like all foreign exchange dealers, and especially one deeply involved in the Swiss Franc, the so-called Swiss National Bank (SNB)event had a profound effect on the company.
The SNB event occurred when, without warning, the Swiss National Bank removed artificial floors from the Swiss Franc causing a catastrophic drop in the price of the currency. Currency dealers and brokers who had clients trading the currency on margins, many had as little as 10% requirements, were left to make up the difference.
“Today’s drop of up to 15 percent has left clients with a negative balance and has prompted the bank to activate a provision of 25 million CHF,” a press release soon after the SNB event stated.
While the event forced the company to take on this 25 million CHF cushion, the event had a far less dramatic effect than it did on its competitor the former FXCM, now called Global Brokerage Inc.; which was forced to see a $300 million lifeline just to stay in business.
Swissquote boasted in the same press release that their profitability would not be deterred by the SNB event: “This provision will influence the results of the first half of 2015 without affecting the profitability of the bank.”
Swissquote and its rebranding
In the summer 2016, Swissquote went through a rebranding in which the website was redesigned.
Here too, the rebranding was in sharp contrast with Global Brokerage Inc. which changed its name after FXCM became toxic after the company was found to have had a conflict of interest which it didn’t disclose to its clients by the Commodities Futures Trading Commission (CFTC) and the National Futures Association (NFA).
Here, rather than being forced by a negative event, the company rebranded as part of its technological evolution.
“The rebranding was of strategic importance. It’s the visual expression of the one brand strategy: We want to challenge convention via the delivery of innovation and technology in everything we do. Orange stands for creativity and enthusiasm, white for transparency and black for authority. The new corporate identity has successfully been implemented into all business units and offices and has created a new dynamic within the company,” Keller said in an email.
Swissquote in Asia/Pacific
The company boasted in its latest press release of numerous European products which have contributed to their product mix.
“The increasing growth in both market share and the number of transactions bears testimony to the success of the Swiss DOTS business model,” the company said in the press release of the Swissquote Swiss Quant Equity Fund.
Less was said about Swissquote’s business in the Asia/Pacific region, but Keller said while still in its infancy the company expects that division is beginning to contribute to the profitability of the company.
“It (their Hong Kong division) is actually growing very fast. As everything in the far East it needs some time to bring the local office to the right level. Our Hong Kong office has generated a first positive contribution to the group in 2016 and will further grow in 2017.”
In a Position to Profit from FXCM’s Loss
Swissquote’s offices in London and Hong Kong both compete directly with subsidiaries of Global Brokerage Inc. As the Industry Spread previously noted, that company’s problems in the USA may spread to other regulators, namely the Finance Conduct Authority in England.
If the regulatory hits of Global Brokerage Inc. are not yet done, those two subsidiaries- Swissquote’s business in England and Hong Kong- are best poised to take advantage of their competitor’s misfortune.