Swiss online bank Swissquote reports strong first half results despite low trading volumes across the industry

August 09, 2023 - Despite a turbulent first half of 2023 for global investors, Swiss online bank Swissquote reports financial performance that surpassed its initial projections. Trading activity for Swissquote was low compared to the previous year (number of transactions down by 26.7%) but improved slightly compared to the second half of 2022. Despite the drop in transactions, the firm has announced strong net revenues and raises guidance for the whole of 2023.

A Snapshot of Swissquote’s H1 2023 Highlights:

Net Revenues reached a record high of CHF 265.6 million, marking a 32.8% hike compared to the same period last year.

Pre-Tax Profit climbed to CHF 124.9 million, reflecting a 37.7% growth year-on-year.

Client Assets touched a record CHF 56.9 billion as of 30 June 2023, while Swissquote's client base expanded by 6.4% over the past year. Average assets per customer remained intact and over CHF 100,000 per client.

With this robust performance, Swissquote has optimistically revised its full-year guidance, aiming for a pre-tax profit of approximately CHF 250 million, up from an initial forecast of CHF 230 million.

Shifting Revenue Streams Reflect a Changing Interest Rate Landscape 

One of the standout revelations was the shift in revenue composition. For the first time, non-transaction-based revenues like net interest income and custody fees surpassed transaction-based revenues, owing significantly to the heightened interest rate environment, boosting net interest income by an impressive 587.6%. Although trading activity was subdued (down by 26.7%), non-transaction revenues surpassed the level of transaction-based revenue, enabling Swissquote to report the second-highest pre-tax profit in the company's history. 

Operational expenses rose by 30.0% to CHF 138.4 million, attributed mainly to adjustable costs such as augmented marketing efforts and escalated variable remuneration. Swissquote's workforce also saw an uptick, growing 5.1% to 1,110, spotlighting their commitment to tech advancement and global reach.

Record level of client assets

The number of client accounts grew by 6.4% to 555,266 in the last 12 months. Client assets increased by 9.9% to a new all-time high of CHF 56.9 billion. Net new money decreased by 39.9% to CHF 3.0 billion but was purely organic (while last year included the acquisition of Keytrade Bank Luxembourg for CHF 1.7 billion). As of 30 June 2023, the portion of cash in client assets was at 16.6%

Stellar Balance Sheet and Upward Revision of Full-Year Projections 

The company's balance sheet remained robust with total assets amounting to CHF 10.6 billion, an increase of 3.5%. Their capital ratio stood at a comfortable 25.5%, while liquidity metrics surpassed regulatory benchmarks, echoing the company's sound financial health.

Despite anticipated market headwinds in H2 2023, Swissquote's updated full-year outlook aims for net revenues of roughly CHF 530 million and a pre-tax profit nearing CHF 250 million.

Sustainability Efforts Pay Off 

Swissquote's dedication to sustainability and non-financial reporting has been acknowledged, as evidenced by an upgrade in their ESG Risk rating by Sustainalytics from “medium risk” to “low risk” in H1 2023.