Swissquote released this morning its numbers for H1 20. These were, once again, above expectations and our own expectations (which were already quite demanding). Guidance is drastically revised upwards with profit before tax expected at CHF100m (vs CHF90m for our own forecasts). Management will update its 2022 guidance during the Q4 20 release (in March 2021). Management expects to increase that guidance.

H1 20 numbers were in line with the Q1 20 trend which means a sharp increase in total revenues (+43.2% yoy) and a 132.8% increase in pre-tax profit.
Guidance for 2020 has been therefore sharply increased as the company expects revenues of CHF300m in 2020 (vs CHF295m for our expectations) and profit before tax at CHF100m (vs CHF90m for our expectations).
The virtuous circle of market volatility and new accounts opening have helped propel Swissquote’s numbers at a level that was expected for 2022. Numbers for July and the first days in August are still in line with the H1 20 numbers (extrapolating this level into H2 20 would lead to actual numbers for FY20 above management’s guidance).

Total revenues at CHF160.7m were 43.2% higher yoy driven by both Swissquote’s main flagships. Net fee & commission income increased indeed by 82.7% yoy to CHF83.4m, while net eforex income increased by 52.2% to CHF60m.

Market volatility has obviously contributed to this sharp increase in revenues but some structural factors should help make this performance more sustainable.

New accounts’ opening requests have amounted to 55,104 for the first six months and new opened accounts have therefore contributed to about 10% of the total revenues (underlying the sustainable impact of these accounts). Revenues in the eforex division have also grown more than volumes as CFD trading is becoming more important in the mix.

And, based on the average assets per new opened accounts, the mix of Swissquote’s clients is getting more oriented to wealthy clients. Assets under custody have increased at CHF33bn (a 10% increase yoy) with CHF3bn net new money.

Operating expenses were under control with an increase of ” only” 17.4% (vs a 43% increase in revenues) due to higher personnel costs (half of this being attributable to the variable remuneration and the remainder to 65 additional employees).

Management is guiding towards revenues of CHF300m and pre-tax profit of CHF100m. Given the ongoing level of activity in July and at the beginning of August, we are comfortable in increasing our own pre-tax profit expectation for 2020 (currently at CHF90m) and for 2022 (management should update this during the FY2020 earnings release and is expected to increase it).

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