Incredible numbers…

Swissquote released this morning a trading update regarding the expected results for H1 21. These are simply impressive. The company indeed expects CHF260m in revenues and CHF130m in pre-tax profit for H1 21. As a comparison, the previous guidance for FY2021 was total revenues of CHF360m and pre-tax profit of CHF130m. Guidance will therefore be sharply revised upwards and we will adjust our forecasts accordingly.

Swissquote has been registering a massive inflow of new clients and new assets. The first months of 2021 have seen strong trading activities in Swissquote’s main revenue segments (fee and commission, eForex and cryptocurrencies). As a result, Swissquote expects to achieve record half-year results with revenues of CHF260m vs CHF161m in H1 20 and pre-tax profit is expected to exceed CHF130m vs CHF58.4m in H120 (as a reminder, H1 20 was already an exceptional half year vs H1 19).

While the trading update remains very succinct, it offers important clues regarding the actual and expected numbers.

First, obviously, the guidance for FY2021 reported on 18 March will be significantly revised upwards (during the H1 21 publication on 6 August). Guidance at that time was for total revenues of CHF360m for 2021 and a pre-tax profit of CHF130m…

The pre-tax profit will be already reached by the end of June 2021, meaning the margin on assets is well above expectations and previous guidance.
The 2021 numbers are also highly likely to be above the 2024 guidance which we described as very bullish three months ago. Management indeed expected for 2024 total revenues to be in the area of CHF500m and pre-tax profit at CHF200m.

That guidance was based on CHF5bn net new money per year, leading to about CHF55bn assets under custody and a 90bp margin.

While we believe net new money and the opening of new accounts remain buoyant between March and June (Swissquote recorded already +CHF1.4bn net new money in January and Februray), we suspect that Swissquote has strongly benefited from the trading of cryptocurrencies. These offer indeed Swissquote a much higher pre-tax margin vs traditional assets (at 80% vs 35% for traditional assets).

It is hard to extrapolate again this exceptional half year to H2 21 and later (especially the buoyant trading of cryptocurrencies) but sustainable revenues and pre-tax profits will remain well above our current expectations.

Following today’s trading update, we will (sharply) revise upwards our expectations for 2021 and later.

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