PRESS RELEASE | LEONTEQ PUBLISHES HALF-YEAR 2023 RESULTS
Zurich, 20 July 2023 | Ad hoc announcement pursuant to Art. 53 LR
Leonteq AG (SIX: LEON) reports Group net profit of CHF 28.8 million in the first half of 2023 as net fee income slightly increased on solid client activity, while the decrease in trading result reflected materially lower market volatility compared to unprecedented market conditions in the prior-year period.
Financial highlights in H1 2023
- Growth in net fee income of 7% to CHF 123.9 million year on year (17% vs H2 2022)
- Normalised net trading result of CHF 17.8 million on the back of reduced market volatility (H1 2022: CHF 179.4 million)
- Profit before taxes of CHF 25.2 million (H1 2022: CHF 145.8 million); Group net Profit of CHF 28.8 million (H1 2022: CHF 118.0 million)
-
Strong capital base maintained at CHF 883.4 million (end-2022: CHF 932.8 million)
Client franchise remained strong
- Stable number of active clients on the platform
- Number of issued products increased by 36% year on year
- Turnover remained stable year on year with strong contribution from new partner business (+60% vs H1 2022) reflecting increasingly diversified issuer base
- Continued solid contribution from asset management-like, balance sheet-light and fund derivatives businesses
- Pension Savings business benefiting from increase in interest rate levels
- Continued progress on rolling out LynQs to clients; +11% new intermediaries onboarded on Leonteq’s digital investing platform
Lukas Ruflin, Chief Executive Officer of Leonteq, stated: “Leonteq’s performance in the first half of 2023 underlined the strength of our broad-based structured products offering and advanced platform services, supporting higher fee income on solid client activity. At the same time, we saw low levels of market volatility compared to the exceptional situation a year ago, which resulted in normalised contributions from hedging and treasury activities. We will continue to invest in our international client franchise and consistently execute on our 2026 Growth Strategy.”
Selected key figures
(CHF million unless otherwise stated) |
H1 2023
|
H2 20221
|
H1 20221
|
Change
vs H1 2022
|
Change
vs H2 2022
|
| Total operating income |
147.1 |
167.2 |
289.2 |
(49%) |
(12%) |
| of which net fee income
|
123.9 |
106.0 |
115.6 |
7% |
17% |
| of which net trading result |
17.8 |
57.3 |
179.4 |
(90%) |
(69%) |
| Total operating expenses |
(121.9) |
(119.7) |
(143.4) |
(15%) |
2% |
| Profit before taxes |
25.2 |
47.5 |
145.8 |
(83%) |
(47%) |
| Group net profit |
28.8 |
38.4 |
118.0 |
(76%) |
(25%) |
| |
|
|
|
|
|
| EPS (CHF) |
1.59 |
2.13 |
6.45 |
(75%) |
(25%) |
|
Capital base2
|
883.4 |
932.8 |
890.2 |
(1%) |
(5%) |
| Return on Equity (annualised) |
7% |
9% |
29% |
(22PP) |
(2PP) |
|
Platform assets (CHF billion)2
|
12.6 |
12.4 |
13.5 |
(7%) |
2% |
| Turnover (CHF billion) |
11.8 |
11.0 |
12.1 |
(2%) |
7% |
| Number of active clients |
890 |
N/A |
896 |
(1%) |
N/A |
1 Effective 01.01.2023, the Group discloses the net result from securities lending and borrowing transactions (previously reported in net fee income) and the net interest result from margins for derivative transactions (previously reported in net interest result) in the net trading result. The figures for the prior periods were adjusted accordingly.
2 At the end of the respective period.
Navigating through challenging markets in the first half of 2023
Despite the continued challenging market environment in the first half of 2023, Leonteq’s client franchise remained strong with a stable number of 890 clients actively entering into transactions on its platform and a 36% rise in new issued products albeit with lower average ticket sizes. Furthermore, net fee income increased by 7% year on year and grew by 17% compared to the second half of 2022. This was particularly driven by an increase in client activity in the European region as well as an increase in the number of large ticket transactions.
Reflecting the continued efforts to diversify revenues across issuers, turnover generated with products issued by Leonteq’s new partners increased by 60% to CHF 2.4 billion year on year whilst turnover from historic partners totalled CHF 3.1 billion compared to CHF 3.5 billion in the prior-year period. turnover with products issued by Leonteq decreased to CHF 6.3 billion in the first half of 2023 from CHF 7.1 billion in the prior-year period. Total platform turnover remained stable at CHF 11.8 billion for the first half of 2023 compared to CHF 12.1 billion in the first half of 2022.
The first half of 2023 was further characterised by materially lower levels of market volatility, continued inflationary pressures and corresponding interest rate hikes. Against this backdrop, Leonteq recorded a normalised net trading result with limited but positive contributions from both hedging and treasury activities totalling CHF 17.8 million. This compared to a very strong performance with a net trading result of CHF 179.4 million in the prior-year period which benefited from unprecedented market conditions.
Due to this combination of factors, total operating income was CHF 147.1 million in the first half of 2023, compared to CHF 289.2 million in the prior-year period.
Total operating expenses were CHF 121.9 million in the first half of 2023, down 15% year on year, mainly reflecting lower performance-driven variable costs and the absence of significant provisions for legal cases. In support of its Growth Strategy 2026, Leonteq also continued to invest in strategic initiatives as well as in talent to further enhance its business and technology platform.
In line with the guidance provided on 26 June 2023, Leonteq reported profit before taxes of CHF 25.2 million in the first half of 2023 compared to CHF 145.8 million in the prior-year period. Income taxes were positive at CHF 3.6 million in the first half of 2023, benefitting from a release of tax accruals. Group net profit totalled CHF 28.8 million in the first half of 2023, compared to CHF 118.0 million in the prior-year period. Earnings per share was CHF 1.59, compared to CHF 6.45 in the first half of 2022.
Shareholders’ equity totalled CHF 821.3 million as of 30 June 2023, compared to CHF 870.0 million as of 31 December 2022. Leonteq’s capital base, comprising shareholders’ equity as well as deferred fee income of CHF 62.1 million, remained strong at CHF 883.4 million as of 30 June 2023. Annualised return on equity was 7% for the first half of 2023 (H1 2022: 29%).
Continued execution of Growth Strategy 2026
In the first half of 2023, Leonteq continued to make progress in executing its Growth Strategy 2026 across all four pillars:
| Offering |
Overall, revenues from new business initiatives contributed 42% of Group economic revenues (excluding hedging results) in the first half of 2023 (H1 2022: 53%). In particular, the Pension Savings business performed well, driven by the increase in interest rates and implemented product enhancements, which significantly improved product conditions as well as product attractiveness. Further, the asset management-like business (including actively managed certificates and tracker certificates) generated stable revenues year on year despite the challenging market environment, demonstrating its recurring nature of income contribution. In this context, the AMC Gateway was further improved by adding crypto assets to the applicable universe of underlyings on the platform. The balance sheet-light business also recorded solid demand from clients with balance sheet-light turnover increasing to CHF 1.7 billion in the first half of 2023, up 55% from the prior-year period, corresponding to 14% of overall turnover (H1 2022: 9%). The Group’s fund derivatives business also recorded solid performance with stable revenues year on year. At the same time, contributions from its crypto asset business as well as its treasury activities reduced compared to the prior-year period.
Following the introduction of the new ETP+ label in 2022, Leonteq launched new exchange-traded products in collaboration with existing and new index sponsors. The ETP+ label represents a distinct innovation for the ETP market in Switzerland as it not only uses a reputable custodian and collateral agent, both based in Switzerland, but also entails daily independent checks, which serve as a key mitigator of issuer risk.
|
Platform
|
Leonteq continued to invest in digital client solutions in the first half of the year, leveraging its scalable technology platform. It also launched LynQs for Asia-based wealth managers and multi-family offices, which provides access to dedicated trade ideas, multi-channel pricing and the most popular structured products in Asia. Furthermore, this version of LynQs offers actively managed certificates that support a wide range of index components. The number of intermediaries onboarded on LynQs globally increased by 11% to 992 in the first half of 2023.
The company also advanced its retail flow business initiative. It made good progress in developing a core platform required for market making and issuing a large number of flow products as well as in creating fully automated and scalable lifecycle processes.
Leonteq was selected as a winner of the annual Wealth-Briefing Asia Awards in June 2023 in the category "Structured Product Solution Pan Asia” thanks to its multi-issuer model, as well as the scalability, speed and automation of services of Leonteq’s platform and the white-labelling option.
For the second consecutive year, LynQs was named “Best Issuance Platform” by Structured Retail Products at the SRP Europe Awards in March 2023, in recognition of the continuous improvements of Leonteq’s platform and the company’s efforts to offer clients a wide variety of functionalities and rapid processing.
Client transactions decreased to 97,874 in the first half of 2023 (H1 2022: 105,948) but remained well above the pre-pandemic level of 74,503 recorded in the first half of 2019, reflecting the continued expansion of Leonteq’s business.
|
| Regions |
Leonteq maintained its strong position in its Swiss home market in the first half of 2023. Together with its platform partners, Leonteq remained the leading issuer of SIX-listed yield enhancement products with a market share of 27%, and it currently ranks as the number three issuer of total SIX-listed structured products with a market share of 11%. At this year’s Swiss Derivative Awards, Leonteq was recognised as a top service provider for the 13th consecutive year.
In Italy, Leonteq’s continued progress in establishing a strong market position was recognised at the Italian Certificate Awards, where it received two product-related awards. In Portugal, Leonteq further strengthened its service centre in Lisbon, where it currently has 79 employees.
As part of its ambition to further expand its offering targeting an international client base, Leonteq strengthened its regional management teams in Europe and Asia (including the Middle East).
Despite the challenging market environment, Leonteq registered solid client activity in all of its regions in the first half of 2023. In its Swiss home market, net fee income remained relatively stable at CHF 48.2 million in the first half of 2023 (H1 2022: CHF 51.4 million). Operations in Europe delivered strong performance and generated 23% growth in net fee income of CHF 62.7 million (H1 2022: CHF 50.9 million), In the Asia region (including the Middle East), net fee income was stable at CHF 13.0 million (H1 2022: CHF 13.3 million).
|
|
Leonteq continued to drive the Group’s sustainability efforts through various ongoing initiatives in the first half of 2023.
In particular, Leonteq is continuing to develop a responsible investing methodology to assess the sustainability of structured products. As part of these efforts, it is engaged in active discussions with relevant industry associations in Switzerland and Europe to agree on a common denominator when it comes to determining sustainability features in structured products.
Under its newly introduced “Core Framework”, Sustainalytics assigned Leonteq an ESG Risk Rating of 12.3. This score categorises Leonteq as continuing to have “Low Risk” of experiencing material financial impacts from ESG factors. The company ranks among the top five percentile of Sustainalytics’ Global Universe as well as the Diversified Financial Universe.
|
Outlook
Through its investments in strategic initiatives over the past few years, Leonteq has created a solid and diversified foundation for the company to build on and will continue to invest in key growth areas such as the retail flow business and its digital investing platform, LynQs. As communicated on 26 June 2023, Leonteq expects profit before taxes of CHF 40-70 million for the full-year 2023.
Leonteq half-year 2023 results press and analyst conference call
A press and analyst conference call with Lukas Ruflin, CEO of Leonteq, and Marco Amato, Deputy CEO and CFO of Leonteq, will be held today, 20 July 2023, at 10.00 a.m. CEST.
The presentation, including slides, can be followed live via audio webcast.
If you wish to join the phone Q session, please dial in using the following numbers and ask for “Leonteq half-year 2023 results”:
- Dial-in number Switzerland: +41 (0)58 310 50 00
- Dial-in number UK: +44 (0) 207 107 06 13
- Dial-in number USA: +1 (1) 631 570 56 13
This press release, the half-year 2023 results presentation and the half-year 2023 report are available at: https://www.leonteq.com/halfyearresults
A digital playback of the telephone conference will be available for one month at: https://www.leonteq.com/halfyearresults
Important dates
8 February 2024 Full-year 2023 results
28 March 2024 Annual General Meeting 2024
25 July 2024 Half-year 2024 results
Alternative Performance Measures used in this press release
The definitions of Alternative Performance Measures used in this press release are provided in the half-year 2023 report on page 5.
CONTACT
Media Relations
+41 58 800 1844
media@leonteq.com
Investor Relations
+41 58 800 1855
investorrelations@leonteq.com
LEONTEQ
Leonteq is a Swiss fintech company with a leading marketplace for structured investment solutions. Based on proprietary modern technology, the company offers derivative investment products and services and predominantly covers the capital protection, yield enhancement and participation product classes. Leonteq acts as both a direct issuer of its own products and as a partner to other financial institutions. Leonteq further enables life insurance companies and banks to produce capital-efficient, unit-linked pension products with guarantees. The company has offices and subsidiaries in 13 countries across Europe, Middle East and Asia. Leonteq AG is listed on the SIX Swiss Exchange (SIX: LEON). www.leonteq.com
DISCLAIMER
This press release issued by Leonteq AG (the “Company”) serves for information purposes only and does not constitute research. This press release and all materials, documents and information used therein or distributed in the context of this press release do not constitute or form part of and should not be construed as, an offer (public or private) to sell or a solicitation of offers (public or private) to purchase or subscribe for shares or other securities of the Company or any of its affiliates or subsidiaries in any jurisdiction or an inducement to enter into investment activity in any jurisdiction, and may not be used for such purposes. Copies of this press release may not be made available (directly or indirectly) to any person in relation to whom the making available of the press release is restricted or prohibited by law or sent to countries, or distributed in or from countries, to, in or from which this is restricted or prohibited by law.
This press release may contain specific forward-looking statements, e.g. statements including terms like “believe“, “assume“, “expect“, "target" “forecast“, “project“, “may“, “could“, “might“, “will“ or similar expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may result in a substantial divergence between the actual results, financial situation, development or performance of the Company or any of its affiliates or subsidiaries and those explicitly or implicitly presumed in these statements. These factors include, but are not limited to: (1) general market, macroeconomic, governmental and regulatory trends, (2) movements in securities markets, exchange rates and interest rates and (3) other risks and uncertainties inherent in our business. Against the background of these uncertainties, you should not rely on forward-looking statements. Neither the Company nor any of its affiliates or subsidiaries or their respective bodies, executives, employees and advisers assume any responsibility to prepare or disseminate any supplement, amendment, update or revision to any of the information, opinions or forward-looking statements contained in this press release or to adapt them to any change in events, conditions or circumstances, except as required by applicable law or regulation.
