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The reverberations continue from last January’s surprise SNB move to remove the EURCHF floor leading to a 20% surprise spike in the value of the Swiss Franc against most major currencies.
Leading retail forex broker Saxo Bank has issued its 2015 Annual Report and released its 2015 results, which saw the bank report a 29% drop in Revenues and end up with a DKK 645 million (USD $98 million) net loss for the year.
We had reported early on that Saxo Bank was looking at a potential $107 million loss from negative client balances due to the Swiss Franc spike. Saxo Bank remained well capitalized however, and also raised an additional €77.5 million in capital in April 2015 by selling a 2.5% stake to money management firm CarVal Investors which valued Saxo Bank at €1.25 billion.
The question in our mind as we awaited Saxo Bank’s full 2015 results was: How did the second half of the year go?
The answer that we can see so far seems to be, So-So.
On the Revenue side of the ledger Saxo Bank did much better in the second half of 2015, reporting Operating Income (Saxo Bank’s moniker for Total Revenues) of DKK 1.375 billion (USD $208 million), well above the DKK 752 million it reported in 1H-2015, although lower than most half year periods over the past few years.
However the large net loss Saxo Bank reported for the full year seems to indicate that the company also lost money in the second half of the year, although not as much as in the first half which included the Swiss Franc related losses. Saxo’s first half 2015 Net Loss was DKK 485 million, and its second half loss DKK 160 million.
The year 2015 saw a lot of other change at Saxo Bank. The company’s co-founder and longtime co-CEO Lars Seier Christensen stepped down from active management to start a new venture capital firm called (appropriately) Seier Capital. Sitting in his old office at Saxo Bank is outside hire Soren Kyhl, who joined Saxo Bank as COO last summer from Danske Bank.
As of year-end 2015 Saxo Bank employs 1,559 people, including 771 in Denmark.
As far as outlook goes, Saxo Bank didn’t say much other than they believe they are in a good financial and strategic position. The issue of cost cutting was mentioned, which we’ve seen by such moves as Saxo Bank ending its longtime sponsorship of the Tinkoff-Saxo cycling team following last year’s Tour de France.
Saxo Bank figures, year by year:
Saxo Bank’s full press release on its 2015 results follows. The Saxo Bank 2015 Annual Report can be downloaded here.
Saxo Bank publishes its 2015 full year annual report
Today Saxo Bank Group publishes its 2015 full year results. In line with its guidance following the unexpected surge in the value of the Swiss franc in January 2015 the bank reported a net loss of DKK 645 million for the year ending 31 December 2015 compared to a net profit of DKK 381 million in 2014. Operating income was DKK 2.1 billion in 2015 compared to DKK 3.0 billion in 2014. Client collateral continued to rise in 2015 seeing an increase of DKK 9.4 billion to DKK 77.6 billion.
The Bank’s capital position is strong with a Common Equity Tier 1 ratio of 14.8 percent, a Tier 1 capital ratio of 17.4 percent and Total capital ratio of 20.7 percent as of 31 December 2015. The Common Equity Tier 1 buffer was DKK 0.8 billion corresponding to 6.1 percent of the Risk Exposure Amounts.
By the end of 2015 client’s collateral deposits had increased by DKK 9.4 billion to DKK 77.6 billion, which is a new all-time high and a sign of trust and confidence in the Bank.
The earnings were adversely affected by the Swiss National Bank’s decision to remove the euro peg for the Swiss franc which resulted in a number of Saxo Bank clients having insufficient margin collateral to cover their losses. This accounted for a net loss of approximately DKK 0.7 billion included in the results for the year. However, the process of collecting outstanding balances from clients is ongoing and will continue into 2016 which is expected to have a positive impact on the Bank’s future results.
Kim Fournais, CEO, Saxo Bank, said:
The financial results reflect a difficult operating environment for our industry in 2015 and were heavily affected by the Swiss events of January 2015. This coupled with uncertainty around the global economy has unsurprisingly hindered our operating revenues in 2015. At the same time, we have continued to strengthen our capital position and build on the foundations for earnings recovery when market conditions improve.
Despite the difficult environment, our strategy of diversification of revenues and investment in technology is validated in the record client inflows we have seen in 2015. We are particularly pleased with the successful launch of the SaxoTraderGO platform.
During 2015, Saxo Bank continued to enhance its platforms and product offering with the launch of SaxoTraderGO in May 2015 aimed at capturing the growing mobile trading market. The bank also continued to be the outsourced provider of choice for banks and brokers looking to upgrade their trading technology.
2015 also saw the bank’s continued foray into the fintech space, with the launch of its fully digital investment solution, SaxoSelect in January 2016, targeting long-term investors.
Key figures at a glance:
- Operating income: DKK 2.1 billion (DKK 3.0 billion in 2014)
- EBITDA*: (loss) DKK 109.4 million (DKK 1,099 million (profit) 2014)
- Net profit**: (loss) DKK 645 million (DKK 381 (profit) in 2014)
- Clients’ collateral deposits: DKK 77.6 billion (DKK 68.2 billion in 2014)
- Total equity: DKK 3.9 billion (DKK 4.2 billion in 2014)
* EBITDA adjusted for Swiss event and other one-off’s was DKK 880 million in 2015 compared to DKK 1.1 billion in 2014
** Net profit adjusted for Swiss event and other one-off’s was DKK 304 million in 2015 compared to DKK 505 million in 2014.
In 2015 Saxo Bank welcomed CarVal Investors (2.4 percent) and Sinar Mas Group (9.9 percent) as new investors valuing Saxo Bank at 9.6 billion DKK. Co-founder Lars Seier Christensen stepped down as co-CEO December 31 2015 and co-founder Kim Fournais continues as sole CEO.