Revenues growing steadily, with the bottom line subdued due to one-off costs related to the acquisition, shares drop 4%
Since the official takeover of MIG Bank back in September 2013, FX trading volumes have increased their share of revenues drastically. Trading volumes at Swissquote after the acquisition have risen by a whopping 200.9% to CHF 226.3 billion ($255 billion) in Q4, while Q3 figures were merely CHF 75.2 billion ($84 billion). These figures are now putting Swissquote amongst the world’s ten largest providers of forex trading services.
Revenues at Swissquote have risen by 12% year-on-year to CHF 124.9 million ($140 million) during Q4. Before the MIG Bank brand has been scrapped since the beginning of this year it contributed with CHF 8 million to revenue figures. The bottom line of the report has not been so exciting with profits dropping 47% to CHF 11.7 million. Customer assets under the brokerage’s custody have risen to CHF 10.1 billion, while the number of accounts grew by 7.3% in Q4.
The main concern for investors in the company now is its ability to transform sheer volume numbers into increased profit margins. The full merger between MIG Bank and Swissquote has been complete as of 9th of December 2013 and both MIG subsidiaries in London and Hong Kong have been renamed to Swissquote Ltd London and Swissquote Ltd Hong Kong. According to the company’s Q3 earnings report the technological integration is not to be complete before the second half of 2014.
Due to costs related to the acquisition of MIG, margins have more than halved from 19.7% in 2012 to 9.3% in 2013. Increased payroll and integration costs have depressed profits for the full year, and uncertainty remains whether the company will manages its acquisition well – the number of customers has grown by 7.3% year-on-year to 216,357, which considering the number of MIG clients is not very encouraging when compared to other industry heavyweights.
The company has decided that it will stop issuing quarterly reports and instead focus on reporting on a half-year and yearly basis. Shares in Zurich are trading almost 4% lower on yesterday’s close as of writing.
For the full press release visit Swissquote’s wesbite.