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Swissquote Group Holding

CR
Bloomberg   SQN SW
Internet banking/Fintech  /  Switzerland  Web Site   |   Investors Relation
Licensed to conquer Europe
Target
Upside 48.1%
Price (CHF) 134.7
Market Cap (CHFM) 2,065
Perf. 1W: 5.65%
Perf. 1M: 10.8%
Perf. 3M: 19.5%
Perf Ytd: -31.7%
10 day relative perf. to stoxx600: -3.85%
20 day relative perf. to stoxx600: 5.61%
Earnings/sales releases17/03/2022

A record year punctuated by diversification to face upcoming challenges

Swissquote’s FY 21 release yielded a lot of optimism regarding the firm’s growth prospects despite the current unsafe environment. While 2021 has been a record year, management has guided for similar revenue generation and profitability in 2022, on the back of product initiations and revenue diversification.


Fact

Swissquote FY 21 release
  • Net revenue of CHF472m (+49% yoy) and pre-tax profit of CHF223m (+111.4% yoy), already disclosed at the beginning of January
  • Record high net new money inflow of CHF9.6bn (total client assets at CHF55.9bn) and an increase in customer accounts by 18.9% yoy
  • Net fee and commission income up 10.4% yoy, while net crypto assets income grew to CHF102m from CHF16m in 2020
  • Net profit of CHF193.1m (CHF91m in 2020) ahead of firm’s, consensus, and our expectations
  • Basel III capital ratio of 26.2% with a proposed dividend of CHF2.2 per share (vs. CHF1.5 in 2020)
  • Revenue and pre-tax profit guidance of CHF475m and CHF225m respectively for 2022 and CHF750m and CHF350m respectively for 2025

Analysis

Although not a surprise given the pre-announcement at the beginning of January, Swissquote’s results for 2021 were outstanding with revenues growing 49% yoy.
Such a growth has been driven by outstanding customer acquisition with a record high net new money inflow of CHF9.6bn, on an organic basis (77,599 accounts have been opened in 2021). Also, this increase in accounts seems qualitative as the average deposit per account has increased to CHF114.6k from a bit less than CHF100k last year. This growth, coupled with exceptional market conditions over 2021 (which have been subject to high volatility and recovered from COVID-19 turmoil), as well as the launch of crypto trading are fuelling a well diversified, net revenue generation which we believe to be crucial to face the potential global economic turmoil stemming from the Russia/Ukraine conflict or customers’ varying appetites for asset classes.

In fact, net revenue is almost perfectly split among multi-currencies cash, stocks, eFX and crypto assets. Going forward, we expect crypto assets’ income to increase at an even faster pace considering the new assets added to the tradable pool (Tezos & Polkadot) as well as the enabling of crypto staking.
Similarly, we welcome the firm’s ability to generate 20% of its net revenues from its asset base (80% transaction based), which should progressively improve, at least on an absolute basis, on the back of increasing account openings and rising interest rates. A great point for the firm’s sustainability.

Overall, the firm’s performance has yielded a strong Basel III capital ratio of 26%, leaving room for further acquisitions (and potentially bigger than Keytrade Bank Luxembourg). Coupled with the so far successful Yuh application (50% JV with Post Finance), Swissquote seems to have the relevant levers to fuel its high growth profile.

And lastly, the firm has proposed a CHF2.2 dividend per share, up c.47% from 2020. While Bloomberg consensus had expected a dividend of CHF3.0, we consider this dividend as satisfying, granting stability, while we should keep in mind that Swissquote has a growth profile and could use excess cash for fuelling its exponential growth.


Impact

Our model is under review.


Updates

10 Aug 22 Earnings/sales releases
Revenue decreased but client growth is pure dr...

17 Mar 22 Earnings/sales releases
A record year punctuated by diversification to ...

13 Jan 22 Earnings/sales releases
Buy the dip

06 Aug 21 Earnings/sales releases
Good numbers, increase in guidance, modest ...

17 Jun 21 Opinion change
Impressive again

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