PRESS RELEASE | LEONTEQ PUBLISHES FULL-YEAR 2023 RESULTS
Zurich, 8 February 2024 | Ad hoc announcement pursuant to Art. 53 LR
Leonteq AG (SIX: LEON) reports Group net profit of CHF 20.6 million for the full-year 2023 as net fee income was relatively stable supported by a solid client franchise, while net trading result significantly decreased due to materially lower market volatility compared to unprecedented market conditions in the prior-year period.
Financials 2023
- Relatively stable net fee income of CHF 213.2 million (down 2% on FX-adjusted basis vs 2022)
- Normalised net trading result of CHF 36.6 million on the back of reduced market volatility (2022: CHF 236.7 million)
- Group net profit of CHF 20.6 million (2022: CHF 156.4 million)
- Strong capital base at CHF 837.9 million (end-2022: CHF 932.8 million); reduction mainly driven by total distribution to shareholders of CHF 90.4 million in 2023
- Board to propose dividend of CHF 1.00 per share (2022: CHF 4.00) at AGM 2024; payout ratio of 87%
Resilient client franchise
- Number of issued products increased by 32% year on year
- 197,118 client transactions processed on the platform (up 15% vs 2022)
- Turnover totalled CHF 21.3 billion (down 4% on FX-adjusted basis vs 2022) with strong contribution from new partner business (up 39% vs 2022) reflecting increasingly diversified issuer base
- Continued solid contribution from AMC business and balance sheet-light business; pension savings business benefiting from increase in interest rate levels
Outlook
- Clear ambition to grow full-year 2024 profits compared to full-year 2023
Lukas Ruflin, Chief Executive Officer of Leonteq, stated: “Our 2023 results are disappointing and significantly below our expectations. However, our client franchise demonstrated its resilience throughout challenging market conditions while we further broadened our offering. In executing our growth strategy, we delivered tangible and measurable progress against all pillars, including our sustainability efforts. Looking ahead, we expect to start harvesting from our investments in strategic initiatives which are aimed to further diversify revenue sources.”
Selected key figures
(in CHF million unless otherwise stated) |
FY 2023 |
FY 2022 |
Change
YoY |
| Total operating income |
260.0 |
456.4 |
(43%) |
| of which net fee income |
213.2 |
221.6 |
(4%) |
| of which net trading result |
36.6 |
236.7 |
(85%) |
| Total operating expenses |
(241.6) |
(263.1) |
(8%) |
| Profit before taxes |
18.4 |
193.3 |
(90%) |
| Group net profit |
20.6 |
156.4 |
(87%) |
| |
|
|
|
| EPS (CHF) |
1.15 |
8.58 |
(87%) |
| Book value per share (CHF) |
44.4 |
48.0 |
(8%) |
| Capital base |
837.9 |
932.8 |
(10%) |
| Return on Equity (%) |
2% |
19% |
(17pp) |
A challenging year for Leonteq
Despite the continued challenging market environment in 2023, Leonteq’s client franchise remained solid with a 15% growth in client transactions and a 32% rise in new issued products albeit with lower average ticket sizes. Net fee income decreased by 4% year on year. Taking into account the significant strengthening of the Swiss franc against major currencies, in particular the US dollar and the euro, net fee income decreased by 2% on a currency-adjusted basis.
Reflecting the continued efforts to diversify revenues across issuers, turnover from products issued by new partners increased by 39% to CHF 4.3 billion year on year whilst turnover from products issued by historic partners totalled CHF 6.0 billion compared to CHF 6.4 billion in 2022. Turnover from products issued by Leonteq decreased to CHF 11.0 billion in 2023 from CHF 13.6 billion in the prior year. Total platform turnover reduced by 8% to CHF 21.3 billion in 2023 (down 4% on a currency-adjusted basis).
2023 was characterised by inflationary pressure, increased geopolitical uncertainties and a significant reduction in market volatility, which reached an all-year low in November 2023. Against this backdrop, Leonteq recorded a normalised net trading result with limited but positive contributions from both hedging and treasury activities totalling CHF 36.6 million. This compared to an exceptionally strong net trading result of CHF 236.7 million in 2022, which was driven by unprecedented market conditions.
Total operating expenses declined by 8% to CHF 241.6 million in 2023 mainly reflecting a significant reduction in discretionary compensation by more than 50% for the year 2023. Leonteq also continued to further enhance its service and technology platform and made select key hires in the sales and IT organisation.
Profit before taxes was CHF 18.4 million in 2023, down from CHF 193.3 million in 2022. Income taxes were positive at CHF 2.2 million in 2023, reflecting prior year tax adjustments.
As a result of these factors, and marginally above the upper range of the guidance provided on 1 December 2023, Leonteq reported Group net profit of CHF 20.6 million in 2023, compared to the record result of CHF 156.4 million in the prior year.
Shareholders’ equity totalled CHF 780.1 million as of 31 December 2023, compared to CHF 870.0 million as of 31 December 2022. The decrease was mainly driven by a total distribution to shareholders of CHF 90.4 million, including a share buyback programme in the amount of CHF 18.0 million. Leonteq’s capital base, comprising shareholders’ equity as well as deferred fee income of CHF 57.8 million, remained strong at CHF 837.9 million as of end-2023, versus CHF 932.8 million at the end of 2022.
The Board of Directors will propose a dividend of CHF 1.00 (2022: CHF 4.00) per share for the financial year 2023 at the Annual General Meeting on 28 March 2024, which is to be paid in equal amounts out of retained earnings and capital contribution reserves. This corresponds to a payout ratio of 87% compared to the announced target of more than 50%.
From the financial year 2024 onwards, Leonteq will continue to target a payout ratio of more than 50% of Group net profits including the potential launch of annual share buyback programmes if financial results permit.
Christopher Chambers, Chairman of Leonteq, stated: “Leonteq made significant distributions to its shareholders through dividends and share buybacks totalling CHF 90 million for 2022 following two record financial years. For the year 2023, the Board of Directors has opted for a prudent approach to capital management and will propose a dividend of CHF 1.00 per share. Going forward, our refined capital return policy takes into account the inherent earnings volatility of our business whilst continuing to commit to an attractive payout ratio.”
Continued execution of Growth Strategy 2026
Throughout 2023, Leonteq continued to make progress in executing its Growth Strategy 2026 across all four pillars
| Offering |
Leonteq continued to diversify its offering by adding crypto assets to the investable universe for the company’s AMC platform. Furthermore, it added Cornèr Bank as an issuer of own actively managed certificates.
Leonteq launched several new exchange-traded products in collaboration with existing and new index sponsors under its new ETP+ concept, for which Leonteq was awarded with “Best newcomer” and “Best ETP issuer” at the Swiss ETF awards.
Overall, revenues from new business initiatives contributed 47% of Group economic revenues (excluding hedging results) in 2023 (2022: 51%). In particular, the pension savings business performed well benefitting from the increase in interest rates and implemented product enhancements. The AMC business generated relatively stable revenues year on year despite the challenging market environment, demonstrating the recurring nature of its income contribution. The balance sheet-light business also demonstrated its resilience with turnover totalling CHF 2.7 billion in 2023, reflecting a stable contribution of 13% (2022: 13%) of overall turnover. Contributions from the fund derivatives business, crypto asset business and from treasury activities decreased year on year.
|
Platform
|
Leonteq introduced several new features for its award-winning digital investing platform, LYNQS: The Equity Screener and Basket Optimizer allow our clients to build-up and price structured products more easily and efficiently, as well as improve the yield of these products. Furthermore, LYNQS was launched for Asia-based wealth managers and multi-family offices, and the mobile version was extended making it one of the first click ‘n’ trade platforms that is accessible via mobile devices in Singapore and Hong Kong. In terms of KPIs, the number of intermediaries onboarded on LYNQS globally increased by 25% to 1,059 in 2023.
Leonteq also made good progress in establishing a new pension savings concept for the Swiss 3a retirement market in collaboration with Glarner Kantonalbank. The two companies set up a joint-venture in 2023 and following a recent “Friends & Family” phase, Leonteq expects the market launch in the near future.
The company also made further progress in developing a core platform for issuing and market making a large number of flow products as well as in creating fully automated and scalable lifecycle processes. Leonteq aims to launch leverage products in Switzerland towards mid-2024. In this context, Leonteq acquired a 10% minority stake in BX Swiss, one of two stock exchanges in Switzerland which will give the company access to the ecosystem of Boerse Stuttgart Group. Leonteq also intends to become a market maker of equity securities and ETFs on BX Swiss (subject to regulatory approvals).
Client transactions increased by 15% to 197,118 in 2023 reflecting the continued expansion of Leonteq’s franchise.
|
| Regions |
Leonteq maintained its strong position in its Swiss home market in 2023. Together with its platform partners, Leonteq remained the leading issuer of SIX-listed yield enhancement products with a market share of 28%, and it currently ranks third among issuers of total SIX-listed structured products with a market share of 12% (2022: 8%).
Leonteq strengthened its regional leadership in European markets with the hire of a new Head Sales Europe, new general managers in Frankfurt and a new branch manager in London. In Italy, Leonteq’s continued progress in establishing a solid market position is evidenced by a market share in Cert-X-listed products of 15% (2022: 13%).
As part of its ambition to further expand its offering that is targeted at an international client base, Leonteq also strengthened its regional management team in Asia (including the Middle East) in 2023.
In its Swiss home market, net fee income totalled CHF 92.3 million in 2023 (2022: CHF 105.3 million). Operations in Europe delivered solid performance and generated 10% growth in net fee income to CHF 99.5 million. In the Asia region (including the Middle East), net fee income was CHF 21.4 million (2022: CHF 25.8 million).
|
| Sustainability |
Leonteq continued to drive the Group’s sustainability efforts through various ongoing initiatives in 2023. In particular, Leonteq developed a Sustainability Framework in early 2023 to further strengthen governance in this area. In August 2023, Leonteq received an upgrade to AA (on a scale of AAA-CCC) from MSCI, the world’s largest provider of ESG indexes. According to MSCI, Leonteq is thus leading its industry in managing the most significant ESG risks and opportunities and ranks among the top twenty-five of MSCI’s 63 diversified financial peers worldwide. |
Outlook
Through its investments in key initiatives over the past few years, Leonteq has created a solid and diversified foundation for the company to build on. Going forward, Leonteq aims to start harvesting from these key investments which are aimed at further diversifying revenue sources. At the same time, Leonteq is evaluating a range of measures to optimise and make its cost structure more flexible in order to adapt to rapidly changing market conditions.
In terms of profitability, Leonteq has the clear ambition to grow profits for the full-year 2024 compared to the full-year 2023.
Leonteq full-year 2023 results press and analyst conference
A press and analyst conference call with Lukas Ruflin, CEO of Leonteq, and Antoine Boublil, CFO of Leonteq, will be held today, 8 February 2024, at 9.00 a.m. CET.
The presentation, including slides, can be followed live via audio webcast.
If you wish to join the phone Q&A session, please dial in using the following numbers and ask for “Leonteq full-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 for other countries: click here
This press release, the full-year 2023 results presentation and the Annual Report 2023 are available at: https://www.leonteq.com/fullyearresults
A digital playback of the telephone conference will be available for one month at: https://www.leonteq.com/fullyearresults
Important dates
28 March 2024 Annual General Meeting 2024
03 April 2024 Ex-dividend date
04 April 2024 Record date
05 April 2024 Payment date
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 Annual Report 2023 on page 9.
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, the Middle East and Asia. Leonteq AG has a BBB credit rating by Fitch Ratings, was assigned with an AA ESG rating by MSCI and is listed on the SIX Swiss Exchange (SIX: LEON).
www.leonteq.com
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