The Swiss derivatives boutique's profits collapsed in the wake of market ructions in the pandemic. It is also beefing up its top management.
Covid-19 hit Leonteq hard: the Zurich-based derivatives firm's first-half net profit slid 82 percent to 5.5 million Swiss francs, it said in a statement on Thursday. A 107.1 million franc trading loss, from losses on hedges related to oil price swings and dividend shortfalls as well as sharply higher prices for the insurance instruments against losses, are behind the profit collapse.
In its outlook, Leonteq said it will keep investing strategically, and reiterated that it expects to spend roughly 200 million francs this year. It will «near-shore» some outside information technology staff and others in Lisbon by the fourth quarter, then begin ramping up next year towards roughly 100 staff in Portugal by 2022.
Darkness Vs Light
The downbeat result masks bright spots: its commission and fee revenue surged 76 percent to 213 million francs. «Our results for the first half of 2020 prove that Leonteq can weather the storm in real periods of market stress and safeguard its profitability,» CEO Lukas Ruflin said.
«While the bottom-line result is disappointing, we are encouraged by the further strengthening of our client franchise and the significant progress we have made by diligently executing the strategic priorities we defined two years ago,» he added.
Banking Tie-Up
Leonteq also notched an industry win, linking up its digital marketplace for derivatives with Barclays’ electronic trading platform. This makes the U.K. investment bank the first third-party issuer on Leonteq's platform, for clients in Switzerland as well as in some European and Asian markets.
The company also said it is hiring Markus Schmid as its people chief, effective in October. The Swiss executive, who has experience in cultural transformations, will join Leonteq's top management.
