Swissquote, Switzerland's largest online bank, booked lower net profits in the first six months of the year as income from crypto assets falls sharply Even so, it plans to launch its own crypto exchange.
Net profit at Swissquote fell 33.7 percent in the first six months of the year to 77.1 million Swiss francs ($80.8 million) resulting in a net profit margin of 38.6 in contrast to 44 percent during the same time last year, the company announced Wednesday.
Swissquote said the environment in which it was operating «was more challenging than initially expected» with most asset classes seeing a decrease in value, but «crypto assets suffered in particular from a sharp correction», resulting in a 69.2 percent decrease in net crypto asset income to 19.5 million francs.
While crypto was pummeled, there were bright spots as well. Net fee and commission income rose 9.8 percent and net interest income rose by 49.8 percent compared to the first half of last year. In addition, Swissquote said that during the first half there were «clear signs of reversal» in the interest rate environment and already contributing to the results as interest income in the first half was almost at the level of all of last year.
Central banks have abandoned their easy money policies in recent months, and Swissquote said it expects to benefit from the higher benchmark rates. In fact, for 2022 as a whole, it expects its interest income will be 2.5 times higher than in 2021. This also allowed the bank to either waive or reduce negative interest rates for its clients.
Client Money Flows
Even in the difficult environment, Swissquote attracted nearly 35,000 new clients resulting in 5 billion francs of new money which according to the company demonstrates solid customer interest. Even so, that was more than canceled out by a negative market impact of 9.1 billion.
This is reflected in crypto assets under custody which declined to 1.1 billion francs in the first half from 2.8 billion during the same year-ago period even though some customers increased major crypto asset holdings.
New Crypto Exchange
By the end of September, Swissquote will launch its own crypto exchange, operating its centralized order book, and allowing its customers to trade amongst themselves.
The company also has the «Yuh» mobile app which has 75,000 customers and now supports Apple and Google pay.
Cautious for Now
With the current environment of uncertainty, Swissquote is remaining cautious for the time being «in particular with respect to the length of the crypto market downturn.»
For 2022, the bank expects net revenues between 400 and 420 million francs with a pre-tax profit somewhere near 190 million francs.
Non-Organic Growth
At the end of April, Swissquote finalized the acquisition of Keytrade Bank Luxembourg, integrating some 8,000 customers with 1.7 billion francs in assets, reinforcing its Benelux presence. The bank said it will look at further M&A transactions if they mesh with Swissquote's strategy.
