Leonteq: Expansion Eats into Profits

Leonteq, Finteq, results, platform

Leonteq posted a decline in first-half profit as spending rose. The derivatives specialist said it is cutting costs, but maintaining its strategy platform.

Leonteq’s profit fell 4 percent to 37.2 million Swiss francs in the first six months of 2016. In a statement Thursday, the firm said the first half was marked by a difficult environment, poor demand from clients, and considerable market uncertainty.

The firm said it made progress in the core platform partner business. The transaction volume with platform partners increased by 40 per cent to 8.7 billion. However, in line with strategy, turnover generated by Leonteq itself fell by 31 per cent to 3.1 billion.

Total margin on turnover decreased by 3 per cent to 101 basis points. Platform partner business, described as Finteq by Leonteq, contributed 81 billion francs of the total turnover of 119.3 billion francs.

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On the expense side, higher personnel costs as well as costs related to the purchase of new offices in London, Singapore and Hong Kong had an impact, causing the cost-income ratio to worsen from 65 to 68 per cent.

The cost control announced in April remains tight. The company expects to achieve savings of 10 million francs by 2017.

Regarding the expansion of the platform, Leonteq said the pipeline of further potential platform partners has grown to more than 25 in number. Currently seven banks are active on the Leonteq platform.

Leonteq is convinced of the long-term opportunities of this business model and is working on further developing its strategic priorities.

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