Leonteq Aims for Sustainable Profitability Amid Lower Revenues
Structured products specialist Leonteq, which also operates a subsidiary in Singapore, reported higher pre-tax earnings for the first half of 2025 despite a drop in overall operating income. The company is implementing targeted measures to restore sustainable profitability and has announced plans to return capital to shareholders.
Operating income reached 124.3 million Swiss francs ($155 million) during the period, representing a 7 percent decrease compared to the same timeframe in 2024, Leonteq said on Thursday. The drop in income was mainly driven by a 25 percent decline in commission and service fees, which fell to 88.0 million francs. This was attributed to lower product margins and a decrease in large-ticket transactions.
However, the impact was partially offset by a significant boost in trading income. Hedging activities benefited from a temporary spike in market volatility in April 2025, resulting in a 39.5 million franc increase in trading income, up from 11.2 million francs a year earlier.
Cost Discipline Supports Operating Margin
In tandem with the lower revenue, Leonteq reduced operating expenses by 9 percent, bringing them to 109.7 million francs. Excluding 2.5 million francs in restructuring and regulatory-related costs, underlying expenses declined by 11 percent.
While IFRS-based pre-tax profit rose by 9 percent to 14.1 million francs, net profit fell 41 percent to 9.3 million francs, mainly due to a higher tax burden.
Regulatory Transition and Legacy Issues Weigh
«Leonteq’s results for the first half of 2025 reflect several challenges that have accumulated in recent years,» CEO Christian Spieler noted. The implementation of a new regulatory regime has consumed significant internal resources.
Additionally, ongoing uncertainties related to legacy compliance matters have dampened client activity, although Spieler expressed optimism that these issues will be resolved in the coming months.
Strong Capital Base Amid Regulatory Shift
As part of the new regulatory framework, Leonteq reported risk-weighted assets (RWA) of 4.6 billion francs as of June 30, 2025, with 2.7 billion linked to market risk. The CET1 capital ratio stood at 14.4 percent—well above the regulatory minimum of 7.0 percent—while the total capital ratio reached 14.4 percent, exceeding the 10.5 percent threshold.
The firm also highlighted progress in its discussions with FINMA, the Swiss Financial Market Supervisory Authority, on finalizing a tailored regulatory liquidity framework.
Strategic Plan Targets Growth and Efficiency
Leonteq has outlined strategic priorities and a 12- to 24-month roadmap to restore profitability. The focus lies in three core areas: downsizing underperforming operations, optimizing established segments, and growing promising initiatives.
Key moves include the planned exit from Japan via a business sale and the discontinuation of the «Bench» pension solution by 2026. By then, around 30 percent of non-sales/trading staff are expected to be based in the company’s Lisbon service center.
New Financial Targets and Shareholder Returns
For the period 2024 to 2027, Leonteq is targeting an average annual revenue growth of 7 percent while maintaining a largely stable cost base. By 2027, the company aims to achieve a pre-tax profit of 60 to 80 million francs and a return on tangible equity (RoTE) of approximately 10 percent.
The dividend policy has also been revised. The company now aims to pay 30 percent of its group profit as an ordinary dividend. If the CET1 capital ratio exceeds 15 percent, Leonteq plans to initiate share buybacks in the following year.
