Leonteq's structured products platform turnover grew by 28% to CHF26.8bn (€26.13bn) on the back of 26,575 structured products issued in 2017 and 'solid' market demand, according to the firm's 2017 result report.

The Swiss firm reported that platform assets (volume outstanding) grew to CHF11.4bn as at December 31, 2017 from CHF9.2bn at end-2016. The platform assets of Leonteq's platform partners also increased to CHF8.4bn during the same period, up 24% compared to end-2016. The volume of Leonteq's own products outstanding increased by 25% to CHF3bn by the end of 2017.

'We have increased our issuance capacity with key partner banks, taken the necessary rightsizing measures and demonstrated our ability to rigorously manage our cost base,' stated Leonteq's chief executive, Marco Amato (pictured). 'Our underlying business is healthy and we have seen solid demand for structured products across all regions and business lines despite historically low levels of volatility. In addition, we have onboarded renowned banking and insurance partners and made further progress with our expansion in Asia.'

Leonteq issuance increased by 27% in 2017. As a result, total turnover grew by 28% to CHF26.8bn with the firm's home market Switzerland, growing its revenues by 25% to CHF102.3m. According to the report, the firm's Asia region activities performed strongly, delivering a 21% increase in net fee income year on year to CHF36.2m and reporting progress in its efforts to onshore the operation in Japan and it registered Leonteq Securities (Japan) Preparation Limited in Tokyo. In addition, the business in Europe grew by 12% to CHF108.5m in 2017.

Leonteq reported the collaboration agreement with Standard Chartered Bank in the second half of 2017, for the issuance and distribution of structured products under the Standard Chartered Bank notes, certificates and warrants programme. As part of the collaboration, Leonteq supports Standard Chartered Bank in the distribution of structured products in Switzerland, the European Economic Area, Hong Kong and Singapore.

Additionally, the Swiss firm reported 'solid progress' in its cooperation with Crédit Agricole CIB after the launch in the first quarter of 2017 of a platform solution developed specifically for the French bank to enhance its in-house issuance capabilities and to offer structured products to its own clients.

2018 outlook

According to Leonteq, its priorities going forward will continue to focus on expanding the scope of its existing cooperation with banking partners and broadening the product offering. The firm also stated that it will continue to 'rigorously manage costs while selectively investing in new hires and in important growth projects, such as the onshoring of the operation in Japan as well as the further development and expansion of its cooperation with Crédit Agricole CIB and Standard Chartered Bank'.

Total operating expenses of around CHF180m (excluding one-off costs; currently no material items are anticipated) are expected for the full year 2018.

To drive profitable growth in the future, Leonteq will implement the automation of payoffs and front-to-back processes as well as additional measures to 'boost client profitability and optimise balance sheet usage at transaction level'.

Leonteq has also launched a new project to reduce the capital intensity of its structured product business by transferring market risk to external hedge providers.

'The growth in net fee income in both the second half and full year 2017 was driven by increased client demand across all business lines, as well as the resolution of issues with key banking partners,' stated the firm.

The investment solutions business line posted 36% growth in turnover to CHF21.7bn in 2017 on the back of increased issuance capacities and strong growth in Leonteq issued products. Following a reduction in the fee income margin from 109 basis points in 2016 to 90 basis points, net fee income in investment solutions increased moderately by 13% to CHF195.4m in 2017.

The banking solutions business line generated a rise in net fee income of 29% to CHF30.6m as a result of an increase in the fee income margin of 12 basis points to 60 basis points. In insurance & wealth planning solutions, net fee income was CHF21.0m (+69%), 'mainly reflecting competitive product design in the prevailing low interest rate environment, which enables insurers to combine sought-after guarantee components with the advantages of unit-linked life insurances'.

Serviced net new policies more than doubled in 2017 and a record of 33,388 policies were outstanding on the platform at end-2017. The decrease in net trading income reflects negative contributions from hedging activities in the amount of CHF-13.2 million resulting from record low levels of volatility in 2017, compared to CHF22.4m in 2016. At the same time, the negative treasury carry on Leonteq's own products improved by CHF4.3m (-25%) to CHF-12.6m in 2017.

Click in the link to read Leonteq's full 2017 report.

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There is no comparable outfit in the structured products market, Leonteq