Leonteq’s Investment Solutions business has reported its best financial results since its creation with a 7% increase in total turnover to CHF28.8 billion, according to the Swiss firm’s 2018 results.
The specialist structured products provider also increased its issuance by 7% to 28,360 structured products. Total platform assets (volume outstanding) rose to CHF11.9 billion, up from CHF11.4 billion at end-2017.
The platform assets of Leonteq’s issuance partners increased to CHF8.8 billion, up 5% compared to end-2017, while the volume of Leonteq’s own products outstanding increased by 3% to CHF3.1 billion. The Investment Solutions business also posted a 9% growth in net fee income to CHF246.7m and total operating income rose by 30% to CHF250.2m.
Leonteq’s Insurance & Wealth Planning Solutions business, net fee income grew by 23% to CHF 25.8m and total operating income rose by 31% to CHF29.7m. This increase was attributed to the prevailing low interest rate environment, which enabled insurers to combine sought-after guarantee components with the advantages of unit-linked life insurance, said the firm. The number of outstanding policies serviced on the platform increased by 23% to 41,195 policies as of 31 December 2018.
In its home market Switzerland, Leonteq grew its net fee income by 13% to CHF115.3m in 2018. In Europe, the business generated a 15% increase in net fee income to CHF125.3m over the same period. The Asia region saw a 12% decrease in net fee income year on year to CHF31.9m, reflecting reduced client activity on the back of macroeconomic uncertainty and increased competition.
Leonteq highlighted a number of recent developments as drivers of the firm’s results including the launch of its Smart Hedging and Issuance Platform (Ship) which is designed to reduce its hedging exposure by offering Leonteq’s issuance partners the opportunity to enter into hedging transactions for their issued products with external hedging partners. The Ship platform was soft launched in a test environment for a limited number of clients, and will be implemented in stages within the next 12 to 18 months.
Leonteq also expanded the cooperation with existing platform partners in 2018. The range of products for EFG International was increased by adding foreign exchange products to the platform; while Raiffeisen added new currencies and payoffs. The firm’s web-based multi-issuer platform Constructor was also expanded by adding Cornèr Bank as a new issuer; improved pricing request automation for Crédit Agricole; and automated key product types such as fixed coupon notes and autocallable features for Standard Chartered Bank.
In the actively managed certificates (AMC), Leonteq increased operational efficiency of its gateway ‘with greater adjustability, cost efficiency and transparency’.
Leonteq also mentioned the launch of its ‘digital marketplace’ - a new initiative to revamp completely its product discovery, pricing, execution and post-trade offering, and increase efficiency across front-, middle- and back-office processes, as well as the implementation of new payoffs and a direct roll-out of new services. The first modules of Leonteq’s have already been released to selected clients and the project is expected to be completed in stages by the end of 2020.
The firm’s net profit stood at CHF91.5m in 2018 from CHF23.1m in the prior year; while total operating income rose by 31%, driven by 10% growth in net fee income and positive contributions from hedging activities.
Leonteq chief executive officer Lukas Ruflin (pictured) said: ‘We achieved the highest profit in the history of our company, consistently using business opportunities and taking advantage of volatile markets. We also improved revenue diversification, strengthened cooperation with our issuance partners and further advanced strategic initiatives to enhance the scalability of our platform, unlock additional value and support further growth.’