Swissquote (SWX: SQN) is targeting to close 2024 with an annual revenue of CHF 595 million and a pre-tax profit of CHF 300 million. The guidance came as the company’s revenue for 2023 increased 30.2 percent to CHF 531.4 million, while the pre-tax profit jumped 26 percent to CHF 270.9 million. Earlier, the company said that it ended 2023 with a set of record financial numbers.

Interest Income Windfall Is Fading

Last year, Swissquote brought in CHF 213.1 million from interest income. It further witnessed resilient cash deposits, which comprised 15 percent of the total client assets. It highlighted that 2023 was the first year when non-transaction-based revenues, with 58 percent, exceeded transaction-based revenues, with 42 percent.

Despite the strong guidance, the Swiss company is expecting its interest income likely to be affected by potential policy rate cuts. However, the company observed “ an upswing in trading optimism” since the last quarter of 2023.

“Getting closer to its medium-term targets set for 2025, Swissquote confirms that the pre-tax profit of CHF 350 million remains the primary objective, which should be achieved with a pre-tax profit margin above 50 percent,” the company noted.

Swissquote Enters South Africa

Additionally, the Swiss broker is expanding its global presence. It has entered the South African markets with the acquisition of Optimatrade Investment Partners, a locally regulated financial services provider. The two companies had a decade long relationship as Optimatrade was acting as an introducer for Swissquote.

The Swiss broker revealed that the commission expenses incurred by last year was about 0.4 percent of net revenues.

Although Swissquote revealed that Optimatrade's CEO will retain his role, it did not disclose the purchase price. The acuisition is expected to be completed by March 1, 2024.

A Decline in Trading Demand

Detailing the revenue streams of last year, Swissquote highlighted that its new fee and commission income decreased 4 percent due to a low level of customer activity. Income from the crypto assets took a dent of 31.9 percent due to low volatility during most of the year. Further, the net eForex income decreased 2.7 percent.

“Even though both eForex assets and volumes grew in comparison to the previous year, the low volatility, which dominated FX markets, affected the profitability of the eForex volumes. Net trading income increased by 2.6%, supported by the development of new products and services (e.g. debit cards and payments),” the company added.

Meanwhile, other company metrics improved. It added 35,328 accounts last year, taking the total number of client accounts to 574,274. The number of trading accounts on the platform grew 7.2 percent. It further highlighted that the number of Robo-advisory and savings accounts expanded 14.9 percent. However, the number of eForex accounts declined 4.3 percent, while the eForex assets elevated 7.2 percent.

Further, the internationally located customers represented a bigger share of net revenues of Swissquote than Swiss residents. The ratio is now 51 percent and 49 percent, respectively.

The overall client assets on the brokerage platform increased 11.1 percent to CHF 58 billion, an all-time high value. The inflow of new monies last year was CHF 5 billion.

“The strength of the Swiss franc affected both client assets and net new monies,” Swissquote pointed out.

Yuh App Remains Loss Making

Additionally, the number of accounts on Yuh, a 50 percent joint venture of Swissquote, jumped 80.8 percent last year to 193,175. The client assets on the app also improved from CHF 0.6 billion at the beginning of 2023 to CHF 1.4 billion at the end. However, the app contributed to a pre-tax loss of CHF 5 million, down from CHF 6.7 million in the previous year.

“In 2024, this contribution is still expected to be negative, but to a lesser extent. Early 2024, the number of Yuh accounts surpassed 200,000,” the brokerage added.