from Leonteq AG (isin : CH0190891181)
Press release: Leonteq publishes full-year 2022 results
Leonteq AG / Key word(s): Annual Results
Press release: Leonteq publishes full-year 2022 results
09-Feb-2023 / 06:45 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 LR
The issuer is solely responsible for the content of this announcement.
PRESS RELEASE | LEONTEQ PUBLISHES FULL-YEAR 2022 RESULTS
Zurich, 9 February 2023 | Ad hoc announcement pursuant to Art. 53 LR
Leonteq AG (SIX: LEON) delivers record results in 2022 for the second consecutive year in a challenging environment with unprecedented market conditions.
Financial highlights 2022
- Total operating income up 9% year on year to CHF 456.4 million
- Profit before taxes increased by 11% year on year to CHF 193.3 million
- Group net profit was stable at CHF 156.4 million; earnings per share rose 1% to CHF 8.58
- Capital base further strengthened to CHF 932.8 million (end-2021: CHF 873.6 million)
- Return on equity of 19% (2021: 21%)
Attractive capital returns to shareholders
- Proposed dividend up by 33% to CHF 4.00 per share for the financial year 2022 (2021: CHF 3.00 per share)
- Share buyback programme of up to CHF 18 million (equivalent to CHF 1.00 pro-forma distribution per share) expected to be launched in early April 2023
- Total distribution of CHF 5.00 per share; payout ratio to shareholders of 58%
- From 2023 onwards, capital return policy with payout ratio of more than 50%, including ambition to pay annual dividend of minimum CHF 2.00 per share and annual share buyback programmes
Change to the Executive Committee
- Marco Amato to step down as Deputy CEO & CFO by end-August 2023 after more than six years of service
- Search process to find a successor initiated by the Board of Directors
Focused execution of Growth Strategy 2026
- Tangible progress in delivery of strategic initiatives
- Considerable recognition from ESG ratings agencies: Double rating-upgrade to “A” by MSCI and upgrade to “Low Risk” from Sustainalytics
- New 2026 sustainability targets of >72% GPTW Trust Index and >25% gender diversity
Outlook
- Leonteq expects profit before taxes in the range of CHF 70-100 million for 2023
Selected key figures
(in CHF million unless otherwise stated)
FY 2022
FY 2021 Change
y-o-y Total operating income 456.4 417.8 9% Total operating expenses (263.1) (243.3)1 8% Profit before taxes 193.3 174.51 11% Group net profit 156.4 155.7 0% EPS (CHF) 8.58 8.47 1% Capital base 932.8 873.6 7% Return on Equity (%) 19% 21% (2pp)
1Tax provisions in the amount of CHF 12.3 million reclassified to taxes.
Lukas Ruflin, Chief Executive Officer of Leonteq, stated: “2022 was an exceptional year in many ways. We achieved a record result, underscoring the resilience of our business model, and we demonstrated our ability to further improve our earnings quality thanks to our efforts to further diversify our offering. At the same time, we delivered tangible and measurable progress against our four strategic pillars and received external recognition for our platform and sustainability efforts. Looking ahead, we will continue to invest in our key growth initiatives with a view to further expanding our ecosystem for investment solutions.”
Strong performance in 2022
2022 was marked by unprecedented market conditions with elevated levels of overall market volatility, particularly in the first and third quarter of the year. Leonteq continued to focus on disciplined risk management and saw more than a two-fold increase in its net trading result in 2022.
In view of the generally more challenging market environment for investors in 2022, Leonteq recorded subdued levels of client activity in most of its regions, resulting in a reduction in net fee income by around one-third compared to 2021. This was also driven by a significant decline in the number of large ticket transactions and higher fee expenses resulting from securities lending transactions. Despite these headwinds, Leonteq’s franchise remained strong, with around the same number of clients entering into transactions in 2022 as in the prior year. Furthermore, turnover generated with Leonteq’s own issued products remained relatively stable at CHF 13.6 billion, while turnover generated with Leonteq’s historic platform partners decreased to CHF 6.4 billion in 2022 from CHF 10.4 billion in 2021. This demonstrates investor confidence in Leonteq’s stand-alone position as an established player in the structured products market.
The strong net trading result compensated for reduced client activity. As a result, total operating income grew by 9% to CHF 456.4 million in 2022.
Total operating expenses rose to CHF 263.1 million in 2022, up 8% year on year, mainly reflecting continued investments in strategic initiatives in support of the Growth Strategy 2026. Leonteq also continued to further enhance its business and technology platform and increased its staff base to 582 FTEs at end-2022 (up 11%).
Leonteq reported 11% growth in profit before taxes to CHF 193.3 million in 2022, up from CHF 174.5 million in 2021. Income tax expenses of CHF 36.9 million in 2022 were significantly higher than the CHF 18.8 million reported in the prior year, which benefited from tax-loss carry-forwards.
As a result, and in line with the guidance provided on 27 December 2022, Leonteq reported Group net profit of CHF 156.4 million in 2022, in line with the record result of CHF 155.7 million in the prior year. Earnings per share rose by 1% to CHF 8.58, compared to CHF 8.47 in 2021.
Shareholders’ equity totalled CHF 870.0 million as of 31 December 2022, compared to CHF 802.1 million as of 31 December 2021. Together with deferred fee income of CHF 62.8 million, Leonteq further strengthened its capital base to CHF 932.8 million as of 31 December 2022. Return on equity was 19% for 2022 (2021: 21%).
Attractive capital returns to shareholders for 2022
The Board of Directors will propose a dividend of CHF 4.00 (2021: 3.00) per share for the financial year 2022 at the Annual General Meeting on 30 March 2023, which is to be paid in equal amounts out of retained earnings and capital contribution reserves. In addition, the Board of Directors has approved the launch of a programme to buy back up to CHF 18 million of Leonteq AG shares, equivalent to a pro-forma distribution of CHF 1.00 per share.
The dividend in cash together with the share buyback thus correspond to a total distribution of CHF 5.00 per share for the financial year 2022, and a payout ratio of 58% of Group net profit, in line with the previously announced target of more than 50%.
From the financial year 2023 onwards, Leonteq will continue to target a payout ratio of more than 50% of Group net profits, with the ambition to pay an annual dividend of at least CHF 2.00 per share combined with the intention to launch annual share buyback programmes if financial results permit.
Christopher Chambers, Chairman of Leonteq, stated: “Leonteq’s business has developed strongly in recent years and the company’s capital base has been significantly strengthened. Our refined capital return policy takes into account these developments. Our strong capitalisation further gives us the strategic flexibility to execute a larger direct share buyback if a sizeable block of shares becomes available. The Board of Directors is convinced that this accretive approach will offer attractive returns for our shareholders over the years to come.”
The share buyback programme for the financial year 2022 is expected to be launched at the beginning of April 2023 and to run until the end of December 2023. The execution of the programme is subject to market conditions and regulatory approvals. The shares are planned to be bought via a second trading line on SIX Swiss Exchange. Shares that have been repurchased under the programme are expected to be cancelled under the new Swiss capital band regime to be approved at the Annual General Meeting 2023.
Change to Leonteq’s Executive Committee
Marco Amato, Deputy CEO & CFO of Leonteq since 2016, will step down from his role by 31 August 2023 to pursue new opportunities.
CEO Lukas Ruflin said: “We owe Marco considerable thanks for his services to the benefit of the company. In addition to his current role, he also served as interim CEO from October 2017 to April 2018 during a challenging period for the company. During his tenure, Marco and his team have notably improved the Group’s financial planning processes and delivered increased transparency in reporting. He also was a driving force behind Leonteq’s Growth Strategy 2026 and the company’s sustainability initiative in recent years. Marco was thus in many ways instrumental in Leonteq’s development over the last more than six years, and we wish him all the best for the future.”
A search process to find a successor has been initiated by the Board of Directors.
Focused execution of Growth Strategy 2026
2022 marked the beginning of a new five-year strategy cycle and Leonteq made tangible progress in executing Growth Strategy 2026 across all four dimensions:
| | Offering In an effort to further expand and diversify its offering across products, asset classes and issuers, Leonteq introduced a new innovative white-labelling issuance model via structuringHUB, which is designed to reduce time-to-market and costs for banks. VP Bank became the first structuringHUB sponsor in 2022. Furthermore, Swissquote joined Leonteq’s multi-issuer platform, offering investors access to yield enhancement payoffs from Switzerland’s market leader in online banking. In the second half of 2022, the product offering was expanded to include participation products (e.g. Actively Managed Certificates, AMCs) and capital protection products. On the Smart Hedging Issuance Platform, all hedging counterparties successfully transitioned to the new alternative reference rates and Leonteq connected to an additional hedging counterparty in 2022. A total of nine counterparties (including Leonteq) are now connected to the platform. In 2022, Leonteq was recognised as a third-country administrator under the EU Benchmark Regulation (BMR). This will enable Leonteq to expand its investment solutions to clients by offering products that reference a wide range of indices which qualify as benchmarks under the BMR. Leonteq maintained its leading position in offering crypto assets in a securitised format by increasing its universe to a total of 30 crypto assets. Leonteq also launched its ETP+ label which uses a Switzerland-based custodian and collateral agent and entails for daily independent checks, which serve as key mitigators of issuer risk. Reflecting Leonteq’s increasingly diversified business offering that goes beyond the traditional structured products business, revenues from new business activities contributed 51% of overall revenues in 2022, an increase of 7 percentage points from the prior year. Platform |
| | Leonteq continued to invest in digital client solutions in 2022, leveraging its scalable technology platform. As part of these efforts, it launched a new range pricing feature on LynQs that allows parameters to be combined in accordance with individual investor demands, with matrix pricing results presented in the form of a heatmap in a matter of seconds. In addition, Leonteq rolled out a new LynQs "Academy" module, an online education programme developed in collaboration with the Lausanne-based Institute for Management Development (IMD) that provides a deep dive into the world of structured products. LynQs was named “Best Issuance Platform” by Structured Retail Products (SRP) in recognition of the continuous improvements made by Leonteq and its efforts to offer clients a wide variety of functionalities and rapid processing. These achievements and the accompanying marketing efforts led to a significant increase in the number of clients connected to LynQs, which grew by 37% to 890 financial intermediaries. Client transactions decreased to 171,863 in 2022 (2021: 264,213) but remained above the pre-pandemic level of 164,007 recorded in 2019, reflecting Leonteq’s continued business expansion. Leonteq started developing a crypto asset platform to support the custody, trading and settlement of digital assets as part of the expansion of its operating platform. It has also continued to build out its Sigma platform, which enables savings solutions on an automated and scalable basis. |
| | Regions Leonteq maintained its strong position in its Swiss home market in 2022. Together with its platform partners, Leonteq remained the leading issuer of SIX-listed yield enhancement products with a market share of 24%, and it currently ranks as the number three issuer of SIX-listed structured investment products (excluding leverage) with a market share of 12%. At this year’s Swiss Derivative Awards, Leonteq was recognised as the top service provider for the 12th consecutive year and received a special award for its white-labelling programme. Underscoring its strong client focus in the European market, Leonteq won a total of five awards at the SRP Europe Awards 2022. In Italy, Leonteq’s continued progress in establishing a strong market position was recognised at the Italian Certificate Awards, where it received four accolades, including taking first place in the “Certificate of the Year” category. In Portugal, Leonteq further strengthened its service centre in Lisbon, where it currently has 72 employees. As part of its ambition to further expand its offering to serve an international client base, Leonteq strengthened its regional management team in Hong Kong and Dubai and launched Shari’a compliant trust certificates with the aim to grow its business in the Middle East. On the back of heightened market uncertainty, Leonteq saw reduction in client activity in most of its regions in 2022. Net fee income in Switzerland was less affected due to the positive contribution from its Pension Savings business and the transfer of the sales coverage for the Nordics region from Europe to Switzerland. As a result, net fee income in Switzerland totalled CHF 96.1 million in 2022 (2021: CHF 117.2 million), operations in Europe generated net fee income of CHF 83.4 million (2021: CHF 146.3 million) and net fee income in the Asia region (including the Middle East) was CHF 23.7 million (2021: CHF 43.2 million). Sustainability |
| | In recognition of the company’s efforts to further integrate ESG considerations and sustainability practices into its business activities and to reporting transparently on its progress each year, Leonteq has received considerable recognition from ESG ratings agencies after publishing its first inaugural Sustainability Report in early 2022: MSCI, the world’s largest ESG provider, assigned Leonteq a double rating-upgrade to A from BB (on a scale of AAA-CCC) and Sustainalytics, another leading ESG research firm, assessed Leonteq to be at “Low Risk” of experiencing material financial impacts from ESG factors (upgraded from “Medium Risk”). Leonteq has also expanded its reporting framework and is today publishing its Sustainability Report in accordance with the GRI Standards 2021. Led by the Sustainability Committee, which is positioned at the Executive Committee level, the company defined a clear set of key performance indicators and key risk indicators to monitor and report progress against its sustainability strategy defined by the Board of Directors. Measures implemented in 2022 include the publication of Leonteq's Code of Conduct & Ethics, the publication of the Supplier Code of Conduct, and the establishment of a global escalation and whistleblowing policy and Integrity Line. Leonteq continued to develop its workplace culture and conducted an employee survey in cooperation with Great Place to Work® (GPTW). The results of the survey placed Leonteq’s Trust Index score at 68% (benchmark: 61%) and the overall satisfaction score at 74% (benchmark: 67%) and certified its operations in Zurich and Lisbon. Leonteq has also defined an improved GPTW Trust Index score to more than 72% as one of its 2026 ESG Targets alongside its target to increase the gender diversity to over 25% within its workforce by 2026. Employees are at the core of Leonteq's business and by making improvements in these areas, the Group believes positive change and further opportunities in other areas will follow. |
Outlook
Through its investments in key initiatives over the past few years, Leonteq has created a solid and diversified foundation for the company to build on. Leonteq’s client franchise remained strong in 2022 but heightened investor uncertainty is expected to persist in 2023 in a market environment characterised by continuous macro-economic and geopolitical uncertainty. On the back of the strategic progress made in recent years, Leonteq plans to increase its annual investments in key growth initiatives by around 50% to approximately CHF 32 million in 2023, compared to CHF 21 million in 2022. In terms of profitability, Leonteq expects profit before taxes of CHF 70-100 million for the full-year 2023.
Leonteq full-year 2022 results press and analyst conference
A press and analyst conference call with Lukas Ruflin, CEO of Leonteq, and Marco Amato, Deputy CEO and CFO of Leonteq, will be held today, 9 February 2023, at 9.30 a.m. CET.
The presentation can be followed live via audio webcast.
If you wish to join the phone Q&A session, please dial in using the following numbers 10-15 minutes before the start of the presentation and ask for ‘Leonteq full-year 2022 results’:
- Dial-in number Switzerland: +41 (0)58 310 50 00
- Dial-in numbers for other countries: click here
This press release, the full-year 2022 results presentation and the Annual Report 2022 are available at: https://www.leonteq.com/fullyearresults
A digital playback of the telephone conference will be available approximately one hour after the event and can be accessed for one month at: https://www.leonteq.com/fullyearresults
Important dates
- 22 March 2023 Close of share register
- 30 March 2023 Annual General Meeting 2023
- 03 April 2023 Ex-dividend date
- 04 April 2023 Record date
- 05 April 2023 Payment date
- 20 July 2023 Half-year 2023 results
Alternative Performance Measures used in this press release
The definitions of Alternative Performance Measures used in this press release are provided in the Annual Report 2022 on page 7.
CONTACT
Media Relations
+41 58 800 1844
media@leonteq.com
Investor Relations
+41 58 800 1855
investorrelations@leonteq.com
LEONTEQ
Leonteq is a Swiss fintech company with a leading marketplace for structured investment solutions. Based on proprietary modern technology, the company offers derivative investment products and services and predominantly covers the capital protection, yield enhancement and participation product classes. Leonteq acts as both a direct issuer of its own products and as a partner to other financial institutions. Leonteq further enables life insurance companies and banks to produce capital-efficient, unit-linked pension products with guarantees. The company has offices and subsidiaries in 13 countries, through which it serves over 50 markets. Leonteq AG is listed on the SIX Swiss Exchange (SIX: LEON). www.leonteq.com
DISCLAIMER
This press release issued by Leonteq AG (the “Company”) serves for information purposes only and does not constitute research. This press release and all materials, documents and information used therein or distributed in the context of this press release do not constitute or form part of and should not be construed as, an offer (public or private) to sell or a solicitation of offers (public or private) to purchase or subscribe for shares or other securities of the Company or any of its affiliates or subsidiaries in any jurisdiction or an inducement to enter into investment activity in any jurisdiction, and may not be used for such purposes. Copies of this press release may not be made available (directly or indirectly) to any person in relation to whom the making available of the press release is restricted or prohibited by law or sent to countries, or distributed in or from countries, to, in or from which this is restricted or prohibited by law.
This press release may contain specific forward-looking statements, e.g. statements including terms like “believe“, “assume“, “expect“, "target" “forecast“, “project“, “may“, “could“, “might“, “will“ or similar expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may result in a substantial divergence between the actual results, financial situation, development or performance of the Company or any of its affiliates or subsidiaries and those explicitly or implicitly presumed in these statements. These factors include, but are not limited to: (1) general market, macroeconomic, governmental and regulatory trends, (2) movements in securities markets, exchange rates and interest rates and (3) other risks and uncertainties inherent in our business. Against the background of these uncertainties, you should not rely on forward-looking statements. Neither the Company nor any of its affiliates or subsidiaries or their respective bodies, executives, employees and advisers assume any responsibility to prepare or disseminate any supplement, amendment, update or revision to any of the information, opinions or forward-looking statements contained in this press release or to adapt them to any change in events, conditions or circumstances, except as required by applicable law or regulation.
End of Inside Information
1555487 09-Feb-2023 CET/CEST