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Investing.com -- Swissquote (SIX:SQN) shares fell more than 7% on Thursday after the company issued a cautious outlook for 2025, guiding below market expectations despite a strong 2024 performance.
The Swiss banking group cited heightened uncertainty as a key factor behind its restrained forecasts, even as revenue surged 24% last year, driven by growth in trading activity and crypto income.
Swissquote reported full-year 2024 pre-tax profit of CHF346 million, slightly below the consensus estimate of CHF354 million.
Net revenue, however, came in at CHF661 million, surpassing the consensus forecast of CHF657 million.
The company saw a notable improvement in its pre-tax profit margin, which reached 52.3%, reflecting strong operational efficiency. The Common Equity Tier 1 (CET1) ratio remained robust at 23.5%.
Total (EPA:TTEF) client assets grew to CHF76 billion, with net new money amounting to CHF8.3 billion.
On average, client assets per account stood at CHF117,000. Management has set guidance for 2025 with projected net revenue of CHF675 million, below the consensus of CHF713 million, and pre-tax profit expectations of CHF355 million against the consensus of CHF389 million.
The company expects total client assets to reach CHF83 billion, with a revenue margin of 85 basis points.
Early indications suggest that crypto trading has remained a positive driver into 2025, contributing to client onboarding and reactivation trends.
While higher cash deposits may provide some compensation in terms of interest income, this is not expected to be a major factor in 2025.
Jefferies analysts view the company’s cautious guidance as reflective of broader market uncertainty. Swissquote shares have declined 11% from their February peak, aligning with the more reserved outlook.
Revenue for the year rose by 24% to CHF661 million, driven by a 25% increase in net fee and commission income, which reached CHF178 million.
A key contributor was the CHF67 million rise in crypto assets income. Net interest income grew by 5%, supported by higher customer cash deposits despite declining interest rates.
Net trading income saw a strong jump of 41%, fueled by increased trading activity.
Non-transaction-based revenue accounted for 48% of the total, while revenue generated outside Switzerland made up 42% of the overall figure.
Expenses rose by 17% to CHF316 million, largely due to an increase in payroll and strategic marketing investments.
Swissquote’s joint venture Yuh contributed positively to earnings for the first time, delivering a profit of CHF1.7 million. The company’s pre-tax profit of CHF346 million resulted in a solid 52.3% margin.
For 2025, Swissquote aims to achieve a net revenue margin of 85 basis points, with securities and eForex at 52 basis points (flat year-over-year), interest income at 24 basis points (down 9 basis points), and crypto at 9 basis points (down 4 basis points).
In the mid-term, the company targets CHF500 million in pre-tax profit by 2028, supported by approximately CHF7 billion in net new money annually and 50,000 new accounts per year.
The company anticipates maintaining a 90-basis-point margin on client assets, with non-transaction-based revenue making up around 40% of total income.
The pre-tax profit margin is expected to settle around 55%, resulting in CHF500 million in pre-tax profit by 2028.