Leonteq Ag · SIX:LEON
Leonteq — H1 2018 Earnings Presentation
37 slides from Leonteq's earnings presentation, Jul 19, 2018
Slide 1: Results Presentation Half Year 2018
ZURICH, 19 JULY 2018 LEONTEQ AG RESULTS PRESENTATION | HALF YEAR 2018
Slide 2: Legal Disclaimer
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 LEGAL DISCLAIMER Not for release, publication or distribution in the United States of America, Canada, Japan or Australia This document is not an offer to sell or a solicitation of offers to purchase or subscribe for shares or any other secu
Slide 3: Agenda
AGENDA RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 • OVERVIEW • FINANCIAL RESULTS H1 2018 • STRATEGY UPDATE • SUMMARY & OUTLOOK • APPENDIX 3
Slide 4: Overview
OVERVIEW RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 4
Slide 5: Key Take Aways
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 KEY TAKE AWAYS • Solid net profit of CHF 40.1 million in H1 2018 compared to CHF 1.2 million in H1 2017 • Total operating income up 36% to CHF 136.1 million, driven by 22% growth in net fee income Financials and improved net trading result •
Slide 6: Financial Results H1 2018
FINANCIAL RESULTS H1 2018 RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 6
Slide 7: Improved Profitability
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 FINANCIAL RESULTS H1 2018 IMPROVED PROFITABILITY Total operating income (CHFm) Total operating expenses (CHFm) Net profit (CHFm) 200 120 -3% 60 +CHFm +36% 38.9 150 90 45 100 60 30 99.0 93.1 95.7 136.1 40.1 50 100.2 115.2 30 15 21.9 1.2 0 0 0
Slide 8: Cost Base 2018E: Targeted Investments in Growth
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 COST BASE 2018E TARGETED INVESTMENTS IN GROWTH Cost base development (in CHFm) • New investment plan to 190 increase staff base by approx. 10% (mainly IT specialists) over the next 12 months 3 • Closely monitor business 2 180 development and
Slide 9: Investment Solutions: Sustained Growth in Turnover and Fee Income
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 INVESTMENT SOLUTIONS SUSTAINED GROWTH IN TURNOVER AND FEE INCOME Turnover (CHFbn) Fee income margin (bps) Net fee income (CHFm) 20 100 160 +21% +24% 15 95 120 90 90 10 90 88 80 114.2 13.0 94.3 101.1 5 10.5 11.2 85 40 0 80 0 H1 H2 H1 H1 H2 H1
Slide 10: Banking Solutions: Increased Contribution from New Partnership
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 BANKING SOLUTIONS INCREASED CONTRIBUTION FROM NEW PARTNERSHIP Turnover (CHFbn) Fee income margin (bps) Net fee income (CHFm) +27% 4 +21% 80 20 3 70 15 63 60 60 2 60 10 18.4 16.1 2.9 14.5 2.4 2.7 1 50 5 0 40 0 H1 H2 H1 H1 H2 H1 H1 H2 H1 2017
Slide 11: Insurance & Wealth Planning Solutions
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 INSURANCE & WEALTH PLANNING SOLUTIONS COMPETITIVE ADVANTAGE OF UNIQUE PRODUCT DESIGN Net new policies Outstanding policies Net fee income (CHFm) +41% +11% 4,000 40,000 20 +24% 3,000 30,000 15 2,000 20,000 10 3,933 3,762 37,150 33,388 29,455
Slide 12: Regional Performance
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 REGIONAL PERFORMANCE SOLID PERFORMANCE IN SWITZERLAND AND EUROPE Switzerland EMEA APAC (Net fee income | CHFm) (Net fee income | CHFm) (Net fee income | CHFm) 100 100 24 +29% -8% +27% 75 75 18 50 50 12 19.7 18.1 63.3 64.3 16.5 25 52.6 25 58.
Slide 13: Regulatory Capital: Business Volumes Drive Capital Requirements
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 REGULATORY CAPITAL BUSINESS VOLUMES DRIVE CAPITAL REQUIREMENTS Risk weighted assets (CHFbn) Eligible capital (CHFm) Core equity tier 1 ratio (%) 4,000 600 24 -1.3PP +4% +11% 3,000 450 18 2,000 300 12 22.7 19.6 18.3 419.7 437.5 2,381 386.7 1,
Slide 14: Strategy Update
STRATEGY UPDATE RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 14
Slide 15: Turnaround Completed: Main Achievements 2017/2018
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 TURNAROUND COMPLETED MAIN ACHIEVEMENTS 2017/2018 • Resolved balance sheet restrictions and product limitations with a key issuance partner Issuance partners • Achieved good progress with Crédit Agricole CIB and Standard Chartered Bank • Incr
Slide 16: Current Challenges: Scalability Limited by Capital Constraints
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 CURRENT CHALLENGES SCALABILITY LIMITED BY CAPITAL CONSTRAINTS Turnover & margins* Platform assets & capital intensity 30 120 15 30 114 26.2 94 22.7 84 83 10 19.6 20 20 80 18.3 26.8 13.2 11.4 10 20.9 40 5 10 18.6 9.2 15.9 7.9 0 0 0 0 2015 201
Slide 17: Strategic Priorities
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 STRATEGIC PRIORITIES CREATE THE BASIS FOR FURTHER SUSTAINABLE GROWTH 1 • Plan to merge business line Investment Solutions and business line Banking Solutions, Reduce subject to pending FINMA approval complexity • Leaner, more systematic and
Slide 18: 1. Reduce Complexity: Merge Business Lines
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 1. REDUCE COMPLEXITY MERGE BUSINESS LINES Merge business lines Project management Insurance & Product Chairman Investment Banking Wealth Planning Solutions Solutions Solutions Product Owner Insurance & Investment Scrum Master* IT Developers
Slide 19: 2. Enable Scalability
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 2. ENABLE SCALABILITY MAKE BUSINESS MODEL MORE SCALABLE LEONTEQ PLATFORM • SHIP connects issuance partners with hedging partners ISSUERS • Capital intensity without SHIP: each CHF 1 billion platform assets triggers approx. CHF 200 million ri
Slide 20: 3. Invest in Growth: Strengthen Platform and IT Organisation
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 3. INVEST IN GROWTH STRENGHTEN PLATFORM AND IT ORGANISATION INVESTMENT SOLUTIONS INSURANCE & WEALTH PLANNING SOLUTIONS • Proprietary technology platform with one of • Capital and cost efficient offering, based on the largest universes of str
Slide 21: 4. Strengthen Capital Base: Capital Increase and Dividend Policy
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 4. STRENGTHEN CAPITAL BASE CAPITAL INCREASE AND CHANGE IN DIVIDEND POLICY • Strengthened capital base will allow to further grow the business, while investing in measures to enhance scalability of the business model • Targeted net proceeds o
Slide 22: Targets 2020
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 TARGETS 2020 COMMITMENT TO NEW FINANCIAL TARGETS Operating income (CHFm) Cost/Income Ratio 300 100 • Leonteq maintains its disciplined 75 cost management while growing 200 its topline • Updated financial targets increase ~300 50 91% 89% tran
Slide 23: Summary & Outlook
SUMMARY & OUTLOOK RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 23
Slide 24: Summary & Outlook
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 SUMMARY & OUTLOOK • Turnaround confirmed with solid H1 2018 performance • Four major strategic priorities defined with the aim of enhancing the scalability of Leonteq’s business and facilitating further growth • Continued investments in tech
Slide 25: Appendix
APPENDIX RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 25
Slide 26: Income Statement
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 INCOME STATEMENT CHFm FY 2015 FY 2016 FY 2017 H1 2017 H2 2017 H1 2018 Change y-o-y Net fee income 228.7 209.0 247.0 119.4 127.6 145.7 22% Net trading result (4.1) 5.5 (25.8) (16.4) (9.4) (3.7) (77%) Net interest result (4.9) (7.5) (8.8) (4.9
Slide 27: Details on Income Statement Items
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 DETAILS ON INCOME STATEMENT ITEMS Net trading income (CHFm) FY 2015 FY 2016 FY 2017 H1 2017 H2 2017 H1 2018 Negative treasury carry (21.1) (16.9) (12.6) (7.0) (5.6) (5.0) Hedging contribution 17.0 22.4 (13.2) (9.4) (3.8) 1.3 Net trading resu
Slide 28: Revenues H1 2018
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 REVENUES H1 2018 Weekly revenue development (in CHFk) • Stable fee income generation 17,500 (on average CHF 5.6 million per week) 15,000 • Contribution of large ticket trans- actions to fee income increased 12,500 to 7% from 5% • Market envi
Slide 29: Balance Sheet
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 BALANCE SHEET CHFm 31.12.2015 31.12.2016 31.12.2017 30.06.2018 Cash and receivables 786.3 603.6 1,022.5 1,719.9 Financial assets 5,707.7 4,841.8 5,204.7 6,658.7 Other assets 93.2 112.8 120.7 133.1 Total assets 6,587.2 5,558.2 6,347.9 8,511.7
Slide 30: Staff Base
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 STAFF BASE FTE by region 31.12.2015 31.12.2016 31.12.2017 30.06.2018 Switzerland 343 350 305 309 Europe 63 84 70 71 Asia 57 76 65 65 Total FTEs 463 510 440 445 FTE by function 31.12.2015 31.12.2016 31.12.2017 30.06.2018 Business units 179 21
Slide 31: Key Performance Indicators
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 KEY PERFORMANCE INDICATORS1 Group KPIs FY 2015 FY 2016 FY 2017 H1 2017 H2 2017 H1 2018 Platform assets (CHFbn)2 7.9 9.2 11.4 10.2 11.4 13.2 Whereof issuance partner business (CHFbn) 4.7 6.8 8.4 7.5 8.4 9.7 Whereof issuance partner business (
Slide 32: Investment Solutions
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 INVESTMENT SOLUTIONS • Provide over 1,000 clients in more than 50 countries access to one of the largest universes of structured investment products with more than 2,000 underlyings and 90 payoffs • Multi-issuer offering to clients for up to
Slide 33: Structured Product Market Switzerland
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 STRUCTURED PRODUCT MARKET SWITZERLAND Total market turnover structured products (in CHFbn)* Total market turnover split by product group 2017 Leonteq platform 2% market 7.9% 9.2% 9.6% share 15% 300 CAGR YIELD ENHANCEMENT +8% PARTICIPATIO
Slide 34: Insurance & Wealth Planning Solutions
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 INSURANCE & WEALTH PLANNING SOLUTIONS • Offer digital platform to life insurers, enabling unit-linked retail products with financial protection • Provide a viable alternative to traditional guarantee product approaches (which are no longer e
Slide 35: Individual Life Insurance Savings Market Switzerland
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 INDIVIDUAL LIFE INSURANCE SAVINGS MARKET SWITZERLAND Total market for individual life insurance savings policies Market shares in Switzerland (premiums in CHFbn)1 2016 10 20.3% SWISS LIFE 8 6.6% GENERALI HELVETIA2 4.4% 15.3% 6 AXA 4.
Slide 36: Shareholder Structure
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 SHAREHOLDER STRUCTURE1 40% Shareholder group Raiffeisen Switzerland2 29.02% Lukas Ruflin family interests3 8.15% Sandro Dorigo 2.45% 21% Institutional investors 1 As per Leonteq share register at 30 June 2018 and 21% significant shareholding
Slide 37: Key Performance Indicators Definitions
RESULTS PRESENTATION | HALF YEAR 2018 ZURICH, 19 JULY 2018 KEY PERFORMANCE INDICATORS DEFINITIONS Platform assets Platform assets are defined as the outstanding volume of products issued and traded through Leonteq’s platform Return on equity Return on equity has been calculated as the ratio of annua