Leonteq Ag · SIX:LEON
Leonteq — FY2018 Earnings Presentation
37 slides from Leonteq's earnings presentation, Feb 7, 2019
Slide 1: Leonteq AG Results Presentation Full-Year 2018
ZURICH, 07 FEBRUARY 2019 LEONTEQ AG RESULTS PRESENTATION | FULL -YEAR 2018
Slide 2: Legal Disclaimer
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 LEGAL DISCLAIMER This presentation of Leonteq AG (the “Company”) serves for information purposes only and does not constitute research. This presentation and all materials, docu- ments and information used therein or distributed in the
Slide 3: Agenda
AGENDA RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 • OVERVIEW • FINANCIALS 2018 • BUSINESS UPDATE • STRATEGIC PRIORITIES • SUMMARY & OUTLOOK • APPENDIX 3
Slide 4: Overview
OVERVIEW RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 4
Slide 5: Highlights 2018
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 HIGHLIGHTS 2018 • Record group net profit of CHF 91.5 million in 2018, up from CHF 23.1 million in 2017 • Cost/income ratio improved from 89% to 67% • Structured products turnover grew by 7% to CHF 28.8 billion and the number of product
Slide 6: Focused Execution on Strategic Priorities in 2018
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 FOCUSED EXECUTION ON STRATEGIC PRIORITIES IN 2018 PRIORITIES DEFINED IN H1 2018 UPDATES & ACHIEVEMENTS • Business line Investment Solutions and business line Increase efficiency, reduce functional Banking Solutions merged Reduce 1 compl
Slide 7: Financials 2018
FINANCIALS 2018 RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 7
Slide 8: Financial Results 2018: Leonteq Delivered a Record Net Profit
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 FINANCIAL RESULTS 2018 LEONTEQ DELIVERED A RECORD NET PROFIT Net profit (CHFm) 100 +296% 80 +135% 60 91.5 40 51.4 20 40.1 23.1 21.9 1.2 0 H1 2017 H2 2017 H1 2018 H2 2018 FY 2017 FY 2018 • Total operating income rose by CHF 67.0 million
Slide 9: Revenue Development
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 REVENUE DEVELOPMENT HIGHER VOLATILITY LEVELS DRIVE TRADING RESULT Net fee income (CHFm) Net trading result (CHFm) Net interest result (CHFm) +90% +69% 280 +10% 30 0 -1% -3.9 210 15 -4 -7.5 -7.4 25.1 21.4 -8.8 140 0 -8 -14.9 272.5 -3.7 2
Slide 10: Cost Development 2018
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 COST DEVELOPMENT 2018 CONTROLLED COST BASE & SELECTED GROWTH INVESTMENTS Total operating expenses 2018 (CHFm) 2018 • Hiring of additional staff, CIR including IT specialists, 200 67% initiated resulting in head- 190 count increase of 46
Slide 11: Segment Profits
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 SEGMENT PROFITS GROWTH IN PROFITS DESPITE CHALLENGING MARKET ENVIRONMENT Profit before taxes (CHFm) 60 Growth in total operating income in both Investment Solutions and Insurance & 50 Wealth Planning Solutions combined with controlled c
Slide 12: Solid Balance Sheet with Low Risk Profile
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 SOLID BALANCE SHEET WITH LOW RISK PROFILE LEVERAGE RATIO IMROVED TO 8.2% Assets (CHFbn) Liabilities and shareholders’ equity (CHFbn) • Total assets rose by 68% to CHF 10.7 billion • Increase in both assets and Cash & receivables 1.7 Sho
Slide 13: Shareholders' Equity
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 SHAREHOLDERS’ EQUITY CONTINUED BUILD-UP OF CAPITAL BASE Shareholders’ equity (in CHFm) 700 In line with the dividend policy announced with the half-year 2018 results, the 0.5 Board of Directors will 600 propose to shareholders that no d
Slide 14: Regulatory Capital
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 REGULATORY CAPITAL STRONG CAPITAL POSITION Risk-weighted assets (in CHFbn) BIS total capital ratio (in %) +30% 2,781 +2.4PP 3,000 24 2% 2,381 2,138 2% 15% 2% 2,000 17% 21% 16 19% 18% 17% 22.0 19.6 18.4 1,000 8 62% 62% 63% 0 0 Dec 2017 J
Slide 15: Business Update
BUSINESS UPDATE RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 15
Slide 16: Regional Performance
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 REGIONAL PERFORMANCE SUSTAINED CLIENT DEMAND IN SWITZERLAND AND EUROPE Switzerland EMEA APAC (Net fee income | CHFm) (Net fee income | CHFm) (Net fee income | CHFm) SWITZERLAND & EUROPE Net fee income grew due to 120 +13% 160 +15% 40 -1
Slide 17: Investment Solutions
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 INVESTMENT SOLUTIONS GROWTH DRIVEN BY INCREASE IN TURNOVER Turnover (CHFbn) Fee income margin (bps) Net fee income (CHFm) 40 100 280 +9% +7% 30 90 88 210 -7% 86 -3% 84 83 84 20 80 140 246.7 226.0 26.8 28.8 10 70 70 117.2 132.6 13.9 15.9
Slide 18: Insurance & Wealth Planning Solutions
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 INSURANCE & WEALTH PLANNING SOLUTIONS UNIQUE PRODUCT CONCEPT INTRODUCED IN SWITZERLAND Unit-linked products outstanding Example of product innovation in Switzerland 50,000 • Drawdown plan for recurring 40,000 premiums and guaranteed Net
Slide 19: Strategic Priorities
STRATEGIC PRIORITIES RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 19
Slide 20: Leonteq's Structured Products Ecosystem
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 LEONTEQ’S STRUCTURED PRODUCTS ECOSYSTEM CREATE VALUE BY CONNECTING SELL - AND BUY -SIDE Leonteq CRM Private Banks CRM EFG IV. I. CRM • New initiative launched to Raiffeisen Invest Access Retail Banks CRM expand structured products Cornè
Slide 21: Smart Hedging and Issuance Platform
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 SMART HEDGING AND ISSUANCE PLATFORM FURTHER PROGRESS IN H2 2018 ACHIEVED LEONTEQ PLATFORM • Project SHIP further advanced in 2018 ISSUERS • First platform to connect issuance partner with hedging partners • First selected hedging counte
Slide 22: Issuance Partner Business
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 ISSUANCE PARTNER BUSINESS FOCUS ON REVENUE DIVERSIFICATION Progress with issuance partners Net fee income (Investment Solutions; CHFm) 250 246.7 • Web-based multi-issuer platform Constructor 212.6 226.0 expanded by adding Cornèr Bank as
Slide 23: Financial Targets 2020
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 FINANCIAL TARGETS 2020 LEONTEQ MAINTAINS TARGET SET Operating income (CHFm) Cost/Income Ratio 300 100% 75% 200 Leonteq maintains its disciplined cost management while growing ~300 50% 91% 282.4 89% its topline 100 219.7 207.0 215.4 <70%
Slide 24: Summary & Outlook
SUMMARY & OUTLOOK RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 24
Slide 25: Leonteq Business Model
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 LEONTEQ BUSINESS MODEL GLOBALLY RECOGNISED COUNTERPARTY FOR STRUCTURED INVESTMENT PRODUCTS PHASE 1 • Differentiate Leonteq through enhanced client services Client focus • Propositions centred around transparency on product documentation
Slide 26: Summary & Outlook
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 SUMMARY & OUTLOOK • Leonteq delivered record financial result in 2018 • Strategic progress achieved and investment grade rating by Fitch obtained • Continued implementation of project SHIP by onboarding additional hedging counterparties
Slide 27: Appendix
APPENDIX RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 27
Slide 28: Income Statement
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 INCOME STATEMENT CHFm H2 2017 H1 2018 H2 2018 Change FY 2017 FY 2018 Change y-o-y y-o-y Net fee income 127.6 145.7 126.8 (1%) 247.0 272.5 10% Net trading result (9.4) (3.7) 25.1 (367%) (25.8) 21.4 (183%) Net interest result (3.9) (7.5)
Slide 29: Details on Income Statement Items
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 DETAILS ON INCOME STATEMENT ITEMS Net trading income (CHFm) H2 2017 H1 2018 H2 2018 FY 2017 FY 2018 Negative treasury carry (5.6) (5.0) (13.3) (12.6) (18.3) Hedging synergies (3.8) 1.3 38.4 (13.2) 39.7 Net trading result (9.4) (3.7) 25.
Slide 30: Staff Base
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 STAFF BASE FTE by region 30.06.2017 31.12.2017 30.06.2018 31.12.2018 Switzerland 317 305 309 335 Europe 80 70 71 77 Asia 67 65 65 74 Total FTEs 464 440 445 486 FTE by function 30.06.2017 31.12.2017 30.06.2018 31.12.2018 Business units 1
Slide 31: Key Performance Indicators
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 KEY PERFORMANCE INDICATORS1 Group KPIs H2 2017 H1 2018 H2 2018 FY 2017 FY 2018 Cost-income ratio 81% 70% 64% 89% 67% Return on equity 11% 19% 9% 6% 18% Investment Solutions Platform assets (CHFbn)2 11.4 13.2 11.9 11.4 11.9 Whereof platf
Slide 32: Economic Revenues 2018
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 ECONOMIC REVENUES 2018 Economic revenues (in CHFm) 18 15 12 9 6 3 0 -3 -6 1 Economic revenues are defined as sales and trading income earned and are considered as recognised at -9 trade date without applying IFRS revenue recognition rul
Slide 33: Platform Assets Since Inception
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 PLATFORM ASSETS SINCE INCEPTION Platform assets (CHFbn) 14 11.9 11.4 12 9.2 10 7.6 7.9 8 8.8 8.4 5.3 6 3.9 6.8 4.7 3.1 3.3 4 2.8 2.6 1.3 2 0.7 2.6 3.7 3.1 3.2 3.0 3.1 2.8 2.7 2.4 1.3 0.7 0.7 0 2008 2009 2010 2011 2012* 2013 2014 2015 20
Slide 34: Structured Product Market Switzerland
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 STRUCTURED PRODUCT MARKET SWITZERLAND FOCUS ON REVENUE DIVERSIFICATION Market turnover Switzerland (in CHFbn) Leonteq turnover (in CHFbn) 400 32 28.8 331 26.8 350 28 2% 1% 3% 275 300 24 19% 24% 22% 1% 250 16% 20 15.9 12% 9% 16% 174 13.9
Slide 35: Individual Life Insurance Savings Market Switzerland
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 INDIVIDUAL LIFE INSURANCE SAVINGS MARKET SWITZERLAND Individual life insurance market (Switzerland) Market shares in Switzerland (Booked gross premiums in CHFbn)* 2017 8 2.6 2.4 17% 20% 6 1.7 1.8 SWISS LIFE 1.7 1.9 0.4 GENERALI 0.7
Slide 36: Shareholder Structure
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 SHAREHOLDER STRUCTURE1 Not registered 16% 40% Shareholder group Raiffeisen Switzerland2 29.02% Lukas Ruflin family interests3 8.15% Sandro Dorigo 2.45% Retail 18% investors 1 As per Leonteq share register at 31 December 2018 and signifi
Slide 37: Key Performance Indicators Definitions
RESULTS PRESENTATION | FULL -YEAR 2018 ZURICH, 07 FEBRUARY 2019 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