Leonteq Ag · SIX:LEON
Leonteq — FY2021 Earnings Presentation
48 slides from Leonteq's earnings presentation, Feb 10, 2022
Slide 1: Leonteq AG Full-Year Results 2021
LEONTEQ AG FULL-YEAR RESULTS 2021 ZURICH, 10 FEBRUARY 2022
Slide 2: Legal Disclaimer
LEGAL DISCLAIMER This presentation of Leonteq AG (the “Company”) serves for information purposes only and does not constitute research. This presentation and all materials, documents and information used therein or distributed in the context of this presentation do not constitute or form part of and
Slide 3: Highlights 2021
HIGHLIGHTS 2021 LUKAS RUFLIN | CEO
Slide 4: Record results validate investments into key strategic initiatives
RECORD RESULTS VALIDATE INVESTMENTS INTO KEY STRATEGIC INITIATIVES OVER THE PAST FOUR YEARS Key figures 2021 417.8 255.6 155.7 8.47 3.00 2020: 234.5 2020: 197.9 2020: 39.9 2020: 2.15 2020: 0.75 +78% +29% +290% +294% +300% Operating income Operating expenses Group net profit Earnings per share Divide
Slide 5: Strategic progress and solidity of client franchise visible in all areas
STRATEGIC PROGRESS AND SOLIDITY OF CLIENT FRANCHISE VISIBLE IN ALL AREAS +27% yoy Turnover in Leonteq products (CHF 14.7 billion) +34% yoy +29% yoy Turnover in balance sheet light business (CHF 2.6 billion) Products issued on Leonteq’s platform (41,663) +59% yoy +28% yoy Revenues from asset Client t
Slide 6: A track record of revenue growth since inception
A TRACK RECORD OF REVENUE GROWTH SINCE INCEPTION Quarterly economic revenues since inception (CHF million)1 140 120 100 80 60 40 20 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1 Economic revenues are defined as sales and trading income earned and are considered as recogni
Slide 7: Following 2018-2021 investment phase, Leonteq enters five-year strategy cycle
FOLLOWING 2018-2021 INVESTMENT PHASE, LEONTEQ ENTERS FIVE-YEAR STRATEGY CYCLE AND COMMITS TO 2026 TARGETS We are executing a Growth Strategy 2026 based on four … measured against clear targets for 2026. dimensions… OFFERING We are further enlarging and diversifying our offering FINANCIAL TARGETS 202
Slide 8: Financial Performance
FINANCIAL PERFORMANCE MARCO AMATO | DEPUTY CEO & CFO
Slide 9: Record results driven by strong client activity and disciplined risk management
RECORD RESULTS DRIVEN BY STRONG CLIENT ACTIVITY AND DISCIPLINED RISK MANAGEMENT IN BENIGN MARKET ENVIRONMENT Total operating income (CHF million) Total operating expenses (CHF million) Net profit (CHF million) +290% +78% +29% 417.8 155.7 255.6 197.9 234.5 39.9 FY 2020 FY 2021 FY 2020 FY 2021 FY 2020
Slide 10: Topline driven by strong performance in each quarter in 2021
TOPLINE DRIVEN BY STRONG PERFORMANCE IN EACH QUARTER IN 2021 Quarterly economic revenues (CHF million)1 Drivers for strong fee income (2021: CHF 306.7 million vs 150 2020: CHF 334.6 million) • High levels of client activity across full range of investment solutions 125 • Further diversification of r
Slide 11: Cost increase resulting from strategic investments, variable costs and provisions
COST INCREASE RESULTING FROM CONTINUED STRATEGIC INVESTMENTS, PERFORMANCE DRIVEN VARIABLE COSTS AND PROVISIONS Total operating expenses (CHF million) 2020 reported 197.9 Provisions 2020 2.4 2020 adjusted cost base 200.3 Cost benefit nearshoring -4.0 Strategic initiatives 6.6 Performance driven varia
Slide 12: Investment Solutions: growth in turnover driven by strong Leonteq issuance
INVESTMENT SOLUTIONS: GROWTH IN TURNOVER DRIVEN BY STRONG LEONTEQ ISSUANCE Turnover (CHF billion) Margin (basis points) Platform assets (CHF billion) 16.0 28.9 14.1 26.4 14.2 120 9.7 108 14.8 9.2 116 96 14.7 11.6 6.3 4.9 2020 2021 2020 2021 Dec 2020 Dec 2021 1 1 Leonteq Platform partners Leonteq Pla
Slide 13: IWPS: subdued performance; integration into Investment Solutions
IWPS: SUBDUED PERFORMANCE ON THE BACK OF CHALLENGING LOW INTEREST RATE ENVIRONMENT; INTEGRATION INTO INVESTMENT SOLUTIONS Change in organisational structure Unit-linked products outstanding Net fee income (CHF million) • IWPS renamed to “Pension Savings” and integrated into Investment Solutions • Lo
Slide 14: Solid balance sheet driven by own issuance and liquid hedging positions
SOLID BALANCE SHEET DRIVEN BY OWN ISSUANCE, LIQUID HEDGING POSITIONS AND HIGH QUALITY INVESTMENT PORTFOLIO Assets (CHF billion) Liabilities and shareholders’ equity (CHF billion) • Total assets grew by 16% to CHF 14.4 billion mainly driven by record 14.4 14.4 volumes in own issued products to 1.2 CH
Slide 15: Strong capital base of CHF 873.6 million
STRONG CAPITAL BASE (SHAREHOLDER’S EQUITY + DEFERRED FEE INCOME) OF CHF 873.6 MILLION Capital base (CHF million) 71.5 155.7 -13.8 14.0 -1.3 873.6 802.1 647.5 Shareholders' Distribution to Allocation to Other Retained earnings Shareholders' Deferred fee Capital equity shareholders OCI effects (net pr
Slide 16: Consistent delivery on dividend policies – CHF 3.00 DPS for 2021
CONSISTENT DELIVERY ON COMMUNICATED DIVIDEND POLICIES – CHF 3.00 DPS FOR 2021 (300% INCREASE) 2018 2019 2020 2021* • Announcement of • Launch of new phase • Distribution in line • Targeted capital base rights offering with of conservative with conservative reached half-year 2018 results dividend pol
Slide 17: Strategy Review
STRATEGY REVIEW LUKAS RUFLIN | CEO
Slide 18: We successfully executed our strategic plan defined in 2018
WE SUCCESSFULLY EXECUTED OUR STRATEGIC PLAN DEFINED IN 2018 Priorities defined in 2018 Achievements Performance Balance sheet-light turnover • SHIP fully operational since mid-2020; 7 hedging Initiate Smart Hedging and counterparties and 6 (white-labelling) issuers (CHF million) 2’558 1 Issuance Pla
Slide 19: We delivered on the strategic priorities set for 2021
WE DELIVERED ON THE STRATEGIC PRIORITIES SET FOR 2021 Add new pay-offs and product features and Go-live of pricing module, white-labelling features add at least one white-labelling issuer to SHIP and integration of AMC client portal to LynQs Issue first products of onboarded white-labelling Further
Slide 20: We built a unique ecosystem with >40 new partners since 2018
WE BUILT A UNIQUE ECOSYSTEM FOR INVESTMENT SOLUTIONS WITH THE ADDITION OF >40 NEW PARTNERS SINCE 2018 Self Private Regional Universal directed banks banks banks investors +5 sp.leonteq.com partners Independent asset Institutional managers investors Family offices Digital solutions & Clients & connec
Slide 21: We diversified our offering and improved quality of earnings
WE SIGNIFICANTLY DIVERSIFIED OUR OFFERING AND IMPROVED THE QUALITY OF OUR EARNINGS Economic revenues (excluding hedging result; CHF million) Traditional structured products business Revenues from traditional products (e.g. BRCs/Autocallables) pre-dominantly on equity and equity indices as underlying
Slide 22: We expanded our global footprint and diversified our client base
WE EXPANDED OUR GLOBAL FOOTPRINT AND DIVERSIFIED OUR CLIENT BASE Net fee income by region (CHF million) Economic revenues by client type1 (%) 307 43 14% 2017 2021 247 15% 36 5% 3% 147 48% 41% 44% 109 33% 64% 54% 117 38% 41% 102 2017 2021 Switzerland Europe (excl. Switzerland) Asia (incl. Middle East
Slide 23: We established Leonteq as a recognised issuer and reduced dependency on historic partners
WE ESTABLISHED LEONTEQ AS A RECOGNISED ISSUER AND REDUCED DEPENDENCY ON HISTORIC PARTNERS Platform assets by issuer1 (CHF billion) Turnover by issuer1 (CHF billion) 16.0 28.9 26.8 2.1 13% 3.8 13% 7% 2.0 11.4 32% 8.5 4% 0.5 39% 6.3 14.7 51% 26% 3.0 61% 16.3 70% 7.9 7.6 48% 10.4 36% 2017 2021 2017 202
Slide 24: We demonstrated operating leverage through platform scalability and automation
WE DEMONSTRATED OPERATING LEVERAGE THROUGH PLATFORM SCALABILITY AND AUTOMATION Operational leverage (Indexed: 2017 = 100) Number of client transactions on the platform 300 4yr CAGR: +28% 4yr CAGR 28% 250 200 150 4yr 264,213 CAGR 5% 206,673 100 164,007 114,005 97,196 50 2017 2018 2019 2020 2021 Trans
Slide 25: Growth Strategy 2026
GROWTH STRATEGY 2026 LUKAS RUFLIN | CEO
Slide 26: Executing Growth Strategy 2026 based on 4 dimensions
BUILDING ON OUR PROGRESS, WE ARE EXECUTING A GROWTH STRATEGY 2026 BASED ON 4 DIMENSIONS OFFERING PLATFORM We are growing our business on the back We are at the forefront of digitalisation and of an enlarged and diverse offering across will continue to invest in digital client products, asset classes
Slide 27: Investing in key initiatives to drive Growth Strategy 2026
WE ARE INVESTING IN KEY INITIATIVES TO DRIVE OUR GROWTH STRATEGY 2026 Expansion of product offering Establish new pension savings Expansion of issuer universe (B2B) offering (D2C) • Further build-out of AMCs, systematic • Launch new innovative product concept • Build-out existing set-ups and add new
Slide 28: Measuring our success against clear targets for 2026
WE ARE MEASURING OUR SUCCESS AGAINST CLEAR TARGETS FOR 2026 Total operating income (CHF million) Return on equity 450-500 418 112 215 21% >15% 307 247 6% 2017 2021 2026E 2017 2021 2026E Net interest result & other ordinary income 1 Net trading income 2 Net fee income 1 Net interest result & other or
Slide 29: Summary
ote *tCEONTEQ SUMMARY LUKAS RUFLIN | CEO
Slide 30: Summary
SUMMARY Record results • Record results resulting from strong client activity, disciplined risk management supported by and 300% benign market environment increase in dividend • Distribution to shareholders of CHF 3.00 per share (+300%) • Business diversification and earnings quality significantly e
Slide 31: Appendix: Financial Results
ote *tCEONTEQ APPENDIX FINANCIAL RESULTS
Slide 32: Group Results
GROUP RESULTS Income statement H2 2021 H1 2021 H2 2020 Change FY 2021 FY 2020 Change (CHF million) y-o-y y-o-y Net fee income 136.7 170.0 121.6 12% 306.7 334.6 (8%) Net trading result 77.0 35.4 8.7 785% 112.4 (98.4) N/A Net interest result (3.3) (2.4) (1.5) 120% (5.7) (6.5) (12%) Other ordinary inco
Slide 33: Segment Results
SEGMENT RESULTS Investment Solutions H2 2021 H1 2021 H2 2020 Change FY 2021 FY 2020 Change y-o-y y-o-y Segment income (CHFm) 203.4 194.4 121.0 68% 397.8 197.8 101% Segment result (CHFm) 114.9 100.1 43.9 162% 215.0 38.4 460% Platform assets (CHFbn) 1 16.0 15.4 14.1 13% 16.0 14.1 13% of which platform
Slide 34: Appendix II: Details on Strategic Growth Initiatives
APPENDIX II DETAILS ON STRATEGIC GROWTH INITIATIVES
Slide 35: LynQs: one-stop-shop providing digital access to structured products
LYNQS: LEONTEQ’S ONE-STOP-SHOP PROVIDING CLIENTS DIGITAL ACCESS TO THE WORLD OF STRUCTURED PRODUCTS Investment ideas Latest trends and daily updated investment ideas prepared by Leonteq’s leading structuring team Quote Click ’n’ trade tailor-made investment products from more than 10 renowned issuer
Slide 36: AMC Gateway: management of own tailor-made investment strategy
AMC GATEWAY: ALLOWS FOR MANAGEMENT OF OWN TAILOR-MADE INVESTMENT STRATEGY Single point of entry Leonteq supports product implementation, trade execution and reporting Less administration Avoid individual trade processing with custodian banks (one central rebalancing for all clients) Cost efficient I
Slide 37: Balance sheet-light business
BALANCE SHEET-LIGHT BUSINESS SMART HEDGING ISSUANCE THIRD-PARTY ISSUERS & Balance sheet-light turnover (CHF million) PLATFORM (SHIP) BACK-TO-BACK HEDGES • Seven leading investment • In parallel to SHIP, Leonteq banks connected to the platform provides third-party products (manufactured outside of •
Slide 38: Smart Hedging Issuance Platform (SHIP)
SMART HEDGING ISSUANCE PLATFORM (SHIP): ENABLES AUTOMATED PRICE SELECTION AND EXECUTION OF OPTION COMPONENT Benefits for the client • Only platform which allows to decouple the choice of the desired credit risk from the provider of the option component • Best option price out of seven leading invest
Slide 39: Largest offering of crypto asset investments in securitized format
LARGEST OFFERING OF CRYPTO ASSET INVESTMENTS IN SECURITIZED FORMAT SECURITISED CRYPTO ASSET INVESTMENT AllowS trading crypto assets as simply and easily as bonds and stocks in any custody account EASY & SECURE ACCESS TO CRYPTO ASSETS No need for key management LARGE PRODUCT UNIVERSE Various products
Slide 40: Expertise in fund derivatives
EXPERTISE IN FUND DERIVATIVES Aberdeen JP Morgan Leonteq works closely with a wide range of fund Allianz Kempen management companies to deliver innovative solutions and competitive pricing Amundi Muzinich Participation Leverage Neuberger Aviva Bergmann AXA New Capital Funds Features BlackRock Nordea
Slide 41: First digital long-term savings product with guarantee and upside
FIRST DIGITAL LONG-TERM SAVINGS PRODUCT WITH GUARANTEE AND UPSIDE • Digital 3a savings account with guarantee and return potential • Savers benefit from higher return potential than with traditional accounts + greater safety than with funds solutions • Addresses the desire for returns and at the sam
Slide 42: Appendix III: New Reporting Framework
APPENDIX III NEW REPORTING FRAMEWORK
Slide 43: New reporting framework introduced to provide transparency
NEW REPORTING FRAMEWORK INTRODUCED TO PROVIDE CLEAR TRANSPARENCY ON MAJOR DRIVERS OF THE COMPANY’S SUCCESS Unchanged reporting according to IFRS Financial statements in accordance with without using adjusted figures provides Financial IFRS statements transparency and allows for comparability and
Slide 44: Earnings quality and issuer diversification
EARNINGS QUALITY AND ISSUER DIVERSIFICATION Economic revenues by business type1 Platform assets by issuer category2 Turnover by issuer category2 (excluding hedging result; CHF million) (CHF billion) (CHF billion) 338 30.3 16.0 28.8 28.9 299 14.7 26.8 26.4 14.1 261 240 11.9 10.4 234 11.4 189 7.6 16.5
Slide 45: Platform scalability
PLATFORM SCALABILITY Number of client transactions Number of issued products Number of pension savings contracts (in thousand) (in thousand) (in thousand) 4yr CAGR 4yr CAGR 4yr CAGR +28% +12% +12% 264 52 53 42 47 37 41 207 32 164 27 28 33 114 97 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017
Slide 46: Diversification of client franchise and regions
DIVERSIFICATION OF CLIENT FRANCHISE AND REGIONS Number of clients Economic revenues by client type Net fee income by region (CHF million) 335 307 273 265 41% 247 129 48% 51% 117 64% 61% 115 112 5% 102 33 1,085 2% 43 1,017 967 998 1,018 3% 32 28 3% 36 3% 50% 54% 173 46% 147 36% 126 125 33% 109 2017 2
Slide 47: Move from weekly to monthly economic revenues disclosure
MOVE FROM WEEKLY TO MONTHLY ECONOMIC REVENUES DISCLOSURE IN THE FUTURE Weekly economic revenues 2021 (CHF million)1 Monthly economic revenues 2021 (CHF million)1 25 60 20 50 15 40 10 30 5 20 0 10 -5 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1 E
Slide 48: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS Dominik Ruggli Leonteq AG Head Investor Relations, Investor Relations Communications & Marketing Europaallee 39 | 8004 Zürich | Switzerland +41 58 800 18 55 investorrelations@leonteq.com www.leonteq.com/investors Follow Us Linkedin Twitter Renato Bolliger Facebook Investo