Leonteq, the Swiss derivatives specialist which had run into problems in the second half of 2016, has returned to profit in the first half of this year, with a little help from its partner Raiffeisen.
Leonteq posted a profit of 1.2 million Swiss francs for the first six months of 2017, the company said in a statement today. This compares with a loss of 20 million francs in the second half of 2016 and a profit of 37.2 million in the first half.
Zurich-based Leonteq had strong growth of commission and service income in the six months through June. The driver of this development was the elimination of limitations of capacity at important partner firms.
New Projects for Further Growth
Leonteq said that the key changing factor was broadening the distribution of products emitted by Raiffeisen into new countries and wider customer groups as well as the successful migration of the structured investment products of Notenstein La Roche private bank to Raiffeisen. Raiffeisen holds a 30 percent stake in Leonteq.
The company also profited from a cooperation with Crédit Agricole Corporate and Investment Bank as well as from the start of a pilot project for the emission of structured products with Postfinance, the financial-service division of Swiss Post. Leonteq launched a new offshore distribution for Japan.
Cost-Cutting Measures
Leonteq’s bid to cut its costs following the difficulties it encountered in the second half of 2016 paid off. The company today is spending less money on personal and infrastructure than in the second half, but still more than in the first half of last year. Total operating expenses declined 9 percent to 99 million Swiss francs compared with the second half, the company said. In the first half of 2016, Leonteq reported expenses of 80.9 million.
Leonteq reported provisions of 7.2 million francs in the first half. Most of the provisions are due to long-term contracts for office space in London and Zurich not needed after the company pared its workforce.
Smaller Workforce
The company had 464 jobs (full-time-equivalents FTEs) at the end of June, which compares with a record 523 in October 2016. Leonteq intends to continue to manage costs strictly.
«We made solid progress in the first half of 2017 in line with the priorities we set for the year, although we are still far from where we want to be,» said Leonteq CEO Jan Schoch according to the statement.
