Swissquote Group Holding SA (SQN) Earnings Call Transcript & Summary

Good morning, everyone, on this sunny day from our headquarter in Gland. I'm together with our CFO, Yvan Cardenas, and we will bring you through this conference call this morning and give you some information about 2023, but also looking what will happen in 2024 and 2025. But let's start with 2023 and one of the announcements that was in the press release. So we acquired, in South Africa, a long-time partner. Over 10 years, he was bringing clients to Swissquote, and we thought it's going so well that it's a good idea to acquire the company. The name of the company is Optimatrade, but obviously, it will be renamed then to something with the Swissquote. We haven't found the name yet. But to give you a few numbers, [ this IP ] growth about 1 billion assets to Swissquote over time, and it's accelerated quite strongly over the last year. And as an [ IP ], he was rewarded by us with a participation to the revenues. So in the press release, we have written 0.4% of total revenue, so that's roughly [ CHF 2 million ], and we acquired the company for a multiple of that in the range of [ CHF 6 million to CHF 7 million ], depending on the -- a little bit on the results that will happen over the next 2 years. So it's a good combination and a good expansion strategy for Swissquote. Now let's go back to 2023. It was a very strong year in a not-so-easy market environment, as you know. But still, we had records in all sectors. We have the best net revenue ever with CHF 531.4 million. We had the best pretax profit ever with more than CHF 250 million, CHF 255.4 million. And also the assets under custody, client assets are at CHF 58 billion, which also is the highest number we had in our history. Same thing obviously applies to the number of accounts that 574,274. And here, continuous growth story of our operations. We had a good start in the year in 2024, with also positive momentum, which is a sign that the growth story of Swissquote will also prevail in 2024 and the year after. Sorry, I forgot to move the slides. We are now on Slide #6 here. And here, I would like to comment the net revenues. So the same as CHF 531.4 million we have made. And if you hear a little bit the historical charts back in 2017, so first of all, you see that it's a continuous growth story. I could go further down to the beginning of Swissquote, but this company is growing and growing, which is normal. We are adding new clients. We are gaining new assets. We're adding new services, and this translates into additional revenue. What we call a little bit the classic business, this would be composed of fee and commission income. And interest income has been the highest here in 2023, with obviously a strong push in interest revenues. We aim to say that it's some kind of a normalization because the year before and specifically the COVID and pre-COVID year was tagged with negative interest, which is not something that we think is a normal situation on the interest rates. But our Chief Financial Officer will tell you the number of rate cuts we have factored in our numbers for 2024 because this is what we do. We do have careful forecasts in the future as we want to achieve the numbers we are announcing to the market. Also here in 2023, a very cautious, a very, let's say, low revenues on the crypto assets in 2023, we are still experiencing crypto winter, and there is a little bit change -- little change there. And 2024 looks much better on that, which looks much better on that front. And you see the distribution on the other revenue segments that we are disclosing in ForEx and CFD, which is now almost the smallest part of our revenue segments, and then trading, this is mainly the classic ForEx. When someone, for instance, would buy U.S. share and having only Swiss francs, then obviously, we provide the change, and this generates the return you see here in light gray on our chart on Page 6. If we are going to Page 7 now, we have client assets, total client assets are CHF 58 billion. So first of all, if you here also go back to 2017, you can see how strongly actually the growth was on the net new money side. We are -- we never had a year in our history with negative net new money. That's also a sign actually that the company is fundamentally growing. Then obviously, there is an impact in the -- from the market. And you see that from 2021 to 2022, we had markets that were not so good. And therefore, the total assets actually declined. But here, this is not the case for 2022 to 2023. It was a good year, stock-wise. And also, our clients made good profit. And you can see this in the evolution of the orange part here. On top of that comes the net new money at CHF 5 billion in 2023, which brings us to this CHF 58 billion of total client assets. What we also show on the chart here is the margin of assets, 96.4. This is within our bandwidth from, say, 80 to 100. This is where we want to see the company. And you also can see here that over time, how stable this is. It's a little bit more volatile market over the last 3 years, but it's also our forecast for 2024 that will stay more or less in the same magnitude. Now if we're looking at this CHF 58 billion, this is composed of securities, up to 85%. The rest is cash. And this also is a very stable mix of our clients' assets. It doesn't move a lot, and -- which is normal. If you open an account at Swissquote, you also bring a bunch of cash with it, not because you want to leave it as cash, but this is the firepower you have when you want to take opportunities in the market. And this 15%, as we said, has been quite stable over the last years and explains the growth in our balance sheet that we will comment in a few slides. Now looking at customer growth. Again, here on the left side, we have net new monies, CHF 5 billion. And you clearly see here that there is, we call it, the pre-COVID and the post-COVID story. So pre-COVID, the company was growing net new money. And speaking organically, something between CHF 2 billion and CHF 3 billion; here, CHF 2.7 billion, CHF 3.1 billion and then CHF 2 billion in 2019. And then you see that the post-COVID time, as of 2020, there was really a shift, and we are now growing at a minimum of CHF 5 billion, I would say. From that standpoint, 2023 was a little bit a lower year, but the start in 2024 has been great. So we were convinced that we go back to the 7 -- CHF 6 billion, CHF 7 billion of net new monies, which we base our forecast for this year. The average assets per customer, very simple math, you take the number of clients. You take the assets, you divide by the number of clients, and you see here that the average assets per account is at about 100,000. This is a reflection of our business model, of our -- the type of clients we are able to attract. I would say, it's much higher than the average industry, and it's certainly higher than deep-discount brokers. You can see here and there. And it's also quite a stable number over the last 5 years. And this is -- we're pleased with that. We would like these to continue like this. So we do want to attract clients, but the clients with a certain [ wealth ]. And this has made our success over the last year. Here, the 574,274 clients we had at the end of 2023. Now the same is CHF 5 billion, where do we gain momentum there? Well, bigger part, 61%, is on is coming in Switzerland or from Switzerland, and the rest is international, so that's the rest of the world where we are active. And you see here the distribution, Switzerland, Europe, Middle East, Asia and rest of the world. These are -- the first three are really the hotspots of where we are and where we have the biggest growth momentum. And also, when you look at the distribution, is it B2C or B2B, B2B2C, it's a good mix, 36% of the CHF 5 billion related to B2C clients directly. And then the rest 64% is institutional, but also the many partnerships we have. So the B2B2C, for example, for [ finance ], where we are providing trading services for them; this would be in the category -- in the 64% and qualify as B2B2C. On the next slide, we call it customer loyalty. We could also call it customer stickiness. And for us, this is a very, very important chart. And let me explain. Here on the left side, you see the distribution of accounts. So we have 61% of the accounts that are prior to 2020, so these are the accounts we still have today in our books. So 61% are before or up to 2020. And then we have the one that we acquired over the last 2 years, 2021, 2022, represents 28%. And then in 2023, we had 11% of the total. So this is important for us because it shows actually that once you have a client, he would stay with you for the longer term, 61% and -- but also that the growth story continues. And then when you look at the distribution of assets, you have almost a similar picture. So the 61 old clients, so to say, represents 74% of our CHF 58 billion. And then the newer guys, 19%, respectively, 7%. It's what we have seen in the past, is that you would accumulate your assets with Swissquote. You opened first the account. And then over time, you bring additional assets, and this explains then the growth here and the difference between the 11% of new clients in 2023, but only the 7% of new assets. We know that the clients we acquired in 2023 will continue to grow their portfolio with us also in 2024. If you now take the numbers and look at the net revenues, so the distribution of net revenues versus the time when we acquired the clients, and there also, it's a very healthy mix. So the 61 older clients still represents about 60% of our net revenues, so they continue to use our services. But the new clients are more or less in the same. They are -- have more or less the same activity than the older clients. So it also shows a lot of stability in the client quality that we are able to acquire, and the use of the services that we bring to them is very stable over time. If you look at the customer profile, if you look at the -- on the right side here by B2C and B2B and B2B2C, it's still mostly a direct business, retail or mass affluent business that represents 74% of our CHF 531.4 million of revenues. And then the more institutional part of our business represents 26%. And now if I look at the customer domicile of our clients, about half of it are in Switzerland, 49%. And then the rest will distribute where we have our hotspots, Europe, 19%; Middle East Asia, 18% and the rest Of The world, 14%. Now if you look at net revenues by asset class and nature, well, first of all, a very good news on the right side. Now here, the biggest part now of our revenue is nontransactional-based, up to 58%. And this, obviously, is linked to the uptick in interest revenues. That's -- it's good news for the company. And also, it stabilizes the revenues forecast for 2024 because we don't see a lot of changes there. We have some forecast about the interest rate environment in 2024, but this part, let's say, it's easy to forecast very stable. And then the part that is a little bit more volatile because it's linked with the performance of the markets, so to say, this rent represented 42% of the mix. Now in 2024, this may change a little bit, not because of the 58%, that will be more or less stable. But the activity of the clients we have seen here since the beginning of the year that this has been quite good, so this gives us a lot of confidence that we are able to reach our numbers, so CHF 595 million latest estimates we have for 2024 and the corresponding CHF 300 million of pretax that we will generate. Now if you look at the revenue by asset classes here, from the highest to the lowest, so cash represented CHF 35 million of net revenues. So cash is an important or has again become an important part of our revenue, so through interest revenues. And then we have the fixed income shares, ForEx, CFD; in the same bucket, around 15% to 11%. And then you see the rest of the distribution here on the left side of our chart. Now if you have a look at our costs, which is something we have a very cautious approach to it, so the biggest part, about 50%, represents payroll and related. And here, some information, you see it goes a little bit up and down here, specifically because [ it is ] between 2021 and 2023. And this is connected to our bonus system, which is company-wide and which also is on kind of amortization of our costs and related to the achievement of the results or the overachievement of the results. And as you know, in 2023, we overachieved our initial budget, and this had an impact on the bonus system we are able to give to our employees. The evolution of the headcount here, this is the black line on the same chart. Now we are below 1,200 clients -- 1,200 employees, sorry. And it's interesting to see the distribution of the headcount, which is very important for us to invest in our technology, to invest in our infrastructure, IT. And this represents the biggest part of the various employee category we have, up to 35%. And then you see the distribution, the foreign offices, so all the network of sales desk and other banks, mainly Luxembourg. This represents [ 14% ] of total headcount. And here on the right, the sales part, customer care, the 23%, this is mainly in Switzerland and at our headquarter. And then you see the healthy mix of headcount. It's very important for us because this is exactly our DNA. We are a tech company with the bank license, and so it's logic to have the biggest part in development and IT. If I go back on the left side, you have -- the second cost segment is other operating expenses. This Is linked to the revenue, so part of the cost goes with revenues. So the higher the revenue, the higher the cost block is. And then the depreciation and marketing, which has been quite stable over the last [ 2 ] years. So on the marketing side, this is the one that we control the most. You may have seen in our press release that we have renewed our partnership with UEFA, and you may know that we have a sponsor of the Europa and the Europa Conference League. And we think this is a great tool to push our brand all of Europe, which is a very important place for us to grow our business. Speaking about growing and growing the profit, this is the main idea of the slides here. You see the growth of pretax and net profits over time. You see also the jump that happens in the pre-COVID time between '17, '18, '19. This company was having more or less a profit around CHF 50 million. And then you really see the growth pattern that we could activate since 2020 with these now best results ever of CHF 255.4 million of pretax. And after tax, it translates into a net profit of CHF 217 million. Also here important is the pretax profit margin, which has been stable now over the last 2 years. And this is also where we put the forecast probably even higher because there is leverage in our business. The marginal additional clients does not cost us a lot of money. So you may see this pretax profit margin grow over time in 2024 and 2025, this is our forecast. So if we relate this to the CHF 58 billion of assets we have in -- we had at the end of 2023 and which we take the revenue of CHF 50 million -- CHF 530 million, this would represent 96 basis points. But you can also express this in basis points when we speak about pretax profit margin, and then this is 48 basis points. Now let's have a look at the balance sheet, which is stable or stable at CHF 10 billion from 2022 to 2023. This is a good sign. You see that the part due to customers here on the right side has decreased slightly. There's a good mix of deposits in Swiss francs, U.S. dollar and euro, and it has been also stable there. So it relates to the [ 15% ] I mentioned before, very stable part of our cash. And what are we doing with our clients deposits? Well, mainly it's placed with central banks, up to CHF 4.6 billion. So these are placed between 1 and 15 days, depending on our strategy. Treasury bills has slightly increased to CHF 394 million. And also, the part we place with all the banks is quite stable around CHF 1.5 billion. Maybe interestingly, the investment securities of the bonds portfolio has increased from CHF 1.7 billion to CHF 2 billion, so we could -- we did capture part of this rate increase through investment in bonds. But there also, we think that the short-term yield on the bonds is quite interesting, so we didn't feel the need of going a little bit longer. I think it's a good strategy. And then also, it gives us very sound ratios here on the left. The liquidity ratio is very high. Still slightly down from 2023, but exceptionally high with 470%. And also the funding, the funding ratio also increased compared to 2022 to [ 277 million ] (sic) [ 277% ] and the interest rate risk is also low at 5.3%. So very, very good numbers. The company is well capitalized, well invested with a healthy balance sheet. Now obviously, interest income was a very important part of our revenue in 2023. And I would like to show you a little bit the headroom we still have. So let's start. It looks like being a little bit complicated slide, but it's quite easy to understand. It's not the first time we are showing this slide. So let's start on the left -- upper left side of the slide. So we're starting at this famous CHF 58 billion of assets we have. And you see that, as said, 15% of that is in cash, and that represents, here in the middle, this CHF 8.6 billion. So this is our play money. This is the money we can invest and generate a return out of that. 34% of this CHF 8.6 billion are used for loans and investment securities. And you see on the right side, so 34% of CHF 8.6 billion represents CHF 2.9 billion. And this is mainly invested in investment securities, this CHF 2.1 billion, with high-quality products, you see the distribution here. Then we have margin lendings. Mainly, so it is our Lombard loans and a little bit of our leasing business, and this represents about CHF 800 million, so not a lot of change there. Now the rest, the 66% of this CHF 8.6 billion, this is the liquidity portfolio. This is CHF 5.7 billion. And you see here the distribution in -- currency-wise, the biggest part is Swiss francs, and then we have 20% is U.S. dollar and 15% is euro. And this, together with the yield we do on our investment securities portfolio, did represent in 2023 a total of CHF 213.1 million. And you see what happens in 2023, so the [ rates ] did increase from 0.95% at the beginning of the year to 1.7%. So if you take the mix, it's obviously, we did not earn 1.7%, but we earned something in the middle as the rates were increasing. And the same pattern happened in U.S. dollar and euro. Now we think that in 2024, it will go the other [ signed ] around, but it will go slowly. So comparing 2023 with 2024, we'll be about -- we'll have about the same interest revenue. Of the CHF 213.1 million together with the rest of our revenue, so that the yield or the margins we did with our client assets, so the investor securities; represented CHF 318.3 million. So combined, we're coming to the net revenues of CHF 531.4 million in 2023. Okay. So we're almost at the end of the presentation. Let's have a look on our equity. So it's the highest number, obviously, because it's been pushed and driven by the profitability of the company. And so it's growing, growing. As the profit is growing, you see here this chart of the total equity having a very strong growth over the last 4 years. Now we are at CHF 898.6 million. I'm convinced that in 2024, we will reach and be much higher than the CHF 1 billion of equity in the company. Capital ratio at 25.1%. It's a good number, a high number, and this is obviously post payment of dividend that you see on the right side. So in 2023 or in 2024, based on the profit of 2023, we will ask the general assembly to pay out a dividend of CHF 4.3 per share. This is almost double than the one we had in 2022. And we have also now defined or fine-tuned a little bit more our dividend policy, and we will aim in the future to pay out about 30% of our profit. And for 2023, this represents this CHF 4.3 per share. Why is this reversal here of the payout ratio? We are now convinced that the profitability is so strong that it is able to fuel the growth of the company and also to develop our equity in a healthy way, so we don't need to retain more than 70% of our of our profit that's efficient to finance our growth on the -- over the next years. Now let's come to the most important slide here because all the rest was almost known already since we published our financial figures quite early in the year. So what will happen in 2024? So first of all, we will continue our established growth story. In Switzerland, mainly, we will continue our strategy to transform Swissquote into a full digital bank. We have made a lot in terms of our service level, and we have been rewarded with a strong growth of clients and client assets. And this also will happen in 2024. Swissquote is becoming a digital bank, a full digital bank with a strong position in Switzerland. In Europe, and mainly when we say Europe, this is mainly the Benelux, where we have our auto bank in the group, Swissquote Bank Europe. They're based in Luxembourg. They are focusing on the Benelux, Germany, France, so the stronghold where we can attract good clients. We are targeting mass affluent clients. For mass affluent, this is a little bit -- on average, they have a little bit higher deposits and [ underline ] we have in Switzerland. If I take the numbers of Swissquote Bank Europe, there, the average deposit is at EUR 200,000 compared to the EUR 100,000 we have overall, so a little bit higher, a higher type of clients, more wealthy clients, I would say. And this is compliant with our strategy. So we will continue to push that in Europe, and we think this is a successful path to our growth. And then comes the rest of the world and mainly the Middle East, where we have our offices now since years in Dubai that are growing well. And there's also the places in Asia, Singapore, Hong Kong, where we are having -- where we have successful operations. So this is the strategy in 2024, and we are confident that we can grow the business by 12% on net revenues, and we will reach CHF 595 million, shortly below CHF 600 million. We think that the pretax profit margin, because of the leverage effect we have in our operations, will grow up to 50%, a bit slightly higher than 50%, and this will produce a pretax portion -- pretax profit of CHF 300 million. So the expenses will grow to CHF 295 million. So this is a slight growth compared to last year, compared to 2023, where the costs were at CHF 276 million. It's growing because we are still growing a little bit the headcount. We need this for our developments, for our operations, but you see now that is -- the costs are now fairly under control. We have another way of showing the number, that CHF 595 million we want to achieve. We can express this in margin on total assets. I wouldn't focus too much on the numbers, but it's more important or interesting to see a little bit of the dynamics you have. So we think that there will be, first, an improved market activity on the crypto asset side. So compared to the CHF 65 billion we'll have at the end of the year, this will represent about 6 basis points. Then the rest, this is interest rates. It -- margin-wise, it will decrease a little bit from 39 to 35. So as we said, we have factored in these rate cuts in 2024. Whether they will happen or not? We think they will, but they're also, we have been fairly conservative. And we think that, and this is the third pillar, we will regain momentum again in securities. There's a renewed interest in trading and the trading activity, and this is something we have seen very strongly in the first 2 months of the year. Now let's have a look on -- sorry. Let's have a look on the midterm outlook 2025. We announced since 2021 that in 2025, we will reach a pretax profit of CHF 350 million, and we think we can do this in now next year. And here, you can see a little bit the growth in pretax profit margin, some from 2022, 2023, the growth was at 37%, 23% 24. Estimate is 17%, and we only need 16% of growth to achieve our famous CHF 350 million. On the net revenue side, now the forecast is to be a little bit lower than CHF 700 million because we don't need -- we just need CHF 700 million. With the increase on our pretax margin, we just need shortly below CHF 700 million to produce a pretax profit of CHF 350 million. And this -- all this forecast is based on sound growth in net new monies, and they are also for 2024 and 2025. We table on a growth of CHF 7 billion a year and about 50,000 of new accounts in 2024 and 2025. So all this combined together makes a very forecastable business. And our pretax profit, we are confident that we can reach this pretax profit of CHF 350 million next year. So this would conclude our -- this will conclude our presentation. There are a few appendices, maybe one, which I would like to comment shortly because it is a business, which is quite exciting. This is the joint venture we have with post finance. This 50-50 joint venture. And it's a huge success. Now we had, by the end of 2023, more than 200,000 clients. So really a very strong growth. We had -- we were able to add 90,000 new clients since the beginning of the year, and we're not only adding clients, but we also are adding assets, CHF 900 million, almost CHF 1 billion of new assets in 2023, which pushed total assets now by our Yuh clients to CHF 1.5 billion. And you see we have now become the #1 Swiss neobank in 2023. We're very proud of that because that's something we wanted to achieve. And now the profitability is in reach. We will reach certain profitability ratios thresholds in 2024 already. But net-net, we'll have the first-time profit produced in 2025. And you see here the value services we are adding. So we have implemented TWINT. We now have [ virtual ] cards. We have a 3a Pillar offering in our business. And obviously, this is also the place where we are paying high interest rates to these client segments that we are cherishing and developing very much. We'll have a very active -- we have a very active investors relation, and you may join us in one of the event here that we have organized. I'll let you read these figures here or these dates, we will be happy if you can make it, if you can join us there. And the rest here are just the key figures. I don't want to comment. But obviously, we will be ready now to take some questions from the audience and comment one of those numbers if you ask us to do so. So again, thank you for joining us this morning, and let's open the Q&A session.

[Operator Instructions] The first question comes from the line of Grégoire Hermann with Berenberg.

Can you hear me well?

Yes. Absolutely.

Great. Just three questions, please. The first one is on the -- basically the increase in customers you're having. I think at H1, you were showing that you had, I think, 52% of customers that were based from Switzerland. Now we can see at full year that it's down to 49%. So it looks like internationalization is going well. Just wondering here on the trade per customer level, is it increasing basically? Are you seeing that the new customers are accretive in terms of trading activity or pretty much the same? And then the two other questions I would have are on crypto. In your guidance for 2024, could you give any insight about what level of crypto trading are you assuming? Is it flat compared to 2023? Or are you actually hoping for more volumes there? And as well, how much more profitable is the crypto activity compared to 2023? I'm not sure I can see that from the numbers you have published today. And I think that since the launch of the crypto exchange, it's supposed to be much more profitable. So can you give, please, a bit more transparency here?

Okay. Okay. We have Yvan, who is eager today give to those questions. So Yvan, would you take the first one about customers and the customer growth and customer mix?

Yes. Perhaps two general comments, with aim to answer your question. Well, the first one is in 2023, we could really see two environments in terms of customer acquisition and when rates were increasing. And then at a certain stage, they peaked and they stabilized. And this really has influenced customer acquisition plus trading activity. Depending on the domicile of the customer and the interest rate environment, the things did not necessarily happen at the same speed. We could really see sort of a tipping point. When rates peaked and stabilized, people became a bit more relaxed and with more visibility on rates and as well long-term rates have started to decrease, mainly impacting as well the mortgage rates. So it could be that this change of the high [ NIM ] has not always been necessarily at the same point in time, depending on the domicile of the customer. Same for the trading activity. We said in our press release, we start 2024 with more optimism than we started 2023. You can see us, but we probably -- with biggest mines than early 2023 because we could see as well some pivot in the trading activity of customers. So I would not necessarily say that new customers, they trade more or less, but we could really see, starting Q4, a better trading activity in various asset classes, not only digital assets, really in various asset classes, but probably not sufficient enough to compensate a quite low Q2 and Q3. So this is probably the observation on the first question, Marc, do you want to take the second one? Or do you give it to me.

About crypto?

Yes.

Yes. Well, continue. I can't add...

Well. So if you take the Slide 21, you can basically calculate that we probably have included a number in our guidance in CHF is almost twice the number of that we did last year. So it's something around about CHF 30 million of crypto assets income for 2024. So this is certainly because we see good trading activity in 2024, already at the end of 2023. If you compare the volumes between H1 and H2, you certainly see a bit of a better environment that was triggered in -- at the end of 2023, you see that crypto volumes increased by 40% between H1 and H2. So this is quite significant. So we have increased the numbers, the forecasted revenues in 2024, but still with the aim to have a conservative number that could show upside, but certainly not a downside on the profit side. So we want a solid profit guidance for 2024. So it means we need a [ resonate ] number for Q2 assets the number is higher given the current trend that we see in the market.

The next question comes from the line of Dan Regli with ZKB.

I have a couple of questions. First, please, on the net interest income outlook in 2024. Can you maybe give a little bit of color about what the net interest income monthly rate was during H2. I mean it was on average CHF 180 million a month, I calculated, but how has this developed over the second half year, last year. From where do you expect it to come the pressure a bit on the margin? Is it more coming from the asset side, as you alluded to, due to cuts in the Central Bank rate? Or is it also that you see some kind of increase in financing costs coming through higher deposit rates or pressure on you to pay higher deposit interest rates. Then the second question is a bit follow-up question on the crypto business and just trying to compare this year with 2021. What are the differences? Or is another year 2021 theoretically possible this year? if it continues as it has started. Then the third question is on the midterm outlook. You have reduced your revenue target to below CHF 700 million from about CHF 750 million previously. And it seems like you have mainly lowered your assumption on AUM growth. Can you maybe explain a bit what has led you to reduce your expectations on AUM growth. And then last question on capital or maybe two questions on capital first. Can you maybe give us an approximation of the capital impact of the acquisition you made in South Africa? And then secondly, on the dividend policy, did I hear you right that you basically said you need not to retain more than 70% of net profit, i.e., meaning that the payout ratio should be at least 30% going forward.

Okay. Thank you very much, Daniel, for this -- for interesting questions. So I will take the third one and then the second one, and then will give to Yvan for the one on the capital impact and then the net interest forecast to come. So first, on the midterm, I think no, we always say that the growth in assets under custody or assets under management will be CHF 7 billion. So this also is our strategy for 2024 and 2025. So there's no big change there. The other point is that we don't need any more of the CHF 750 million to create a CHF 350 million of pretax. That was a little bit point. So we may do so at the CHF 750 million, but we think that even though we would do only CHF 690 million or CHF 700 million, we'll still be able to create a pretax of CHF 350 million. The biggest driver or the strongest numbers in our 2025 forecast was really to achieve the CHF 350 million. We are strongly working on that. And I think this is achievable. Also seeing the growth patterns now that we have on revenue and margin. What the crypto business is concerned, could you go back to the crazy 2021 year? I would say, yes, why not? But it's -- as you know, it's tough to make a forecast in this so volatile market. So we went from a crypto winter to a crypto summer without having a spring. So this is a little bit the magnitude and the volatility in this market. It's absolutely doable that we are going back to the 2021 years because you can say -- you can see that the adoption rate now of cryptos has become bigger. You have seen what happened in the U.S. with now the ETPs, these ETFs promoted by big, big companies and that has gained traction and where billions has been invested already. So this makes the total collapse of the crypto products and cryptocurrency rather unlikely going forward. So we may come back to the high volatility but I want to say this is not in our forecast. Because we have seen what happened from 2021 to 2022. So basically, we're still cautious in the way we do forecast and we take all these as a good news. Now this doesn't mean that we haven't invested in our technology. We have strongly invested there because we think it is -- will be part of the banking business of the future. So you have to be positioned there, you need to have good service. We strongly worked on our own exchange. We have improved the system. We have invested a lot in technology and for the clients, this means that the spread has become much better, but the liquidity has become much better. And this also is really something that is appreciated by the clients. The feedback we receive now from the clients when trading with us and say you guys, you really have a great liquidity. There's no problem anymore to execute big orders in our exchange because -- of this because the liquidity is there. And at the end of the day, this is what is important. And of course, also, you need to offer all the rest of the scene. It's difficult to be only a broker and only a provider of transactions in cryptocurrency you need to offer custody as part of the business, you need to have it in a very secure and very safe way. So you need to make transfers in and out from wallets in the cloud and you also need to offer staking because that's part of the crypto ecosystem. So bullish on the technology, not excluding 2021 scenario back but would be super good news for us because it's not forecasted in our numbers in 2024 [ neither ] 2025. Now going back, maybe first to the factoring of the net interest income. That was your first question. and then the capital impact on the acquisition of Optimatrade and then our dividend policy.

Yes. Daniel. Yes, so on the net interest income, so we have decided net interest contribution I think if we basically take the final rates of 2023, that are basically, probably the ones that we have expensed today. You see that we have -- you end up with a higher number than the one that is included in the guidance 2024 because we expect rates to decrease in CHF, euro and USD. So basically, we have included in our guidance what the market is pricing or what the market -- we understand the market is pricing in terms of rate cuts. But for the time being, we're probably around CHF 19 million, slightly above on a monthly basis because now we are really at the peak of the rate. So this is the first answer. The second one, yes, so the idea of the intention is that from now, a 30% payout ratio should be maintained by the group. So this is what we already implemented for this year, increasing the dividend and moving forward, the payout ratio should be much more stable. It was rather volatile before because we had rather a dividend per share perspective, now we'll move to a payout ratio perspective.

And there was a question about Optimatrade...

Yes. Optimatrade. Mark, I think, mentioned an idea of the purchase price as well in the annual report there is a node called subsequent event. You have here an indication of what the goodwill could be, we speak about goodwill around CHF 4 million, so it's really a small impact on the capital ratio.

Thank you very much for your explanation. Apologies if I -- can I take your time for a quick bit longer. And just back to the midterm outlook. And you sounded rather that you reduced the revenue target because CHF 700 million is actually enough. But I mean analyst would rather have you say we get to CHF 750 million and increased pretax profit guidance. So we don't fully get why you should only get to CHF 700 million revenues now in 2025, whereas you expected CHF 750 million previously.

Yes. Well, that's a fair question, Daniel, and I remember one of my very first roadshow, I did when I was a young banker, and I think it was with BlackRock. And BlackRock say, "Good CEOs always meet the targets." So -- and the target is CHF 350 million. Now obviously, if you would do CHF 750 million of revenue, then the return profit would be much higher, but I don't want to put the bullet in my foot and produced an expectation for 2025 that would be higher than this sacred CHF 350 million that we are now promoting since many years. So do I exclude that we go to CHF 750 million? No, I don't because I think we will have growth opportunities in the company we set the brand Swissquote and with all the things we've put in place in the past. So this could well happen. But the most important number to me as the CEO, I want to reach the CHF 350 million. Everything about that would be good news.

And if I may, just step in, Daniel then it's question of assumptions. You can see that basically, we think that by keeping the same margin on assets and growing CHF 7 billion per year. We should go to the CHF 350 million. Then we think the assumption in terms of margin asset it's solid because it needs a bit of recovery in trading activity, which we are seeing now. These things may, let's say, accelerate more than this assumption, then we probably may end up with a higher marginal assets and therefore, generate more revenue. I think what is important to note is because interest rate contribution is higher than initially expected when we leave the outlook 2025. We think the pretax margin can be higher than initially expected. And therefore, the CHF 350 million are easier to achieve than initially factor back in 2021 when we lease the outlook 2025.

Your next question comes from the line of [ Christian Slater ] with [indiscernible]

Can you hear me?

Yes. Very well. Yes.

Okay. Great. So just two questions. You mentioned that you've got a bigger part of our non-transaction-based remains used now, this mix will it still stable? Or do you think that it could tilt in the future, again, a bit more towards transactions, especially also seeing the higher revenues you got on interest rates. That's the first one. On the second one, just on the terms of the interest rates, you mentioned that you are doing the leasing and Lombard credit. So why not mortgages?

Okay. I take the second one and give the first one to Yvan. Well, we're doing mortgages, but we do this with partner banks because we're not -- it's not one of our specialty and we thought it's better to deal with the bank that has the organization already in place. So we are like an [ IB ] to them, and then we share the revenue. And currently, we do these with [ Luzerner Kantonalbank ]. So the rest actually a little bit of leasing and Lombard credit. Lombard credit is a good one because that's part of the ecosystem. If you want to take a little bit more leverage because you seem that the markets are going up and the Lombard especially the way we produce it a good way. It's not a fixed draw down. It's a facility that we give to the clients and then they use it or not, and they like it a lot. The leasing business, it is a little bit marginal. It was very important when interest rates were negative because every opportunity to make a return out of the Swiss franc was then welcome. The pressure is now a little bit off, in many ways of creating a decent return. That's why also the leasing business has stayed stable over time and the only place where we're doing that is with Tesla. So -- and there is area -- that it's quite stable. Now going back to the first question.

Yes. So that's a very key one. And [indiscernible] if you look at the Slide 12 then you see that basically in 2023, we generated 58% out of non-transaction-based revenue. And this is a bit exceptional, mainly because we had this significant growth in interest income. On the same slide, you see that basically cash, so pure interest income contributed to 35%, so it means out of the 58%, 35% are linked to interest income. And we know that interest income, sooner or later will start to decrease not go back to negative territory like in the past, but it will decrease. So moving forward, I think we'll probably closer to a 60% transaction-based, 40% non-transaction-based. And I would say lower interest income, we will remain short term, medium-term transaction-based business model but with a better mix than we had in the past. I remember times when it was more 90%, 10%. We have initiatives. We have tracked to diversify this net [indiscernible] mix. It's not something that you can change very quickly, but the trend is to a more balanced mix of revenues. But I will have a bet for a 60-40 in the base, 60% transaction base, 40% non-transaction-based in the future for instance.

Your next question comes from the line of Christoph Blieffert with BNP Paribas.

I have a couple of follow-up questions, first on crypto and then on NII, please. Let's start with crypto. Can you give us an indication for crypto revenues in the first 2 months of 2024 please.

Okay. Thank you...

Well. So I can give you -- when I take January and February, the average is a bit above CHF 4 million on a monthly basis -- CHF 4 million and CHF 5 million.

Okay. Great. And -- excellent. And on your crypto exchange, you mentioned that this is in full operation. Can you give us some indication which percentage of trades you already execute on your own exchange, please?

Well, so today, we have rolled out all points on the exchange. So 100% of the coins are executed within the exchange. Then we have various liquidity sources, sometimes customers they basically match together and sometimes they may match with no liquidity providers, so with the market. But today, we have 100% of the volume that is executed there -- as Swissquote exchange. This provide many benefits in terms of liquidity because we can really now improve liquidity, and we have various sources of liquidity for each coin which was not necessarily the case before, and we have as well up to the possibility to rollout more coins faster if we like to.

Can you give an indication about the percentage of trade which you can already internalize?

Well, it's -- today internalized, I would say, trade that basically have a customer between another customer, but it's quite a decent percentage, Christoph. It's quite...

Yes, it depends a little bit how long you hold the position in the book. And this itself is a factor of how big these buckets are. And the problem in the past was that the volatility was so high that we wouldn't want to take no [ more ] risk, so we kept the trades unless we could match them immediately against the [Technical Difficulty] we kept them on a very short time. So there is a little bit of improvement potentially there, especially if the volatility is stable. But if you look now at what's going on with the bitcoins, even though we're closing one direction, you still have big swings in the market. So we have a cautious approach to that. What is improving is the number of participants, the more we have, the easier it is for us to hedge the transaction internally. So we expect this to improve over time and probably this internal matching ratio, which is a high percentage, I would say, 50% can continue to improve over time.

Excellent. Last question on crypto would be on M&A. I mean in the past, I got the impression that you were looking on smaller -- yes, crypto exchanges or crypto providers in order to strengthen your own offering? Is this still on your radar screen?

Well, it's -- I think it's the question could be extended to M&A in general. So what we are looking at is to make acquisitions that we can absorb easily. So something that will accelerate business segment in which we already are. We're little bit careful with transformational M&A that will completely shake up the company. The problem so far is that even though there are lots of targets in the market that would apply to this statement and the prices are still super high. The price expectation is still super high. There's a lot of fantasy coming out of this crazy COVID, post COVID period where prices just went up the roof. So we're a little bit careful. We have to wait that the market is becoming more reasonable. And then I'm convinced that we will have targets. Now are we looking specifically for crypto targets? Not specifically, I would say. It's part of our offering. That being a Swiss bank, we have a lot of requirements and duties in terms of crypto business, and it's probably the expectations from our regulated areas is much higher than in other part of the world. So this also makes crypto a pure crypto player acquisitions a little bit more difficult.

Okay. And then the last question is on NII. When I look on your balance sheet, your deposits are down some CHF 700 million in the second half of 2023. Can you share with us your underlying assumption with regard to your deposit base for 2024? And can you give us also some insight where those deposits really went through -- the reason why it's down. I mean is it reinvestment of clients? Were those outflows? What can you share?

Yes, Christoph, if I may, I'll take this one. So what you need to keep in mind, so it's true that the balance sheet has decreased and I think with the interest rate policy that we had I would not have expected cash deposits to specifically increase significantly. But keep in mind, if you look at the Slide 16, you see that the Swiss francs has still increased. We had decreases in USD and Euros. But keep in mind that the rate -- the Swiss franc was relatively strong in 2023. So when we translate this USDs into Swiss francs, we have the FX impact that is not necessarily small at the end of 2023. So it is the same [ USD 2.2 billion ] now even if they remain stable during the year, when you translate them at the end of 2023, you lose a few percentage because of the FX impact. This is a bit changing the picture of the balance sheet. But its true that the percentage of cash compared to total client assets have decreased. If I remember correctly we're at 17%. At the end of June, we are at 15%. Then it's a picture at a point in time and so -- we always said we will be between 15% to 20%. So there was a bit of investment in particular, at the end of the year, we mentioned that trading activity improved slightly at the end of 2023. There was a bit of recovery. So I think nothing to worry about, but it's true that in the context of interest rates environment, I think the good news if we could keep this 15%. So we remain in the usual bandwidth, but there was a bit of additional investments at the end of the year. But as well, you need to take into consideration this FX impact due to the fact that we report in the CHF currency.

The next question comes from the line of [indiscernible].

Actually, just a very small question -- very small detail, not really important, but just for the understanding. Looking at the Robo-Advisory accounts, I mean, in the past, you used to show them separately now they're together with the saving accounts, which is not the problem. But just to understand the underlying dynamics I was wondering if you could tell us a bit how they developed during 2023. I mean it seems that it will be now probably 8,000 or 9,000 accounts, if I'm not mistaken. So just -- if you could give us an indication on that?

Yes. So no, it's true that we have grouped them because we know we have let's say, sort of a wealth management initiative. So not necessarily from a regulatory perspective, but from a commercial perspective, we have launched Invest Easy, Invest 3A and we have decided basically to group these type of accounts that are basically assets in account that are really asset based in terms of revenues and not necessarily transaction based. So it's -- no, it's not only about the robo that is a quite sophisticated tool. We have easier strategies that are available to the customer. And this is what you can see in terms of accounts, we see sort of a recovering traction plus almost 50% growth in number of accounts. This is because the implementation of, I would say, more easy investment strategies was probably an opportune move. It triggered a new interest when the Robo has probably reached somehow a plateau because it was quite -- it is quite a complex tool that is not so easy to step in for new customers. So these are these few initiatives Invest Easy, I think we have 5 strategies available plus 3A -- Invest 3A.

No, I understand. So and this would explain actually why you have this big growth in the total number of accounts if we combine robo and savings together, but that's because of all these new initiatives...

Exactly. And what is interesting is that you can see that it has even surpassed the level of assets that we have in the eForex business. So we, in the past, we insisted a lot about FX and CFDs but now in terms of size, that's even bigger than FX and CFD in terms of size of assets.

Yes, I see. And the second question I had is on the on the number of transactions per client per year, I mean, if we do the math, we see it's about I mean, as an average for the year '23, it's about 10 per client per year. I mean, obviously, I'm aware that there was distortions because of the timing, that's what you explained before. When you have certainly new clients and then they're peaking and stopping and so on. But I was just wondering, as an indication for 2024, what is embedded in your guidance? You said that January, February is seeing an increase in the trading activity. And if you can give us an indication of what kind of trading activity you imply in your guidance if it's I don't know, either in terms of the number of trades per client? Or if you don't want to comment on the number per se, just to what extent it's a conservative assumption or not?

Well, so I'll comment, if you don't mind, a bit generally. But if you look more in detail to the Slide 21, where basically we communicated on this margin on assets basically, you see that for securities trading and eForex, we plan on a better trading activity or slightly better. The margin assets increases from 54 to 56. So what we think is '23 was really the lowest end of the trading activity. So we will grow from 2023 to 2024 because in average, we'll have more assets. So net new money, plus now we start the year at 58% and not that -- I don't remember, it could be at 52% early 2023. So I'll average more assets, net new money but as well better trading activity on digital assets, securities trading, and eForex. So we plan for slight recovery. And if you do a bit of math I think -- in general, you can see what we expect more in terms of trading activity. But it's true that 2023 was rather very low, and not only at Swissquote, I think it was across the board in the industry.

I may add something. Sometimes, we forget a little bit how difficult the year 2023 was in that perspective -- is the human brain is made in the way -- in this way that you get used to everything. But if not in 2023, inflation was still very high and there was a lot of uncertainties with the war. Now we still have the war but somehow we got used to and somehow, we are living with inflation. So -- and maybe see a little bit more positive side of the stock markets where -- because everyone is expecting inflation to come down and the interest rates to increase. But it's true that 2023, just on the pure trading side was not a great year. So everything that comes after should be better. We convinced that we've reached the bottom of our trading activity. And you mentioned the number of 10. I can go back in time. There was -- I don't think there was a year when we were at that low level of [ trading ]...

The next question comes from the line of Manuel Peter with Helvetische Bank.

And congratulations for the good numbers. I got only one understanding question concerning your Slide 10 of the presentation. There you show that over the last 12 months, you grew customer accounts at a total 6.6%. But at the same time, you show in the pie chart above that you acquired roughly 11% new accounts. So does that mean that the delta of the 11% to the 6.6% or the cost on this you lost? Or am I missing something?

Thanks, Manuel, for the question. No. In fact, if you -- there are various explanations. I mean, we have accounts that are closed during the year. This is certainly true. But if you look -- the plus 6.6%, this is total accounts. So it means as well including eForex accounts. And if you look at eForex account, they're rather flat, some semester, they could even decrease because here, because it's quite a speculative segment. We only count or report what we qualify as active accounts. So it means the accounts need to be funded and they need to show a certain minimum trading activity. Then in some jurisdictions. If you take the example of the Swissquote in [ Europe], Swissquote in Luxembourg, we have as well in activities. So customers, they get charged if they remain inactive after a couple of months. And this triggers sometimes customers to close accounts when they are with a very small balance or relatively inactive. So it's true, the gross amount of account opens was higher -- but in some segments, we don't report inactive accounts and therefore, the plus 6.6% scopes out mainly the inactive accounts. So I think it show that the total 574,000 is quite an healthy number because it's mainly about active accounts that are reported by Swissquote.

Mr. René Locher, you are the next one, I guess.

Okay. Can you hear me?

We can, certainly.

So on slide -- I am on Slide 21 and 22. So first of all, I want to understand whether you get the CHF 2 billion additional assets to increase the net new money from CHF 5 billion to CHF 7 billion. So that's my first question. And then a second question is on the 2024 outlook. I think you are using or calculating on average assets, which would then be CHF 61.5 billion. And just on this crypto assets, I mean, don't want to be too bullish, and as you know, analysts tend to be a little bit too bullish. But you very good 2021. And just as a reminder in 2021 crypto assets revenue were CHF 102 million. So I mean what I can see now or what I can calculate now is, you are factoring some CHF 37 million, which looks okay, just given the run rate of CHF 4 million in January and February. But just -- here just a word of caution, I mean, bitcoin and also as a result, but you -- nevertheless, we should not factor in 2021 because this is too high. So that's -- the second question. And the third one is on 2025. Here again, going forward an additional CHF 7 billion average assets in '25 would then be CHF 68.5 billion, 1 percentage point or 1% revenue margin I end up at CHF 68.5 billion, which is below CHF 700 million. That's fine. And then if I -- and that CHF 350 million pretax profits, you have like CHF 335 million cost, operating expenses in plenty plant, which is another plus 14%. Yes. I mean just, is my thinking right or something wrong when you're talking '24 and '25.

Well, René, first of all, I want to make very clear, you're thinking is always right. So this -- so yes -- perhaps on the crypto. So on the crypto 2021, we had, I mean, an exceptional year. We did more than CHF 100 million of crypto assets income. I mean it means more or less, we were very close to CHF 8 million to CHF 10 million net revenues per month. So it was -- 2021 was pretty huge in terms of activity. When you look outside, spot volumes in the market, you see that there is a good recovery in crypto asset trading activity. But not necessarily to the extent of 2021. I think everything is set that 2024 could be a great year. But for the time being, there is a positive trend. There is a very positive trend, but the volumes did not necessarily get at the levels of 2021. I was asked before by Christoph, I said on a monthly basis, January, February, we are between [CHF 4 billion to CHF 5 billion]. So I think it's good because it means our assumption that is already higher than in 2023 should rather not put at risk the profit, and this is always what we aim to do with our guidance on digital assets. But we're not yet there at the levels of 2021. Then yes, we can aim CHF 7 billion per year. So compared to 2023 we could say well, the missing [ CHF 2 billion ] will come from. Well, 2023 was a particular year with a period before interest rates peaked and after interest rates stabilized and then digital assets, they have always been very positive for client onboarding and client reactivation. So the momentum, it means probably that the momentum we see in customer acquisition in 2024 is positive. This is why we insist again on the CHF 7 billion. Then you had a question about 2025. Yes, I think we don't need the CHF 700 million. We probably be at between CHF 650 million and CHF 700 million and the pretax margin as confirmed in the press release above 50%. So in the guidance, 2024, you see that there is an improvement of the pretax margin. I will expect this pretax margin to continue to improve in 2025. So your math are certainly correct. And why I expect pretax margin to improve in 2024 and in 2025 because as Marc mentioned before, our CEO mentioned before, we think we will reach a stable level of headcount. We grow the headcount, probably but not to the same extent that we did in the past. So from a cost perspective, we have the possibility to adjust and therefore, to stabilize our level of expenses.

If I may add something about the crypto markets in general. So the first is we can say that the technology in the last year and also the acceptance of the product has matured a lot. And the most of the [ excesses ] of the past has been now punished in a way, either by the regulator or by the market and many of the bizarre provider have disappeared or are -- or will disappear be shortly. And also one thing that has not worked so well is the entire [ DeFi ] market, this idea that the finance will completely decentralized and that will have a lot of smaller companies on the blockchain doing very specific businesses. And that was a very nice concept, but it's not what the regulator wants. The regulator wants consolidation, supervision. So concentration rather than the decentralization. And I think that's also a good news for us is this -- the fact that a bank actually should run the crypto business. This is a strong argument in our favor. And the one, obviously, we would agree because at the end, it's a financial product and it has to obey to a certain number of rules and regulation. Now Swissquote actually is not a crypto stock because we are not the assets. We are more of a digital bank, but we think that crypto should be part of the offering. But I will insist that Swissquote is not a crypto stock.

And then you have last question I guess from AWP.

The next question comes from the line of [indiscernible] with AWP.

Also question regarding midterm outlook on net new money. I don't know, if I understood correctly. Just to clarify. So you expect around CHF 7 billion net new assets in 2024 and 2025 each year, so CHF 7 billion 2024 and CHF 7 billion 2025 around that?

Yes. This is correct.

Correct. So here on my cockpit, I don't see any more question. Operator, is that correct?

Correct. That was the last question.

Okay. Then I guess we can close here. I would like to thank you for the participation this morning. Thank you for the interesting questions. And as usual, Yvan, and myself, we are available this afternoon. Should you have additional questions, please do contact us directly. So thank you for -- thank you to everyone, and see you soon. Bye-bye.