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

Good morning, everyone. Good morning to our press conference for the 2024 results. Here on the desk at our headquarter in Gland, we have our CFO, Yvan Cardenas. He will be available for the Q&A session shortly after this presentation; and myself, Marc Burki, the CEO. We will comment the 2024 results, of course. We'll start with an executive summary. We'll speak about the results of full year -- the full year results 2024. We'll have a look at our balance sheet and our capital situation, and then we'll talk about the guidance for 2025 and the outlook for the next 3 years. And then we have a few messages later on in the appendix. But let's start immediately with some key figures of 2024. So 2024, as you know, already was an excellent year for Swissquote again after other excellent years in 2023 and 2022. It was the best results ever. We almost achieved the figures we wanted to achieve in 2025. We promised to the market that we will do CHF 350 million of pretax in 2025, and we achieved this in 2024, almost achieved it with CHF 345.6 million of pretax profit. This obviously is the best result ever. And this very good result has been sparked and pushed by our real growth, which is the number of new accounts we had in 2024. That's 75,000 new accounts. That's a plus of 13.2%. And the net new money that we acquired in 2024 of CHF 8.3 billion. This CHF 8.3 billion is a very good result. It's the second highest with only 2021 was higher, slightly higher at CHF 9 billion, and it was purely organic growth, and it was above the -- our targets that we set as a growth pattern of CHF 7 billion. So all in, excellent year, record results on the revenue side, on the profit side and very close to our 2025 targets we have now achieved in 2024. So looking at the full year and again, our real performance is to look at the customer growth and the asset growth. You can see here, 2024, CHF 8.3 billion, only 2021 was better. This was this very special crypto year we had. And here, in 2024, it was a good year in terms of crypto, but only at the very end of the year. So it was otherwise a normal year, so to say, and we achieved this CHF 8.3 billion of net new money. And again, purely organic. And if you look now at the number of accounts, we have now at the end of 2024, we had 650,000 accounts, client accounts. And if we divide the assets of CHF 76 billion divided by the number of accounts, this gives an average of CHF 117,000. So this also is the highest ever. But you can see that it's fairly stable. We have good clients with good average assets. And this is the -- reflecting the quality of the clients we try to acquire. Where does the new money coming from in 2024? It's mainly a Swiss and European business. You see here year that with CHF 5 billion of growth in Switzerland, that's the highest number. But shortly after comes Europe with CHF 2.2 billion. And then we have our traditional hotspot in the Middle East with almost CHF 600 million of growth. The rest is happening in Asia and the rest of the world. And there, we have CHF 330 million of net new monies. Now if we look at how this is distributed, this is 62%. So again, Swissquote is a Swiss business with growth potentials outside of Switzerland. So the Swiss growth of CHF 8.3 billion represents 62% and then the rest of the world is 38%. Now on the distributed on the B2C and the B2B side, on the B2C, this represents 47%. And then we have the B2B or the B2B2C, that's 53% of the growth and net new monies in 2024. Now let's have a look at our net revenues. In 2024, we achieved CHF 661 million of net revenues. This also, again, is the best number ever. It did grow by 24% compared to 2023, which was a good year also and also with high growth compared to 2022. And almost every segment did grow in 2024, including the interest revenue, a slight growth of 5% despite the fact that interest rates did decrease from 2023 to 2024. But still because the growth on the balance sheet was high, we could achieve a slightly better results. You see that on the fee and commission income, it did grow by 25%. The -- all the rest trading, crypto assets, spectacular growth by 350%. Only the ForEx was a little bit lower with 6%. There was less volatility on ForEx currency pairs, and this explains the slight lower number in 2024. But overall, a very strong growth pattern. If you go a little bit back to 2018, that's 6 years ago, we did 1/3 of the revenue with CHF 240 million that we now achieved in 2024. And we also believe that the growth story will continue, pushed by net new monies and pushed by new clients joining our bank and our system. So the clients' assets are at CHF 76.3 billion is obviously the highest number ever achieved at Swissquote. That's a growth of 32%. But of course, we had good markets in 2024. So this growth of 32% is not only external growth with net new monies. We have about CHF 10 million -- CHF 10 billion of asset growth, which is due to the good market. So it's a good split between net new monies and performance of the markets and ultimately, performance of our clients. So our clients are potentially happy in 2024 since they are invested in the stock markets. This is one of the reasons why they have an account with us, and they realized collectively a very good performance. And then comes on top the CHF 8.3 billion of net new monies. If you look at the distribution in cash and securities, we have these traditional numbers of 15%. This is -- this doesn't change a lot in our history. You can go back a few years, we are almost there in these numbers. So it's -- when clients do open an account, they bring in assets and they bring in cash in the ratio of 85% to 15%. So this also explains why our balance sheet did grow so strongly over the last year because in the -- because the mix doesn't really change. Now the 15% is mainly distributed in Swiss francs, up to 49%. And then we have our 2 main other currencies, U.S. dollar and euro, but this we have full slides later on, then we will discuss about our balance sheet. I think now if you look at the net revenues by customer profile, it's again, Switzerland, that represents 58% and then we have the distribution in the rest of the world, 19% is our second largest revenue contributor, that's Europe. And we have -- this is the place where we have the other bank of the group in Luxembourg, who also contributed strongly to our number. And then we have our hotspot in the Middle East, Asia region with 12%, 11% being the rest of the world. Now if you look by customer type, it's strongly a B2C business at Swissquote to 73%. The rest is B2B or B2B2C at 27%. Also, this number did not change massively over the last year. It's a good mix of clients, but Swissquote up to 70% is a B2C business. But since our systems are quite good and our technology is good as well, we are able to serve some institutional clients and make them benefit from the various developments and our tax system and tech stacks we have put in place. If you have a look at the net revenues by asset class, we -- again, CHF 661 million of net revenues, 27% has been performed with cash. That's mainly interest revenues and loans. And then we have the fixed income, which all traditionally is an important part of our revenue mix to 15%. Crypto assets strong in 2024 with 13% and then the rest is foreign exchange, securities and the rest of the business, you can read here on the left side of this slide. Now one important figure that we always look at is the match or the distribution between transaction-based and nontransaction-based. There, our aim is to be at least at 40% on the nontransaction-based revenue here at 48%. Again, we had good interest income. The custody fees is a reflection of the assets we have at Swissquote. Then we have some management fees, referral fees. That's also a sole part of the nontransaction-based revenue. When we speak about transaction-based revenue, this is obviously brokerage income. So this is the one influenced and facing the market, foreign exchange, eFX markup, trading with crypto that would go into the transaction-based revenue. And this is always a little bit more difficult to forecast short term, when we try to figure what 2025 will be. There is a guesswork how volatile and how good the markets will be. And traditionally at Swissquote, we are more on the cautious side, whether in crypto or trading with securities, more on this a little bit later. Now if we look at total expenses, they did grow by almost 16% in 2024, but about half of that, 45% are one-offs, and this is noted here, we had one-offs of CHF 7.1 million. And then we have what we call adjustable expenses of CHF 12.2 million. This is mainly the bonus system we have put in place, profit award, et cetera. So if -- or marketing a little bit, if you deduct this from that, then you have a more balanced figures. And you see that our payroll and related expenses are fairly under control in 2024. Now looking at the distribution of headcount, speaking about payroll and related, it's -- we are a tech company. We have 36% of our workforce are working in technology. Sales trading and marketing represents 21%. And then we do invest strongly in our compliance and risk, workforce that now increased to 12%. That's part of being a well management -- well-managed company from that perspective. And this will continue to grow as the number of full-time equivalent will grow over the years. It has been always around 8% to 12% here in that sector. Then we have one sector we call the infrastructure back office support. That's the operational workforce of the company at 16%. So again, a very tech-driven company, but we believe that with this technological revolution that helped us or was at the inception of Swissquote years ago is far from being finished. We have lots of ideas and developments in the artificial intelligence. We have a few slides later on what we are doing in this sector, but we believe that is very well positioned to benefit from the innovation and the tech revolution that is shaking these markets and Swissquote obviously wants to be at the forefront of all this. Now looking at profitability. Again, 2024 was the highest number ever. We achieved CHF 345.6 million of pretax profit. This is the orange bar here in 2024, but we also had net profits of CHF 294.2 million. This is after -- mainly after paying taxes and with a very good pretax profit margin of 52.3%. Now if we look at revenues, this CHF 661 million of revenues, expressed in basis points on our assets, this is 98 basis points. It's a little bit better than our average of 90 basis points, which we use to forecast our future growth and mainly the outlook 2028. And now expressed in pretax profit margin to the CHF 76 billion, this is 51 basis points. So a very profitable, highly competitive organization. Now looking at the balance sheet as of 31st December 2024. So I mentioned it already before, we had a high growth on our total assets of CHF 13.3 billion. That's a plus of 33% from the CHF 10 billion that we had in 2023. And if you look at how this is distributed, we have almost CHF 5.5 billion of the CHF 13.3 billion, which are cash and cash equivalents that we placed with central banks. Then we have treasury bills of CHF 433 billion, placed with other banks, CHF 2.3 billion. And you see here that our investment portfolio has increased from CHF 2 billion to almost CHF 3 billion. We do anticipate interest rates reductions across the board in 2025 and beyond. So we increased a little bit our investment securities portfolio to secure interest revenues in the future, even though the interest rates will go down. But overall, still a very liquid balance sheet. We have a leverage ratio of 7.2%. This hasn't almost -- this is almost equivalent to what we have in 2023. So we are high above the minimum of 3%. So a very solid and very liquid balance sheet. Here also liquidity ratio is at 309%. So that's almost 3x the minimum of 100%. The funding ratio was stable at 263% and then there's no interest rate risk at Swissquote with the interest rate risk at 3.6%, where the max should be 15%. So very good figures there. Now if we have a look at the -- on the liability side, so really, there's a lot of cash on cash at that Swissquote. The distribution of our cash from our clients is -- it's mainly in Swiss francs to CHF 5.5 billion. And then the second client deposit is with U.S. dollar at CHF 3.1 billion. This is good news since the U.S. dollar still pays good interest rates. So we are quite happy about that. And it did grow dramatically in 2023, almost CHF 1 billion additional from CHF 2 billion to CHF 3.1 billion. Lower figures in euro, also with growth from CHF 1.5 billion to CHF 1.9 billion. And there also, that's good news because these are the higher interest revenue generating cash position, so higher than the interest we get on Swiss francs. And you've seen the news today, it went down from 50 basis points to 25 basis points. Our forecast to crunch the numbers for 2025 is that as of the 1st of July 2025, the interest rates in Switzerland will go down to 0. That's our forecast. So that's the way we number crunch and compute the revenues for 2025. So according to what we always do, we do have a cautious approach, and we factored in reductions in interest rates, revenues. That's very important since this represents a decent part of our figures in 2024. So we have to account the reduction in interest rates in our forward-looking statements. Now speaking about interest income contribution. So let's start here on the very left side, total client assets of CHF 76.3 billion. And again, only 15% of that amount is in cash. The rest is invested in securities, and this generates the other revenues, excluding interest income, and it's CHF 436.8 million in 2024. Now if we concentrate on the 15%, that's the cash, our own cash and the cash from our clients. So 64% of that CHF 11.4 billion of cash is the liquidity portfolio, and this represents CHF 7.3 billion. And it's Swiss francs, U.S. dollar, euro and others. And you see the challenge we had in 2024, and we will also have in 2025 is that the sovereign rates in Swiss franc decreased from 1.7% to 0.45% now at 25 basis points in 2025. So that's quite a strong reduction. And we had a similar situation in U.S. dollar from 5.4% to 4.3% and also the euro interest rates decreased from 3.9% to 2.9%. So that's the challenge, and that's also the situation going forward, 2025, 2026, we don't see these interest rates going back to where they were in 2022 and '23, and we have to take this into account for our forecast. Now the rest of the 36% of our cash is invested in lending portfolio and investment securities. So 36% of 11.4% represents CHF 4.1 billion, and this is distributed in our investment securities. That's CHF 3 billion increase to CHF 3 billion. We have high-grade investment products and our CFO can give you more information on that, but our lending portfolio of CHF 1.1 billion also did increase. And there you see the various type of revenues we can generate out of that. Now this combined together with the revenues generated on our liquidity portfolio represents CHF 224.2 million. Now if you add this CHF 224 million to the CHF 436 million, then this gives the results we achieved in 2024 of CHF 661 million. Now looking at the equity, our equity reached for the first time or overreached the CHF 1 billion symbolic threshold we set ourselves last year. We were close to CHF 1 billion. Now we are much higher at CHF 1.1 billion. And you see also the various capital requirements. We have the FINMA minimum at 11.2%. Our capital ratio of 23.5%. Now what are we doing with the excess cash? Well, first, some of that will be used as dividend payment. We had our ratio of 30% of payout that we promised to the market. So in 2024, we achieved CHF 19.7 earnings per share and 30% of that will be paid in dividend. That represents CHF 6 per share, and that's our proposal to the general assembly to -- in May as a payout ratio. Obviously, it's the highest ever as the company has the highest ever profit. Now if we look at the capital allocation strategy, this is always a very anticipated slide. So again, here, you see our minimum -- FINMA minimum of 11.2%. It's not the ambition of our Board of Directors to go down to 11.2%. We have our internal buffer at 18%. And if we would reach the 18%, this would trigger a certain number of reactions, but we are high above that, we are at 23.5%. Now if we compute the difference between 18% and 23% and express this in what we could call excess capital, then this would be CHF 230 million. So we are committed to this payout of 30%. And in this CHF 230 million of excess capital, we have already taken into account the payout of 6%. Otherwise, our capital ratio will be higher than the 23.5%. That already takes into account our payout. Now what are we doing with the excess capital of CHF 230 million. We may use this for inorganic growth. But again, our ambition is to accelerate growth. So we do not anticipate to have transformational acquisitions that would completely shake up the -- what we are as a company. But from time to time, we do make targeted acquisitions to grow a little bit faster. We had our internal ambition to reach at least CHF 500 million of excess capital. And when we reach CHF 500 million of excess capital, we will then decide what we can do with it, whether we have a higher dividend payout than the 30%, but that's not immediately happening. That's something for the future. But there also, our CFO is able to give you more information about that. Now looking at the guidance in 2025. We guided the market with growth compared to 2025. So we think that our net revenues will grow from CHF 661 million to CHF 675 million and that our pretax profit will grow from CHF 346 million to CHF 355 million. Again, growth in 2026, 2025 as well. It's less growth than we experienced in 2023, but we have to take into account that 2025 will be a more difficult year because we have this reduction in interest rates that we know will have an impact on our figures. Now the way we compute this is we start from the assets. We think that also in 2025, we will grow the assets by our average numbers of CHF 7 billion. And if you add the CHF 7 billion to the -- to our total assets at the end of 2024, we think we will be at CHF 83 billion by the end of 2025. Now the way we compute our revenues is simply looking at the margins on those assets. We think that nothing will change on the securities, trading and eForex, we will stay more or less at 52 basis points unless something extravagant happens to the market. But to the looks of it, it will be almost identical for now, at least that's what we have experienced in the first 2 months in 2025, we think that we will be -- we'll achieve this 52 basis points. We had a good start. But as you know, there are lots of uncertainties in the market. And there, we are always a little bit cautious. Now interest rates, this will go down from 33% to 24%. We know this because it happened today. Again, our forecast is that it will go down to 0 in the second half of 2025. This is part of our number crunching, and it has been taken into account for our numbers, and this explains why we go down from 33 basis points to 2024 -- to '24. And the last point is the crypto assets, it had a very good start in 2025. As you know, the crypto was booming. It did boom in the end of 2024 with the U.S. elections and it continued with 2025. Now this is a volatile market. We are always cautious. We always have been cautious, and we don't want to guide the market with numbers that we're not able to achieve. So there, this 9 basis points is probably some kind of an average number that we know that we can achieve in 2025. Now all this together is the numbers we are using to crunch and to forecast 2025. Now if you look a little bit longer term, and we have -- we always do forecast 3 years in advance. We start with the net new monies because that's the most stable numbers we know that we will be able to achieve, and it's our average target of CHF 7 billion. Looking at 2024, yes, it was higher than CHF 7 billion. It was at CHF 8.3 billion, but we know that CHF 7 billion is probably a decent average forecast for the next 2 years. And if you add the CHF 7 billion year-on-year and if you put a margin of 0.9% of client assets, then this means that we will achieve net revenues of CHF 900 million in 2028. Now we have an average profit -- pretax profit margin of 55% that will slightly increase because there is leverage in our business model. And this means that by 2028, we will achieve pretax profit margins -- pretax profit of almost CHF 0.5 billion at CHF 500 million. This is the forecast for our numbers. You know that we are really good at forecasting, always a little bit on the cautious side. But 3 years ago, we announced that we'll do CHF 350 million in 2025. Again, this has been achieved 1 year earlier. This is why we're confident that the CHF 500 million is something that we can achieve. It's good growth. Swissquote is a growth company. We know what we have to do to achieve that and the growth story of Swissquote will continue, obviously. So here, you see the midterm outlook, we are in 2025. The CHF 675 million will grow to CHF 900 million in 2028. That's a plus 33%. And then the pretax of CHF 355 million that we think we'll achieve in 2025 will grow to CHF 500 million, and that's a plus 41% in 2028. Maybe better than that, depending on how good the markets are. But again, Swissquote has this reputation of achieving the targets we are forecasting and rather staying on the cautious side of things. Now have a look at our customer loyalty. It's always interesting to see the quality of the new clients we are gaining. And if they're using our system, this is very much the case. 17% of our 650,000 client accounts in total have been acquired in 2024. Half of that in the second half of 2024. So we know that these clients will now contribute to revenues also in 2025. But if you look at what happens in 2024, then the new clients that we acquired generated 9% of -- 10%, sorry, of total revenues. Why not 17% is because the new clients are distributed over the year. And if you acquire someone on the 31st of December, then obviously, he has no time to contribute to the yearly figures, but he will be there for 2025. And this is to show you that the new clients we acquire to have about the same behavior than the clients we already had in the past. And here also, you see the figures for the one we acquired from 2021 to 2023, and you have similar type of figures. 2021 to 2023 represents 32% of our total clients and they contributed to 36% of total revenues in 2024. Now let's have a look to close our presentation on the product road map. We have many projects on AI. The ones that are client-facing are the various developments we did. So we're using AI to present news sentiments. We have analysis. We developed a GPT. We call it Swissquote GPT. This is to help our customer care. We have lots of other AI developments, but these are internal tools that we're using for fraud detection and fraud [ computing ], which is a plague for every online bank. So we have to use the best tools in place to be able to fight against that. But on the client side, we are pushing new services and new products. We have now just launched an Elite card that is very successful. And on the trading side, we introduced fractional trading, also very appreciated by our clients, and we have various saving plans that we have put in place. So overall, a very good year in terms of new products and new services. And then, of course, we have our joint venture with PostFinance and we're very proud that they reached profitability in 2024. We now have almost CHF 3 billion of client assets, only new. And at the end of 2024, we had almost 300,000 clients using our system. So we're very proud of that. It's difficult to be profitable in that sector because it's a scale business. You need lots of clients, and we are very, very happy that the growth is so strong. So this proves that the services we have developed for our clients are really appreciated, and we think this growth will continue in -- over the next year. You may have seen that in the U.K., for example, which is the most advanced market in the use of neobanking, almost half of U.K. residents do use some kind of a neobank. And we also think that this will happen in Switzerland. So there is strong growth to come also if you just concentrate on the Swiss market. Now a few dates. We'll have a lot of events in 2025. To start with the one that will already start next week, we are in London to present our figures. Then we have our general -- Annual General Meeting on the 8th of May. We have other conferences with various banks, one in May 15 and then in June 12. And then on August 14, we'll already present our first half results 2025. Then you have a few look on our key figures. I have commented most of them. I will not comment any further. And this would close my initial presentation, and we're now happy to take some questions for the Q&A session.

[Operator Instructions] The first question comes from Daniel Regli from ZKB.

I have 4, if I may. One is on costs. One is on the net new money outlook. One is on the net interest income or liquidity portfolio, in particular. And then the last one is on eForex, if I may. So first, on this cost. And just I wondered, can you elaborate a bit more on this one-off cost? What has triggered these one-off costs? And were they accounted for only in H2? Or were they spread across the whole year 2024? Then my second question on the net new money target. Obviously, you have kept it stable at this CHF 7 billion you already had in the prior strategic period. What has led you to not increase this number further given your market presence and everything has also grown. Are you not optimistic that you can achieve a higher net new money number per year going forward. And then the third question is on the net interest income and particularly your guidance for 2025. And there just based on back of the envelope calculation, I came to about CHF 190 million net interest income, just multiplying the margin you guided times the average client assets. And if so, how do you come to this high number. Just also based on the back of the envelope calculation, I found that you must lose about CHF 90 million, give or take, in total revenues coming from the lower interest rates we will see over all the currencies you're having. So obviously, you're guiding for only a CHF 30 million lower net interest income number, which means that about CHF 60 million has to be compensated from somewhere else. So can you please help me understand a bit where this CHF 60 million are coming from? And then the last question on eForex, it's just a very broad question. And can you just talk a bit about what the business is doing. It seems to be kind of stagnating a bit. Will this be growing again? Or what are the challenges in this business?

Okay. Thank you. Thank you, Daniel. I will take question 2 and question 4 and then give the one about net interest revenue and this cost one-off to Yvan. Yes, let's start with the CHF 7 billion. True, we did more than CHF 7 billion in 2024 at CHF 8 billion. But if you look back a little bit in the last 3 years, we were at CHF 7.7 billion in 2022 at CHF 5 billion in 2023, at CHF 8.3 billion in 2024. So we just took some kind of an average on that and forecasting then the CHF 7 billion for the next year. It may be a little bit on the conservative side. We agree to that. We hope we do better. We hope we do more. But again, we like to be conservative on that side for such a long period of 3 years. Now the eForex business, yes, we don't think that we will grow dramatically. We do have a good operation in this sector, but this business is limited by various factors. It's limited in terms of leverage in Europe. It's limited in the way you can do marketing in the various fields. Europe is very strongly limiting that. Switzerland as well has guidelines on how you can push and market those products. And we do, again, have quite a fairly conservative approach to that. So we don't see this growing massively over time. We want to keep that business. We want to continue to invest in it, but we have just to face reality that this business is highly controlled and highly regulated in the countries where we are active. So we take this into account. Now for the cost and the one-off and net interest revenue, I'll let Yvan to response.

Hello, Daniel. So on the cost side, yes, they mainly happened in H2. So we do refer to 2 types of expenses. On the one aspect, we see adjustable ones. So here, what we consider is basically the bonus provision, what we call profit award is higher than last year because we basically overachieved the initial targets. So here, we have a CHF 6.5 million increased variable remuneration. You have as well, we have increased marketing in light of the good customer acquisition. Initial budget was at CHF 29 million. So you have here a CHF 5 million, CHF 7 million I would say, strategic increase of marketing that we think is as well somehow adjustable. And then you have a few one-offs. It's mainly a few impairments on IT technology systems, increased provision expenses compared to 2023. There is a bit of depreciation in intangible assets. So I think it's not a change of accounting policies. But in light of good results, you certainly have a bit of a more conservative approach on this aspect. So these are the 2 items that we refer as adjustable or one-off costs. On the net interest income, Well, you're right. We certainly are guiding for a net interest income slightly above CHF 190 million. There is always an impact of roundings. But yes, it's slightly above CHF 190 million. I would say we have 2 positive aspects in 2024. First, we have more USD deposits than initially expected. You could see that we could grow USD deposits by more than CHF 1 billion. So the mix of currencies has a bit changed. It's a bit more favorable to us. At the same time, we have increased the debt securities portfolio, in particular, in USD. So it was really a good coincidence. Rates in USD are still relatively high, and we got an extra inflow of USD currencies. So we're confident to reach a net interest income guidance. Then there is still an uncertainty on the interest rate levels. As Marc mentioned, we have factored Swiss franc at 0% in H2. We'll see what the situation is. So the cut of today was anticipated. So the cut of today is included in the numbers. We'll see then what the SMB does. But luckily, we have other currencies, in particular, USD and here, the rates they are more favorable to us.

Just one quick follow-up on the cost question. And I just saw that you have built about CHF 6 million in provisions in H2. Can you maybe quickly explain a bit what has triggered this relatively high buildup in provisions? Or is there any kind of legal case outstanding or something?

Well, it's always we look at -- so we have more customers, we have more activity. Therefore, we have as well, it's what we call -- if you look at the annual report, I think we described a bit the concept of the provision. It's more -- management will look at the amount of claims that we have, not open litigation but claims and we'll basically, together with the legal department try to assess what the potential risk is. Then in general, if you look at our numbers, when we have positive years, in general, we are a bit more cautious on this provision level. And I think 2024 is another example. I think there is a bit of judgment. And in the context of good numbers, we did not want to take any risk in the assessment of these claims, but there is not today one specific legal litigation.

The next question comes from Amit Jagadeesh from UBS.

It's Amit Jagadeesh from UBS. I have 2 questions -- sorry, 3 questions. Firstly, on crypto in 2025, what level are you assuming in your guidance? Is it flat versus 2024 or more or less volumes? Secondly, on Slide 26, you've set out a number of new products and AI-led initiatives. Can you just tell us how much have these already contributed to new customer acquisition and asset growth? And what are your expectations for in the future? And then lastly, could you provide some more color on a time frame of when you expect to hit a growth buffer of CHF 500 million in the new capital allocation strategy.

Okay. Would you start with the first one?

Yes. So I'll probably take the first one, the last one. So on cryptos, well, you see that we -- I think we're guiding for a lower number compared to 2024, around 20% to -- 20%, 25% less than in 2024. It's mainly related to a lack of visibility. I think we mentioned in the presentation, the start of 2025 was relatively good. So we had January and February certainly look a bit good, which explains that in absolute numbers, the guidance we have included for crypto assets is relatively high compared to past practice. Our aim with crypto assets is that the guidance should never be at risk of a downside. So it should be a number we're very comfortable to reach with. But today, I have to say, Mr. Burki and myself, we have difficulties to forecast crypto assets in the next 10 months. So today, it's still good. How much will it last? It's a bit difficult to assess. But more or less, the guidance says 20%, 25% less compared to 2024. On the capital growth buffer, so what we say is we want to grow it because with CHF 230 million, you can certainly do a bit of inorganic, but no, it's not that you can buy large-size companies. So we want to build it. We don't exclude it to use it before reaching the CHF 500 million. So it's an envelope that we want to build across time, potentially use it already before. But I will say with the profit targets that we have, we probably could reach it somewhere between 2027, 2028. It will depend as well on the opportunities we have down the road. Should we not reach it or should we be there by 2028 without any M&A transaction happening, then I will say that the additional dividend distribution, they will really have to be discussed and implemented.

And then I'll take the second question, which is a difficult one. It's a tough one. It's difficult to say how much the developments we do actually contribute to the top line, of course, we could, in some specific case, we can easily compute the numbers, for example, if you take the Elite cards, and we know precisely what revenue has been generated with the Elite card, but it has just recently been launched. So there I will be then able to give you the numbers in 2025. But what we are trying to do, we are trying to build a very attractive platform. And we know that to sustain the growth we have in assets, in number of clients, you have to innovate. You have to bring new features. It's very true also on the neobank side. Now we have become #1 on the Swiss market, and this is based on features and functionalities of the platform. If you would just have a debit card, then we would not be at CHF 3 billion assets and 300,000 clients. So we have to innovate. We have to create attractive features for our clients. And then overall, this generates the revenues. We do not try to associate specific developments with a specific revenue. Yes, we could do it with fractional trading. But there also, it is difficult to say whether the fractional trading has really generated more revenue than normal trading. It's a feature that is well used. I can say that about now 10% of all the trades we do are fractional trades, and this tendency will grow, and it will become some kind of an almost normal feature. I think that sooner or later, every bank will have to offer fractional trading. It's something that is gaining on popularity and the pressure now is on other banks to offer this as well. Because this goes with this new type of clients, these neobank clients that are used to using apps that are using -- used to think in cash numbers rather than number of shares. This is becoming the normality. So we have to translate this into our offering. But again, it's a tough question to see which exactly innovation growth, which type of revenue. Let's just say innovation is pushing the new assets, new clients we are gaining over time.

The next question comes from Thomas Paul from AWP.

Yes. Two questions just for possible acquisitions. I suppose this is not in your revenue guidance. There are no acquisitions included. And could you a bit allude to what kind of acquisitions, targeted acquisitions you want to make? And the second question would be around the margins in trading just because the competition is quite fierce, I think. And this year, a new trade -- or an existing trade with Central Bank has said that they will give very favorable conditions in trading. How do you react to that?

Yes. So maybe the last point, it is a highly competitive market. We know this. And there are several providers in Europe mainly and in Switzerland also that have cheaper prices than we have. We think that the end game is you need to have the best product/price ratio in the market, and we believe that Swissquote has this advantage over all our competitors. This is why we have been so successful. It's not the first time in Switzerland that someone says we go after Swissquote. We're now 20 years in this business. And every year, we have someone saying that we will be the new Swissquote in the future. But so far, this hasn't been achieved. It's -- again, it's a highly competitive market. You have 0 brokers all over Europe. You have them in Germany. You have a name Robinhood, Trade Republic, Revolut and all those providers. It is difficult to offer the range of service we're offering if you don't earn some money on the trading. There is a caveat somewhere. There is a price to pay for being at 0 because if you're at 0, you don't earn anything and you don't have then the financial capacity to invest in the tools that will be so important in the future. Now if you go 5 years down the road, how much will artificial intelligence influence the way we are consuming financial products. We think that it will be very important. We think that the way you interact with your financial adviser, your electronic financial adviser, the way you interact with your investment portfolio will be highly influenced by artificial intelligence. We are investing a lot in that sector. We also are using artificial intelligence to combat fraud and crime. Being a neobank, and this happens all over the planet, there are criminal organizations that try to benefit from the facility we put in place towards our clients. So there also, you have to invest high amounts of money to combat this and artificial intelligence is one of that. So there's a trade-off between the fees you get from your clients and then the service you are rendering. You can go down to 0, but all the business models in 0, all the zero training business model has not been successful so far. Look what is happening -- look what's happening in Germany. The 0 brokers are at best around breakeven, but none really have had the success of the 0 brokers of the U.S. So Robinhood, for example, is a good example. They are successful in the U.S., but they are not successful in Europe. Because in Europe, what is called the payment for order flow is very constrained and very limited. So you cannot resell the trading flow to any hedge fund and then make a lot of money out of it. This is not something that is working well in Europe, and it will be even more constrained in the future. So we don't believe in that business model, and this is not our business model. We believe in the fact that we have to be aggressive on the pricing, but very good on the overall service level. Now to the first question, does the revenue guidance include any external -- any future acquisition? No, that's not the case. Any additional or any external growth will add to our top and bottom line. And then Target acquisition, yes, we -- again, we are cautious in what we are doing. If I go back in history, we did many acquisitions, but none of them were actually what we call transformational. We wouldn't acquire a company that would completely change what we are today because also there, we have seen many things happening in the market, and this is not always successful. So we want to make acquisitions that help us push a product or a service that we're already offering. So it's accelerated growth, so to say, but in the sectors where we already are. And the number of targets are limited in the markets. And we know this, but this is our way of growing the company. We think that we have sufficient traction in our organic growth so that we can a little bit be picky on the type of companies that we are acquiring.

Our next question comes from Daniel Tula from [ Vercentile ].

Yes, I have a few straightforward questions. The first one is about the Credit Suisse integration into UBS in Switzerland, which is about to happen in the next few months or so. And as you are certainly aware of Credit Suisse has launched a few years ago, the CSX offering with many clients, especially also younger generation clients who have welcomed this offering. It was an economically interesting offering and also technically convenient. Now these clients are going to be integrated into UBS as far as I know. And UBS has a different offering and people say it's more complicated and more expensive and on the whole, less advantageous. So we're talking about 300,000 back in 220 -- end of 2022 when the last figures were published, we're talking about 300,000 clients in CSX in Switzerland. Do you see that as a potential for your company? And do you think this is going something that -- this is going to be something where you see growth potential? That's the first question. Sorry for the long introduction, but -- and the second question is how you assess this takeover by -- Safra Sarasin has taken over the Saxo Bank, which had a pan-European business model. In my perception, relatively successful, but I'm not deeply into that bank. But nevertheless, the takeover seems to be quite -- at least to me, it's quite spectacular. Maybe you can -- I'm wondering whether the online banking industry has already reached a state of maturity where we can expect to see such takeovers, maybe you see that differently. And the third and last question is as a newcomer in terms of analyzing your company, I am wondering what kind of European or international clients you're having and gaining. I can see the Swiss pattern, but not fully understand the international pattern.

Okay. Very good. Thanks for all these 3 questions that are very, very much linked to our business model. I may start with the last one, which is our strategy in Europe. So I said before that the European market is super competitive. Just have a look in Germany. You have Flatex who merged with DEGIRO, you have Trade Republic, you have all the type of providers, and they are very aggressive on the price. And when I say aggressive, they are at 0. So this is more or less the strategy that now Saxo Bank wants to do as well. We don't believe in that business model, to be very honest. It's a challenging business model because it's a very simple equation. If you don't get the money on the trade, you have to get the money somewhere else. And what are they doing? They are pushing their clients into securities lending and then keeping all the money for themselves. We also offer securities lending at Swissquote but we do it in a completely different way. We give the money to the clients to say, look, if you want to -- if you want to lend your shares, then we have the facility, we offer the solution and then you will get the biggest part of the revenue. We take something because we have to pay for the infrastructure, but the money goes to the clients. If you take DEGIRO, for example, this is not the case. The money goes directly into the pocket of DEGIRO. There's no magic in that. You have to get money somewhere. And if you don't get it in the transactions, you get it elsewhere, especially with now interest rates coming down, this hot honeypot of interest revenue is now fading away. So this makes this business model even more challenging. So I'm very skeptical that these 0 brokers will survive over the longer term. They will have to adapt their business model. Now Saxo, and this is your second question for us, nothing has changed. They are in the Swiss market, and they are decent competitors. We respect them a lot. I think they respect us as well. We are in the same segment. We have selected a different approach and a different business model. They go 0, we stay where we are because it has been successful. I don't think that this -- that the takeover -- it was not a takeover actually, Sarasin replaced their existing shareholders. I think they have 70% -- Saxo Bank had 70% external shareholders that they wanted to go out. Now they have been replaced by Sarasin. I think it stabilizes the shareholding, but you will have to ask Saxo what it actually changes. I don't think that on the product side, it will change a lot for us. Again, we respect them. They are active on the Swiss market, and we know them well. For us, it's let's say, it's business as usual. Of course, they do position themselves. I think everyone that wants to challenge the Swiss market to position against the #1. This is the rule of the game. If you are the #1, you are the #1 and then the #2 and #3 and #4 say, we want to go after them. This is normal, and it's now our mission and our strategy to be faster and better and have better and more exciting services to our clients. Now your first question was about Credit Suisse and specifically about the neobanks. This is a good question. We think that in this sector, the growth is just yet to come. If you take the most mature market in Europe, which is the U.K., then they have very good providers over there, not to mention Revolut, which has now a banking license in the U.K. These services are limited for now in scope. I think that with you, we have a more broader service level. I think that many of those providers will have to expand their service offering because just with a debit card, you don't gain a lot of money. So you have to expand the service, you have to be creative, you have to be innovative. Of course, it's an opportunity. Credit Suisse being merged with UBS is an opportunity, not only on the neobank, by the way, but also in the banking sectors in general. Many clients now maybe don't want to have all their eggs in the same place, and they want to diversify their offering. We think that -- you is the #1 today in Switzerland has the best offer. And of course, if we can benefit from that move of CSX to be integrated in UBS, yes, we -- and we see this already. We have high growth now in the first weeks in 2025. Maybe this is also a little bit pushed by that. I think the real #2 today in the Swiss market is neither CSX nor UBS, it's Nium actually, that's our prime competitor we are dealing with. And you mentioned the 300,000 clients, yes, it's true, but there has been a little bit of push. I remember in the last weeks of Credit Suisse, they actually pushed their retail clients into CSX, where you basically had no choice. This is not a good growth. The good growth is when people select a service provider and then say, this is my bank. This is where I want to be. There will be lots of innovation coming into that sector of the neobank. Artificial intelligence will play a major role in the way you consume this type of product because it's very a theme with the type of clients you have. You have a telephone, you are using already yet artificial intelligence all over your mobile and then finance will just be one additional integration into that. So we are very excited about what is coming, and we think that we have super good products to be able to be competitive in that sector.

[Operator Instructions] We have a follow-up question from Daniel Regli from ZKB.

Just one follow-up a bit on the net new money growth and outlook. And just when looking at the numbers, you achieved obviously a very pleasing result also in Europe, where you saw net new money picking up quite a bit in H2 as well as over the full year. Can you maybe just elaborate a bit what are the key markets. What are the key challenges you're facing? And where do you see the biggest potential going forward?

Yes, thank you, Daniel. And it is also a question from the person before that I didn't fully answer. So we have a European strategy. And again, our European strategy is not to go for the low-cost, low deposits clients because this market is highly competitive already, and you have numerous providers. Just take Flatex, for example, they have millions of clients, but the average deposits is very low. We are in a higher cost jurisdiction with our bank in Luxembourg. We think that Luxembourg is a fantastic place to be. It's something that looks like Switzerland in Europe in the quality of the service, the history in private banking, the know-how and the knowledge you find them, but it's a high-priced jurisdiction. And so there also, you have to select your business model. We think that for Europe, there is a place to be -- to take for mass affluent clients. These clients that are too low to be well served by private banks, but where the average assets is too high to be served by pure discount brokers. So there's a sweet spot there. It's not easy because you have to offer a full range of service. You have to have dedication to your clients. This is what we do with our highly successful and profitable bank, Swissquote Bank Europe, based in Luxembourg. There, the asset growth has been high. About half of our asset growth in Europe has taken place in Luxembourg -- at our bank in Luxembourg and this is to continue. So there, a very specific type of clients, mass affluent spread all over Europe. But demanding a very broad range of service, a very broad range of products to trade and a super good interface. So that is where we think that we can be successful in Europe. And as the time will go, we will expand our service levels. When you look at the service level of our bank in Luxembourg, it's very similar to what we have in Switzerland, but it's different jurisdictions. It's MiFID tagged and lots of European regulations. So we had to adapt our offering in Switzerland to the request of the regulation in Europe. And this is an ongoing process. This is why, for example, you don't -- you can't buy OTC fixed income products in other bank in Luxembourg because for now, this requires additional developments and there's additional regulation to that. So we try to do this. We have been successful so far, and we will continue to push because we think this is our sweet spot.

In Europe, where you are very active, are you seeing good growth?

You mean in which countries?

Which countries.

Yes. Okay. Well, it's a usual suspect. It's Germany, France, the Benelux, this is the place where we have the highest growth. Benelux because it's around Luxembourg. Luxembourg, obviously, we're by far the #1 by the digital banks, but it's a very small country. But the Benelux in general, we are very good positioned. We now have good tractions in France and where they are keen of the Luxembourg/Swiss type of banking services if you have mass affluent. So there good growth and Germany being the strongest economy in Europe, obviously, where there's no secret that we have the highest numbers of clients. Italy, yes, we -- traditionally, we do have Italian clients. Because of the language of Switzerland, and we have lots of Italian-speaking people here at Swissquote and Swissquote has always been -- we always had the Italian language on our website. We do also have some clients that we acquired through reverse solicitation even though now we push everyone to Luxembourg.

The next question comes from Christoph Blieffert from BNP Paribas.

I have 3, please. The first on capital then NII and the last question is on Yuh. First on capital, your CET1 ratio is down year-over-year driven by RWA inflation. Here, it would be helpful if you could explain what has driven up credit risk-related RWA to some CHF 2.5 billion in 2024. And if you can provide the kind of outlook when it comes to further RWA inflation in 2025, this would be helpful.

Yes. So on the credit risk-weighted assets, so that's true. So we not only increased the debt securities portfolio, but we as well took a bit of credit exposure in order to basically be able to navigate through this complex 2025. So I think we could see in 2024 a good timing to enter more debt securities positions. That being said, with a limited duration, we've not increased the duration of the portfolio. So it's really with the aim to, let's say, bridge 2024 and 2026 in the context of perhaps a more particular 2025. So I will expect more of this credit weighting to expire in 2026. And that's why the capital ratio was below the level of June 2024. You could see the capital ratio decrease from 2025 to 20% -- 23.5%. When these positions will expire, then I will expect the capital ratio to move up again.

Okay. And this would also help to build your capital buffer a little bit earlier than 2027, 2028?

Yes, exactly.

Good. Okay. And then the second question is on NII. I mean you had some CHF 28 million of interest expenses to customers in the annual report. What kind of number can we expect in 2025?

Well, so it should materially decrease on trading accounts, we don't have interest anymore. Then we have a few saving accounts that in certain currencies, we still serve a bit of interest. And then the B2B cash deposits, they're always a bit customized agreements. So we should expect a quite significant decline in interest expenses still because of the B2B and the saving accounts, but you should certainly expect a decline.

Okay. And the last question is on you. And here, it would be helpful if you could provide some details of the revenue contribution you are generating out of Yuh. And are those revenues rather trading driven? Or are there a fixed fee for those services you provide?

So here, I should look at Page 150 of the annual report, where we need to basically disclose transactions with joint ventures. So we have obviously one. So the numbers, they fully relate to Yuh. So it's a combination of banking services and IT services. So we certainly charge Yuh for any payment and brokerage transaction for the custody of assets, et cetera, but we as well charge Yuh for the fact that we basically provide IT, compliance, et cetera, services. So it's a combination of fixed and variable revenues. There are minimums. So should they not reach a certain level, we'll charge a minimum. So it's a good mix. Yes, it's a good mix. But look at Page 150 of the annual report.

We have a follow-up question from Daniel Tua from [ Vercentile ].

Yes. Actually, I have 2 follow-up questions, but I'm trying to be a bit shorter than before. It's actually to come back to what you explained before, I mean the kind of clients that are coming out of big banks like Credit Suisse or et cetera. I have an idea of the pattern of these -- of many of these clients there, they are in my view, rather boring clients with the current account, a little bit of savings and very few, if any, trading activities. Is this type of client also a client that Swissquote is aiming for? That's my first question. And the second one is a new one. Are there any lessons that you could or should draw from the failure of FlowBank?

Okay. No. Well, I wouldn't want to comment the failure of FlowBank. That's a very special case in Switzerland, and we have nothing to do with that. About all the clients declines of Credit Suisse, we don't think they're boring, the clients of Credit Suisse. But remember, there have been 2 waves. The first wave was the one that happens when Credit Suisse went bankrupt and lots of those -- a lot of those boring accounts would actually go out. If you only have cash, then you move fast. And most probably, you will go to a cantonal banks in that specific situation. And I remember the cantonal banks were the major recipients or PostFinance of those let's say, security seeking cash deposits and which is understandable. Then Credit Suisse was saved or at least the bankruptcy was finished, taken over by UBS. And then now it's coming the second wave because now it's the more difficult part is to integrate the whole thing into one, only brand lots of things will change. Relationship manager may change, maybe your fees will change as well. So this is always the case then when people start to look around. And I think these clients are everything else than boring because they have assets, they have securities and they're looking for solid banks where they can do their wealth management. Now we're not a private bank. So we do not offer advice or we do not offer asset management services. But if you are self-directed and if you were initially self-directed at Credit Suisse, then Swissquote Bank is certainly a solid alternative. And this is the type of clients we are able to catch.

Why don't you want to elaborate a little bit on the FlowBank question. I mean it is a relevant question, and it is a very special case in Switzerland, as you say. But what makes it so different from any other case? And why do you want to be so far away from them? I mean, I'm not saying you're doing something wrong or you -- but what is -- what makes you so -- yes.

I can -- well, I can comment on that a little bit. It's a bankruptcy case. So I don't know exactly what happened. You would have to ask -- I just know the information I've seen in public. So it's not my role or my function here to elaborate or comment on the bankruptcy of a competitor, even how small it is. So it's -- I just don't know what happened. That's the case, I don't know.

Yes. But one lesson could be we have even -- we have to have higher equity positions than other banks than traditional banks, for instance, we need to make feel clients safer than other traditional banks. We are a younger bank. We have to offer clients more how should I say, safety. I mean these could be lessons, not in the sense that you are behaving similar to FlowBank, but it could be -- I mean, yes.

Look, I just know. I think you answered it partly to your own question. Of course, you need to have adequate capital, you need to be profitable at a certain stage. Swissquote, I do not compare to FlowBank because I think we are completely different animal. We are in the Swiss market since 25 years. We have high capital ratio. We are highly profitable. We have high capital buffers. So it's just not the same bank. And I don't know exactly what happened at FlowBank. So maybe the only thing is that they are in Geneva and we are in Gland. So that's maybe the only point where you could draw a comparison. But really you should ask the management of FlowBank what exactly happened.

Okay. So we have a few questions in writing. Perhaps I'm going to quickly read them and eventually group them a bit. The first one are related to Yuh. Can you remind us the business model with you, how you share profit with PostFinance? And together with another one, could you please talk about your expectation of Yuh over the next year? Marc, do you want to take it?

Yes. So Yuh is a joint venture between PostFinance and Swissquote. It has been decided since the very inception of that, that Swissquote actually would offer the services, the banking services and PostFinance would be a financial investor into the joint venture. It has been very successful so far. Our initial target was to be breakeven because that's when every startup, this is -- you have to be breakeven, you're a bank or you operate in banking services and you have to make profit at a certain stage. So we are super proud that this has been achieved. Again, it goes a little bit back to what we discussed already. We think that these targets a new class of clients. The new generation born with a telephone in their hands, with a mobile in their hands and this type of banking services. There will be coming the moment where all those technology will merge into one. Every bank now has to have mobile applications. Everyone has to have a debit card. This has become kind of a standard. This will replace the credit card in the future. So this is our growth pattern. How do we share the profit? Well, for now, it's -- there was no profit. So there was nothing really to share. It's just in 2024 that we crossed the line, but we leave the profit in the company. That's the aim because we want to give them enough means to further develop the business. It's a highly competitive business. There are actors in Switzerland active in the Swiss market without being properly regulated here in Switzerland. If you take N26, for example, or even Revolut, they claim to be the highest or the strongest providers, but they don't have a license. They don't have a banking license in Switzerland. This is a little bit the particular situation in Switzerland. You can be a foreign providers and advertise your service without being properly regulated here. This is specific to the Swiss market, and we have to live with that situation. So highly competitive, but there is a premium for a solid Swiss provider, and this is where we want to -- this is where we want to be successful.

Then thank you, Marc. So we have other questions. One is on some time periods, the Swissquote share is highly correlated with the Bitcoin. So the perception of Swissquote seems to be focused on the cryptocurrencies. Do you try to correct that, if I may take it. Well, I think it's -- so it's a valid one, and it's the opportunity to highlight or to make the connection with the guidance 2025 of Swissquote. So in my opinion, there is a correlation between Swissquote and Bitcoin when Bitcoin is up because naturally, having this in our offering, we offer or we benefit from an upside. Should we see more crypto trading activity in the market, it's very likely that Swissquote may benefit from it from a revenue standpoint, but as well from a client acquisition standpoint. Then what we try to correct is to have a negative correlation in the sense that when Bitcoin is declining, the Swissquote share should not be impacted. And what we try to do is to be conservative with the number that we include in the guidance. So when you look at the guidance 2025 and the number we have included for crypto assets, doesn't mean that management is negative about the crypto outlook in the future. It means management is cautious. So should activity continue, there's probably a bonus for Swissquote. Should the activity significantly slow down, we believe we will still achieve this number. Therefore, investors should not see a downside risk at Swissquote related to crypto assets. I move to the 2 last ones. One about profitability. So we have a profitability target of 55% in 2022. Its pretax margin stood at 17.8% in 2020, 33% and then 52% in 2024 with increasing net revenues until 2028, I will assume increased scale benefits. So the question is, why is it becoming more costly for you to grow than in the past? And are you observing increasing competitive pressure. If I may take it as well. I think while we're growing profitability, so the pretax margin is increasing in the context of decreasing interest rates. So I think it's an important change. So interest will continue to decrease in 2025. The Interest rates in Swiss franc are expected to be at 0%. So this obviously will impact the profitability. So we still grow profitability in a declining interest rate environment. And then as Mr. Marc mentioned many times, we want to continue to invest in technology, and we think that the opportunities are in front of us. So with a 55% pretax margin target, I think that's the right balance between short-term profitability and investments for the future. And we think that a higher target will probably basically require us to compromise too much on the technology investments. This is my point. Marc, you would like to add something?

No.

Okay. And the last one, I'll take it for myself. Do you plan in the midterm to publish quarterly results? Should define what midterm means? What I can say is at least in the short term, this is not our intention. We know most of the periods, they do. So I think investors, they can collect a bit of information. But for the time being, we're really comfortable and we think half year results are the good frequency period in relation to our business model. That was the last question.

Thank you, Yvan. Are there other questions from the participants?

Gentlemen, so far, there are no further questions.

Okay. Very good. So yes, then let me thank you for your passionate question this morning and the interesting discussion we had. Again, we are here to answer additional questions you may have in the afternoon. So please don't hesitate to contact us through our media desk if you need something. Otherwise, thank you for your participation, and have a wonderful day.