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Saxo Bank’s profit tumbles 66%, assets grow by 2%

 Saxo Bank just reported its financial results for the first half of 2009, profits are down, assets are up amid lower trading volumes.

At the bottom line Net Profit tumbled 66% from 120,921,000 DKK in the first half of 2008 to 41,011,000 DKK (~$ 7.4 million) in the first half of 2009. Total assets increased by 2.4% and the number of employees decreased by 20%.

It seems that Saxo Bank suffered more than other Forex brokers in this financial crisis due to its relatively large size, competitive ineffectiveness and probably local regulation (it’s regulated as a Danish bank).

Saxo continued it’s geographical expansion with number of offices opened in Europe, the Middle East and Asia (one I largely critisized) as well as vertical expansion where it acquired stakes in several asset management firms.

 

Below is the press release and below it is the embedded financial report for H1 2009.

Saxo Bank, the online specialist in trading and investment, has reported its half year results showing that clients’ collateral deposits and assets under management in total exceeded DKK 25 billion and, in a very difficult year, profit before tax reached DKK 55 million

Operating costs increased primarily due to new office openings, product launches, as well as contributions to the Danish State Guarantee Scheme and with unchanged income, profit before tax declined from the same period in 2008.

- Pre-tax profits of DKK 55 million (DKK 162 million).

- Operating income of DKK 969 million (DKK 969 million).

- EBITDA of DKK 128 million (DKK 221 million).

- Clients’ collateral deposits increased to more than DKK 11 billion (DKK 8 billion).

- Assets under management in the Asset Management department exceeded DKK 14 billion (DKK 0).

- The solvency ratio for Saxo Bank Group was 18.9% (10.1%).

In a joint statement, Saxo Bank co-CEOs and co-founders, Kim Fournais and Lars Seier Christensen, commented: “We did expect 2009 to be a difficult year. However, the results reassure us that we took the right decision when we chose to steer the Bank into a new phase based on a more flexible structure before the financial crisis took hold. We also find it encouraging that the Bank managed to strengthen and optimise its entire value chain, product offering and geographical footprint during what were six very challenging months for the financial markets as a whole. And, equally importantly is of course, that our new Asset Management department got off to a good start with DKK 14 billion in assets under management, a number that since has grown to DKK 16 billion”.

During the first half of 2009, Saxo Bank introduced a number of enhancements to its award-winning online trading platform, the most significant of which were related to Commodity CFD’s and FX options. In addition to a broader product offering, the Bank widened its geographical footprint and established its presence in Milan, Madrid and Prague, and acquired two Dutch broker houses and a Tokyo-based provider of FX services. In May, Saxo Bank became the first Danish bank to receive regulatory approval to operate a regional office in the Dubai International Financial Centre.

Saxo Bank also acquired Danish wealth management company Fondsmæglerselskabet Sirius Kapitalforvaltning A/S in January 2009 with the intention of establishing a stronger Nordic presence in portfolio management. In addition, the Bank purchased the entire share capital of Capital Four Management Fondsmæglerselskab A/S and a 51% stake in Global Evolution Fondsmæglerselskab A/S. Saxo Bank also acquired almost 40% of EuroInvestor.com, a leading share and investment portal in Europe.

Saxo Bank remains an investment bank not dependent on a loan financing business but is covered by the Danish government’s two-year guarantee for unsecured claims against Danish financial institutions.