More and more customers in XTB, but the profits clearly down

8 February this year X-Trade Brokers Dom Maklerski SA (XTB) published the preliminary financial report for the fourth quarter of 2018. The consolidated net profit amounted to PLN 4,5 million, which is a clearly worse result than the result in the same period last year - then the profit amounted to PLN 32,27 million. A decrease was also recorded in the item of consolidated revenues from operating activities. In Q4 2018 it was PLN 42,79 million, compared to PLN 76,15 million in Q4 2017.

There are more and more customers, but the profits are worse

The number of clients trading in XTB is in an upward trend. At the end of last year, investment accounts opened almost new customers to 6000. This is the best result in the entire year of 2018. In total, during 12 months, the broker acquired new clients over 20 000.

The report reads:

“XTB has a solid foundation of a constantly growing customer base and number of active customers. In 2018, the Group acquired 20 new customers, which means an increase of 672% y / y. In turn, the average number of active clients for the same period was higher by 9,3 y / y, ie by 2% y / y. In the fourth quarter of 612 alone, the number of new clients acquired was record-breaking compared to the previous quarters of 14. "

Despite such positive statistics, the company's revenues dropped significantly. XTB comments on this phenomenon as an effect of consolidation and limited volatility in the Forex market and key CFD instruments. Additionally, as a result of introducing product intervention by ESMA. It can be assumed that the limitation of leverage in most cases also led to an automatic order to reduce the trading volume by some investors trading more aggressively. Operating costs were also important, as they increased by over 2017% compared to 17.

XTB comment:

"The second half of 2018 brought a reduction of revenues to the level of 90,4 million PLN, a calmer situation on financial markets, lower profitability on flights (on average 116 PLN) and a decrease in the volume of trading expressed in flights to 803 987 flights. One of the more important factors determining the level of XTB revenues in the second half of 2018 was the product intervention of the European Securities and Markets Authority (ESMA) introduced in August that specifies for the retail client the maximum permitted level of leverage (for CFDs to 30: 1 for main currency pairs and 20: 1 for non-major currency pairs, gold and major indices). "

XTB, as the largest Forex broker in this part of Europe, carefully plans a long-term strategy. Its foundations are to be the expansion of the customer base and product offer, more and more effective penetration of existing markets, as well as expansion into new markets. His main interest is Latin America, Africa and Asia, regions beyond ESMA's tentacles. An established company registered in Belize is to be a gateway to provide services in these regions.

The share price of the company quoted on the Warsaw Stock Exchange has reacted over -XUMX% at the opening. The course is still in the local minima zone of October XUMUMX.

XTB, D1 stock chart, period: May 2018 - February 2019

Full XTB report