Monecor (London) Ltd the owner and operator of ETX Capital the London based CFD trading and Spread Betting broker, recently published its FY 2020 earnings and the numbers make for interesting reading. They are a testament to the increased activity among retail and professional clients during the initial phase of the pandemic.
ETX Capital revenue and client asset growth in 2020
Revenues grew by +48% during the year at the same time the value of client assets jumped by+ 57%
Group revenue grew to £31.8 million while the client asset figures hit a record £225.0 million.
Revenue growth can be directly attributed to increased levels of client activity with most of the firm’s income being generated in the form of bid-offer spreads and overnight funding charges on leveraged client positions.
Spread income during the period to the end of December 2020 grew by +68% to a figure of £23.0 million
That figure represented more than three-quarters of the group’s total revenue for the year.
Funding revenues grew by +8% to £8.90 million not bad when we consider that benchmark Interest rates have been at or close to zero over much of this period.
2020 wasn’t all one-way traffic for ETX however, and costs were also up at the broker, rising by +9.0% in the financial year thanks to a combination of rising staff costs and sales commissions.
How ETX Capital’s 2020 results compare to 2019?
Overall the broker reported a net profit of £428,000 that compares to the loss of -£2.60 million in 2019
On an EBITDA basis earnings came in at +£2.70 million an improvement on the prior years -£1.20 million EBITDA figure.
ETX Capital CEO, Philip Adler was quoted as saying that:
“The year has been truly eventful, I am very pleased with our results and the team performance during COVID and we finished on a high with the acquisition of ETX Capital by Swiss-based private equity firm Guru Capital which helped set our new vision and initiatives.”
Can ETX Capital revenues continue to grow?
However, the fact that forex broker ETX did not make a significant profit in what will have been one of its best years ever must be giving the new owners something of a headache.
Guru Capital is looking to diversify the ETX revenue streams, however, there are few businesses in financial services with margins as good as those in CFDs and Spread Betting and that means that the company will need to increase volumes both in terms of transactions and the number of clients, whilst at the same time making sure that costs don’t continue to eat into ETX Capitals earnings.