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  • 2023.11.08
    XTB financial results for the 3rd quarter of 2023

    In the third quarter of 2023 XTB reported a consolidated net profit of PLN 121,1 million compared to PLN 236,2 million a year earlier. Consolidated revenue amounted to PLN 275,7 million (Q3 2022: PLN 391,3 million) and operating expenses amounted to PLN 165,0 million (Q3 2022: 132,5 million). During the period, the Group acquired 67,5 thousand new clients, while the number of active clients amounted to 223,1 thousand compared to 151,7 thousand a year earlier, which is an increase of 47,1% y/y.

     

     

    Revenues  

     

    In the third quarter of 2023, the Group’s revenues decrease by 29,5% y/y, i.e. from PLN 391,3 million to PLN 275,7 million. This decrease was contributed by a lower profitability per lot of PLN 108, amounting to PLN 137 (Q3 2022: PLN 245). Significant factors determining their level were lower volatility in the financial and commodity markets in the third quarter of 2023, understood as the presence of long and clear trends, compensated in part by an increase in the number of active clients (increase of 47,1% y/y), combined with their high trading activity represented by the number of CFD contracts concluded in lots. Consequently, the transaction volume in CFD instruments amounted to 2 011,5 thousand lots (Q3 2022: 1 594,6 thousand lots).  

     

    XTB has a solid foundation in the form of constantly growing client base and the number of active clients. From the beginning of the year, the Group recorded a further record in this area, acquiring 234 704 new clients compared to 145 826 a year earlier, an increase of 60,9%. Similar to the number of new clients, the number of active clients was also a record, increasing by 47,3% y/y, from 224 339 thousand to 330 357.  

     


     

    The priority of the Management Board is to further increase the client base leading to the strengthening of XTB’s global position by reaching the mass client with its product offerings. The ambition of the Management Board in 2023 is to acquire, on average, at least 40-60 thousand new clients per quarter. These activities are supported by a number of initiatives, including the first passive investment product introduced in September 2023, which allows clients to build up to 10 strategies based on ETFs. Each strategy can consist of up to 9 ETFs. Investors have a choice of over 350 exchange traded funds currently available on the xStation 5 platform. The client determines the percentage of each ETF included in the plan.

     

    The product is currently launched in 6 markets: Czech Republic, Slovakia, Germany, Portugal, Romania and Italy. It will also be launched in Spain and Poland in the fourth quarter of this year. According to the company, the product is attracting considerable interest despite the lack of significant marketing activity around it.  

     

    In addition, from April 2023, XTB will allow you to invest in selected European and non-European markets in company shares and ETFs at a fraction of their price. Fractional shares offer greater flexibility and control over investments. This makes it easier for clients to tailor their investment portfolio to their individual financial goals and risk tolerance.  

     

     

     

     

     

     

    Following the realized activities, the Group acquired a total of 104,2 thousand new clients in the first quarter of 2023, in the second quarter of this year 63,0 thousand new clients, and more than 67,5 thousand new clients in the third quarter of this year. In turn, 26,3 thousand new clients were acquired in October 2023.

       

     

     

     

    In order to strengthen its market position and global recognition, XTB cooperates with titled athletes who are XTB brand ambassadors. In February 2022, an advertising campaign was introduced featuring titled combat sports athlete, the first Polish woman in the UFC organization and a champion in the organization, as well as three-time world champion in Thai boxing – Joanna Jędrzejczyk.

           

     

     

     

    In September 2022, promotional activities were launched featuring Conor McGregor, another XTB brand ambassador – the Irish mixed martial arts (MMA) and UFC fighter. Conor McGregor is the biggest combat sports star in the world and the highest paid athlete according to a list compiled by Forbes. In addition to being a fighter, Conor is also a successful business person as an investor in number of interesting projects.

                 

     

     

     

     

    Jiří Procházka, a Czech fighter, one of the one of the top MMA fighters, UFC champion, also became the face of XTB brand. This cooperation ended in May 2023.

     
             

     

     

     

     

    Iker Casillas, former Real Madrid footballer, considered one of the best goalkeepers of all time, also joined the XTB ambassador team in 2022. He currently serves as deputy general manager of the Real Madrid Foundation.

     

    XTB, thanks to its cooperation with such celebrities as Joanna Jędrzejczyk, Conor McGregor, Jiří Procházka or Iker Casillas, has started to promote the investment solutions it offers, in particular convincing that investing in different types of assets is accessible to everyone, with tools that make it easier to enter the world of investment into the world of investment: through daily market analyses, as well as numerous educational materials.  

     

    Looking at XTB’s revenues in terms of the classes of instruments responsible for their creation, it can be seen that commodity based CFDs led the way in the third quarter of 2023. Their share in the structure of revenues on financial instruments reached 47,7%. This is a consequence of high profitability on CFD instruments based on oil, gold and wheat quotes. The second most profitable asset class was CFD instruments based on indices. Their share in the revenue structure in the third quarter of 2023 was 25,4%. The most profitable instruments in this class were CFDs based on the US 100 and the US 500 index. Revenue on CFD instruments based on currencies accounted for 22,2% of total revenue, where the most profitable instruments in this class were CFDs based on the EURUSD, USDJPY and GBPUSD currency pairs.  

     

     

    XTB places great importance on the geographical diversification of revenues, consistently implementing the strategy of building a global brand. The country from which the Group derives more than 20% of revenues each time is Poland, with a share of 20,7% in the third quarter of 2023 (Q3 2022: 49,3%). Due to the overall share in the Group’s revenues, Poland was separated for presentation purposes as the largest market in terms of revenues in the Group. The Group breaks down its revenues by geographic area according to the country of the XTB office in which the client was acquired. The exception is the Middle East region, which also presents revenues from clients from this market acquired by the subsidiary XTB International Ltd. based in Belize.  

    XTB puts also strong emphasis on diversification of segment revenues. Therefore, the Group develops institutional activities under X Open Hub brand, under which it provides liquidity and technology to other financial institutions, including brokerage houses. Revenues from this segment are subject to significant fluctuations from period to period, analogically to the retail segment, which is typical for the business model adopted by the Group.  

     

     

    The business model used by XTB combines features of the agency model and the market maker model, in which the Company is a party to transactions concluded and initiated by clients. XTB does not engage, in proprietary trading for its own account in anticipation of changes in the price or value of the underlying instruments (so-called proprietary trading).

     

    The hybrid business model used by XTB also uses an agency model. For example, on the majority of trading in CFD instruments based on cryptocurrencies, XTB hedges these transactions with third-party partners, virtually ceasing to be the other party to the transaction (legally, of course, it is still XTB). The Company’s fully automated risk management process limits exposure to market changes and forces it to hedge positions in order to maintain appropriate levels of capital requirements. In addition, XTB executes directly on regulated markets or alternative trading venues all transactions in shares and ETFs and CFDs instruments based on these assets. XTB is not a market maker for this class of instruments.

     

    It is inherent in XTB’s business model that revenues are highly volatile from period to period. Operating results are affected primarily by: (i) volatility on financial and commodity markets; (ii) the number of active clients; (iii) the volume of their transactions in financial instruments; (iv) general market, geopolitical and economic; (v) competition in the FX/CFD market and (vi) the regulatory environment.  

     

    As a general rule, the Group’s revenues are positively affected by higher activity in the financial and commodity markets due to the fact that in such periods see higher levels of trading by the Group’s clients and higher profitability per lot. Periods of clear and long market trends are favourable for the Company and it is at such times it achieves the highest revenues. Therefore, the high activity of the financial and commodities markets generally leads to increased trading volume on the Group’s trading platforms. Conversely, a decrease in this activity and the related decrease in trading activity of the Group’s clients generally leads to a decrease in the Group’s operating income. Accordingly, the Group’s operating income and profitability may decline during periods of low activity in the financial and commodity markets. In addition, a more predictable trend may emerge in which the market moves in a limited price range. This leads to market trends that can be predicted with a higher probability than in the case of larger directional movements in the markets, which creates favourable conditions for trading within a narrow market range (range trading). In this case, a higher number of profitable trades are observed for clients, leading to a reduction in the Group’s market making result.  

     

    Volatility and market activity is driven by a number of external factors, some of which are market specific and some of which may be linked to general macroeconomic conditions. It can significantly affect the Group’s revenues in subsequent quarters. This is characteristic of the Group’s business model.  

     

    Expenses

     

    In the third quarter of 2023 operating expenses amounted to PLN 165,0 million and were higher PLN 32,4 million to the same period a year earlier (Q3 2022 r.: PLN 132,5 million). The most significant changes occurred in:  

     

     •  costs of salaries and employee benefits, an increase of PLN 14,7 million mainly due to the increase in employment;

     

     • marketing costs, an increase of PLN 10,0 million mainly due to higher expenditures on marketing online and offline campaigns;

     

     • other external services, an increase by PLN 2,8 million as a result of mainly higher expenditure on: (i) legal and advisory services (increase by PLN 1,6 million y/y); (ii) IT systems and licenses (increase by PLN 1,0 million y/y).

     

     

     

    In q/q terms, operating costs increased by PLN 7,6 million mainly due to PLN 3,8 million higher offline marketing expenses and PLN 2,3 million higher salary and employee benefits expenses, mainly resulting from an increase in employment, as well as 0,7 million higher commission expenses resulting from higher amounts paid to payment service providers through which clients deposit their funds on transaction accounts.

     

     

    As a result of XTB’s rapid growth, the Board estimates that total operating expenses in 2023 could be as much as a quarter higher than what we saw in 2022. The Management Board’s priority is to further increase the client base and build a global brand. As a consequence of the ongoing activities, marketing expenditure may increase by less than a fifth compared to last year.  

     

    The final level of operating expenses will depend, in particular, on the rate of employment growth and the amount of variable remuneration paid to employees, on the level of marketing expenses, on the rate of geographical expansion into new markets and on the impact of possible new regulations and other external factors on the level of revenues generated by the Group.  

     

    The level of marketing expenses will depend on an assessment of its impact on the Group’s performance and profitability, the pace of overseas expansion and the degree of client responsiveness to the actions undertaken. Employment growth in the Group will be contributed by its dynamic growth, both in existing and new markets. In turn, variable remuneration components will be influenced by the Group’s performance.

     

    Dividend

     

    XTB’s dividend policy assumes that the Management Board recommends to the General Meeting of Shareholders the payment of dividend in the amount which takes into account the level of net profit presented in the Company’s standalone annual financial statements and a number of various factors concerning to the Company, including the prospects for further operations, future profits, cash requirements, financial situation, the level of capital adequacy ratios, expansion plans, legal requirements in this respect as well as FSA guidelines. In particular, the Management Board will be guided by the need to ensure an adequate level of the Company’s capital adequacy ratios and the capital required for the Group’s growth when making its dividends payment proposals.  

     

    The Management Board reiterates that its intention is to recommend the General Meeting in the future to adopt resolutions on the payment of dividend, taking into account the factors indicated above, in an amount ranging from 50% to 100% of the Company’s standalone net profit for a given financial year. The standalone net profit for the nine-months period of 2023 amounted to 540,6 million.  

     

    The levels of the total capital ratio (IFR) of XTB on individual days in Q1-Q3 2023 are presented in the chart below.

    At the end of the third quarter of this year the total capital ratio in the Company amounted to 174,2%. The total capital ratio informs about the ratio of own funds to risk-weighted assets, in other words, it shows whether the brokerage house is able to cover the minimum capital requirement for market, credit, operational and other risks with its own funds.

     

     

    Cash and cash equivalents

     

    XTB invests part of its cash in bank deposits and in financial instruments with a 0% risk weight, i.e. in treasury bonds and bonds guaranteed by the State Treasury. As at September 30, 2023 the total value of own cash and bonds in the XTB Group was PLN 1 629,1 million, which PLN 1 236,4 million was cash and PLN 392,7 million for bonds.

     

  • 2023.08.18
    XTB financial results for the 1st half of 2023

    In the first half of 2023 XTB reported a consolidated net profit of PLN 421,0 million compared to PLN 479,6 million a year earlier. Consolidated revenue amounted to PLN 818,9 million ( H1 2022: PLN 836,2 million), and operating expenses amounted to PLN 341,6 million (H1 2022: PLN 267,8 million). During the period, the Group acquired a record 167,2 thousand new clients, while the number of active clients increased by 44,4% y/y from 190,1 thousand to 274,5 thousand.

     

     

    Revenues  

     

    In the first half of 2023, r. the Group’s revenues decreased by 2,1% y/y, from PLN 836,2 million to PLN 818,9 million. Contributing to this decline was a lower profitability per lot of PLN 48, amounting to PLN 226 (H1 2022: PLN 274). This decrease is mainly the results of lower volatility in the financial and commodity markets in Q2 2023, compensated in part by the constantly increasing number of new clients (increase by 65,5% y/y), combined with their high transactional activity expressed in the number of CFD contracts concluded in lots. Consequently, trading in derivatives amounted to 3 615,5 thousand lots (H1 2022: 3 050,7 thousand lots).  

    XTB has a solid foundation in the form of constantly growing client base and the number of active clients. In the first half of 2023, the Group recorded another record in this area by acquiring 167 200 new clients compared to 101 030 a year earlier, an increase of 65,5%. Analogous to the number of new clients, the number of active clients was also a record. This rose from 190 088 to 274 450, i.e. an increase of 44,4% y/y.  

     

     

    The priority of the Management Board is to further increase the client base leading to the strengthening of XTB’s market position globally by reaching the with its product offering to the mass client. The ambition of the Management Board in 2023 is to acquire, on average, at least 40-60 thousand new clients per quarter. These activities are supported by a number of initiatives, including the offer, introduced on April 11, 2023, to invest in the Romanian market (expanded in other markets, including: the Portuguese, Czech, Slovak, Polish, Italian or Spanish markets) in company shares and ETFs for a fraction of their price. Fractional shares allow greater flexibility and control over investments. This makes it easier for clients to tailor their investment portfolio to their own unique financial goals and risk tolerance.

     

    Following the ongoing activities, the Group acquired a total of 104,2 thousand new clients in the first quarter of 2023, and nearly 63,0 thousand new clients in the second quarter of this year. In turn, 22,8 thousand new clients were acquired in July 2023.

       

     

    In order to strengthen its market position and global recognition, XTB cooperates with titled athletes who are XTB brand ambassadors. In February 2022, an advertising campaign was introduced featuring titled combat sports athlete, the first Polish woman in the UFC organization and a champion in the organization, as well as three-time world champion in Thai boxing – Joanna Jędrzejczyk. 

           

     

     

     

     

    In September 2022, promotional activities were launched featuring Conor McGregor, another XTB brand ambassador – the Irish mixed martial arts (MMA) and UFC fighter. Conor McGregor is the biggest combat sports star in the world and the highest paid athlete according to a list compiled by Forbes. In addition to being a fighter, Conor is also a successful business person as an investor in number of interesting projects.

           

     

     

     

     

     

     

    Jiří Procházka, a Czech fighter, one of the one of the top MMA fighters, UFC champion, also became the face of XTB brand. This cooperation ended in May 2023. 

     
             

     

     

     

     

    Iker Casillas, former Real Madrid footballer, considered one of the best goalkeepers of all time, also joined the XTB ambassador team in 2022. He currently serves as deputy general manager of the Real Madrid Foundation.

     

    XTB, thanks to its cooperation with such celebrities as Joanna Jędrzejczyk, Conor McGregor, Jiří Procházka or Iker Casillas, has started to promote the investment solutions it offers, in particular convincing that investing in different types of assets is accessible to everyone, with tools that make it easier to enter the world of investment into the world of investment: through daily market analyses, as well as numerous educational materials.

     

    Looking at XTB’s revenues in terms of the classes of instruments responsible for their creation, it can be seen that CFDs based on indices led in the first half of 2023. Their share in the structure of revenues on financial instruments reached 51,8%. This is a consequence of the high profitability on CFDs instruments based on the US 100 index, the German DAX stock index (DE30) or US 500 index. The second most profitable asset was CFD instruments based on commodities. Their share in the revenue structure in the first half of 2023 was 38,5%. The most profitable instruments in this class were CFDs based on natural gas and gold quotation. Revenues on CFDs instruments based on currencies accounted for 7,7% of total revenues, where the most profitable financial instruments in this class were those based on the USDJPY and EURUSD currency pair.

     

    XTB places great importance on the geographical diversification of revenues, consistently implementing the strategy of building a global brand. The country from which the Group derives more than 20% of revenues each time is Poland, with a share of 47,9% (H1 2022 r.: 39,8%). Due to the overall share in the Group’s revenues, Poland was separated for presentation purposes as the largest market in terms of revenues in the Group. The Group breaks down its revenues by geographic area according to the country of the XTB office in which the client was acquired. The exception is the Middle East region, which also presents revenues from clients from this market acquired by the subsidiary XTB International Ltd. based in Belize.  

     

     

    XTB puts also strong emphasis on diversification of segment revenues. Therefore the Group develops institutional activities under X Open Hub brand, under which it provides liquidity and technology to other financial institutions, including brokerage houses. Revenues from this segment are subject to significant fluctuations from period to period, analogically to the retail segment, which is typical for the business model adopted by the Group.  

     

    The business model used by XTB combines features of the agency model and the market maker model, in which the Company is a party to transactions concluded and initiated by clients. XTB does not engage, in proprietary trading for its own account in anticipation of changes in the price or value of the underlying instruments (so-called proprietary trading).

     

    The hybrid business model used by XTB also uses an agency model. For example, on most CFD instruments based on cryptocurrencies, XTB hedges these transactions with third-party counterparties, virtually ceasing to be the other party to the transaction (legally, of course, it is still XTB). The Company’s fully automated risk management process limits exposure to market changes and forces it to hedge positions in order to maintain appropriate levels of capital requirements. In addition, XTB executes directly on regulated markets or alternative trading venues all transactions in shares and ETFs and CFDs instruments based on these assets. XTB is not a market maker for this class of instruments.

     

    XTB’s business model includes high revenue volatility from period to period. Operating results are affected primarily by: (i) volatility in the financial and commodity markets; (ii) the number of active clients; (iii) the volume of their transactions in financial instruments; (iv) general market, geopolitical and economic; (v) competition in the FX/CFD market; and (vi) the regulatory environment.  

     

    As a general rule, the Group’s revenues are positively affected by higher activity in the financial and commodity markets due to the fact that in such periods see higher levels of trading by the Group’s clients and higher profitability per lot. Periods of clear and long market trends are favourable for the Company and it is at such times it achieves the highest revenues. Therefore, the high activity of the financial and commodities markets generally leads to increased trading volume on the Group’s trading platforms. Conversely, a decrease in this activity and the related decrease in trading activity of the Group’s clients generally leads to a decrease in the Group’s operating income. Accordingly, the Group’s operating income and profitability may decline during periods of low activity in the financial and commodity markets. In addition, a more predictable trend may emerge in which the market moves in a limited price range. This leads to market trends that can be predicted with a higher probability than in the case of larger directional movements in the markets, which creates favourable conditions for trading within a narrow market range (range trading). In this case, a higher number of profitable trades are observed for clients, leading to a reduction in the Group’s market making result.  

     

    Volatility and market activity is driven by a number of external factors, some of which are market specific and some of which may be linked to general macroeconomic conditions. It can significantly affect the Group’s revenues in subsequent quarters. This is characteristic of the Group’s business model.

     

    Expenses

     

    Operating expenses in H1 2023 amounted to PLN 341,6 million and were PLN 73,8 million higher than in the comparable period (H1 2022: PLN 267,8 million). The most significant y/y changes occurred in:  

     

     •  costs of salaries and employee benefits, an increase of PLN 31,8 million, mainly due to an increase in employment;

     

     •  marketing costs, an increase of PLN 30,9 million resulting mainly from higher expenditures on online marketing campaigns;

     

     •  other external services, increase by PLN 7,6 million as a result of incurring mainly higher expenditure on: (i) IT systems and licenses (increase by PLN 3,8 million y/y); (ii) legal and advisory services (increase by PLN 2,1 million y/y) and (iii) market data services (increase by PLN 0,8 million y/y).

     

     

     

    On a quarterly basis, operating expenses decreased by PLN 26,8 million, mainly due to PLN 26,6 million lower offline marketing expenses.

     

     

    As a result of XTB’s rapid growth, the Board estimates that total operating expenses in 2023 could be as much as a quarter higher than what we saw in 2022. The Management Board’s priority is to further increase the client base and build a global brand. As a consequence of the ongoing activities, marketing expenditure may increase by around a fifth compared to last year.

     

    The final level of operating expenses will depend, in particular, on the rate of employment growth and the amount of variable remuneration paid to employees, on the level of marketing expenses, on the rate of geographical expansion into new markets and on the impact of possible new regulations and other external factors on the level of revenues generated by the Group.  

     

    The level of marketing expenses will depend on an assessment of its impact on the Group’s performance and profitability, the pace of overseas expansion and the degree of client responsiveness to the actions undertaken. Employment growth in the Group will be contributed by its dynamic growth, both in existing and new markets. In turn, variable remuneration components will be influenced by the Group’s performance.

     

    Dividend

     

    XTB’s dividend policy assumes that the Management Board recommends to the General Meeting of Shareholders the payment of dividend in the amount which takes into account the level of net profit presented in the Company’s standalone annual financial statements and a number of various factors concerning to the Company, including the prospects for further operations, future profits, cash requirements, financial situation, the level of capital adequacy ratios, expansion plans, legal requirements in this respect as well as FSA guidelines. In particular, the Management Board will be guided by the need to ensure an adequate level of the Company’s capital adequacy ratios and the capital required for the Group’s growth when making its dividends payment proposals.

     

    The Management Board reiterates that its intention is to recommend the General Meeting in the future to adopt resolutions on the payment of dividend, taking into account the factors indicated above, in an amount ranging from 50% to 100% of the Company’s standalone net profit for a given financial year. The standalone net profit for the first half of 2023 amounted to PLN 422,8 million.

     

    The levels of XTB’s total capital ratio (IFR) at individual dates in the first half of 2023 are presented in the chart below.

    At the end of the first half of the year, the Company’s total capital ratio was 164,3%. The total capital ratio provides information on the ratio of own funds to risk-weighted assets, or to put in other words, it shows whether a brokerage house is able to cover the minimum capital requirement for market, credit, operational and other risks with its own funds.

     

     

    Cash and cash equivalents

     

    XTB invests part of its cash in bank deposits and financial instruments with a 0% risk weighting i.e., in government bonds and bonds guaranteed by the State Treasury. As at June 30, 2023, XTB Group’s total own cash and bonds amounted to PLN 2 030,9 million, of which PLN 1 651,1 million was in cash and PLN 379,9 million in bonds.

     

  • 2023.05.08
    XTB financial results for the 1st quarter of 2023

    In the first quarter of 2023 was another period of dynamic business development and building a client’s base for XTB. The group acquired a record 104,2 thousand new clients, an increase of 88,3% y/y, while the number of active clients increased by 44,1% y/y from 149,7 thousand to 215,7 thousand. This also contributed to the increase in the trading volume of clients on CFD instruments expressed in lots – an increase from 1,6 million to 1,8 million, i.e. 18,2% y/y.  

     

    XTB’s dynamic operational growth, coupled with favourable market conditions, translated into record-breaking financial results in the first quarter of 2023. Consolidated net profit amounted to PLN 302,8 million compared to PLN 252,6 million a year earlier. This is an increase of PLN 50,2 million. Consolidated revenues amounted to PLN 531,6 million (Q1 2022: PLN 439,8 million) with operating expenses of PLN 184,2 million (Q1 2022: 131,0 million).

     

     

    Revenues  

     

    In the first quarter of 2023, XTB recorded a record level of revenue. They increased by 20,9% y/y, i.e. by PLN 91,8 million, from PLN 439,8 million to PLN 531,6 million. Significant factors determining their level were high volatility in the financial and commodity markets and the constantly growing number of active clients (increase by 88,3% y/y), connected with their high transaction activity expressed in the number of CFD contracts concluded in lots. As a consequence the transaction volume in CFD instruments amounted to 1 845,2 thousand lots (Q1 2022: 1 560,7 thousand lots), and a profitability per lot amounted to PLN 288 (Q1 2022: PLN 282).  

     

     

    XTB has a solid foundation in the form of constantly growing client base and the number of active clients. In the first quarter of 2023 Group reported another record in this area, acquiring 104 206 new clients compared to 55 333 a year earlier, which means an increase of 88,3%. Similarly to the number of new clients, the number of active clients was also record high. It increased from 149 729 to 215 703, i.e. by 44,1% y/y.  

     

     

    The priority of the Management Board is to further increase the client base leading to the strengthening of XTB’s market position in the world by reaching the mass client with its product offer. The ambition of the Management Board in 2023 is to acquire, on average, at least 40-60 thousand new clients quarterly. As a result of the implemented activities, the Group acquired in the first quarter of this year 104,2 thousand new clients, while in April 2023, 20,6 thousand new clients were acquired.  

               

     

     

     

     

     

     

    In order to strengthen its market position and worldwide recognition, XTB cooperates with titled athletes who are the ambassadors of the XTB brand. In February 2022, an advertising campaign was launched with the participation of the titled martial arts competitor, the first Polish woman in the UFC organization and the champion of this organization, as well as the three-time world champion in Thai boxing – Joanna Jędrzejczyk.

             

     

     

     

     

     

    In September 2022, promotional activities were launched with the participation of Conor McGregor, another XTB brand ambassador – Irish mixed martial arts (MMA) and the UFC fighter. Conor McGregor is the biggest martial arts star in the world and the best rewarded athlete according to Forbes list. Conor is not only a fighter, but also a successful person in business as an investor in many interesting projects.

                   

     

     

     

     

     

     

    The face of the XTB brand is also Jiří Procházka, a Czech fighter, one of the leading MMA fighters, UFC champion. Thanks to this cooperation, XTB plans to continue its intense promotional activities.

     
               

     

     

     

     

     

    The team of XTB ambassadors was also joined in 2022 by Iker Casillas, a former Real Madrid footballer, considered one of the best goalkeepers of all time. He is currently the Deputy Director General of the Real Madrid Foundation.

     

     

    Thanks to the cooperation with such personalities as Joanna Jędrzejczyk, Conor McGregor, Jiří Procházka or Iker Casillas, XTB started promoting the offered investment solutions, in particular, convincing that investing in various types of assets is available to everyone, using the tools provided that facilitate entry into the world of investments: through daily market analysis, as well as numerous educational materials.  

     

    Looking at XTB’s revenues in terms of the classes of instruments responsible for their creation, it can be seen that in the first quarter of 2023 CFDs based on commodities. Their share in the structure of revenues on financial instruments reached 48,8% compared to 30,2% a year earlier. The most profitable instruments in this class were CFDs instruments based on quotations of natural gas and gold. The second most profitable asset class was CFD based on index. Their share in the revenue structure in the first quarter of 2023 was 45,3% (Q1 2022: 57,4%). The most profitable instruments in this class were CFDs instruments based on the German DAX index (DE30), the US 100 index and the US 500 index. Revenues on CFDs based on currencies accounted for 4,2% of all revenues compared to 9,4% year earlier, where the most profitable instruments in this class were CFDs on currency pairs EURUSD.  

     

     

     

     

    XTB places great importance on the geographical diversification of revenues, consistently implementing the strategy of building a global brand. The country from which the Group derives more than 20% of revenues each time is Poland, with a share of 51,6% (Q1 2022 r.: 27,3%). Due to the overall share in the Group’s revenues, Poland was separated for presentation purposes as the largest market in terms of revenues in the Group. The Group breaks down its revenues by geographic area according to the country of the XTB office in which the client was acquired. The exception is the Middle East region, which also presents revenues from clients from this market acquired by the subsidiary XTB International Ltd. based in Belize.  

     

    XTB puts also strong emphasis on diversification of segment revenues. Therefore the Group develops institutional activities under X Open Hub brand, under which it provides liquidity and technology to other financial institutions, including brokerage houses. Revenues from this segment are subject to significant fluctuations from period to period, analogically to the retail segment, which is typical for the business model adopted by the Group.

     

     

    XTB’s business model includes high volatility of revenues depending on the period. Operating results are mainly affected by: (i) volatility on financial and commodity markets; (ii) the number of active clients; (iii) volume of concluded transactions on financial instruments; (iv) general market, geopolitical and economic conditions; (v) competition on the FX/CFD market and (vi) regulatory environment.

     

    As a rule, the Group’s revenues are positively affected by higher activity of financial markets due to the fact that in such periods, a higher level of turnover is realized by the Group’s clients and higher profitability per lot. The periods of clear and long market trends are favourable for the Company, and it is at such times that it achieves the highest revenues. Therefore, high activity of financial markets and commodities generally leads to an increased volume of trading on the Group’s trading platforms. On the other hand, the decrease in this activity and the related decrease in the transaction activity of the Group’s clients leads, as a rule, to a decrease in the Group’s operating income. Due to the above, operating income and the Group’s profitability may decrease in periods of low activity of financial and commodity markets. In addition, there may be a more predictable trend in which the market moves within a limited price range. This leads to market trends that can be predicted with a higher probability than in the case of larger directional movements on the markets, which creates favourable conditions for transactions concluded in a narrow range trading. In this case, a greater number of transactions that bring profits to clients is observed, which leads to a decrease in the Group’s result on market making.  

     

    The volatility and activity of markets results from a number of external factors, some of which are characteristic for the market, and some may be related to general macroeconomic conditions. It can significantly affect the revenues generated by the Group in the subsequent quarters. This is characteristic of the Group’s business model.

     

    Expenses

     

    The operating costs in the first quarter of 2023 amounted to PLN 184,2 million and were PLN 53,2 million higher compared to the same period a year earlier (Q1 2022: PLN 131,0 million). The most important changes occurred in:  

     

     • marketing costs, an increase by PLN 30,8 million resulting mainly from higher expenditure on online and offline marketing campaigns;

     

     • costs of remuneration and employee benefits, an increase by PLN 16,9 million, mainly due to an increase in employment and higher provisions for variable remuneration components (bonuses);

     

     • other external services, an increase by PLN 2,7 million as a result of mainly higher expenditure on: (i) support database systems (increase by PLN 1,2 million y/y); (ii) market data delivery services (increase by PLN 0,6 million y/y) and (iii) legal and advisory services (increase by 0,5 million y/y);

     

     • commission costs, an increase by PLN 1,8 million resulting from higher amounts paid to payment service providers through which clients deposit their funds in transaction accounts.

     

     

    In q/q terms, operating costs increased by PLN 26,0 million, mainly due to PLN 13,4 million higher costs of salaries and employee benefits resulting mainly from an increase in employment and an increase in provisions for variable remuneration components (bonuses), higher by PLN 13,0 million of marketing costs related mainly to higher expenditures on online marketing campaigns.

     

     

    Due to the dynamic development of XTB, the Management Board estimates that in 2023 the total costs of operating activities may be even higher by about a one-fourth to the level we observed in 2022. The priority of the Management Board is to further increase the client base and build a global brand. As a consequence of the implemented activities, expenditures on marketing may increase by about one-fifth compared to the previous year.  

     

    The final level of operating costs will depend on the level of variable remuneration components paid to employees, the level of marketing expenditures, the dynamics of geographical expansion into new markets and the impact of potential product interventions and other external factors on the level of revenues generated by the Group. The level of marketing expenditures depends on their impact on the Group’s results and profitability, the rate of foreign expansion and the degree of client responsiveness to the actions taken. The employment growth in the Group will be driven by its dynamic development, both on the existing and new markets. The amount of variable remuneration components is influenced by the Group’s results.

     

    Dividend

     

    The XTB dividend policy assumes recommendation by the Management Board to the General Meeting a dividend payment in the amount taking into account the level of net profit presented in the standalone annual financial report of the Company and a variety of factors relating to the Company, including prospects for further operations, future net profits, demand for cash, financial situation, the level of capital adequacy ratios, expansion plans, legal requirements in this area and KNF guidelines. In particular, the Management Board, when submitting proposals for dividend payment, will be guided by the need to ensure an appropriate level of the Company’s capital adequacy ratios and the capital necessary for the development of the Group.  

     

    The Management Board maintains that its intention is to recommend the General Meeting in the future to adopt resolutions on the payment of dividend, taking into account the factors indicated above, in the amount of 50% to 100% of the Company’s standalone net profit for a given financial year. The standalone net profit for the first quarter of 2023 amounted to PLN 299,8 million.  

     

    The levels of the total capital ratio (IFR) of XTB on individual days in Q1 2023 are presented in the chart below.

     

    At the end of the first quarter of this year the total capital ratio in the Company amounted to 136,7%. The total capital ratio informs about the ratio of own funds to risk-weighted assets, in other words, it shows whether the brokerage house is able to cover the minimum capital requirement for market, credit, operational and other risks with its own funds.

     

     

    Cash and cash equivalents

     

    XTB invests part of its cash in bank deposits and in financial instruments with a 0% risk weight, i.e., in treasury bonds and bonds guaranteed by the State Treasury. As at March 31, 2023 the total value of own cash and bonds in the XTB Group was PLN 1 906,6 million, which PLN 1 535,2 million was cash and PLN 371,5 million for bonds.

     

     

  • 2023.03.30
    Financial results of XTB for 2022

    The year 2022 was a further period of dynamic business development and building a client base for XTB. High volatility in the financial and commodity markets as well as the environment of negative real interest rates have made trading on financial instruments very attractive for many investors. As a result, the Group acquired a record 196,9 thousand new clients and the number of active clients increased by 35,9% y/y from 190,5 thousand to 258,8 thousand. This translated into a significant increase in the volume of clients’ trading on CFD instruments expressed in lots – an increase from 4,1 million to 6,4 million lots, i.e. by 55,1% y/y.  

     

    XTB’s dynamic operational growth, coupled with favourable market conditions, translated into record-breaking financial results in 2022. Consolidated net profit amounted to PLN 766 096 thousand compared to PLN 237 830 thousand a year earlier. Consolidated revenues amounted to PLN 1 444 249 thousand (2021: PLN 625 595 thousand) with operating expenses of PLN 558 567 thousand (2021: 348 772 thousand).

     

     

    Revenues

     

    In 2022, XTB reported record increase in revenue from PLN 625 595 thousand to PLN 1 444 249 thousand, i.e. by 130,9% y/y. Significant factors determining their level were high volatility in the financial and commodity markets and the constantly growing number of active clients (increase by 35,9% y/y), connected with their high transaction activity expressed in the number of CFD contracts concluded in lots (increase by 55,1% y/y). As a consequence the transaction volume in CFD instruments amounted to 6 365,6 thousand lots (2021: 4 104,6 thousand lots), and a profitability per lot amounted to PLN 227 (2021: PLN 152).

     

    XTB has a solid foundation in the form of constantly growing client base and the number of active clients. In 2022 the Group reported another record in this area, acquiring 196 864 new clients compared to 189 187 a year earlier, which means an increase of 4,1%. Similarly to the number of new clients, the number of active clients was also record high. It increased from 190 452 to 258 799, i.e. by 35,9% y/y.

     

    The priority of the Management Board is to further increase the client base leading to the strengthening of XTB’s market position in the world by reaching the mass client with its product offer. These activities are and will be supported by a number of initiatives, including the introduction of new products or promotional campaigns. The ambition of the Management Board in 2023 is to acquire, on average, at least 40-60 thousand new clients quarterly. In January 2023, the Group acquired a total of 42,3 thousand new clients, while in February 2023, it was 36,5 thousand of new one.

     

     

     

    For example, on January 9, 2023, XTB launched a new promotion “Free share for a good start” consisting in receiving a free share worth up to USD 30 for opening an account with XTB and making a deposit of any amount.

     

    In order to strengthen its market position and worldwide recognition, XTB cooperates with titled athletes who are the ambassadors of the XTB brand. In February 2022, an advertising campaign was launched with the participation of the titled martial arts competitor, the first Polish woman in the UFC organization and the champion of this organization, as well as the three-time world champion in Thai boxing – Joanna Jędrzejczyk.    

               

     

     

    In September 2022, promotional activities were launched with the participation of Conor McGregor, another XTB brand ambassador – an Irish mixed martial arts (MMA) and the UFC fighter. Conor McGregor is the biggest martial arts star in the world and the best rewarded athlete according to Forbes list. Conor is not only a fighter, but also a successful person in business as an investor in many interesting projects.

                     

     

     

     

     

    The face of the XTB brand is also Jiří Procházka, a Czech fighter, one of the leading MMA fighters, UFC champion. Thanks to this cooperation, XTB plans to continue its intense promotional activities.

     
               

     

     

    The team of XTB ambassadors was also joined in 2022 by Iker Casillas, a former Real Madrid footballer, considered one of the best goalkeepers of all time. He is currently the Deputy Director General of the Real Madrid Foundation.

         

     

     

    Thanks to the cooperation with such personalities as Joanna Jędrzejczyk, Conor McGregor, Jiří Procházka or Iker Casillas, XTB started promoting the offered investment solutions, in particular, convincing that investing in various types of assets is available to everyone, using the tools provided that facilitate entry into the world of investments: through daily market analysis, as well as numerous educational materials.

     

    Looking at XTB’s revenues in terms of the classes of instruments responsible for their creation, it can be seen that in 2022 CFDs based on index were in the lead. Their share in the structure of revenues on financial instruments reached 46,4% compared 32,8% year earlier. This is a consequence of high profitability on CFD instruments based on the US 100 index, the German DAX index (DE30) or the US 500 index. The second most profitable asset class was CFD based on commodities. Their share in the revenue structure in 2022 was 33,8% (2021: 49,3%). This is a consequence of high profitability on CFD instruments based on quotations of natural gas, gold and oil prices. Revenues on CFDs based on currencies accounted for 17,0% of all revenues, compared 12,5% year earlier, where the most profitable financial instruments in this class were CFD based on currency pairs EURUSD and GBPUSD.

     

    XTB places great importance on the geographical diversification of revenues, consistently implementing the strategy of building a global brand. The country from which the Group derives more than 20% of revenues each time is Poland, with a share of 41,4% (2021: 33,5%). Due to the overall share in the Group’s revenues, Poland was separated for presentation purposes as the largest market in terms of revenues in the Group. The Group breaks down its revenues by geographic area according to the country of the XTB office in which the client was acquired. The exception is the Middle East region, which also presents revenues from clients from this market acquired by the subsidiary XTB International Ltd. based in Belize.

     

     

    XTB’s business model includes high volatility of revenues depending on the period. Operating results are mainly affected by: (i) volatility on financial and commodity markets; (ii) the number of active clients; (iii) volume of concluded transactions on financial instruments; (iv) general market, geopolitical and economic conditions; (v) competition on the FX/CFD market and (vi) regulatory environment.

     

    As a rule, the Group’s revenues are positively affected by higher activity of financial markets due to the fact that in such periods, a higher level of turnover is realized by the Group’s clients and higher profitability per lot. The periods of clear and long market trends are favourable for the Company and it is at such times that it achieves the highest revenues. Therefore, high activity of financial markets and commodities generally leads to an increased volume of trading on the Group’s trading platforms. On the other hand, the decrease in this activity and the related decrease in the transaction activity of the Group’s clients leads, as a rule, to a decrease in the Group’s operating income. Due to the above, operating income and the Group’s profitability may decrease in periods of low activity of financial and commodity markets. In addition, there may be a more predictable trend in which the market moves within a limited price range. This leads to market trends that can be predicted with a higher probability than in the case of larger directional movements on the markets, which creates favourable conditions for transactions concluded in a narrow range trading. In this case, a greater number of transactions that bring profits to clients is observed, which leads to a decrease in the Group’s result on market making.

     

    The volatility and activity of markets results from a number of external factors, some of which are characteristic for the market, and some may be related to general macroeconomic conditions. It can significantly affect the revenues generated by the Group in the subsequent quarters. This is characteristic of the Group’s business model.

     

    Operating expenses

     

    The operating costs in 2022 amounted to PLN 558 567 thousand and were PLN 209 795 thousand higher than in the previous year (2021: PLN 348 772 thousand). The most important changes occurred in:

     

    marketing costs, an increase by PLN 102 268 thousand resulting mainly from higher expenditure on online and offline marketing campaigns; 

     

    costs of remuneration and employee benefits, an increase by PLN 60 765 thousand, mainly due to an increase in employment and higher provisions for variable remuneration components (bonuses);

     

    commission costs, an increase by PLN 18 178 thousand resulting from higher amounts paid to payment service providers through which clients deposit their funds in transaction accounts;

     

    other external services, an increase by PLN 11 533 thousand as a result of mainly higher expenditure on: (i) support database systems (increase by PLN 4 166 thousand y/y); (ii) market data delivery services (increase by PLN 2 807 thousand y/y); (iii) legal and advisory services (increase by PLN 2 762 thousand y/y) and (iv) recruitment costs (increase by PLN 1 967 thousand y/y).

     

  • 2022.11.08
    XTB financial results for the 3rd quarter of 2022

    In the third quarter of 2022 XTB reported a consolidated net profit of PLN 236,2 million compared to PLN 104,3 million a year earlier. This is an increase by PLN 131,9 million, i.e. by 126,5% y/y. Consolidated revenue amounted to PLN 391,3 million (Q3 2021: PLN 200,0 million), and operating expenses amounted to PLN 132,5 million (Q3 2021: PLN 84,8 million). The number of active clients amounted to 151,7 thousand compared to 110,9 thousand a year earlier, which means an increase by 36,8% y/y.  

     

     

    Revenues  

     

    In the third quarter of 2022, the Group’s revenues increase by 95,6% y/y, i.e. from PLN 200,0 million to PLN 391,3 million. Significant factors determining their level were high volatility in the financial and commodity markets and the constantly growing number of active clients (increase by 36,8% y/y), connected with their high transaction activity expressed in the number of contracts concluded in lots. As a consequence the transaction volume in CFD instruments amounted to 1 595 thousand lots (Q3 2021: 1 044 thousand lots), and a profitability per lot amounted to PLN 245 (Q3 2021: PLN 192).  

     

    XTB has a solid foundation in the form of constantly growing client base and the number of active clients. From the beginning of the year, the Group acquired 145 826 new clients compared to 146 427 a year earlier, which means a slight decrease by 0,4% mainly due to high base from the first quarter of 2021, while the number of active clients was record high and reached the level of 224,3 thousand compared to 160,6 thousand a year earlier, which means an increase by 39,7% y/y.  

     

    The ambition of the Management Board in 2022 is to acquire, on average, at least 40 thousand new clients quarterly.  As a result of the implemented activities, the Group acquired in the first quarter of this year 55,3 thousand new clients and in the second quarter of this year nearly 45,7 thousand new clients, while in the third quarter of this year, almost 44,8 thousand new clients. In turn, in October 2022, XTB acquired 17,6 thousand new clients.   

     

    The priority of the Management Board is to further increase the client base leading to the strengthening of XTB’s market position in the world. These activities will be supported by a number of initiatives, including with the participation of new XTB brand ambassadors. In February 2022, an advertising campaign was launched with the participation of the titled martial arts competitor, the first Polish woman in the UFC organization and the champion of this organization, as well as the three-time world champion in Thai boxing – Joanna Jędrzejczyk.  

     

    XTB, thanks to the cooperation with Joanna Jędrzejczyk, started promoting the offered investment solutions, in particular, convincing that investing in various types of assets is available to everyone, using the tools provided that facilitate entry into the world of investments: through daily market analysis, as well as numerous educational materials.

     

     

     

     

     

    In September 2022, promotional activities were launched with the participation of Conor McGregor, another XTB brand ambassador – an Irish mixed martial arts (MMA) fighter and the UFC. Conor McGregor is the biggest martial arts star in the world and the best rewarded athlete according to Forbes’ list. Conor is not only a fighter, but also a successful person in business as an investor in many interesting projects.

     

     

     

     

     

     

     

     

    The face of the XTB brand is also Jiří Procházka, a Czech fighter, one of the leading MMA fighters, UFC champion. Thanks to this cooperation, XTB plans to continue its intense promotional activities.

     

     

     

     

     

     

    The team of XTB ambassadors was also joined in 2022 by Iker Casillas, a former Real Madrid footballer, considered one of the best goalkeepers of all time. He is currently the Deputy Director General of the Real Madrid Foundation.

     

    Looking at XTB’s revenues in terms of the classes of instruments responsible for their creation, it can be seen that in the third quarter of 2022 CFDs based on index were in the lead. Their share in the structure of revenues on financial instruments reached 37,6%. This is a consequence of high profitability on CFD instruments based on the US 100 index, Warsaw Stock Exchange index WIG20, the German DAX index (DE30) or the US 500 index. The second most profitable asset class was CFD based on currencies. Their share in the revenue structure in the third quarter of 2022 was 31,0%. The most profitable instruments in this class were CFDs on currency pairs EURUSD, USDPLN and GBPUSD. Revenues on CFDs based on commodities accounted for 27,7% of all revenues, where the most profitable financial instruments in this class were CFD based on gold, oil prices and natural gas prices.  

     

     

     

    XTB places great importance on the geographical diversification of revenues, consistently implementing the strategy of building a global brand. The country from which the Group derives more than 20% of revenues each time is Poland, with a share of 49,3% in the third quarter of 2022 (III quarter 2021 r.: 32,2%). Due to the overall share in the Group’s revenues, Poland was separated for presentation purposes as the largest market in terms of revenues in the Group. The Group breaks down its revenues by geographic area according to the country of the XTB office in which the client was acquired. The exception is the Middle East region, which also presents revenues from clients from this market acquired by the subsidiary XTB International Ltd. based in Belize.  

     

     

    XTB puts also strong emphasis on diversification of segment revenues. Therefore the Group develops institutional activities under X Open Hub brand, under which it provides liquidity and technology to other financial institutions, including brokerage houses. Revenues from this segment are subject to significant fluctuations from period to period, analogically to the retail segment, which is typical for the business model adopted by the Group.  

     

     

    XTB’s business model includes high volatility of revenues depending on the period. Operating results are mainly affected by: (i) volatility on financial and commodity markets; (ii) the number of active clients; (iii) volume of concluded transactions on financial instruments; (iv) general market, geopolitical and economic conditions; (v) competition on the FX/CFD market and (vi) regulatory environment.

     

    As a rule, the Group’s revenues are positively affected by higher activity of financial markets due to the fact that in such periods, a higher level of turnover is realized by the Group’s clients and higher profitability per lot. The periods of clear and long market trends are favourable for the Company and it is at such times that it achieves the highest revenues. Therefore, high activity of financial markets and commodities generally leads to an increased volume of trading on the Group’s trading platforms. On the other hand, the decrease in this activity and the related decrease in the transaction activity of the Group’s clients leads, as a rule, to a decrease in the Group’s operating income. Due to the above, operating income and the Group’s profitability may decrease in periods of low activity of financial and commodity markets. In addition, there may be a more predictable trend in which the market moves within a limited price range. This leads to market trends that can be predicted with a higher probability than in the case of larger directional movements on the markets, which creates favourable conditions for transactions concluded in a narrow range trading. In this case, a greater number of transactions that bring profits to clients is observed, which leads to a decrease in the Group’s result on market making.  

     

    The volatility and activity of markets results from a number of external factors, some of which are characteristic for the market, and some may be related to general macroeconomic conditions. It can significantly affect the revenues generated by the Group in the subsequent quarters. This is characteristic of the Group’s business model.

     

    Operating expenses

     

    In the third quarter of 2022 operating expenses amounted to PLN 132,5 million and were higher PLN 47,7 million to the same period a year earlier (Q3 2021: PLN 84,8 million). The most significant changes occurred in:  

     

     •  marketing costs, an increase of PLN 23,8 million mainly due to higher expenditures on marketing online and offline campaigns;

     

     •   costs of salaries and employee benefits, an increase of PLN 12,4 million mainly due to the increase in employment;

     

     •  commission expenses, an increase of PLN 4,4 million as a result of larger amounts paid to payment service providers through which clients deposit their funds on transaction accounts;

     

     •  other external services, an increase by PLN 4,0 million as a result of mainly higher expenditure on: (i) IT systems and licenses (increase by PLN 1,5 million y/y); (ii) legal and advisory services (increase by PLN 1,2 million y/y) and (iii) recruitment costs (increase by PLN 0,5 million y/y).

     

    In q/q terms, operating costs decreased by PLN 4,2 million, mainly due to the offline marketing expenditure lower by PLN 6,1 million and the costs of remuneration and employee benefits higher by PLN 2,6 million, mainly due to employment growth.

     

    Due to the dynamic development of XTB, the Management Board estimates that in 2022 the total costs of operating activities may even be about 50-55% higher than that observed in 2021. The priority of the Management Board is to further increase the client base and build a global brand. As a consequence of the implemented activities, marketing expenditures may increase in 2022 by nearly 70-75% compared to the previous year.

     

    The final level of operating costs depend on the level of marketing expenses, changes in the level of employment in the Group, the amount of variable components paid to employees and the pace of geographic expansion into new markets.  

    The level of marketing expenditures depends on their impact on the Group’s results and profitability, the rate of foreign expansion and on clients responsiveness to the actions taken. The employment growth in the Group will be driven by its dynamic development, both on the existing and new markets. The amount of variable remuneration components is influenced by the Group’s results.

     

    Dividend

     

    The XTB dividend policy assumes recommendation by the Management Board to the General Meeting a dividend payment in the amount taking into account the level of net profit presented in the standalone annual financial report of the Company and a variety of factors relating to the Company, including prospects for further operations, future net profits, demand for cash, financial situation, the level of capital adequacy ratios, expansion plans, legal requirements in this area and KNF guidelines. In particular, the Management Board, when submitting proposals for dividend payment, will be guided by the need to ensure an appropriate level of the Company’s capital adequacy ratios and the capital necessary for the development of the Group.

     

    The Management Board maintains that its intention is to recommend to the General Meeting in the future to adopt resolutions on the payment of dividends, taking into account the factors indicated above, in the amount ranging from 50% to 100% of the Company’s standalone net profit for a given financial year. The unit net profit for the 9-month period of 2022 amounted to PLN 712,7 million.  

     

    The levels of the total capital ratio (IFR) of XTB on individual days in Q1-Q3 2022 are presented in the chart below.

     

    At the end of the third quarter of this year the total capital ratio in the Company amounted to 168,0%. The total capital ratio informs about the ratio of own funds to risk-weighted assets, in other words, it shows whether the brokerage house is able to cover the minimum capital requirement for market, credit, operational and other risks with its own funds.

     

     

    Cash and cash equivalents

     

    XTB invests part of its cash in bank deposits and in financial instruments with a 0% risk weight, i.e. in treasury bonds and bonds guaranteed by the State Treasury. As at September 30, 2022 the total value of own cash and bonds in the XTB Group was PLN 1 611,7 million, which PLN 1 259,7 million was cash and PLN 352,0 million for bonds.

     

  • 2022.08.19
    XTB financial results for the 1st half of 2022

    In the first half of 2022 XTB reported a consolidated net profit of PLN 479,6 million compared to PLN 65,0 million a year earlier. Consolidated revenue amounted to PLN 836,2 million ( H1 2021: PLN 242,0 million), and operating expenses amounted to PLN 267,8 million (H1 2021: PLN 163,3 million). In this period the Group noted over 101 thousand new clients compared to nearly 108 thousand a year earlier (a slight decrease of 6,3% y/y).

     

    Revenues

     

    In the first half of 2022, the Group’s revenues increased by 245,5% y/y, from PLN 242,0 million to PLN 836,2 million. Significant factors determining their level were high volatility in the financial and commodity markets and the constantly growing average number of active clients (increase by 42,7% y/y), connected with their high transaction activity expressed in the number of contracts concluded in lots. As a consequence, transaction volume in CFD instruments amounted to 3 050,6 thousand lots (H1 2021: 1 986,7 thousands lots), and the profitability by 125,0%, from PLN 122 to PLN 274.  

     

    XTB has a solid foundation in the form of constantly growing client base and the number of active clients. In the first half of 2022 the Group acquired 101 030 new clients compared to 107 854 a year earlier, which means a slight decrease by 6,3% mainly due to high base from the first quarter of 2021. In the reporting period, the number of active clients was record high. It increased by 42,5% y/y., i.e. from 133 415 to 190 088.

     

    The ambition of the Management Board in 2022 is to acquire, on average, at least 40 thousand new clients quarterly. As a result of the implemented activities, the Group acquired in the first quarter of this year 55,3 thousand new clients and in the second 

    quarter of this year nearly 45,7 thousand new clients. In turn, in July 2022, XTB acquired 13,3 thousand new clients.  

     

    The priority of the Management Board is to further increase the client base leading to the strengthening of XTB’s market position in the world. These activities will be supported by a number of initiatives, including the new advertising campaign launched on February 14, 2022 with the participation of the new XTB brand ambassador – Joanna Jędrzejczyk – a titled martial arts competitor, the first Polish woman in the UFC organization and a champion in this organization, as well as a three-time world champion in Thai boxing.  

     

    XTB, thanks to the cooperation with Joanna Jędrzejczyk, started promoting the offered investment solutions, in particular, convincing that investing in various types of assets is available to everyone, using the tools provided that facilitate entry into the world of investments: through daily market analysis, as well as numerous educational materials.

    Looking at XTB’s revenues in terms of the classes of instruments responsible for their creation, it can be seen that in the first half of 2022 CFDs based on index were in the lead. Their share in the structure of revenues on financial instruments reached 48,9%. This is a consequence of, high profitability on CFD instruments based on the US 100 index, the German DAX index (DE30) or the US 500 index. The second most profitable asset class was CFD based on commodities. Their share in the revenue structure in the first half of 2022 was 34,8%. The most profitable instruments in this class were CFDs on natural gas, gold and oil prices. Revenues on CFDs based on currencies accounted for 13,4% of all revenues, where the most profitable financial instruments in this class were based on the EURUSD currency pair.  

     

     

    XTB places great importance on the geographical diversification of revenues, consistently implementing the strategy of building a global brand. The country from which the Group derives more than 20% of revenues each time is Poland, with a share of 39,8% (H1 2021 r.: 27,9%). Due to the overall share in the Group’s revenues, Poland was separated for presentation purposes as the largest market in terms of revenues in the Group. The Group breaks down its revenues by geographic area according to the country of the XTB office in which the client was acquired. The exception is the Middle East region, which also presents revenues from clients from this market acquired by the subsidiary XTB International Ltd. based in Belize.  

     

     

    XTB puts also strong emphasis on diversification of segment revenues. Therefore the Group develops institutional activities under X Open Hub brand, under which it provides liquidity and technology to other financial institutions, including brokerage houses. Revenues from this segment are subject to significant fluctuations from period to period, analogically to the retail segment, which is typical for the business model adopted by the Group.  

     

     

    XTB’s business model includes high volatility of revenues depending on the period. Operating results are mainly affected by: (i) volatility on financial and commodity markets; (ii) the number of active clients; (iii) volume of concluded transactions on financial instruments; (iv) general market, geopolitical and economic conditions; (v) competition on the FX/CFD market and (vi) regulatory environment.

     

    As a rule, the Group’s revenues are positively affected by higher activity of financial markets due to the fact that in such periods, a higher level of turnover is realized by the Group’s clients and higher profitability per lot. The periods of clear and long market trends are favourable for the Company and it is at such times that it achieves the highest revenues. Therefore, high activity of financial markets and commodities generally leads to an increased volume of trading on the Group’s trading platforms. On the other hand, the decrease in this activity and the related decrease in the transaction activity of the Group’s clients leads, as a rule, to a decrease in the Group’s operating income. Due to the above, operating income and the Group’s profitability may decrease in periods of low activity of financial and commodity markets. In addition, there may be a more predictable trend in which the market moves within a limited price range. This leads to market trends that can be predicted with a higher probability than in the case of larger directional movements on the markets, which creates favourable conditions for transactions concluded in a narrow range trading. In this case, a greater number of transactions that bring profits to clients is observed, which leads to a decrease in the Group’s result on market making.  

     

    The volatility and activity of markets results from a number of external factors, some of which are characteristic for the market, and some may be related to general macroeconomic conditions. It can significantly affect the revenues generated by the Group in the subsequent quarters. This is characteristic of the Group’s business model.

     

     

    Operating expenses

     

    The operating costs in the first half of 2022 amounted to PLN 267,8 million and were PLN 104,5 million higher compared to the comparable period (H1 2021 r.: PLN 163,3 million). The most important y/y changes occurred in:  

     

     • marketing costs, an increase of PLN 47,2 million mainly due to higher expenditures on marketing online and offline campaigns;

     

     • costs of salaries and employee benefits, an increase of PLN 34,3 million mainly due to the increase in employment and higher provisions for variable remuneration components (bonuses);

     

     • commission expenses, an increase of PLN 9,8 million as a result of larger amounts paid to payment service providers through which clients deposit their funds on transaction accounts;

     

     • other costs, an increase by PLN 4,1 million, mainly due to donations in the amount of PLN 1,1 million; created write-downs of receivables (increase by PLN 1,0 million y/y); business travel costs (increase by PLN 0,8 million y/y) and provisions for litigation (increase by PLN 0,6 million y/y).

     

    In q/q terms, operating costs increased by PLN 5,7 million, mainly due to offline marketing expenditure higher by PLN 4,0 million and higher costs of taxes and fees by PLN 1,7 million, mainly due to higher costs related to the fee to the Bank Guarantee Fund.

     

    Due to the dynamic development of XTB, the Management Board estimates that in 2022 the total costs of operating activities may even be about 50% higher than that observed in 2021. The priority of the Management Board is to further increase the client base and build a global brand. As a consequence of the implemented activities, marketing expenditures may increase in 2022 by nearly 70% compared to the previous year.

     

    The final level of operating costs depend on the level of marketing expenses, changes in the level of employment in the Group, the amount of variable components paid to employees and the pace of geographic expansion into new markets.

    The level of marketing expenditures depends on their impact on the Group’s results and profitability, the rate of foreign expansion and on clients responsiveness to the actions taken. The employment growth in the Group will be driven by its dynamic development, both on the existing and new markets. The amount of variable remuneration components is influenced by the Group’s results.

     

    Dividend

     

    The XTB dividend policy assumes recommendation by the Management Board to the General Meeting a dividend payment in the amount taking into account the level of net profit presented in the standalone annual financial report of the Company and a variety of factors relating to the Company, including prospects for further operations, future net profits, demand for cash, financial situation, the level of capital adequacy ratios, expansion plans, legal requirements in this area and KNF guidelines. In particular, the Management Board, when submitting proposals for dividend payment, will be guided by the need to ensure an appropriate level of the Company’s capital adequacy ratios and the capital necessary for the development of the Group.

     

    The Management Board maintains that its intention is to recommend to the General Meeting in the future to adopt resolutions on the payment of dividends, taking into account the factors indicated above, in the amount ranging from 50% to 100% of the Company’s standalone net profit for a given financial year. The unit net profit for the first half of 2022 amounted PLN 472,2 million.  

     

    The levels of the total capital ratio (IFR) of XTB on individual days in the first half of 2022 are presented in the chart below.  

     

    At the end of the first half of this year the total capital ratio in the Company amounted to 164,4%. The total capital ratio informs about the ratio of own funds to risk-weighted assets, in other words, it shows whether the brokerage house is able to cover the minimum capital requirement for market, credit, operational and other risks with its own funds.

     

     

     

    Cash and cash equivalents

     

    XTB invests part of its cash in financial instruments with a 0% risk weight, i.e. in treasury bonds and bonds guaranteed by the State Treasury. As at June 30, 2022, the total value of own cash and bonds in the XTB Group was PLN 1 342,9 million, which PLN 995,8 million was cash and PLN 347,1 million for bonds.

     

  • 2022.05.06
    XTB financial results for the 1st quarter of 2022

    In the first quarter of 2022 XTB reported a consolidated net profit of PLN 252,6 million compared to PLN 89,1 million a year earlier. This is an increase of PLN 163,5 million. Consolidated revenues amounted to PLN 439,8 million (Q1 2021: PLN 186,7 million), and operating expenses amounted to PLN 131,0 million (Q1 2021:  PLN 86,9 million). During the period, the average number of active clients increased by 46,3 thousand clients, which means and increase by 44,7% y/y.

     

     

    Revenuesl  

     

    In the first quarter of 2022, XTB reported a record increase in revenues by 135,6% y/y, i.e. by PLN 253,1 million from PLN 186,7 million to PLN 439,8 million. The significant factors determining their level were high volatility in the financial and commodity markets and the constantly growing average number of active clients (increase by 44,7% y/y), combined with their high transactional activity expressed in the number of contracts concluded in lots. Consequently, trading in derivative instruments amounted to PLN 1 560,7 thousand lots (Q1 2021: 1 115,4 thousand lots), and the profitability per lot increased by 68,4%.  

     

    XTB has a solid foundation in the form of constantly growing client base and the number of active clients. In the first quarter of 2022, the Group acquired 55 333 new clients compared to 42 760 a quarter earlier, which means an increase of 29,4%. This is the effect of continuing the optimized sales and marketing strategy, bigger penetration of already existing markets, successive introduction of new products to the offer and expansion into new geographic markets. The number of active clients was record high in the analysed period. It increased from 127 174 to 149 726, i.e. by 17,7% q/q.

     

     

    The ambition of the Management Board in 2022 is to acquire, on average, at least 40 thousand new clients quarterly. As a result of the implemented activities, the Group acquired a total of 55,3 thousand new clients in the first quarter of 2022, while in April 2022, 15,3 thousand new clients were acquired.

     

    The priority of the Management Board is to further increase the client base leading to the strengthening of XTB’s market position in the world. These activities will be supported by a number of initiatives, including the new advertising campaign launched on February 14, 2022 with the participation of the new XTB brand ambassador – Joanna Jędrzejczyk – a titled martial arts competitor, the first Polish woman in the UFC organization and a champion in this organization, as well as a three-time world champion in Thai boxing.

     

    XTB, thanks to the cooperation with Joanna Jędrzejczyk, started promoting the offered investment solutions, in particular, convincing that investing in various types of assets is available to everyone, using the tools provided that facilitate entry into the world of investments: through daily market analysis, as well as numerous educational materials.

     

    Looking at XTB’s revenues in terms of the classes of instruments responsible for their creation, it can be seen that in the first quarter of 2022, CFDs based on index were in the lead. Their share in the structure of revenues on financial instruments reached 57,4% compared to 39,9% a year earlier. This is a consequence of high profitability on CFD instruments based on the US 100 and US 500 indexes, the German DAX stock index (DE30) or the Russian RUS 50 index. The second most profitable asset class was commodity CFDs. Their share in the structure of revenues in the 1st quarter of 2022 was 30,2% (Q1 2021: 53,8%). The most profitable instruments in this class were CFDs based on quotations of crude oil, gold and natural gas prices. Revenues on CFDs based on currencies accounted for 9,4% of all revenues, compared to 2,7% a year earlier, where the most profitable financial instruments in this class were based on the EURUSD currency pair.

     

     

    XTB places great importance on the geographical diversification of revenues, consistently implementing the strategy of building a global brand. The country from which the Group derives more than 20% of revenues each time is Poland, with a share of 27,3% (Q1 2021 r.: 37,8%). Due to the overall share in the Group’s revenues, Poland was separated for presentation purposes as the largest market in terms of revenues in the Group. The Group breaks down its revenues by geographic area according to the country of the XTB office in which the client was acquired.

     

    XTB puts also strong emphasis on diversification of segment revenues. Therefore the Group develops institutional activities under X Open Hub brand, under which it provides liquidity and technology to other financial institutions, including brokerage houses. Revenues from this segment are subject to significant fluctuations from period to period, analogically to the retail segment, which is typical for the business model adopted by the Group.


    XTB’s business model includes high volatility of revenues depending on the period. Operating results are mainly affected by: (i) volatility on financial and commodity markets; (ii) the number of active clients; (iii) volume of concluded transactions on financial instruments; (iv) general market, geopolitical and economic conditions; (v) competition on the FX/CFD market and (vi) regulatory environment.
     
    As a rule, the Group’s revenues are positively affected by higher activity of financial markets due to the fact that in such periods, a higher level of turnover is realized by the Group’s clients and higher profitability per lot. The periods of clear and long market trends are favourable for the Company and it is at such times that it achieves the highest revenues. Therefore, high activity of financial markets and commodities generally leads to an increased volume of trading on the Group’s trading platforms. On the other hand, the decrease in this activity and the related decrease in the transaction activity of the Group’s clients leads, as a rule, to a decrease in the Group’s operating income. Due to the above, operating income and the Group’s profitability may decrease in periods of low activity of financial and commodity markets. In addition, there may be a more predictable trend in which the market moves within a limited price range. This leads to market trends that can be predicted with a higher probability than in the case of larger directional movements on the markets, which creates favourable conditions for transactions concluded in a narrow range trading. In this case, a greater number of transactions that bring profits to clients is observed, which leads to a decrease in the Group’s result on market making.  
     
    The volatility and activity of markets results from a number of external factors, some of which are characteristic for the market, and some may be related to general macroeconomic conditions. It can significantly affect the revenues generated by the Group in the subsequent quarters. This is characteristic of the Group’s business model.  
     
    Operating expenses
     
    The operating costs in the first quarter of 2022 amounted to PLN 131,0 million and were PLN 44,1 million higher compared to the comparable period (Q1 2021: PLN 86,9 million). The most important y/y changes occurred in:

     

    •   marketing costs, an increase by PLN 17,6 million resulting mainly from higher expenditure on online marketing campaigns;
    •  
    • costs of salaries and employee benefits, an increase by PLN 15,6 million mainly due to the increase in employment and provisions for variable remuneration components (bonuses);
    •  
    • commission costs, an increase by PLN 3,6 million resulting from higher amounts paid to payment service providers through which clients deposit their funds in transaction accounts;
    •  
    •   other external services, an increase by PLN 2,6 million as a result of mainly higher expenditure on: (i) IT systems and licenses (increase by PLN 1,0 million y/y); (ii) legal and advisory services (increase by PLN 0,8 million y/y) and (iii) market data delivery services (increase by PLN 0,7 million y/y).
    •  
    In q/q terms, operating costs increased by PLN 30,3 million, mainly due to higher marketing costs by PLN 13,4 million, mainly related to higher expenditure on online marketing campaigns, and higher by PLN 10,5 million costs of remuneration and employee benefits resulting mainly from the increase in employment and an increase in provisions created for variable remuneration components (bonuses) and commission costs higher by PLN 3,5 million, resulting from the amounts paid to payment service providers through which clients deposit their funds in transaction accounts.
     
    Due to the dynamic development of XTB, the Management Board estimates that in 2022 the total costs of operating activities may even be about a third higher than that observed in 2021. The priority of the Management Board is to further increase the client base and build a global brand. As a consequence of the implemented activities, marketing expenditure may increase by over 40% compared to the previous year.  
     
    The final level of operating costs will depend on the level of variable remuneration components paid to employees, the level of marketing expenditures, the dynamics of geographical expansion into new markets and the impact of potential product interventions and other external factors on the level of revenues generated by the Group.  
     
    The value of variable remuneration components will be influenced by the results of the Group. The level of marketing expenditures depends on their impact on the Group’s results and profitability, the rate of foreign expansion and on clients responsiveness to the actions taken. The impact of a new product intervention on the Group’s revenues will determine, if necessary, a revision of the cost assumptions.
     
    Dividend
     
    The XTB dividend policy assumes recommendation by the Management Board to the General Meeting a dividend payment in the amount taking into account the level of net profit presented in the standalone annual financial report of the Company and a variety of factors relating to the Company, including prospects for further operations, future net profits, demand for cash, financial situation, the level of capital adequacy ratios, expansion plans, legal requirements in this area and KNF guidelines. In particular, the Management Board, when submitting proposals for dividend payment, will be guided by the need to ensure an appropriate level of the Company’s capital adequacy ratios and the capital necessary for the development of the Group.  
     
    The Management Board maintains that its intention is to recommend to the General Meeting in the future to adopt resolutions on the payment of dividends, taking into account the factors indicated above, in the amount ranging from 50% to 100% of the Company’s standalone net profit for a given financial year. The unit net profit for the first quarter of 2022 amounted to PLN 249,0 million.  
     
    The levels of the total capital ratio (IFR) of XTB on individual days in the first quarter of 2022 are presented in the chart below.
     
    At the end of the first quarter of this year the total capital ratio in the Company was 218,0%. The total capital ratio informs about the ratio of own funds to risk-weighted assets, in other words, it shows whether the brokerage house is able to cover the minimum capital requirement for market, credit, operational and other risks with its own funds.
     
    Cash and cash equivalents
     
    XTB place part of its cash in financial instruments with a 0% risk weight, i.e. in treasury bonds and bonds guaranteed by the State Treasury. As at March 31, 2022, the total value of own cash and bonds in the XTB Group was PLN 1 271,6 million, of which PLN 937,3 million was cash and PLN 334,3 million for bonds.
     
  • 2022.03.09
    Financial results of XTB for 2021

    The year 2021 was for XTB a period of dynamic business development, entering new markets and building a client base.
    As a result, the Group acquired a record 189 thousand new clients compared to 112 thousand a year earlier (increase by 68,9% y/y). This translated into a significant increase in the volume of clients’ trading on CFD instruments expressed in lots – an increase from 3,2 million to 4,1 million lots, i.e. by 29,3% y/y.

     

    XTB’s dynamic operating growth translated into very good financial results in 2021, despite the “high base” effect from the first half of 2020, when the markets experienced above-average volatility caused, among others, by the global COVID-19 pandemic. Consolidated net profit amounted to PLN 237,8 million compared to PLN 402,1 million a year earlier. Consolidated revenues amounted to PLN 625,6 million (2020: PLN 797,8 million) with operating expenses of PLN 348,7 million (2020: PLN 282,0 million).

     

    Revenues

     

    In 2021, XTB’s revenues decreased by 21,6% y/y, from PLN 797,8 million to PLN 625,6 million. This decrease was due to the profitability per lot lower by PLN 99, amounting to PLN 152 (2020: PLN 251). This decrease is mainly due to the effect of the “high base” from the first half of 2020, when the markets experienced above-average volatility caused, among others, by the global COVID-19 pandemic. The client trading volume, calculated in lots, was higher by 29,3% y/y.

     

    In the fourth quarter of 2021, revenues increased by 31,2% y/y, i.e. by PLN 43,6 million, from PLN 140,0 million to PLN 183,6 million. This change was influenced by: (i) higher turnover of clients in financial instruments expressed in the number of transactions concluded in lots – an increase by 272 613 lots (from 800 935 to 1 073 549 lots); (ii) slightly lower profitability per lot – a decrease by PLN 4 (from PLN 175 to PLN 171).

     

    XTB has a solid foundation in the form of constantly growing client base and the number of active clients. This is the key to the amount of recurring income in the future. The Group reported another record in this area, acquiring 189 187 new clients compared to 112 025 a year earlier, which means an increase of 68,9%. This is the effect of continuing the optimized sales and marketing strategy, bigger penetration of already existing markets, successive introduction of new products to the offer and expansion into new geographic markets. Similarly to the number of new clients, the average number of active clients was also record high. It increased from 107 287 to 190 452, i.e. by 77,5% y/y.

     

    The ambition of the Management Board in 2022 is to acquire, on average, at least 40 thousand new clients quarterly. As a result of the implemented activities, the Group acquired a total of 18,1 thousand new clients in January 2022, while in February 2022, 15.1 thousand new clients were acquired.

     

    Looking at XTB’s revenues in terms of the classes of instruments responsible for their creation, it can be seen that in 2021, CFDs based on commodities were in the lead. Their share in the structure of revenues on financial instruments reached 49,3% compared to 33,0% a year earlier. This is a consequence of, among others high profitability on CFD instruments based on quotations of gold, natural gas, crude oil and silver prices. The second most profitable asset class was index-based CFDs. Their share in the revenue structure in 2021 was 32,8% (2020: 53,2%). The most profitable instruments in this class were CFDs based on the US 100 index, the German DAX share index (DE30) and the US 500 index. Revenues on CFDs based on currencies accounted for 12,5% of all revenues, compared to 11,5% a year earlier, where the most profitable financial instruments in this class were based on the EURUSD currency pair.

     

    XTB places great importance on the geographical diversification of revenues, consistently implementing the strategy of building a global brand. The country from which the Group derives more than 20% of revenues each time is Poland, with a share of 33,5% (2020: 37,0%). Due to the overall share in the Group’s revenues, Poland was separated for presentation purposes as the largest market in terms of revenues in the Group. The Group breaks down its revenues by geographic area according to the country of the XTB office in which the client was acquired.

     

    XTB puts also strong emphasis on diversification of segment revenues. Therefore the Group develops institutional activities under X Open Hub brand, under which it provides liquidity and technology to other financial institutions, including brokerage houses. Revenues from this segment are subject to significant fluctuations from period to period, analogically to the retail segment, which is typical for the business model adopted by the Group.

     

    XTB’s business model includes high volatility of revenues depending on the period. Operating results are mainly affected by: (i) volatility on financial and commodity markets; (ii) the number of active clients; (iii) volume of concluded transactions on financial instruments; (iv) general market, geopolitical and economic conditions; (v) competition on the FX/CFD market and (vi) regulatory environment.

     

    As a rule, the Group’s revenues are positively affected by higher activity of financial markets due to the fact that in such periods, a higher level of turnover is realized by the Group’s clients and higher profitability per lot. The periods of clear and long market trends are favourable for the Company and it is at such times that it achieves the highest revenues. Therefore, high activity of financial markets and commodities generally leads to an increased volume of trading on the Group’s trading platforms. On the other hand, the decrease in this activity and the related decrease in the transaction activity of the Group’s clients leads, as a rule, to a decrease in the Group’s operating income. Due to the above, operating income and the Group’s profitability may decrease in periods of low activity of financial and commodity markets. In addition, there may be a more predictable trend in which the market moves within a limited price range. This leads to market trends that can be predicted with a higher probability than in the case of larger directional movements on the markets, which creates favourable conditions for transactions concluded in a narrow range trading. In this case, a greater number of transactions that bring profits to clients is observed, which leads to a decrease in the Group’s result on market making.

     

    The volatility and activity of markets results from a number of external factors, some of which are characteristic for the market, and some may be related to general macroeconomic conditions. It can significantly affect the revenues generated by the Group in the subsequent quarters. This is characteristic of the Group’s business model.

     

    Operating expenses

     

    The operating costs in 2021 amounted to PLN 348 772 thousand and were PLN 66 768 thousand higher than in the previous year (2020: PLN 282 004 thousand). The most important changes occurred in:

     

    marketing costs, an increase by PLN 32 370 thousand resulting mainly from higher expenditure on online marketing campaigns;

     

    commission costs, an increase by PLN 13 648 thousand resulting from higher amounts paid to payment service providers through which clients deposit their funds in transaction accounts;

     

    costs of remuneration and employee benefits, an increase by PLN 12 121 thousand mainly due to an increase in employment;

     

    other external services, an increase by PLN 8 991 thousand as a result of mainly higher expenditure on: (i) IT systems and licenses (increase by PLN 4 456 thousand y/y); (ii) legal and advisory services (increase by PLN 1 778 thousand y/y) and (iii) market data delivery services (increase by PLN 1 367 thousand y/y).

  • 2021.12.22
    XTB adopts the ESG strategy


    XTB has just adopted a detailed ESG strategy for sustainable development, which is one of the pillars of XTB’s business strategy. Its three main areas are environment, social responsibility and corporate governance.


    The ESG strategy also includes specific goals and tasks for the coming years. As a technology company XTB strives to digitize its processes as much as possible, and thus lower its carbon footprint and ultimately reach carbon neutrality. Additionally, in the area of caring for the natural environment XTB focuses on educating its employees and associates and promoting good practices.


    In the area of social responsibility, the company puts the strongest emphasis on economic education. XTB wants to provide everyone interested in the functioning of financial markets with an open access to knowledge on this subject. Therefore, it is constantly expanding the free base of educational materials, where one can find numerous articles, videos and comments on market insights. XTB’s social goal is also to create a working environment that is friendly to all employees respecting their values, ensuring equal treatment and their comprehensive development.


    In the third area – corporate governance – XTB wants to develop the position of one of the world’s largest Forex / CFD brokers, listed and supervised by regulatory bodies on financial markets where the company is present: FCA, BaFin, ACPR, CySEC, IFSC. The company also puts emphasis on clear and transparent communication with all its stakeholders, especially regarding long-term goals and planned activities. All initiatives in the area of social responsibility are carried out by the XTB Capital Group and the XTB Foundation, which was established in 2020.


    The implementation of the adopted ESG Strategy will be monitored and reported on an ongoing basis. The implementation of the ESG Strategy and initiatives in this area is coordinated by the ESG Manager who is directly reporting to the Management Board of XTB in the structure of the organization. For the detailed information on XTB’s sustainable development strategy visit ir.xtb.com website – tab ESG.

  • 2021.11.09
    XTB financial results for the 3rd quarter of 2021

    In the third quarter of 2021 XTB reported PLN 104,3 million of consolidated net profit compared to PLN 68,4 million of profit a year earlier. Consolidated revenues reached PLN 200,0 million (Q3 2020: PLN 139,6 million), and operating costs PLN 84,8 million (Q3 2020: PLN 60,1 million). In this period, the Group acquired over 38 thousand new clients against 21 thousand a year earlier (increase by 82,1% y/y).

     

    Revenues

    ll

    In the third quarter of 2021 XTB noted revenues increase by 43,3% y/y, i.e. from PLN 139,6 million to PLN 200,0 million. The significant factor determining the level of revenues was a constantly growing client base combined with their high transaction activity noted in the number of concluded transactions in lots and in the nominal value of the realized turnover. As a consequence the transaction volume in CFD instruments amounted to 1 044 thousand lots (III quarter 2020: 760 thousand lots) and a profitability per lot amounted to PLN 192 (III quarter 2020: PLN 184).

     

    Looking at revenues in terms of the classes of instruments responsible for their creation, it can be seen that CFDs based on commodities dominated. Their share in the structure of revenues on financial instruments in the third quarter of 2021 reached 58,2% against 22,9% a year earlier. This is a consequence of the high interest of XTB clients in CFD instruments based on gold, silver and natural gas. The second most profitable class were CFD instruments based on indices. Their share in the structure of revenues in III quarter of 2021 reached 22,5% (III quarter 2020: 52,0%). The most profitable instruments among this asset class were CFDs based on the US 100 and US 500 indexes. Revenues of CFD based on currencies reached 15,7% of all revenues, compared to 20,1% a year earlier, where the most popular financial instruments in this class were based on the EURUSD currency pair.

    XTB has a solid foundation in the form of constantly growing client base and the number of active clients. This is the key to the amount of recurring income in the future. From the beginning of the year, the Group reported another record in this area, acquiring 146 427 new clients compared to 73 612 a year earlier, which means an increase of 98,9%. This is the effect of continuing the optimized sales and marketing strategy, bigger penetration of already existing markets, successive introduction of new products to the offer and expansion into new geographic markets. Similarly to the number of new clients, the average number of active clients was also record high. It increased from 53 309 to 106 961, i.e. by 100,6% y/y.

    ll

    The priority of the Management Board is to further increase the client base, leading to strengthen the market position of XTB in the world. These activities will be supported by a number of initiatives, including introduced on 5th October 2020 a new offer for shares and ETFs (Exchange-Traded Funds) “0% commission” for monthly volumes up to EUR 100 000. This offer was received with enthusiasm by current and new XTB clients. The company aims to be the first choice and comprehensive solution for every investor. Over the past few years, XTB has done a great deal of work – from expanding the offer by around 3,9 thousand financial instruments (from 1 500 to 5 400 currently), to the continuous improvement of the web and mobile version of the award-winning xStation platform. Now with a free offer, XTB has opened the door wide to anyone interested in investing in both real stocks and ETFs. XTB currently allows client to invest in over 3 000 real stocks from 16 of the world’s largest stock exchanges, including New York Stock Exchange, London Stock Exchange, Spanish Bolsa de Madrid, German Börse Frankfurt and of course Warsaw Stock Exchange. Besides stocks, XTB offers over 270 ETFs, including commodities, real estate and bonds.

    ll

    The „0% commission” offer is supported by a marketing and advertising campaign with the participation of the new XTB brand ambassador – one of the best football manager on the world, José Mourinho. The new XTB ambassador is the coach who not only won championships in a record number of countries (Portugal, England, Italy and Spain), but is also one of only three coaches who have won the UEFA Champions League twice with two clubs.

    The ambition of the Management Board for 2021 was to acquire at least 120 thousand new clients. This goal was achieved in July this year. The management board assumes that in the following periods it will be possible to acquire at least 30 000 new clients quarterly on average. In October 2021, the Group acquired a total of 13,0 thousand new clients.

    ll

    XTB places great importance on the geographical diversification of revenues. The country from which the Group derives more than 15% of revenues is Poland with the share of 32,1% in III quarter of 2021 (III quarter 2020: 34,5%). The share of other countries in the geographical structure of revenues does not exceed 15%. Due to the overall share in the Group’s revenue, Poland was set apart for presentation purposes as the Group’s largest revenue market.

    The Group breaks down its revenues by geographic area according to the country of the XTB office in which the client was acquired.

    XTB puts also strong emphasis on diversification of segment revenues. Therefore the Group develops institutional activities under X Open Hub brand, under which it provides liquidity and technology to other financial institutions. Revenues from this segment are subject to significant fluctuations from quarter to quarter, analogically to the retail segment, which is typical for the business model adopted by the Group.

    ll

    XTB’s business model includes high volatility of revenues depending on the period. Operating results are mainly affected by: (i) volatility on financial and commodity markets; (ii) the number of active clients; (iii) volume of concluded transactions on financial instruments; (iv) general market, geopolitical and economic conditions; (v) competition on the FX/CFD market and (vi) regulatory environment.

    As a rule, the Group’s revenues are positively affected by higher activity of financial markets due to the fact that in such periods, a higher level of turnover is realized by the Group’s clients and higher profitability per lot. The periods of clear and long market trends are favourable for the Company and it is at such times that it achieves the highest revenues. Therefore, high activity of financial markets and commodities generally leads to an increased volume of trading on the Group’s trading platforms. On the other hand, the decrease in this activity and the related decrease in the transaction activity of the Group’s clients leads, as a rule, to a decrease in the Group’s operating income. Due to the above, operating income and the Group’s profitability may decrease in periods of low activity of financial and commodity markets. In addition, there may be a more predictable trend in which the market moves within a limited price range. This leads to market trends that can be predicted with a higher probability than in the case of larger directional movements on the markets, which creates favourable conditions for transactions concluded in a narrow range trading. In this case, a greater number of transactions that bring profits to clients is observed, which leads to a decrease in the Group’s result on market making.

    The volatility and activity of markets results from a number of external factors, some of which are characteristic for the market, and some may be related to general macroeconomic conditions. It can significantly affect the revenues generated by the Group in the subsequent quarters. This is characteristic of the Group’s business model.

    Expenses

    The operating costs in the third quarter of 2021 amounted to PLN 84,8 million and were PLN 24,7 million higher compared to the comparable period (III quarter 2020: PLN 60,1 million). The most important y/y changes occurred in:

    • – costs of salaries and employee benefits, an increase by PLN 11,2 million, mainly related to new employment;
    •  
    • – marketing costs, an increase by PLN 6,9 million resulting mainly from higher expenditure on online marketing campaigns;
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    • – commission costs, an increase of PLN 3,1 million resulting from higher amounts paid to payment service providers through which clients deposit their funds in transaction accounts;
    •  
    • – other external services, an increase by PLN 1,7 million as a result of mainly higher expenditure on: (i) IT systems and licenses (increase by PLN 1,2 million y/y); (ii) internet and telecommunications (increase by PLN 0,3 million y/y).

    In q/q terms, operating costs increased by PLN 8,4 million, mainly due to higher by PLN 8,3 million costs of salaries and employee benefits, mainly due to the creation of provisions for variable remuneration components (bonuses) and employment growth.

    Due to the dynamic Group development, the Management Board estimates that in 2021 the total costs of operating activities may be about a dozen percent higher than what we noticed in 2020. The priority of the Management Board is to further increase the client base and build a global brand. In the fourth quarter of this year, an increase in marketing expenditure is assumed compared to the level in the third quarter of this year.

    The final level of operating costs will depend on the level of variable remuneration components paid to employees, the level of marketing expenditures, the dynamics of geographical expansion into new markets and the impact of any new regulations and other external factors on the level of revenues generated by the Group.

    The value of variable remuneration components will be influenced by the results of the Group. The level of marketing expenditures depends on their impact on the Group’s results and profitability, the rate of foreign expansion and on clients responsiveness to the actions taken. The impact of a new product intervention on the Group’s revenues will determine, if necessary, a revision of the cost assumptions.

    Dividend and capital requirements

    The XTB dividend policy assumes recommendation by the Management Board to the General Meeting a dividend payment in the amount taking into account the level of net profit presented in the standalone annual financial report of the Company and a variety of factors relating to the Company, including prospects for further operations, future net profits, demand for cash, financial situation, the level of capital adequacy ratios, expansion plans, legal requirements in this area and KNF guidelines.
    In particular, the Management Board, when submitting proposals for dividend payment, will be guided by the need to ensure an appropriate level of the Company’s capital adequacy ratios and the capital necessary for the development of the Group.

    For example, the Polish Financial Supervision Authority, in its last Statement on dividend policy in 2021, published on December 16, 2020 recommended that the dividend in 2021 should be paid only by brokerage houses that have met, among others, the following criteria:

    A. Dividend in the amount not exceeding 75% of the net profit for 2020:

    I. for entities subject to capital adequacy standards pursuant to Regulation (EU) No 575/2013 of the European Parliament and the Council of the European Union of 26 June 2013 on prudential requirements for credit institutions and investment firms amending Regulation (EU) No 648/2012 (EU Official Journal of the EU L 176 of June 27, 2013, hereinafter referred to as: “Regulation 575/2013”) as of December 31, 2020:

    Common Equity Tier I ratio was at least 6%;

    Tier I capital ratio was at least 9%;

    the total capital ratio is at least 14%;

    II. for entities not subject to capital adequacy standards pursuant to Regulation 575/2013 as at 31 December 2020, the ratio being the share of equity in total assets is at least 50%;

    III. the last supervisory grade assigned in the BION process is 1 or 2;

    IV. the entity in 2020 and until the date of approval of the financial report and adoption of the resolution on the distribution of profit for 2020 did not violate the provisions on capital requirements contained in Regulation 575/2013 and the Law of July 29, 2005 on trading in financial instruments (OJ, 2020, item 89) and the provisions on limits on large exposures, excluding breaches of limits relating to clients’ funds.

    B. Dividend in the amount not exceeding 100% of the net profit for 2020:

    I. meets all the criteria listed in A;

    II. for entities subject to capital adequacy standards in accordance with Regulation 575/2013, the criteria referred to in point (a) And points I are met at the end of each quarter in 2020;

    III. for entities not subject to capital adequacy standards in accordance with Regulation 575/2013, the criterion referred to in point (a) A point II is met at the end of each quarter in 2020.

    On June 28, 2021, the Company received a supervisory grade (BION) of 2 [2,46] from the Polish Financial Supervision Authority. The assessment was given on December 31, 2020. Published by the Polish Financial Supervision Authority on May 22, 2018. Announcement on the position regarding the dividend policy in the medium-term, aimed at facilitating financial market entities supervised by the Polish Financial Supervision Authority in terms of financial planning related to the payment of dividends in the average indicates that the current supervisory assessment for XTB is in line with the criteria recommended by the Polish Financial Supervision Authority, which should allow the Company to potentially pay dividends for the current financial year in accordance with these criteria.

    From June 26, 2021, XTB applies capital adequacy monitoring in accordance with Regulation (EU) 2019/2033 of the European Parliament and of the Council of November 27, 2019 on prudential requirements for investment firms and amending Regulations (EU) No. 1093/2010, (EU ) No. 575/2013, (EU) No. 600/2014 and (EU) No. 806/2014, hereinafter referred to as “IFR Regulation” It replaced, in the case of XTB, Regulation of the European Parliament and of the Council (EU) No. 575/2013 of 26 June 2013 on prudential requirements for credit institutions and investment firms, amending Regulation (EU) No. 648/201, hereinafter referred to as the “CRR Regulation”. Both regulations require maintaining an appropriate ratio of own funds to the risk incurred – in the case of the CRR Regulation, it’s measure was the total risk exposure, and the total capital ratio could not be lower than 8%, while in the case of the IFR Regulation, the total measure of the risk incurred is the highest of the values: (i) a fixed overhead requirement, (ii) a fixed minimum capital requirement, or (iii) a “K-factor” requirement related to customer risk, market risk and firm risk; in the case of the IFR Regulation, the ratio of total own funds cannot be lower than 100%.

    In order to ensure comparability, the requirements from previous periods have been properly scaled; however, it should be noted that the value of the total risk exposure calculated in accordance with the CRR Regulation is calculated in a different way than the value of the capital requirement calculated in accordance with the IFR Regulation.

    The chart below presents the value of the total capital ratio (CRR) in Q1-Q3 2021.

    The chart below presents the value of the total capital ratio (IFR) in Q1-Q3 2021.

    The total capital ratio informs about the ratio of own funds to risk-weighted assets, in other words, it shows whether the brokerage house is able to cover the minimum capital requirement for market, credit, operational and other risks with its own funds. At the end of the third quarter of this year, the total capital ratio in the Company was 126,9% (the equivalent under the CRR Regulation 10,2%).

    It should be remembered that every year the PFSA publishes updated Positions on dividend policy applicable to brokerage houses when paying dividends for a given year. If the PFSA uses a simple scaling of the ratios in the future, the level of equity and capital requirements above which XTB could pay a dividend could be 175%. It should be noted, however, that the Commission may set the appropriate levels in a completely different way, taking into account the ongoing supervision over brokerage houses. If the criteria are left unchanged in future positions, the position of the PFSA will apply, stating that for entities not subject to capital adequacy standards in accordance with Regulation 575/2013 (CRR Regulation), the ratio being the share of equity in total assets as at 31 December of the previous year was at least 50%.

    The Management Board maintains that its intention is to recommend to the General Meeting in the future to adopt resolutions on the payment of dividends, taking into account the factors indicated above, in the amount ranging from 50% to 100% of the Company’s standalone net profit for a given financial year. The unit net profit for the period of 9 months of 2021 amounted to PLN 167,9 million.

    Cash and cash equivalents

    In an environment of low interest rates, which discourages the maintenance of deposits in banks, XTB started to locate part of its cash in financial instruments with a risk weight of 0% (treasury bonds and bonds guaranteed by the State Treasury). As at 30.09.2021 the total amount of own cash and treasury bonds in the Group amounted to PLN 898,9 million, that includes PLN 754,6 million of own cash and PLN 144,3 million of treasury bonds.