GFT Technologies AG (DE:GFTG) has lowered its FY17 guidance due to delayed decision making at its two largest investment banking customers – Deutsche Bank (DE:DBKGn) (DB) and Barclays (LON:BARC). GFT said that management changes at the banks have resulted in deferred orders. However, investment banking revenue outside these two customers has been guided upwards, as has the group’s retail banking segment. But these factors were outweighed by the revenue declines at the two investment banks, and management has cut its FY17 revenue guidance by 6% to €425m, while EBITDA comes back by 13% to €42m.
In order to explain the downgrades, GFT provided a table of revenues by client groups. This shows investment banking revenues from Barclays and DB coming back by 23% from the previous guidance to €126m while their retail banking revenues increase by 11% to €69m. The cuts in investment banking are mainly due to deferrals in regulatory projects. DB is expected to produce 39-40% of GFT’s FY17 revenues, down from 44-45% in FY18, while Barclays’ share is expected to fall to 4-5%, down from 7-8%. This is the first time that the two largest accounts have been cut back significantly simultaneously at GFT. Nevertheless, management believes its guidance is now conservative.
To read the entire report Please click on the pdf File Below: