Fintech Group AG (DE:FTKG) proposed banking joint venture (JV) with Austrian Post has been abandoned in accordance with the feedback of the relevant regulatory bodies that the approval of a new banking licence might take between one and a half to two years. This supports FTG’s near-term earnings and leaves the business focused on its online brokerage activities. Meanwhile, 10-month KPIs indicate the brokerage business continues to perform well, with trades up 16% over the corresponding 10-month period. High-margin OTC products jumped 34% and represent c 25% of the total. In the wake of the recent de-rating, the shares look increasingly attractive on c 11x consensus FY19 earnings.
10-month KPIs: Trades rise 16% to 10.6m
Total brokerage customers rose 16% y-o-y (and 4% over four months) to stand at 285k. FTG estimates the addressable market size in Germany as 1.2–1.5m, growing at 1–2% per year. The 10.6m trades over 10 months indicate there were 4.0m trades over the July to October period, which includes the quiet summer months. The 4.0m translates to annualised c 42 trades per customer compared with over c 48 in H1. Importantly, OTC products (or exchange-traded products, ETPs) jumped 25%. An attractive new ETP product pricing regime took effect from 1 November and FTG will benefit from a full period of the new pricing in FY19.
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