How Did Saxo Bank Do in the First Half of 2012?

Another one of the big boys in the industry just released its profitability report. Saxo Bank reported its results for the first half of 2012.

For those of you not in the know, the Denmark-based Saxo Bank A/S is one of the renowned brokers in the industry with thousands of clients for forex trading in more than 180 countries.

Last week, it finally announced its results for the first six months of 2012. Its headline figures show that it scored an operating income of 1.416 billion DKK which translates to 237 billion USD, and a net income of 43.5 million DKK, equivalent to 7.31 million USD. However, these metrics are lower compared to where they were in 2011.

In the previous year, Saxo Bank enjoyed 1.769 billion DKK (297 million USD) in operating income and a net income of 345 million DKK (58.1 million USD).

On the bright side, the broker increased deposits (a lot of which came through client acquisition and global expansion) which rose by almost 30% to 30.22 billion DKK from 23.284 billion DKK at the end of 2011. Total client collateral deposits were also up from 68.4 billion DKK in December 2011 to 74.4 billion DKK in June 30, 2012.

Uncertainty in the markets for the first six months of 2012 took its toll on the broker’s income. Saxo Bank reasoned that the bleak outlook for global growth and the uncertainty of the euro zone debt crisis put a damper on investors’ market activity.

Even central banks, namely the SNB and BOJ, weighed on the bank’s profits. Saxo Bank claimed that currency interventions targeting the Swiss franc and the Japanese yen played a role in the decrease of trading volumes for the first half of the year.

In the first half of 2012, Saxo also made a change that would benefit both their clients and increase trading volumes; the Denmark-based bank increased its margin threshold for forex trading from 50,000 EUR to 300,000 EUR in May and reduced its CFD margin requirements in July.

For the newbies out there, take note that Saxo Bank’s changes basically enabled its clients to trade the same risk exposure using less margin collateral, which provided greater flexibility for trading multiple short-term positions and diversifying long-term portfolios. (Read all about our Leverage the Killer lesson if you want to know more about margins!)

Though Saxo Bank’s performance wasn’t as good as FXCM‘s, the bank’s performance for the first half of 2012 is still encouraging. After all, the market conditions that have affected trading volume could improve as the outlook improves on global growth, as well as the uncertainty of global monetary and fiscal policy improves.

For now, it’s a good sign for the industry that a major forex player is dedicated to continuously providing new and improved products for its clients. This goes to show that even in down times, brokers are confident enough in the industry’s future to continue to step up their game and create the best possible trading environment for you.