Leonteq Earnings Call: Losses Now, Profit Promised Ahead

Leonteq AG ((CH:LEON)) has held its Q4 earnings call. Read on for the main highlights of the call.

Leonteq’s latest earnings call struck a cautious but constructive tone as management balanced a difficult 2025 with visible strategic progress. The firm reported losses and margin pressure, yet highlighted stronger capital, lower costs, better client activity in the second half, and substantial regulatory clean-up, underpinning confidence in a return to profit from 2026.

Stronger Capital After Early FRTB Transition

Leonteq completed its transition to the new FRTB market‑risk framework in November 2025, well ahead of the regulatory timetable. The move cut market‑risk RWA by 16%, lifting the CET1 ratio to 16.9% and giving the board scope to consider a share buyback from 2027, assuming capital stays clearly above 15%.

Deep Cost Cuts and Efficiency Drive

The group pushed through material cost reductions, cutting underlying operating expenses by CHF 36 million, or 16%, to CHF 194 million in 2025. Personnel spending fell by CHF 20 million as headcount dropped 7%, contractors were reduced by nearly a quarter and variable pay more than halved, positioning the cost base for leaner growth.

H2 Rebound in Client Activity

Client momentum improved notably in the second half, with transactions up 14% to over 140,000. The platform also saw a record 33,000 products issued in H2, helping Leonteq lift its share of the Swiss structured products market to 29% despite the tough backdrop.

Retail Flow Business Gains Early Traction

The retail flow unit entered the Swiss listed leverage segment in April 2025, quickly building a catalogue of more than 10,000 products and taking around 7% share in its categories. The business generated roughly CHF 3 million of revenue in its launch year and is targeted to almost triple to about CHF 8 million in 2026 as it expands into Germany and beyond.

Growth in AMCs, LYNQS and Issuer Flow

In higher‑value product lines, new‑generation AMCs outstanding climbed about 46% to CHF 0.3 billion, supporting recurring AMC revenue of CHF 28.3 million in H2. Activity on the LYNQS platform surged, with products initiated up 90% to 11,087 and click‑n‑trade usage rising, while turnover in Leonteq‑issued products grew 23% to CHF 7.5 billion in H2.

Balance Sheet Expansion and Liquidity Shift

Total assets increased by CHF 0.5 billion to CHF 11.2 billion as client demand kept issued products growing modestly to CHF 5.3 billion. The CHF 2.7 billion investment portfolio was refocused into higher‑quality liquid assets to prepare for a stricter liquidity regime, trading off some yield for resilience.

Strategic Execution and Leadership Refresh

Management stressed progress against its “Resize, Optimize, Expand” plan, with 2025 largely devoted to resizing and optimizing the platform. The nomination of Felix Oegerli as independent chairman is meant to bolster capital‑markets expertise as Leonteq targets a return to positive pretax results in 2026 and its mid‑term ambitions by 2028.

Regulatory Overhangs Largely Cleared

The group has moved onto a new regulatory regime and addressed key FINMA remediation points, while legacy issues with BaFin have been resolved. One remaining EU matter has been remediated and is expected to close, easing regulatory uncertainty and freeing management to focus on growth and profitability.

Weak Net Income and IFRS Loss

Despite operational progress, net income fell 17% to CHF 178.5 million and Leonteq posted an IFRS net loss of roughly CHF 33 million. Underlying pretax loss came in at CHF 21.5 million for 2025, even after the sharp cost cuts, underlining the scale of revenue and margin headwinds.

Trading Setback and Hedging Drag

The net trading result swung from a CHF 21.5 million gain in 2024 to a CHF 3.1 million loss in 2025. Management blamed a rare period in which realized volatility stayed below implied levels for an extended time, turning hedging into a drag and sharply reducing trading‑related income.

Margin Compression and Fee Pressures

Structured product margins slipped from 70 to 59 basis points as competition and pricing limits weighed on profitability. Large‑ticket deals contributed only about CHF 7 million versus CHF 14 million a year earlier, while a stronger Swiss franc shaved another CHF 5 million off fee income.

Pause with Key Insurance Partner

Revenues were further hit by a temporary halt in new business with Leonteq’s largest insurance partner, linked to merger‑driven reprioritization. This pause particularly hurt Swiss fee income tied to pension‑savings products, exposing the firm’s dependence on a handful of strategic relationships.

Treasury and Interest Costs Under Strain

Treasury activities turned negative as Leonteq de‑risked its portfolio, reducing credit exposure at the cost of lower returns. The net interest result was also negative at CHF 6.4 million, reflecting both the extension and higher use of credit facilities during the year.

Equity Erosion and Capital Sensitivities

Shareholders’ equity fell 14% to CHF 0.7 billion, driven partly by a CHF 52.9 million capital distribution. Currency swings added to the pressure, with a CHF 46.6 million hit from U.S. dollar depreciation, highlighting how FX and capital actions can quickly move the equity line.

One‑Off and Transition Charges

Results were also burdened by roughly CHF 11 million of non‑recurring costs related to restructuring and regulatory transition. These included CHF 9 million of restructuring expenses and CHF 2.2 million tied to the move to the new regime, which management argues should not repeat at the same scale.

Structural and Competitive Challenges

Beyond cyclical volatility, Leonteq faces structural industry pressures such as persistent margin compression and excess capacity. Limited pricing power with some partners and dependence on unpredictable trading results mean its transformation, while underway, is capital‑intensive and will take time to translate into stable returns.

Guidance and Path Back to Profitability

Looking ahead, Leonteq expects to return to a positive pretax result in both the first half and full year 2026, and to hit its mid‑term financial targets by 2028, driven by revenue growth across all regions. Operating expenses are guided to around CHF 200 million in 2026 as the retail flow rollout, modest pay normalization and index effects lift costs, while capital plans include maintaining a strong CET1 and only considering buybacks once profitability and buffers are secure.

Leonteq’s earnings call painted a picture of a firm in mid‑transition: bruised by 2025 losses but shoring up capital, cutting costs and reigniting client activity. For investors in structured‑product specialists, the story now hinges on whether the 2026 return to profit materializes and whether new retail and AMC flows can offset enduring margin and trading headwinds.