Exclusive: Omar Arnaout,CEO of XTB, Interview Following the Publication of 2020 Full Year Preliminary Financial ResultsXTB has just published full year results for 2020. It has been a difficult year, but judging from the record number of new accounts and profit, not for XTB?
2020 was the best year in the history of XTB from every possible perspective. We were able to onboard over 112,000 new accounts and generate a profit of over 75 million GBP. What has been clear to us over the last few years, is that the strategy that we have undertaken has proved effective and we have to focus on its execution together with the optimization of all our processes to make sure that we continue to grow at such a dynamic pace and ensure that our clients receive the best possible service.
What is the story behind those results? Is it just the pandemic and people finding time to invest or rather a combination of several factors that turned out to be lucky for the company?
The global pandemic certainly had an effect at the beginning of 2020 on market volatility and this was surely one of the drivers for increased interest in financial markets. On the other hand, external reports clearly show that we were one of the quickest growing companies in the industry during this period, which shows that our results were strongly influenced by our own strategy not only during 2020 itself but also by everything that was done in previous years.
I firmly believe that we have evolved on every level in recent years including a wider array of products, world class service and technology, optimised internal processes in countless departments such as sales, customer service and marketing. Concluding, I am sure this success would have not been possible without the immense work from our teams in the recent years.
XTB reported record sales and profits. Since you are a dividend company, what part of this profit-cake will go to XTB shareowners?
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 in the future the adoption of resolutions to the General Meeting on dividend payment taking into account factors mentioned above, at the level of 50% to 100% of Company’s standalone net profit of a given financial year. The standalone net profit for 2020 amounted to over 75 million GBP.
It is not easy to compare brokers between one another due to differences in product offer and market approach, but how would you position XTB against global players? Where would XTB like to be in this rank a year from now?
External reports indicate that XTB was among the top companies in the industry in terms of active client growth and volume growth. What I have to point out is that this growth has not satisfied our ambition and during 2021 we aim to continue our dynamic growth and do everything we can to make sure that we are amongst the top 5 companies in the world in our industry in terms of the number of active clients. The comfort that we have is that we know exactly what we have to do in order to make this possible.
How would you summarise the fourth quarter of 2020 in terms of market situation and how it translated to your results?
Q4 2020 showed a continuation of upward price movement on most popular indices. From XTB’s perspective, US indices and DAX based CFD turned out to be the most profitable instruments for the company. From the general perspective, the top 10 most profitable instruments were almost the same as any other quarter. What stood out during this period were CFDs based on Soybean and Ripple. Soybean continued its upward trend which was initially started in June 2020 and saw the underlying almost double in price. On the other hand, Ripple was the crypto currency, which lost value due to their owners’ regulatory problems they are facing with the SEC.
In October last year, you introduced a 0% commission offer on real stocks, which XTB offers currently on 8 markets. After the first 3 full months with this offer, can you share with us some details on how it is perceived by the market?
XTB has had real stocks and ETFs in its offer for some time now and an interest in this offer has grown very dynamically from the very beginning, but with the introduction of our 0% commission offer and increased market volatility I have to say that client interest has skyrocketed. At the moment, we do not only aim at being one of the world’s biggest CFD providers, but we would also like to achieve the same in the stock industry.
In the last current report, you have confirmed plans of opening a new XTB office in Dubai, UAE. Can you share the roadmap for this expansion?
XTB has already attracted attention from clients from all over the world and after solidifying our position on our current markets we made a decision to return to global expansion and the Dubai office is among our priorities right now. We are currently finalizing all formalities enabling us to commence our business activities and we are aiming at starting our operational activity in the first half of 2021. We are truly excited with this project and we see a very big potential of growth in the region.
Asian markets and investors seem to be more and more interested in investing in Western markets. Besides Dubai and license issues with South Africa, do you consider any other markets to be promising e.g. far East?
In terms of global expansion our main focus is currently focused on starting our operational business in Dubai because of the high potential we see. Additionally of course we aim at continuing to work on obtaining a license in South Africa. Once those tasks have been achieved we will see what the future holds but at the moment we do not have any further plans of global expansion.
X Open Hub reported a five-fold increase of income in 2020 (from GBP 4 million in 2019 to GBP 20 million in 2020). How do you see the growth potential X Open Hub for the next year?
X Open Hubs revenue stream is based on two pillars: technology and liquidity. We are striving to continue developing both of these pillars during the next year. In terms of the liquidity offering we are planning to start working with several banks and brokers from Asia and tighten our relationships with the current client base from Europe, by offering them additional services and new asset classes. In terms of technology, we will continue enhancing our trading platforms and building the recognition of our web and mobile applications.
We are preparing several marketing campaigns presenting the advantages of our trading systems over the competition. Our trading technology is warmly welcomed by larger institutional clients, so we hope that we will be able to maintain this uptrend, especially within our clients from bank institutions.
2020 also marks starting cooperation with new XTB global ambassador José Mourinho. Do you already see the benefits of this partnership?
We were all very excited at starting our cooperation with Jose Mourinho, who is one of the most successful managers in football history. Jose epitomises what many of us would like to achieve in our lives, and we are delighted to say that the interest in our campaign with Jose has been immense and we are certain it has had a significant influence on the results we are able to achieve in the last quarter of 2020.
In 2020, XTB attracted 112 thousand new clients. That’s almost the same number to clients acquired over six years between 2014 and 2019. Why did so many people choose XTB over your competitors?
One of our main focuses in recent years has been to focus on the complete client journey with XTB from the moment of account opening, and this is surely an element that our clients have highly appreciated. Account opening is intuitive and we do everything we can to make sure that our clients have their accounts open as soon as possible after all necessary formalities have been undertaken. Once the account is open we provide our clients with the highest level of service, world class analytical and educational resources.
Top notch technology and support together with a wide variety of financial markets, making sure that our clients can focus on the main reason they joined us which is investing. Everything we do is focused on our clients satisfaction and what is crucial is that due to the fact that we are a technological company that employs today almost 140 IT specialists changes and improvements are made on a month to month basis. We know that we have to do everything we can to meet the rising demands of the modern investor.
You underlined the role of your team in the overall success of the company in 2020. Last year must have been difficult in this area as well, since behind typical challenges like remote work, XTB hired about 150 people…
From March 2020, nearly all XTB employees have been working from home and taking into consideration the immense amount of work that everyone has had and the fact that we have ensured to provide our clients with exactly the same high level of service, I have to say that I am extremely grateful to our team and proud of what they have achieved. This level of work requires a great deal of organisation and self-discipline, and I can most certainly say that without the commitment and engagement of our whole team everything we achieved in 2020 would have not been possible. Additionally, the fact that we are able to not only take on but also train and manage 150 new employees was an amazing success, which has taught all of us a lot of countless lessons on management.
They say ‘the winners are not judged’ but what in your opinion XTB could have done better last year?
XTB has always been a company with high aspirations aiming to be the very best and we have always had more tasks and plans than we can physically handle and 2020 was not different. Simply speaking we all live in a very dynamically evolving world and there will always be countless things to improve and optimise from every perspective and I simply hope that with every year we can improve even more and grow at an even quicker pace. What I am sure of is that with the engagement of our whole team I am confident this will be possible.
There’s been a solid year behind XTB, but I bet you already think about the future. What is the plan for XTB growth in 2021?
The comfort that we have as mentioned in previous questions is that we perfectly know what we have to do in order to achieve even quicker growth and 2021 will be a year focused on the execution of those tasks related to our ultimate goal of being one of the top 5 biggest global companies in the industry. Many of those tasks will be focused on the further improvement of the complete client experience, with the optimization of marketing and sales processes and the further enhancement of our offer.