Trading 212 doubles its net profit in 2021 and focuses on brokerage

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An unprecedented retail boom allowed Trading 212 to collect handsome fees from its clients’ transactions, resulting in a 75% increase in revenue for the fiscal year ending December 31, 2021.

Trade 212

According to its filing with the UK Companies House, the FCA-regulated broker said online trading revenue jumped to £94m from £54.2m the previous year.

The solid turnover was however partially offset by the surge in operational costs which increased by 55% during the period. Citing increased personnel costs and other expenses associated with scaling up the business, operating expenses were reported at £42.4 million for the 2021 financial year, up from £27 million. pounds sterling the previous year.

As a result, Trading 212 made a net profit of £45m, up 104% on an annual basis from £21.9m in 2019.

T212 has seen incredible levels of growth over the past few years. Turnover fell from £2m in 2019 to £54.3m in 2020 and then to £94.1m in 2021, while profit/(loss) after tax fell from (£0.3m) to £21.9m and then to £45.3m. million over the same period.

Net assets also increased during this period due to both retained earnings in the business and a share capital injection of £20 million. Net assets now stand at £94m, up from £29m at the end of 2020.

In 2020, Trading 212 had temporarily halted onboarding new users as its platform was under pressure to keep up with the huge growth in retail investment, which caused severe operational difficulties. However, the company has, since February 14, restarted daily onboarding for a limited number of customers, with the intention of resuming full onboarding thereafter.

Other Company Highlights

Trading 212 was the first UK retail broker to offer commission-free trading and its commodity portfolio consists of stocks, ETFs, currencies and derivatives.

In terms of CFD products, the company operated from January 2021 to May 2021 on a spread revenue model, taking advantage of the difference between the prices offered to clients and those on which hedging transactions were carried out via a back-to-back hedging agreement with a subsidiary of the group. From May 2021, T212 has chosen to end this arrangement to manage its own risk within defined parameters for each product and asset class, hedging exposures outside of these with third parties.

For the stock trading business, the Company operates a commission-free model in which clients do not pay any commission for trading or custody fees for the assets held. Instead, T212 collects commissions from clients when trading in a different currency than their money was deposited in, and through a secured stock lending program.

From January 2021 to August 2021, T212 operated by routing all orders to counterparties, but after that date the broker operated as a systematic internaliser (“SI”). This means that the company now internalizes a large trading volume by acting as a principal for customer buy and sell orders, and holds inventory on its balance sheet.

While operating both a CFD platform and a brokerage platform, T212 continues to focus on brokerage with the growth strategy that helps increase client money and asset balances by 2 £.1 billion to £2.9 billion.

T212 said it has invested significantly in the UK entity and its operating model. This included an increase in its share capital of a further £19.8m and cash reserves of over £90m. The FCA-regulated brokerage has significantly increased its workforce in the city, with new recruitment plans to reach around 70 by the end of the third quarter of 2022.

Outside of the UK entity, and following Brexit, Trading 212 has revealed its intention to transfer some of its clients within the group. This will see the UK entity transfer around 14% of its customers (all EU customers) to the new Cypriot entity, while the Bulgarian entity will also transfer its customer to the Cypriot or UK entity.

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