German online broker DAB has reported its Q4 results.
Tumbling stock markets have caused concern among investors that online brokers will lose revenues as fewer customers open accounts and existing customers trade less. While results published by HypoVereinsbank’s online broking subsidiary Direkt Anlage Bank (DAB) do support this theory, they also reveal the strength of its business.
In Q4 2000, Direkt Anlage Bank reported 14% growth in the number of new accounts and 8% growth in the number of executed transactions. This shows that growth can still be achieved in difficult conditions. On the other hand, the average number of transactions per account fell to 21.5, which is well below the average for 2000 (28.2) and indeed 1999 (23.7).
However, other areas of DAB’s results show depth to its business. Its mutual fund supermarket holds only slightly fewer assets than its share trading business, and is less subject to stock market volatility. In addition, DAB’s B2B operation, which focuses on independent intermediaries rather than consumers, is also increasing its share of total assets. The superior investment knowledge of these customers also makes this part of DAB’s business less susceptible to exchange movements.
2001 will also be the first complete year when DAB can share its knowledge and experience with France’s Selftrade, which it acquired last year. Selftrade has recently entered both the Italian and Spanish markets and if it can learn from DAB’s success in Germany, as well as its own in France and the UK, strong growth can be expected. The number of online trading accounts in Spain is forecast to grow from 22,104 in 2000 to 780,680 in 2004. In Italy the number will increase from 109,317 to 667,645.
Although it still risks losing out from future stock market movements, DAB will undoubtedly remain a considerable force in European online financial services thanks to the diversity of its business.
