B2B Payments

Corporate FinServ Shows Muted Performance In Latest Earnings

A look at some of the latest earnings data from B2B financial services firms doesn’t just provide a glimpse into the health of these companies: It also offers an idea of how corporates are doing too. Global payments player FairFX, along with banks Opus Bank and UBS, all released their most recent earnings reports. While the small business customers of FairFX propelled the company to post its first-ever profit, corporate customers of Opus and UBS reported more muted figures on dampened corporate lending amid higher market volatility.

FairFX

Cross-border corporate payments and financial services firm FairFX posed a 52 percent increase in revenues in its full year 2017 earnings report released on Monday (April 23).

Most notably, the company posted its first-ever profit, landing more than $319,000 in pretax profit compared to a $1.95 million loss in 2016. FairFX pointed to recent acquisitions as a key driver of its growth for the year.

“2017 has been a groundbreaking year for the group in terms of growth and expansion of operations,” said Ian Strafford-Taylor, chief executive, in a statement. “The group has enjoyed a good start to 2018 to date and has also completed the acquisition of the international payment business and supply chain partner City Forex. The board is confident that the outlook for the full year remains in line with market expectations.”

The takeover of City Forex, announced in February, followed last August’s acquisition of CardOne and the launch of its Fair Everywhere solution, a small business current account that includes global payment and foreign exchange management services.

Earlier this month, the company revealed it secured its eMoney license to issue Mastercard-branded commercial cards, and noted it is expanding its corporate finance capabilities though a collaboration with Alternative Business Funding.

Revenues for Q1 of 2018 grew by 85.3 percent, the company added.

Opus Bank

The first quarter of 2018 for California-based Opus Bank narrowly missed expectations when it posted $0.34 earnings per share (analyst estimates pegged EPS at $0.36).

Still, the firm posted a 14 percent increase in pretax earnings quarter over quarter and a 13 percent increase year over year, reaching $20.9 million.

The earnings were its first full-quarter results announced since welcoming a new Chief Financial Officer, Kevin L. Thompson, announced last November.

In terms of corporate financial services, Opus Bank said business deposits drove a $99.7 million increase in total deposits for the quarter; business deposits now account for 63 percent of total deposits as of March 31, 2018, the bank noted.

A $16.8 million decrease in commercial business loans dampened performance, however, and drove an overall $2.3 million decrease in total criticized loans, though CEO and President Stephen H. Gordon said in a statement that Opus Bank recorded new loan fundings more than double those of Q1 2017, exceeding loan payoffs during the quarter.

“Consistent with past years, we estimate our quarterly loan production will ramp over the course of 2018,” Gordon said, “driven by our leading multifamily banking division and bolstered by the contributions from numerous commercial bankers hired throughout our footprint over the recent quarters.”

UBS

UBS, the largest bank in Switzerland, may have posted a 19 percent increase in Q1 net profit, but reports in Reuters on Sunday (April 22) said the company missed investor expectations. Its investment bank posted a strong quarterly performance, but its wealth management operations missed forecasts, reports said.

Its corporate financial services operations helped the financial institution remain resilient, however. Despite an increase in volatility in Q1, reports said, UBS’ corporate services across Asia helped to offset decreases in revenue from advising companies. Still, volatility is having an impact on UBS and its corporate clientele.

“After the spike in volatility, naturally we saw our clients become a bit more defensive,” said Kirt Gardner, chief financial officer. “Their optimism was dented a bit, and that carries into the second quarter.”

Missing performance expectations with its wealth management operations, coupled with higher costs, caused UBS shares to decline as much as 4 percent after posting the results.

“The quarter turned out to be a tale of two halves, with an exuberant start in January that went well beyond typical seasonality, followed by a more muted finish,” said Chief Executive Sergio Ermotti during a conference call.

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