Bank Frick exceeded its own profit projections for the past financial year, despite the "crypto winter," as revealed in the 2022 annual report. All areas of the Liechtenstein bank as well as increasing interest in blockchain banking services contributed to the positive result.
Founded in 1998, the private bank based in the Principality of Liechtenstein was one of the first banks in Europe to enable trading and custody of cryptocurrencies in a regulated banking environment in 2018. While the bank's core competencies previously lay in the areas of classic banking, funds and capital markets, as well as e-commerce, blockchain banking has secured its place as a separate pillar of the financial institution. Interest in these services increased again in the past financial year.
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Blockchain banking: an opportunity for traditional financial institutions?
Traditional banks can offer crypto services in various areas such as custody, trading, and lending. Custody involves securely holding digital assets on behalf of clients, while trading enables clients to buy and sell cryptocurrencies through the bank's platform. Bank Frick, in particular, also develops crypto structuring solutions for intermediaries.
The strategy paid off for the Liechtenstein private bank. Despite the turbulence in the market, the reporting period was very successful for blockchain banking, according to the annual report. Bank Frick was able to attract new and exciting customers and saw a further increase in inquiries. As a fully regulated bank, the financial institution also supports the industry's demands for more regulation. However, there was a certain decline in securities commissions, especially in stocks and crypto assets. In particular, the so-called crypto winter - the falling prices in the crypto markets - had a negative impact on the trading business.
Institutional interest despite "crypto winter"
Nevertheless, it is evident that more and more traditional financial intermediaries and professional clients are using and taking advantage of offerings in the blockchain sector. The trend of continuous convergence between traditional banking and blockchain banking was also noticeable in 2022. Furthermore, the bank has already made preparations for new products that are expected to be introduced in the coming half-year.
"All four business areas contributed to this excellent annual result. Interest in blockchain-based assets continues to rise in the traditional financial world. The topics of cryptocurrencies and blockchain have also become more prominent in the public consciousness." - Mario Frick, Chairman of the Board of Directors of Bank Frick
According to Bank Frick's annual report, the expected increase in cryptocurrencies did not materialize due to poor macroeconomic conditions and geopolitical uncertainties in Europe. However, the shift from a negative to a high-interest rate environment also had advantages for the institution. The new market situation created additional opportunities to generate interest income from reverse repo transactions, money market and time deposits, FX swaps (interest rate differentials), higher-yielding bonds, and lending. As a result, net interest income was CHF 27 million, which is 53% (CHF 9.4 million) higher than in the previous period. Together with the budgeted net new money, CEO Edi Wögerer expects a net profit of CHF 12.6 million for the current financial year.