CommSec chief Paul Rayson warns upstart start-ups

CEO Paul Rayson has a message for fintech start-ups and other firms trying to steal customers.

CommSec CEO Paul Rayson announced a 57 per cent rise in profit. Picture: Jack Atley

CommSec chief Paul Rayson has a message for fintech start-ups and other companies trying to steal customers.

“Bring it on,” Mr Rayson said when asked about the arrival of new online brokers targeting niches of the market, such as international share trading.

“Competition is good but we’ve got a pretty good international offering, it’s competitive, you can trade lots of markets and you’ve got good support and convenience, so bring it on.”

A range of competitors from international-focused broker Macrovue to the horde of new ‘robo advisers’ has emerged in recent years, picking up slivers of the market. ANZ Bank is also mulling a sale of its online share trading platform.

Asked if CommSec had any interest in ANZ’s business, Mr Rayson said: “In any industry integration is difficult and that’s why we’re going to focus on doing what we do well.

“We’ve got a good business, great customer satisfaction, so we’ll continue focusing on improving our platform for our investors.”

CommSec, the nation’s biggest online retail broker, boosted profit 57 per cent to $120.7 million for the year to June 30, according to accounts filed with corporate regulator. The result was built on a 12.4 per cent rise in brokerage revenue to $156.7m.

But Mr Rayson said the accounts did not reflect CommSec’s entire business, claiming two “line items” in owner Commonwealth Bank’s annual accounts provided a better view of the broker’s performance. In CBA’s results, CommSec’s total revenue grew about 7 per cent.

Along with brokerage, Mr Rayson said CommSec’s two other main sources of revenue were margin lending, which produced a “flat to slight down” performance, and cash management accounts attached to trading accounts, which were performing well.

He said the overall margin lending market had shrunk to about $11 billion, from $30bn before the global financial crisis, and investors’ risk appetite for leveraging into risk assets “just hasn’t come back”.

Mr Rayson said there had been growing demand for international share trading, derivatives such as options and exchange traded funds amid a thirst for more diversification.

He said trading volumes were holding up well, despite higher volatility, adding that the Brexit result was one of CommSec’s biggest days on record.

“Over the last few years volumes have grown. It was up 12 per cent last year and a similar amount the year before, so we’ve seen a good trend and that’s continued into this year,” he said.

“The trading behaviour of a retail clients is they tend to buy the dips — and there’s been a few of those — and sell into the rallies, that’s typical retail trading behaviour and that’s continued the last few months.”