Moscow Exchange announces results for the third quarter of 2018
Moscow Exchange (MOEX) today announces its financial results in accordance with International Financial Reporting Standards (IFRS) for Q3 2018. Record high fee and commission income (F&C) from the Money Market and Depositary and Settlement Services were key highlights in the quarter, while all markets delivered positive YoY F&C growth.
Unless stated otherwise, all figures below refer to performance in Q3 2018 and all comparisons are with the corresponding period last year.
KEY FINANCIAL HIGHLIGHTS FOR Q3 2018
- Fee and commission income was up 8.4% to RUB 5,917.6 mln on the back of strong performance of Derivatives, Equity and Money Markets.
- Operating Expenses remained under control and increased by 6.1%, below the full-year guidance.
- EBITDA reached RUB 7,138.1 mln, up 0.6%
KEY BUSINESS & CORPORATE HIGHLIGHTS FOR Q3 2018
- MOEX continues to be the center for capital raising by Russian corporates, with over
RUB 1.70 trln in bond placements in 9M 2018. There were 153 bond issues by 86 corporates during the period. - The number of corporates with direct access to the FX and Money Markets exceeded 100 as of the end of the quarter.
- The Unified Collateral Pool continued to gain traction with 36 market participants using the service at the end of Q3 2018.
- MOEX reached a strategic partnership agreement with Kazakhstan Stock Exchange (KASE). MOEX will provide KASE its IT solutions for trading & clearing and acquire up to 20% in KASE.
EVENTS OCCURRING AFTER THE REPORTING PERIOD
- Growth of the domestic retail segment continues, with over 2.4 mln registered private brokerage accounts and approximately 480,000 Individual Investment Accounts as of the beginning of November.
- The Electronic OTC platform was launched in the Fixed Income Market to facilitate flow and transactions in less liquid instruments.
- MOEX significantly expanded the product offering of its Derivatives Market by launching deliverable futures on gold, cash-settled futures on four LME non-ferrous metal price benchmarks (nickel, copper, aluminum and zinc), and USD/INR futures.
- Fourteen commercial banks signed a memorandum of cooperation with MOEX to jointly develop a platform for private clients to choose and purchase on-line offerings of domestic financial institutions (banks, asset managers and insurance companies).
Alexander Afanasiev, Chief Executive Officer of Moscow Exchange, said:
"In the third quarter of 2018, fee and commission income increased across all markets, and the fees generated by the Money Market and Depository and Settlement Services set record highs. The Unified Collateral Pool project remains on track: client volumes are increasing and it’s clear that there is demand in the market for the new service. Increased trading by retail investors made an important contribution to volume growth and continues to represent a significant opportunity for our business. Finally, we are pleased to have concluded a strategic partnership agreement with KASE, which will bring our markets closer together."
Maxim Lapin, Chief Financial Officer of Moscow Exchange, said:
"Moscow Exchange’s fee and commission income continued to advance during the third quarter, largely on the back of higher fees from the Money Market, Derivatives Market and FX Market. We observed some stabilization in net interest income on a quarter-on-quarter basis. NII excluding the effect of the investment portfolio revaluation reached RUB 3.90 bln in Q3 2018. Operating expenses remained under control and grew by 6.1%, below the full-year guidance. Net of non-cash changes to amortization schedules, operating expenses added just 3.5%, in line with inflation. As a result, EBITDA was up 0.6% to RUB 7.14 bln."
FINANCIAL HIGHLIGHTS
| RUB mln | Q3 2018 | Q3 2017 | YoY | Q2 2018 | QoQ |
|---|---|---|---|---|---|
| Operating Income | 9,822.6 | 9,657.2 | 1.7% | 10,180.0 | -3.5% |
|
5,917.6 | 5,458.5 | 8.4% | 5,927.2 | -0.2% |
|
3,893.2 | 4,185.1 | -7.0% | 4,110.7 | -5.3% |
| NII less realized gains/losses on investment portfolio revaluation[1] | 3,896.0 | 4,169.1 | -6.6% | 4,142.2 | -5.9% |
|
11.8 | 13.6 | -13.2% | 142.1 | -91.7% |
| Operating Expenses | 3,508.8 | 3,306.2 | 6.1% | 3,502.6 | 0.2% |
|
1,555.3 | 1,475.5 | 5.4% | 1,526.3 | 1.9% |
|
1,121.3 | 1,001.3 | 12.0% | 1,123.1 | -0.2% |
|
159.0 | 133.6 | 19.0% | 147.6 | 7.7% |
|
673.2 | 695.8 | -3.2% | 705.6 | -4.6% |
| Profit before other operating expenses and tax | 6,313.8 | 6,351.0 | -0.6% | 6,677.4 | -5.4% |
| Other operating expenses (one-off provision) | 0.0 | 0.0 | NM | 873.5 | NM |
| Net Profit | 5,106.4 | 5,143.1 | -0.7% | 4,864.9 | 5.0% |
| Basic earnings per share. RUB | 2.27 | 2.29 | -1.0% | 2.16 | 5.0% |
| Net Profit | 5,106.4 | 5,143.1 | -0.7% | 4,864.9 | 5.0% |
|
0.0 | 0.0 | NM | 873.5 | NM |
|
0.0 | 0.0 | NM | -346.0 | NM |
|
66.2 | 0.0 | NM | -22.6 | NM |
| Adjusted Net Profit | 5,172.6 | 5,143.1 | 0.6% | 5,369.9 | -3.7% |
| EBITDA | 7,138.1 | 7,096.1 | 0.6% | 6,638.3 | 7.5% |
|
0.0 | 0.0 | NM | 873.5 | NM |
|
-2.8 | 0.0 | NM | -113.0 | NM |
| Adjusted EBITDA | 7,135.3 | 7,096.1 | 0.6% | 7,398.8 | -3.6% |
| Adjusted EBITDA margin | 72.6% | 73.5% | -0.9 p.p. | 72.7% | -0.1 p.p. |
| Operating Expenses net of non-cash changes in amortization schedules of 2018 | 3,423.2 | 3,306.2 | 3.5% | 3,417.8 | 0.2% |
PERFORMANCE OF KEY BUSINESS LINES
| RUB mln | Q3 2018 | Q3 2017 | YoY | Q2 2018 | QoQ |
|---|---|---|---|---|---|
| Equities Market | |||||
| Fee and commission income, RUB mln | 466.0 | 408.5 | 14.1% | 516.1 | -9.7% |
| Trading volumes, RUB bln | 2,588.7 | 2,290.3 | 13.0% | 2,888.7 | -10.4% |
| Bond Market | |||||
| Fee and commission income, RUB mln | 507.5 | 494.8 | 2.6% | 551.3 | -7.9% |
| Trading volumes (ex. overnights), RUB bln | 5,155.1 | 4,245.1 | 21.4% | 5,266.6 | -2.1% |
| FX Market | |||||
| Fee and commission income, RUB mln | 1,030.0 | 959.8 | 7.3% | 1,044.5 | -1.4% |
| Trading volumes, RUB bln | 91,035.4 | 83,689.4 | 8.8% | 90,379.0 | 0.7% |
| Money Market | |||||
| Fee and commission income, RUB mln | 1,639.7 | 1,560.1 | 5.1% | 1,561.6 | 5.0% |
| Trading volumes, RUB bln | 96,245.7 | 114,947.3 | -16.3% | 91,694.7 | 5.0% |
| Derivatives Market | |||||
| Fee and commission income, RUB mln | 564.8 | 494.5 | 14.2% | 612.8 | -7.8% |
| Trading volumes, RUB bln | 22,087.3 | 21,663.1 | 2.0% | 21,839.9 | 1.1% |
| Depository and Settlement Services | |||||
| Fee and commission income, RUB mln | 1,120.3 | 1,083.4 | 3.4% | 1,099.1 | 1.9% |
| Average assets under custody, RUB bln | 43,574.1 | 37,268.7 | 16.9% | 42,544.7 | 2.4% |
| Other fee and commission income (IT Services and Listing) | |||||
| Information services, RUB mln | 199.2 | 179.5 | 11.0% | 189.5 | 5.1% |
| Sale of software and tech. services, RUB mln | 168.1 | 158.7 | 5.9% | 175.6 | -4.3% |
| Listing and other services, RUB mln | 76.9 | 88.1 | -12.7% | 80.3 | -4.2% |
| Other fee income, RUB mln | 145.1 | 31.1 | 366.6% | 96.4 | 50.5% |
| Net interest and other finance income | |||||
| Net interest and other finance income, RUB mln | 3,893.2 | 4,185.1 | -7.0% | 4,110.7 | -5.3% |
| Investment portfolio, RUB bln | 627.9 | 695.6 | -9.7% | 731.6 | -14.2% |
- The effective fee in the Bond Market declined due to the increased share of placements with shorter maturities (both in the corporate and government bond segments), as well as by a higher proportion of primary placements accounted for by government and CBR bonds.
- Trading volumes in the Money Market decreased due to lower volumes of repo with the CBR (-98.9%) and inter-dealer repo (-33.2%). This was partly offset by continued growth of GCC repo volumes (up 9.5x). The shift towards types of repo with higher fees (i.e. CCP and GCC repo), coupled with favorable changes to GCC terms and lower market concentration resulted in 5.1% fee and commission income growth.
- Average assets under custody at NSD grew 16.9%, which supported growth in income from Depository and Settlement Services. At the same time, this income line was negatively affected by a decline in volumes of repo with CMS through NSD as well as a higher share of volumes accounted for by large market participants, who are subject to lower fee rates.
- The cash position[2] at the end of Q3 2018 was RUB 83.70 bln. The company had no debt as of the end of the quarter.
- CAPEX for the quarter was RUB 604.8 mln, all of which was spent on purchases of equipment and software as well as software development. CAPEX for 9M 2018 totaled RUB 1.36 bln.
Moscow Exchange’s consolidated IFRS financial statements for Q3 2018 are available on the Investor Relations section of the company's web site.
The Q3 2018 IFRS Financial Results webcast is scheduled for 7 November 2018 at 3:30 pm (Moscow time).
Contacts:
| Investor Relations: | Public Relations: |
|---|---|
|
Anton Terentiev +7 495 363 3232
|
Lev Bystrov +7 495 363 3232
|
NOTES TO EDITORS
About Moscow Exchange
Moscow Exchange Group operates Russia’s main trading platform for equities, bonds, derivative instruments, currencies, money market instruments and commodities. The Group includes the central securities depository (National Settlement Depository), and a clearing center (National Clearing Centre), performing the functions of central counterparty on the markets, which allows Moscow Exchange to offer its clients the full spectrum of trading and post-trading services.
Moscow Exchange was formed in December 2011 as a result of a merger between Russia's two main exchange groups – MICEX Group, the oldest domestic exchange and operator of the leading securities, foreign exchange and money market platform in Russia; and RTS Group, at the time the operator of Russia's leading derivatives market. This combination created a vertically integrated public trading market across most major asset classes named Moscow Exchange. Moscow Exchange held the initial public offering of its shares on 15 February 2013 (ticker MOEX).
Disclaimers
Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could," "may" or "might" the negative of such terms or other similar expressions. The Company wishes to caution you that these statements are only predictions and that actual events or results may differ materially. The Company does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in the Russian Federation, rapid technological and market change in the industries the Company operates in, as well as many other risks specifically related to the Company and its operations.
[1] Calculated as the sum of Interest and other finance income and Foreign exchange gains less losses less Interest expense (compared to Net interest and other finance income, excludes gains/losses on FVTOCI and gains/losses on AFS)
[2] Cash position is calculated as the sum of Cash and cash equivalents, Financial assets at fair value through profit and loss, Due from financial institutions, Financial assets at fair value though other comprehensive income less Balances of market participants and Distributions payable to holders of securities.