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08.11.2019 09:30

Moscow Exchange announces results for the third quarter of 2019

Moscow Exchange (MOEX) today announces its financial results in accordance with International Financial Reporting Standards (IFRS) for Q3 2019. Record fee income on the Derivatives and Equities Markets as well as strong performance of Depository and Settlement Services drove 8% growth in total fee income.

Unless stated otherwise, all figures below refer to performance in Q3 2019 and all comparisons are with the corresponding period last year.

KEY FINANCIAL HIGHLIGHTS FOR Q3 2019

  • Fee and commission income grew 8.1% to RUB 6,399.6 mln, driven by the Equities and Derivatives Markets.
  • Net interest income (NII) increased by 8.7%, supported by realized gains on revaluation of the investment portfolio.
  • Net Income rose by 6.8% to RUB 5,453.4 mln.

KEY BUSINESS & CORPORATE HIGHLIGHTS FOR Q3 2019

  • 70 corporates, including 33 newcomers, placed 164 bond issues, raising a total of RUB 680 bln.
  • The total number of retail clients surpassed 3 million in September 2019.
  • Four new Russian-law ETFs were listed, bringing the total number of ETFs traded on MOEX to 30 with total AUM of RUB 29 bln.

EVENTS OCCURRING AFTER THE REPORTING PERIOD

  • MOEX changed the trading mode for the most liquid corporate bonds and sovereign Eurobonds from T0 to T+1 in order to boost liquidity in the instruments.
  • MOEX became a clearing member on the Shanghai Gold Exchange (SGE), which in due course will allow MOEX to establish a trading and clearing link with the SGE.
  • The Supervisory Board approved a new dividend policy, under which the company will seek to pay the entire free cash flow out in the form of dividends. The policy also raises the payout floor from 55% to 60% of net profit.
  • MOEX held its annual investment forums in New York and London.
  • MOEX was ranked by Forbes as one of the world's best employers for the third straight year.
  • MOEX CFO Maxim Lapin was named Best Chief Financial Officer in Russia at the Russian Managers’ Association Annual Awards

Yury Denisov, CEO of Moscow Exchange:
"In the third quarter, the Equities and Derivatives Markets delivered record fee and commission income on the back of increased client activity, including considerable growth from retail investors. This trend is the result of both a strong market backdrop and expansion of the line of products and services on offer to market participants and their clients.

"We continue to improve our infrastructure to make it even more convenient for clients and with the aim of stimulating liquidity growth. Last month we changed the trading mode for the most liquid corporate bonds and some sovereign Eurobonds to T+1 settlement. Already in the first weeks since this change we have seen double-digit growth in trading volumes in these instruments.
"The strong performance of the Russian equity market has continued in the fourth quarter: the MOEX Russia Index is hitting new record highs and this gives us optimism as we think about the Company’s results for this year. We are also pleased to note that our new corporate strategy, which focuses on growth and expansion of our business, has been well received by all stakeholders. The management team is intently focused on successful implementation of the strategy."

Maxim Lapin, CFO of Moscow Exchange, said:
"Fee and commission (F&C) income increased thanks to contributions from the Equities and Derivatives Markets as well as Depository & Settlement Services. The FX Market posted a strong performance quarter-on-quarter despite the year-on-year decline. Money Market performance was muted as we observed a trough in corresponding open interest. The Fixed Income Market took a pause, with the pace of primary issuance slowing after a strong 1H2019. Altogether, 9M 2019 F&C growth stands at 10.0%.

"Net interest income (NII) improved 8.7% year-on-year on the back of realized investment portfolio revaluation. The resulting topline operating income added 8.6% year-on-year, coming in at RUB 10.66 bln. Recurring OPEX expanded by 7.6% year-on-year. OPEX growth remains right at the lower end of the guidance range as of 9M2019 – which is 8.0%. As a result, net profit grew 6.8% year-on-year to RUB 5.45 bln."

FINANCIAL HIGHLIGHTS

RUB mln Q3 2019 Q3 2018 YoY Q2 2019 QoQ
Operating Income 10,664.0 9,822.6 8.6% 11,100.0 -3.9%
  • Fee and commission income
6,399.6 5,917.6 8.1% 6,561.8 -2.5%
  • Net interest and other finance income (NII)
4,233.5 3,893.2 8.7% 4,498.0 -5.9%
NII less realized gains on investment portfolio revaluation (core NII)1 3,528.4 3,896.0 -9.4% 4,118.8 -14.3%
  • Other operating income
30.9 11.8 161.9% 40.2 -23.1%
Operating Expenses 3,775.8 3,508.8 7.6% 3,873.8 -2.5%
  • Personnel expenses
1,776.0 1,555.3 14.2% 1,797.6 -1.2%
  • D&A and IT maintenance
1,183.1 1,121.3 5.5% 1,238.0 -4.4%
  • Remaining general and administrative expenses
816.7 832.2 -1.9% 838.2 -2.6%
Profit before other operating expenses and tax 6,888.2 6,313.8 9.1% 7,226.2 -4.7%
Other operating expenses (107.9) - nm 83.5 nm
Net Profit 5,453.4 5,106.4 6.8% 5,902.6 -7.6%
Basic earnings per share, RUB 2.42 2.27 6.7% 2.62 -7.7%
           
Net Profit 5,453.4 5,106.4 6.8% 5,902.6 -7.6%
  • Other operating expenses / (income)
(one-off provisions and movements in allowance for ECLs under IFRS 9)
107.9 (2.8) nm (83.5) nm
  • Adjustment for the change in amortization schedules (2018 only)
- 85.6 nm - nm
  • Deferred taxes related to one-off provisions, movements in IFRS 9 allowance and change in amortization schedules
(21.6) (16.6) nm 16.7 nm
Adjusted Net Profit 5,539.7 5,172.6 7.1% 5,835.8 -5.1%
           
EBITDA 7,628.3 7,138.1 6.9% 8,196.0 -6.9%
  • Other operating expenses / (income)
(one-off provisions and movements in IFRS 9 allowance)
107.9 (2.8) nm (83.5) nm
Adjusted EBITDA 7,736.2 7,135.3 8.4% 8,112.5 -4.6%
Adjusted EBITDA margin 72.5% 72.6% -0.1 p.p. 73.1% -0.6 p.p.

PERFORMANCE OF KEY BUSINESS LINES

RUB mln Q3 2019 Q3 2018 YoY Q2 2019 QoQ
Equities Market          
Fee and commission income, RUB mln 604.8 466.0 29.8% 540.6 11.9%
Trading volumes, RUB bln 3,320.3 2,588.7 28.3% 2,994.2 10.9%
           
Bond Market          
Fee and commission income, RUB mln 500.4 507.5 -1.4% 751.6 -33.4%
Trading volumes (excl. overnight bonds), RUB bln 4,577.6 5,155.1 -11.2% 6,337.6 -27.8%
           
FX Market          
Fee and commission income, RUB mln 932.6 1,030.0 -9.5% 885.7 5.3%
Trading volumes, RUB bln 82,445.2 91,035.4 -9.4% 79,996.4 3.1%
           
Money Market          
Fee and commission income, RUB mln 1,651.9 1,639.7 0.7% 1,788.6 -7.6%
Trading volumes, RUB bln 87,580.4 96,245.7 -9.0% 84,473.5 3.7%
           
Derivatives Market          
Fee and commission income, RUB mln 774.0 564.8 37.0% 642.7 20.4%
Trading volumes, RUB bln 24,080.6 22,087.3 9.0% 19,221.8 25.3%
           
Depository and Settlement Services          
Fee and commission income, RUB mln 1,301.1 1,120.3 16.1% 1,313.2 -0.9%
Average assets under custody, RUB bln 47,965.1 43,574.1 10.1% 47,020.9 2.0%
           
Other fee and commission income (IT Services, Listing and Other fee income) 634.8 589.3 7.7% 639.4 -0.7%
Information services, RUB mln 214.6 199.2 7.7% 217.6 -1.4%
Sale of software and tech. services, RUB mln 199.3 168.1 18.6% 199.8 -0.3%
Listing and other services, RUB mln 152.8 76.9 98.7% 153.1 -0.2%
Other fee income, RUB mln 68.1 145.1 -53.1% 68.9 -1.2%
           
Net interest and other finance income          
Net interest and other finance income, RUB mln 4,233.5 3,893.2 8.7% 4,498.0 -5.9%
Investment portfolio, RUB bln 771.0 627.9 22.8% 767.1 0.5%
  • The total market capitalization of the Equities Market at the end of the third quarter was RUB 45.47 trln (USD 681.00 bln). Fee and commission income from the Equities Market grew by 29.8% YoY on the back of higher trading volumes and reached a record level of RUB 604.8 mln.

  • Fees and commissions from the Bond Market were RUB 500.4 mln, effectively flat YoY. Trading volumes excluding overnight bonds declined by 11.2% YoY due to fewer placements of the CBR’s short-term bonds (OBRs). The effective fee in the Bond Market was supported by a higher proportion of longer-term corporate bonds and federal government bonds (OFZ) in the primary market. At the same time, the weight of the primary market in total trading volumes declined.

  • Money Market trading volumes declined by 9.0% YoY, while fee income was flat (+0.7% YoY). The discrepancy between volume and fee dynamics was attributable to increasing average repo terms and the UCP-linked fee rate revision that supported the effective fee.

  • Derivatives trading volumes increased by 9.0% YoY. The trading volume mix shifted to favor more expensive commodity contracts, whose volumes surged by 80.2% YoY. This, together with the UCP-linked fee rate increase (that came into effect in November 2018) helped achieve record quarterly fee income of RUB 774.0 mln (+37.0% YoY).

  • The cash position2 at the end of Q3 2019 was RUB 90.14 bln. The company had no debt as of the end of the quarter.

  • Capex for the quarter was RUB 0.56 bln (RUB 1.35 bln for the first nine months of 2019), all of which was spent on purchases of equipment and software as well as software development.

Moscow Exchange’s consolidated IFRS financial statements for Q3 2019 are available on the Investor Relations section of the company's web site.

The Q3 2019 IFRS Financial Results webcast is scheduled for 8 November 2019 at 4:00 pm (Moscow time).

Contacts:

Investor Relations: Public Relations:
Anton Terentiev
+7 495 363 3232
ir@moex.com
Lev Bystrov
+7 495 363 3232
pr@moex.com

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 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).
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, Current tax prepayments and Other financial assets less Balances of market participants, Overnight bank loans, Distributions payable to holders of securities, Margin account, Liabilities related to assets held for sale, Current tax payables and Other financial liabilities.
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