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30.10.2020 09:45

Moscow Exchange announces results for the third quarter of 2020

Moscow Exchange (MOEX) today announces its financial results in accordance with International Financial Reporting Standards (IFRS) for Q3 2020. Record fee income from the Money Market and Depository & Settlement Services as well as strong performance by the Equities and Derivatives Markets helped MOEX achieve a new all-time high F&C income.

Unless stated otherwise, all figures below refer to performance in Q3 2020 and all comparisons are with the corresponding period last year.

KEY FINANCIAL HIGHLIGHTS FOR Q3 2020

  • Fee and commission (F&C) income advanced 30.0% to RUB 8,320.9 mln.
  • Operating income added 6.0% despite a 29.8% contraction in Net Interest Income (NII) amid declining domestic and global interest rates.
  • Operating expenses increased 11.8% on the back of higher personnel costs.
  • Net profit grew 2.7% to reach RUB 5,598.6 mln. Adjusted net profit was up 1.8%.

KEY BUSINESS & CORPORATE HIGHLIGHTS FOR Q3 2020

  • A personal finance platform Finuslugi – also known as the Marketplace project – is now open for all clients following a successful ‘friends & family’ launch in early September. Currently, six Russian banks are connected to the platform and offering deposits at competitive rates, with more to come later in the year.
  • MOEX launched trading in international stocks with 20 stocks from S&P 500 currently listed. The number will grow to more than 50 stocks by year-end.
  • The Bond Market welcomed 169 new bond issues by 60 corporates, including 12 newcomers, for a total of RUB 448 bln.
  • ETFs continue to gain ground with six new Russian-law ETFs listed during the quarter and eight to date. The total number of ETFs traded on MOEX reached 49 with a total NAV of approaching RUB 100 bln.
  • HeadHunter, the leading online recruitment platform in Russia, did a secondary listing on MOEX, exemplifying the trend for Russian companies originally listed abroad becoming anchored locally.

EVENTS OCCURRING AFTER THE REPORTING PERIOD

  • The number of retail investors is 7.4 mln as of October 29. The number of Individual Investment Accounts now exceeds 3 mln.
  • Sovcomflot (FLOT) completed IPO on MOEX, raising RUB 42.9 bln – an equivalent of USD 550 mln. FLOT’s free float is 17.2%.
  • Samolet (SMLT) shares began trading on MOEX following the company’s IPO. RUB 2.9 bln – an equivalent of USD 37 mln – were raised by the company.
  • Globaltrans, a leading freight rail transportation group, did a secondary listing of its GDRs on MOEX.
  • Deliverable futures on POLY, IRAO, MAIL and split-lot futures on GMKN commenced trading on the Derivatives Market.

Yury Denisov, Chief Executive Officer of Moscow Exchange:

"We remain focused on deepening our main markets by expanding the range of instruments available for trading and offering new services. As a result, we see strong trading volume growth across all MOEX markets year-on-year, and are reporting record-high quarterly fee and commission income. We are pleased to see new companies’ stock listings on our platform, including two recent IPOs and listings by a number of companies with Russian roots that historically only had listings abroad. In order to offer more investment opportunities for retail investors and respond to growing demand for diversification, MOEX commenced trading in foreign stocks. We plan to expand the list of available international stocks to several hundred names by the end of next year.

"The number of retail brokerage accounts is increasing impressively: in October an average of about 48,000 accounts were opened per business day. Together with asset management companies, we continue to develop the market for exchange-traded funds. ETFs are increasingly popular and more than half a million Russian investors now hold them in their investment portfolios.

"The launch of personal finance platform Finuslugi was an important milestone in the implementation of our strategy to create marketplaces for various types of clients. We are at the beginning of quite an interesting journey to build a new brand, a new service that significantly expands the opportunities for banks and other financial companies to attract new customers. We expect that Finuslugi will become the platform-of-choice for Russian citizens to buy financial products and manage them online."

Max Lapin, Chief Financial Officer of Moscow Exchange:

"We’ve hit the new F&C high for the fourth quarter in a row, which clearly is a positive development. This quarter, F&C income surpassed the RUB 8 bln mark to arrive at RUB 8.3 bln. Importantly, its growth rate accelerated further compared with the two preceding quarters, reaching 30.0% year-on-year. In fact, it is the strongest growth in five years and every F&C business line posted a double-digit growth. Two fee and commission business lines delivered record highs in absolute terms: the Money Market and Depositary & Settlement Services."

"We continue to implement strategic initiatives that become a backbone for our future growth with particular emphasis on base assets such as equities and bonds. Specifically, in 2020YTD we’ve had two IPOs, brough five Russian companies listed abroad on to MOEX via secondary listings and launched trading in 20 foreign stocks. A bit more than 30 are coming up till the year end. ETFs are also on the rise. We keep adding Eurobonds and listing newly issued domestic bonds."

"Operating income added 6.0% despite a 29.8% contraction in Net interest income (NII) amid declining domestic and global interest rates. Since the share of F&C income reached a record-high 74% of operating income in the quarter, we can now expect fulfilling the strategic target of 70% on 12-month basis in the near future. The growing part of our operating income – F&C income – has reached a level where its weight commands the expansion of the total as it supersedes the decline of NII. Our quarterly OPEX growth accelerated to 11.8%, in line with prior communication. The 9M2020 OPEX growth remains contained at 5.7% YoY and below the FY2020 guidance range of 7.0-8.5%."

"Net profit for the quarter increased 2.7% to RUB 5.6 bln. Net of Expected Credit Loss (ECL) provisions, the adjusted net profit added 1.8%."

FINANCIAL HIGHLIGHTS

RUB mln Q3 2020 Q3 2019 YoY Q2 2020 QoQ
Operating income 11,308.2 10,664.0 6.0% 12,027.6 -6.0%
  • Fee and commission income
8,320.9 6,399.6 30.0% 7,990.9 4.1%
  • Net interest and other finance income (NII)
2,970.1 4,233.5 -29.8% 4,027.0 -26.2%
NII less realized gains on investment portfolio revaluation (core NII)[1] 2,926.6 3,528.4 -17.1% 3,816.9 -23.3%
  • Other operating income
17.2 30.9 -44.3% 9.7 77.3%
Operating expenses 4,222.6 3,775.8 11.8% 4,138.4 2.0%
  • Personnel expenses
2,174.1 1,776.0 22.4% 2,101.3 3.5%
  • D&A and IT maintenance
1,238.0 1,183.1 4.6% 1,183.6 4.6%
  • Remaining general and administrative expenses
810.5 816.7 -0.8% 853.5 -5.0%
Profit before other operating expenses and tax 7,085.6 6,888.2 2.9% 7,889.2 -10.2%
Other operating gains/(expenses) -51.2 -107.9 nm 599.8 nm
Net profit 5,598.6 5,453.4 2.7% 6,820.1 -17.9%
Basic earnings per share, RUB 2.48 2.42 2.5% 3.02 -17.9%
           
Net Profit 5,598.6 5,453.4 2.7% 6,820.1 -17.9%
  • Other operating expenses / (income)
(one-off provisions and movements in allowance for ECLs under IFRS 9)
51.2 107.9 nm -599.8 nm
  • Deferred taxes related to one-off provisions and movements in IFRS 9 allowance
-10.2 -21.6 nm 120.0 nm
Adjusted net profit 5,639.6 5,539.7 1.8% 6,340.3 -11.1%
           
EBITDA 7,887.2 7,628.3 3.4% 9,310.1 -15.3%
  • Other operating expenses / (income)
(one-off provisions and movements in IFRS 9 allowance)
51.2 107.9 nm -599.8 nm
Adjusted EBITDA 7,938.4 7,736.2 2.6% 8,710.3 -8.9%
Adjusted EBITDA margin 70.2% 72.5% -2.3 p.p. 72.4% -2.2 p.p.

PERFORMANCE OF KEY BUSINESS LINES

RUB mln Q3 2020 Q3 2019 YoY Q2 2020 QoQ
Equities Market          
Fee and commission income, RUB mln 955.7 604.8 58.0% 975.9 -2.1%
Trading volumes, RUB bln 5,413.5 3,320.3 63.0% 5,527.0 -2.1%
           
Bond Market          
Fee and commission income, RUB mln 591.2 500.4 18.1% 707.2 -16.4%
Trading volumes (excl. overnight bonds), RUB bln 5,641.9 4,577.6 23.3% 6,337.2 -11.0%
           
FX Market          
Fee and commission income, RUB mln 1,049.8 932.6 12.6% 1,013.3 3.6%
Trading volumes, RUB bln 84,408.0 82,445.2 2.4% 75,193.8 12.3%
           
Money Market          
Fee and commission income, RUB mln 2,278.8 1,651.9 38.0% 2,032.5 12.1%
Trading volumes, RUB bln 111,800.0 87,580.4 27.7% 102,659.9 8.9%
           
Derivatives Market          
Fee and commission income, RUB mln 909.7 774.0 17.5% 834.0 9.1%
Trading volumes, RUB bln 31,896.9 24,080.6 32.5% 27,214.6 17.2%
           
Depository and Settlement Services          
Fee and commission income, RUB mln 1,634.3 1,301.1 25.6% 1,473.5 10.9%
Average assets under custody, RUB bln 53,752.6 47,965.1 12.1% 51,370.9 4.6%
           
Other fee and commission income (IT Services, Listing and Other fee income) 901.4 634.8 42.0% 954.5 -5.6%
Information services, RUB mln 297.7 214.6 38.7% 249.1 19.5%
Sale of software and tech. services, RUB mln 241.4 199.3 21.1% 216.6 11.4%
Listing and other services, RUB mln 205.0 152.8 34.2% 200.2 2.4%
Other fee income, RUB mln 157.3 68.1 131.0% 288.6 -45.5%
           
Net interest and other finance income          
Net interest and other finance income, RUB mln 2,970.1 4,233.5 -29.8% 4,027.0 -26.2%
Investment portfolio, RUB bln 753.7 770.8 -2.2% 938.1 -19.7%
  • The total market capitalization of the Equities Market at the end of the third quarter was RUB 45.24 trln (USD 582.57 bln). Fee and commission income from the Equities Market grew by 58.0% on the back of the corresponding increase in trading volumes of 63.0%. The insignificant discrepancy in fee income and trading volumes dynamics is due to the tariff structure that provides monetary incentives for higher volumes traded.
  • Fees and commissions from the Bond Market increased by 18.1%. Trading volumes excluding overnight bonds added 23.3%. The effective fee in the Bond Market declined due to a high share of short-term OBR offerings and subdued amount of corporate placements.
  • Money Market fee income advanced 38.0%, reaching an all-time high of nearly RUB 2.3 bln. Trading volumes were up 27.7%. The discrepancy between volume and fee dynamics was attributable to a higher GCC repo share, an increase in average repo terms and a greater total open interest.
  • Fee income from the FX Market was up 12.6%. Trading volumes were up 2.4%. The trading volume mix shifted towards the more profitable spot segment following a higher demand for CCP services in current economic conditions. Spot volumes added 22.0%, while swap volumes declined by 3.3%.
  • Derivatives market fee income grew 17.5%, while trading volumes expanded 32.5% on the back of FX derivatives volumes soaring by 102.3%. The difference in fee income and volumes dynamics is due to the change of trading volumes structure and a lower share of options. Index derivatives trading volumes increased by 44.7%. Commodity derivatives trading volumes declined by 35.8%. Equities derivatives trading volumes decreased by 25.3%.
  • The Other fee income line now includes an additional fee on EUR balances of 0.2% above the ECB rate that was introduced at the beginning of the year. The additional fee explains the 131.0% surge in other fee income line. Sale of information services expanded 38.7% largely due to the weakening of RUB.
  • The cash position[2] at the end of Q3 2020 was RUB 97.22 bln. The company had no debt as of the end of the quarter.
  • Capex for the quarter was RUB 0.80 bln, mostly spent on purchases of equipment and software as well as software development.

Moscow Exchange’s consolidated IFRS financial statements for Q3 2020 are available in the Investor Relations section of the company's web site.

The Q3 2020 IFRS Financial Results webcast is scheduled for 30 October 2020 at 4:00 pm (Moscow time).

Contacts:
Investor Relations: Public Relations:

Anton Terentiev, CFA
+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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