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20.08.2021 09:45

Moscow Exchange announces results for the second quarter of 2021

Moscow Exchange (MOEX) today announces its financial results in accordance with International Financial Reporting Standards (IFRS) for Q2 2021. Record fee income from the Money Market as well as strong performance by Depository & Settlement Services and the Derivatives Market helped MOEX sustain solid double-digit growth of F&C income and approach the all-time high quarterly fee income.

Unless stated otherwise, all figures below refer to performance in Q2 2021 and all comparisons are with the corresponding period last year.

KEY FINANCIAL HIGHLIGHTS FOR Q2 2021

  • Fee and commission (F&C) income grew by 24.2% to RUB 9.9 bln.
  • Operating income was up 9.7%. F&C income accounted for more than 75% of operating income.
  • Net profit grew by 2.1% to RUB 7.0 bln.

KEY BUSINESS & CORPORATE HIGHLIGHTS FOR Q2 2021

  • MOEX acquired a 70% stake in INGURU, an e-commerce platform that offers insurance and other financial products. INGURU offerings have been incorporated into MOEX’s personal finance platform Finuslugi.
  • HMS Group, one of the largest pump and compressor producers in Russia, listed its GDRs on MOEX, becoming the 17th Russian company incorporated abroad to obtain a secondary listing on Moscow Exchange.
  • The Bond Market welcomed 153 new bond issues by 63 corporates, including 12 newcomers, for a total of RUB 802 bln.
  • The non-CCP Loan Market was launched as part of the Money Market, expanding liquidity management opportunities for banks and corporate clients.
  • A new version of MOEX Listing Rules came into force, allowing sub-federal and municipal bonds to be included in the Sustainability Sector. The City of Moscow pioneered green bond issuance under the new rules, raising a total of RUB 70 bln.
  • MOEX published its 2020 Sustainability Report in accordance with Global Reporting Initiative (GRI) international standards.
  • Following a court ruling in favor of Moscow Exchange, MOEX received insurance proceeds of RUB 675 mln related to provisions accrued in Q1 2019 in connection with the grain case. This is reflected in the Exchange’s Q2 2021 IFRS financial statements. The Exchange continues to pursue all possible legal remedies to recover the remainder of these provisions.

EVENTS OCCURRING AFTER THE REPORTING PERIOD

  • EMC (European Medical Center), one of the leading private healthcare providers in Russia, conducted its IPO solely on MOEX, raising a total of USD 500 mln.
  • The total number of individuals with brokerage accounts reached 13.4 mln as of mid-August. The number of Individual Investment Accounts approached 4.3 mln.
  • MOEX launched quarterly options on US stock index futures. The underlying asset is a futures contract on shares of the SPDR S&P 500 ETF Trust, the world's largest ETF, which tracks the benchmark S&P 500 Index.
  • 204 international stocks are currently available on MOEX’s platform, up from 55 at the beginning of the year. MOEX announced plans to start trading international stocks in USD in autumn, in addition to its existing RUB offering. The number of stocks available will expand to 500 by year-end.
  • 103 ETFs with a total NAV of RUB 226 bln are now listed on MOEX, up from 55 ETFs with NAV of RUB 140 bln at the beginning of the year.
  • MOEX published an ESG guide for issuers that covers a number of topics on the corporate sustainability agenda.
  • MOEX signed a contract with a renewable energy provider, which brought the total share of renewable energy used by the Group to nearly 50%. We plan to bring this number to 95% in the future.

Yury Denisov, Chief Executive Officer of Moscow Exchange, said:

"We achieved excellent results in the second quarter. The expansion of instruments available to investors on our platform and extended trading hours on the Derivatives and FX Markets boosted trading volumes and helped significantly increase fee and commission income. We are pleased that fees and commissions now account for 75% of MOEX's total income, which is in line with our targets.

"We see interest from clients to trade global markets strategies using derivatives. For that reason, we recently launched derivatives on the US stock market, the first futures contracts on Chinese securities to be offered in Russia and we are preparing to launch other stock and index futures – including with Asian underlyings – as well as Russian and international equity options.

"We are on track to help investors open up new investment horizons and we will add hundreds of new instruments including international stocks – which will be available in USD beginning this fall – as well as international ETFs and derivatives. Access to the traded markets for investors from various parts of Russia and other countries will expand on the back of ongoing extension of equities trading hours. Clients will be able to trade up to 17 hours a day in most of our markets.

"MOEX’s personal finance platform, Finuslugi, is showing good results in terms of client traffic growth. The project team is focused on building an efficient customer journey map and expanding the number of offerings from banks and insurance companies. The acquisition of Inguru, a leading digital platform in the insurance segment, significantly complements our marketplace’s product offering."

Max Lapin, Chief Financial Officer of Moscow Exchange, said:

"Double-digit fee and commission growth this quarter accelerated to 24.2%, outpacing our strategic target despite the elevated base of last year and subsiding levels of volatility. Market activity was strong, with the Money and Derivatives Markets contributing to higher fee and commission growth, while Equities performed on par. Velocity in equities during the quarter was in line with 3Q 2020, driven by sustained levels of activity among retail investors. Our efforts to develop the Money Market via GCC came to fruition as we witnessed a steady and meaningful increase in GCC repo terms. Depository and Settlement Services delivered once again, following an ongoing surge in the value of assets held in custody.

"Operating income added 9.7% despite a 22.9% contraction in net interest income (NII) on the back of low interest rates. The company is positively geared to the rise of interest rates, in both RUB and USD, and we’re starting to feel the impact. The share of fee and commission income remained comfortably above our strategic target of 70% for the fourth consecutive quarter. This means our financial performance is driven predominantly by fees and commissions, a more predictable business line and one that is a strategic priority.

"OPEX added 19.5% during the quarter, resulting in positive operating jaws on the fee and commission income level. We believe that our fee and commission income will grow at a higher rate than our costs for the full-year, provided that current trends continue. The acquisition of Inguru added a 2.7 p.p. non-organic component to quarterly opex growth. This acquisition highlights our ability to expand our business in strategic areas while keeping the quality of our P&L intact.

"Following the consolidation of Inguru, which adds 2-3 p.p. to OPEX growth on a full-year basis, and the launch of Marketplace-related marketing, we are updating our guidance for FY21 OPEX growth to 13%-20% YoY. The breakdown is as follows: 5-6 p.p. relate to core business expenses growth, 6-8 p.p. is attributable to development projects including the Marketplace and 2-6 p.p. are stemming from Inguru consolidation together with the Marketplace marketing support. We keep our FY21 CAPEX guidance intact.

"Net profit for the quarter increased 2.1% to RUB 7.0 bln. Excluding the effect of Expected Credit Loss (ECL) provisions, the adjusted net profit added 1.5%."

FINANCIAL HIGHLIGHTS

RUB mln Q2 2021 Q2 2020 YoY Q1 2021 QoQ
Operating income 13,195.8 12,027.6 9.7% 12,856.4 2.6%
  • Fee and commission income
9,926.7 7,990.9 24.2% 9,252.9 7.3%
  • Net interest and other finance income (NII)
3,105.2 4,027.0 -22.9% 3,550.6 -12.5%
NII less realized gains on investment portfolio revaluation (core NII)[1] 3,119.1 3,816.9 -18.3% 2,921.3 6.8%
  • Other operating income
163.9 9.7 1589.7% 52.9 209.8%
Operating expenses 4,943.8 4,138.4 19.5% 4,524.0 9.3%
  • Personnel expenses
2,421.7 2,101.3 15.2% 2,394.0 1.2%
  • D&A and IT maintenance
1,378.0 1,183.6 16.4% 1,315.0 4.8%
  • Remaining general and administrative expenses
1,144.1 853.5 34.0% 815.0 40.4%
Profit before other operating expenses and tax 8,252.0 7,889.2 4.6% 8,332.4 -1.0%
Other operating gains/(expenses) 505.3 599.8 nm 158.5 nm
Net profit 6,963.8 6,820.1 2.1% 6,835.3 1.9%
Basic earnings per share, RUB 3.09 3.02 2.3% 3.03 2.0%
           
Net Profit 6,963.8 6,820.1 2.1% 6,835.3 1.9%
  • Other operating expenses / (income)
(one-off provisions and movements in allowance for ECLs under IFRS 9)
-505.3 -599.8 nm -158.5 nm
  • Additional grain receivables recognition (from other operating income)
-158.7 - nm - nm
  • Deferred taxes related to one-off provisions and movements in IFRS 9 allowance
132.8 120.0 nm 31.7 nm
Adjusted net profit 6,432.6 6,340.3 1.5% 6,708.5 -4.1%
           
EBITDA 9,669.5 9,310.1 3.9% 9,382.2 3.1%
  • Other operating expenses / (income)
(one-off provisions and movements in IFRS 9 allowance)
-505.3 -599.8 nm -158.5 nm
  • Additional grain receivables recognition (from other operating income)
-158.7 - nm - nnm
Adjusted EBITDA 9,005.5 8,710.3 3.4% 9,223.7 -2.4%
Adjusted EBITDA margin 68.2% 72.4% -4.2 p.p. 71.7% -3.5 p.p.

PERFORMANCE OF KEY BUSINESS LINES

  Q2 2021 Q2 2020 YoY Q1 2021 QoQ
Equities Market          
Fee and commission income, RUB mln 1,199.1 975.9 22.9% 1,257.1 -4.6%
Trading volumes, RUB bln 6,826.4 5,527.0 23.5% 7,154.7 -4.6%
           
Bond Market          
Fee and commission income, RUB mln 663.6 707.2 -6.2% 516.9 28.4%
Trading volumes (excl. overnight bonds), RUB bln 4,835.9 6,337.2 -23.7% 4,034.2 19.9%
           
FX Market          
Fee and commission income, RUB mln 1,021.1 1,013.3 0.8% 1,073.3 -4.9%
Trading volumes, RUB bln 85,915.2 75,193.8 14.3% 78,726.8 9.1%
           
Money Market          
Fee and commission income, RUB mln 2,894.4 2,032.5 42.4% 2,388.2 21.2%
Trading volumes, RUB bln 116,061.2 102,659.9 13.1% 93,608.8 24.0%
           
Derivatives Market          
Fee and commission income, RUB mln 1,092.4 834.0 31.0% 1,228.2 -11.1%
Trading volumes, RUB bln 35,539.7 27,214.6 30.6% 40,069.2 -11.3%
           
Depository and Settlement Services          
Fee and commission income, RUB mln 1,948.6 1,473.5 32.2% 1,921.3 1.4%
Average assets under custody, RUB bln 66,591.6 51,370.9 29.6% 63,147.5 5.5%
           
Other fee and commission income (IT Services, Listing and Other fee income) 1,107.5 954.5 16.0% 867.9 27.6%
Information services, RUB mln 309.4 249.1 24.2% 274.0 12.9%
Sale of software and tech. services, RUB mln 263.6 216.6 21.7% 246.7 6.9%
Listing and other services, RUB mln 183.5 200.2 -8.3% 155.9 17.7%
Other fee income, RUB mln 351.0 288.6 21.6% 191.3 83.5%
           
Net interest and other finance income          
Net interest and other finance income, RUB mln 3,105.2 4,027.0 -22.9% 3,550.6 -12.5%
Investment portfolio, RUB bln 871.3 938.1 -7.1% 928.7 -6.2%
 
[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).
  • The total market capitalization of the Equities Market at the end of the second quarter was RUB 59.84 trln (USD 818.02 bln). Fee and commission income from the Equities Market grew by 22.9% on the back of a corresponding increase in trading volumes of 23.5%.
  • Fees and commissions from the Bond Market decreased by 6.2%. Trading volumes excluding overnight bonds decreased by 23.7%. The effective fee in the Bond Market improved due to adjustments in tariff schedules across trading modes and a higher share of corporate bond trading on the secondary market.
  • Money Market fee income advanced 42.4% to RUB 2.9 bln. Trading volumes were up 13.1%. The discrepancy between volume and fee dynamics was mainly attributable to an increase in average repo terms and a higher share of CCP repo in total trading volumes.
  • Fee income from the FX Market was virtually flat, adding just 0.8%. Trading volumes increased by 14.3%. The trading volume mix slightly deteriorated towards the less profitable swap segment. Spot volumes added 8.3%, while swap volumes added 16.6%.
  • Derivatives Market fee income grew 31.0% with an almost identical increase in trading volumes of 30.6%. Single stock derivatives grew 54.5%. Commodity derivatives trading volumes gained 24.9%. Index derivatives were up 23.2%.
  • Other fee income gained 21.6% mainly on the back of consolidation of Inguru. This line also includes an additional fee on EUR balances of 0.2 p.p. above the ECB rate that was introduced at the beginning of 2020. Information sales added 24.2% in revenue. The sale of software and technical services line added 21.7% YoY.
  • The cash position[2] at the end of Q2 2021 was RUB 86.26 bln. The company had no debt as of the end of the quarter.
  • Capex for the quarter was RUB 0.58 bln, mostly spent on purchases and development of software.

Moscow Exchange’s consolidated IFRS financial statements for Q2 2021 are available in the Investor Relations section of the company's web site.

The Q2 2021 IFRS Financial Results webcast is scheduled for 20 August 2021 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, Due to financial institutions, Distributions payable to holders of securities, Margin account, Current tax payables and Other financial liabilities.
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