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29.10.2021 09:45

Moscow Exchange announces results for the third quarter of 2021

Moscow Exchange (MOEX) today announces its financial results in accordance with International Financial Reporting Standards (IFRS) for Q3 2021. Record fee income from the Money Market, Depository & Settlement Services and the Derivatives Market as well as strong performance across other business lines helped MOEX achieve all-time high quarterly fee income.

Unless stated otherwise, all figures below refer to performance in Q3 2021 and all comparisons are with the corresponding period last year.

KEY FINANCIAL HIGHLIGHTS FOR Q3 2021

  • Fee and commission (F&C) income grew by 25.1% to reach an all-time high of RUB 10.4 bln.
  • Operating income was up 18.2%. F&C income accounted for a record-high 78% of operating income.
  • OPEX added 17.3%, operating jaws between F&C income and operating costs remained positive.
  • Adjusted net profit grew by 19.4% to RUB 6.7 bln.

KEY BUSINESS & CORPORATE HIGHLIGHTS FOR Q3 2021

  • MOEX launched trading in global stocks in USD in addition to their trading in RUB. MOEX is on track to have 500 global equities traded on the its platform by year-end.
  • The Bond Market welcomed 175 new bond issues by 77 corporates, including 17 newcomers, for a total of RUB 942.5 bln.
  • Global equities became eligible collateral on MOEX, providing market participants and their clients more flexibility to fund operations on MOEX and therefore facilitating additional trading activity.
  • An evening trading session for OFZs and Eurobonds was introduced on the Bond Market that now operates for almost 14 hours a day.
  • NCC obtained Qualified Derivatives Dealer (QDD) status from the IRS to run fully-functional repo operations with global equities.
  • NSD started to provide automated administration of W-8BEN tax forms for the convenience of clients.
  • Finuslugi.ru, a MOEX-owned personal finance platform, introduced a consumer lending functionality.

EVENTS OCCURRING AFTER THE REPORTING PERIOD

  • The Supervisory Board re-elected Yury Denisov as MOEX CEO throught 2025.
  • 15 million people held brokerage accounts on MOEX as of the end of October. More than 6 mln new unique accounts have been registered since the beginning of the year.
  • 114 ETFs with a total NAV of RUB 251 bln are now listed on MOEX, up from 55 ETFs at the beginning of the year.
  • Renaissance Insurance, Russia's leading diversified independent insurance company, completed its IPO on MOEX, raising a total of RUB 17.7 bln. This is the fourth IPO on MOEX since the beginning of the year.
  • MOEX increased its stake in OTC FX platform NTPro to 95%.
  • MOEX held a ‘Ring the Bell for Financial Literacy’ ceremony, a global initiative by the WFE and IOSCO, joining 70+ other participating stock exchanges globally.

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

"MOEX has delivered fee and commission income growth significantly ahead of our strategic targets. Key drivers of this growth include the roll-out of new products and instruments, the expansion of trading hours and inflow of new clients. The number of individual investors with accounts on MOEX has now reached 15 million. Before the end of the year we plan to increase the number of global stocks available on our platform to 500 names and to launch a morning trading session for the equity market.

"In line with our strategy, we are also successfully growing our business beyond traditional securities exchange offerings. We have acquired the OTC FX trading platform NTPro, we are planning an investment into crowdsourcing platform Potok and we are rolling out new products and services on our personal finance marketplace, Finuslugi. These initiatives expand opportunities for existing clients and allow us to access new types of customers.

"MOEX continues to strengthen its position as a key platform for capital raising. We’re seeing an uptick in IPOs of Russian businesses and are delighted to welcome new companies to our market. New issuers drive new liquidity on the market and create new opportunities for investors. For companies that go public, an IPO means increased brand recognition and access to capital to fund growth and development."

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

"Fee and commission (F&C) growth advanced to 25.1% in the third quarter, which was the highest quarterly growth rate so far in 2021. F&C performance has been well ahead of our strategic target, despite declining volatility and an already high base in 2020. All our core markets and business lines – with the exception of FX – delivered substantial growth, with the Money Market, Derivatives Market and Depositary & Settlement Services setting new record highs in terms of F&C. F&C growth from Equities was broadly in line with the growth in total F&C despite somewhat normalizing velocity as the IMOEX index passed the 4,000 mark in a steady climb. Ongoing hikes of the RUB key rate acted as a drag on Fixed Income Market activity. We continued to deliver on key initiatives, increasing the stake in NTPro to 95% and launching consumer lending operations at Finuslugi as well as rolling out trading in global equities in foreign currencies.

"Operating income added 18.2% as net interest income (NII) was virtually flat. We’ve passed the inflection point on NII, and therefore do not expect it to hamper our growth going forward. F&C income accounted for a record high 78% of revenue, above our strategic target of 70%. This means our financial performance is driven more by F&C income than ever before and hence became more predictable. OPEX was up 17.3% and in line with the previous quarter, resulting in positive operating jaws on the F&C income level. Given the business structure, MOEX is naturally hedged against rising domestic inflation. The acquisition of Inguru added a 4.0 p.p. non-organic component to quarterly OPEX growth.

"We are updating the FY21 OPEX growth guidance to 18%-21% YoY, reflecting higher non-organic contribution that now includes NTPro and a more certain outlook on the marketing spend. The revised FY21 CAPEX guidance is RUB 3.0 – 3.7 bln, compared to the prior range of RUB 3.0 – 4.0 bln."

FINANCIAL HIGHLIGHTS

RUB mln Q3 2021 Q3 2020 YoY Q2 2021 QoQ
Operating income 13,362.4 11,308.2 18.2% 13,195.8 1.3%
  • Fee and commission income
10,411.6 8,320.9 25.1% 9,926.7 4.9%
  • Net interest and other finance income (NII)
2,914.2 2,970.1 -1.9% 3,105.2 -6.2%
NII less realized gains on investment portfolio revaluation (core NII)[1] 2,914.9 2,926.6 -0.4% 3,119.1 -6.5%
  • Other operating income
36.6 17.2 112.8% 163.9 -77.7%
Operating expenses 4,951.3 4,222.6 17.3% 4,943.8 0.2%
  • Personnel expenses
2,358.6 2,174.1 8.5% 2,421.7 -2.6%
  • D&A and IT maintenance
1,383.2 1,238.0 11.7% 1,378.0 0.4%
  • Remaining general and administrative expenses
1,209.5 810.5 49.2% 1,144.1 5.7%
Profit before other operating expenses and tax 8,411.1 7,085.6 18.7% 8,252.0 1.9%
Other operating gains/(expenses) 6.5 -51.2 nm 505.3 nm
Net profit 6,740.0 5,598.6 20.4% 6,963.8 -3.2%
Basic earnings per share, RUB 2.98 2.48 20.2% 3.09 -3.6%
           
Net Profit 6,740.0 5,598.6 20.4% 6,963.8 -3.2%
  • Other operating expenses / (income)
(one-off provisions and movements in allowance for ECLs under IFRS 9)
-6.5 51.2 nm -505.3 nm
  • Additional grain receivables recognition (from other operating income)
- - nm -158.7 nm
  • Deferred taxes related to one-off provisions and movements in IFRS 9 allowance
1.3 -10.2 nm 132.8 nm
Adjusted net profit 6,734.8 5,639.6 19.4% 6,432.6 4.7%
           
EBITDA 9,337.0 7,887.2 18.4% 9,669.5 -3.4%
  • Other operating expenses / (income)
(one-off provisions and movements in IFRS 9 allowance)
-6.5 51.2 nm -505.3 nm
  • Additional grain receivables recognition (from other operating income)
- - nm -158.7 nm
Adjusted EBITDA 9,330.5 7,938.4 17.5% 9,005.5 3.6%
Adjusted EBITDA margin 69.8% 70.2% -0.4 p.p. 68.2% 1.6 p.p.

PERFORMANCE OF KEY BUSINESS LINES

RUB mln Q3 2021 Q3 2020 YoY Q2 2021 QoQ
Equities Market          
Fee and commission income, RUB mln 1,185.6 955.7 24.1% 1,199.1 -1.1%
Trading volumes, RUB bln 6,772.1 5,413.5 25.1% 6,826.4 -0.8%
           
Bond Market          
Fee and commission income, RUB mln 649.9 591.2 9.9% 663.6 -2.1%
Trading volumes (excl. overnight bonds), RUB bln 5,109.4 5,641.9 -9.4% 4,835.9 5.7%
           
FX Market          
Fee and commission income, RUB mln 942.9 1,049.8 -10.2% 1,021.1 -7.7%
Trading volumes, RUB bln 74,021.5 84,408.0 -12.3% 85,915.2 -13.8%
           
Money Market          
Fee and commission income, RUB mln 3,043.9 2,278.8 33.6% 2,894.4 5.2%
Trading volumes, RUB bln 131,316.7 111,800.0 17.5% 116,061.2 13.1%
           
Derivatives Market          
Fee and commission income, RUB mln 1,239.3 909.7 36.2% 1,092.4 13.4%
Trading volumes, RUB bln 37,098.7 31,896.9 16.3% 35,539.7 4.4%
           
Depository and Settlement Services          
Fee and commission income, RUB mln 2,126.5 1,634.3 30.1% 1,948.6 9.1%
Average assets under custody, RUB bln 71,952.9 53,752.6 33.9% 66,591.6 8.1%
           
Other fee and commission income (IT Services, Listing and Other fee income) 1,223.5 901.4 35.7% 1,107.5 10.5%
Information services, RUB mln 295.6 297.7 -0.7% 309.4 -4.5%
Sale of software and tech. services, RUB mln 320.7 241.4 32.9% 263.6 21.7%
Listing and other services, RUB mln 191.0 205.0 -6.8% 183.5 4.1%
Other fee income, RUB mln 416.2 157.3 164.6% 351.0 18.6%
           
Net interest and other finance income          
Net interest and other finance income, RUB mln 2,914.2 2,970.1 -1.9% 3,105.2 -6.2%
Investment portfolio, RUB bln 807.4 753.7 7.1% 871.3 -7.3%
  • The total market capitalization of the Equities Market at the end of the third quarter was RUB 65.05 trln (USD 894.19 bln). Fee and commission income from the Equities Market grew by 24.1% on the back of a corresponding increase in trading volumes of 25.1%.
  • Fees and commissions from the Bond Market improved by 9.9%, despite a 9.4% decline in trading volumes (excluding overnight bonds). The effective fee in the Bond Market improved due to a higher share of corporate bond placements in the primary market.
  • Money Market fee income advanced 33.6% to surpass RUB 3.0 bln for the first time. Trading volumes were up 17.5%. The discrepancy between volume and fee dynamics was mainly attributable to an increase in average repo terms and CCP repo accounting for a higher share of total trading volumes.
  • Fee income from the FX Market decreased by 10.2%. Trading volumes declined 12.3%. The trading volume mix slightly improved towards a more profitable spot segment. Spot volumes decreased 8.1%. Swap volumes were down 13.9%.
  • Derivatives Market fee income grew 36.2%, while trading volumes added 16.3%. The effective fee dynamics are explained by a shift in the trading volume mix in favor of value-added single stock and commodity derivatives. Trading volumes of single stock derivatives doubled. Commodity derivatives trading volumes surged 92.0%.
  • Other fee income gained 35.7%, mainly due to 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 stood virtually flat, decreasing by just 0.7%. The sale of software and technical services line added 32.9% largely due to growth of ASTS FIFO MFIX protocol sales.
  • The cash position[2] at the end of Q3 2021 was RUB 88.00 bln. The company had no debt as of the end of the quarter.
  • Capex for the quarter was RUB 1.08 bln, mostly spent on purchases and development of software.


Moscow Exchange’s consolidated IFRS financial statements for Q3 2021 are available in the Investor Relations section of the company's web site.

The Q3 2021 IFRS Financial Results webcast is scheduled for 29 October 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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