Moscow Exchange (MOEX) today announces its financial results in accordance with International Financial Reporting Standards (IFRS) for Q1 2020. Record fee income on the Equities and Derivatives Markets, as well as strong performance by the FX Market, helped MOEX achieve an all-time high quarterly F&C income.
Unless stated otherwise, all figures below refer to performance in Q1 2020 and all comparisons are with the corresponding period last year.
KEY FINANCIAL HIGHLIGHTS FOR Q1 2020
- Fee and commission income grew by 29.3% to RUB 7,909.9 mln, mainly driven by the Equities, Derivatives and FX Markets.
- An increase in client balances, as well as a realized gain from revaluation of the investment portfolio, more than offset the decline in interest rates, resulting in a 2.1% increase in net interest income (NII).
- Operating expenses remained under control, decreasing by 1.6% amid the impact of the COVID-19 pandemic.
- Adjusted net profit rose by 30.9% to RUB 6,600.8 mln.
KEY BUSINESS & CORPORATE HIGHLIGHTS FOR Q1 2020
- 53 corporates, including 10 newcomers, placed 143 bond issues, raising a total of RUB 588 bln.
- MOEX Board approved the purchase of a stake in NTProgress, one of the leading platform solution providers on the Russian OTC FX electronic market, with a client base of more than 30 banks.
- Two new instruments were launched on the MOEX Derivatives Market: futures on Yandex shares and futures on natural gas.
EVENTS OCCURRING AFTER THE REPORTING PERIOD
- The total number of retail clients reached 5 mln as of 15 May 2020. The number of Individual Investment Accounts is now 2.2 mln.
- A new Russian-law ETF tracking global tech stocks became available, bringing the total number of ETFs traded on MOEX to 37 with total AUM of more than RUB 50 bln.
- The MOEX Derivatives Market product offering expanded further as the Exchange launched weekly options on futures of Gazprom and Sberbank shares.
- The MOEX AGM approved a new Board of Directors with eight independent directors on a 12-seat board. Shareholders voted to pay a 2019 dividend of RUB 7.93 per share (the total dividend represents 89% of 2019 net profit).
- MOEX published its inaugural Sustainability Report for 2019. The report was prepared in accordance with GRI Sustainability Reporting Standards (GRI Core).
- MOEX committed RUB 100 mln of aid to medical institutions, healthcare professionals, the elderly and others affected by the coronavirus pandemic. The increase in the company’s charity budget was financed mostly by savings in the marketing budget as events moved online.
Yury Denisov, CEO of Moscow Exchange, said:
"It was a challenging quarter for the Exchange, as we had to ensure operational continuity amid considerably higher volatility and trading volumes, while transitioning most of our staff to work remotely as a result of the COVID-19 pandemic. To comply with quarantine requirements and out of concern for the health of our employees, 90% of our staff are currently working from home. We nevertheless report a very strong set of financial results for the quarter, driven by a substantial increase in client activity across most of our markets. We saw substantial savings in our operating budget, which enabled us to increase our charity budget and donate RUB 100 mln to various charitable organizations with programs to help medical institutions, healthcare professionals and people in need due to the pandemic."
Max Lapin, CFO of Moscow Exchange, said:
"Fee and commission income improved substantially thanks to contributions from the Equities, Derivatives and FX Markets as well as Depository & Settlement Services. Extraordinary volatility helped us achieve new F&C highs. The Bond Market pulled back from its recent peak, as the environment was not conducive for primary placements. The Money Market remained nearly flat, decreasingly slightly due to a combination of factors. The Money Market is driven by the product mix, repo terms and aggregate size of market participants’ positions rather than by volatility. Our countercyclical model include a balanced combination of volatility-linked and position-linked business lines, which perform equally well in varying conditions. Overall, in Q1 2020 we had the best quarterly F&C growth rate in four years – since Q1 2016 – and one of the three fastest quarterly growth rates since our IPO in 2013.
"Net interest income for the quarter improved 2.1% year-on-year on the back of stronger RUB and USD client balances together with a realized gain from revaluation of the investment portfolio. The resulting topline operating income added 16.6% year-on-year, coming in at almost RUB 12 bln. Recurring OPEX contracted by 1.6% year-on-year, below our guidance range for FY 2020 growth of 6.5%-9.5%. It was helped by both a modest increase in personnel expenses and some savings on the administrative side. We therefore update our FY 2020 OPEX growth guidance to 6.0%-8.5%. Costs related to measures to combat COVID-19 were immaterial, thanks to our early transition to remote working. Other operating expenses were driven nearly exclusively by the change in IFRS 9 provisions, which are 90% attributable to the FVTOCI bond portfolio. As a result, net profit surged 90.7% year-on-year to RUB 5.90 bln. On an adjusted basis, which provides better comparability, net profit strengthened by 30.9%."
FINANCIAL HIGHLIGHTS
| RUB mln | Q1 2020 | Q1 2019 | YoY | Q4 2019 | QoQ |
|---|---|---|---|---|---|
| Operating income | 11,988.4 | 10,283.1 | 16.6% | 11,182.4 | 7.2% |
|
7,909.9 | 6,117.5 | 29.3% | 7,102.5 | 11.4% |
|
3,992.7 | 3,910.9 | 2.1% | 4,070.6 | -1.9% |
| NII less realized gains on investment portfolio revaluation (core NII)[1] | 3,290.9 | 3,910.2 | -15.8% | 3,661.3 | -10.1% |
|
85.8 | 254.7 | -66.3% | 9.3 | 822.6% |
| Operating expenses | 3,678.2 | 3,736.9 | -1.6% | 4,048.8 | -9.2% |
|
1,794.7 | 1,755.9 | 2.2% | 1,784.4 | 0.6% |
|
1,169.1 | 1,204.9 | -3.0% | 1,302.7 | -10.3% |
|
714.4 | 776.1 | -8.0% | 961.7 | -25.7% |
| Profit before other operating expenses and tax | 8,310.2 | 6,546.2 | 26.9% | 7,133.6 | 16.5% |
| Other operating gains/(expenses) | (871.0) | (2,653.5) | nm | 63.1 | nm |
| Net profit | 5,904.0 | 3,095.5 | 90.7% | 5,749.1 | 2.7% |
| Basic earnings per share, RUB | 2.62 | 1.37 | 91.1% | 2.55 | 2.7% |
| Net Profit | 5,904.0 | 3,095.5 | 90.7% | 5,749.1 | 2.7% |
|
871.0 | 2,435.2 | nm | (63.1) | nm |
|
(174.2) | (487.0) | nm | 12.6 | nm |
| Adjusted net profit | 6,600.8 | 5,043.7 | 30.9% | 5,698.6 | 15.8% |
| EBITDA | 8,234.9 | 4,765.5 | 72.8% | 8,136.9 | 1.2% |
|
871.0 | 2,435.2 | nm | (63.1) | nm |
| Adjusted EBITDA | 9,105.9 | 7,200.7 | 26.5% | 8,073.8 | 12.8% |
| Adjusted EBITDA margin | 76.0% | 70.0% | 5.9 p.p. | 72.2% | 3.8 p.p. |
PERFORMANCE OF KEY BUSINESS LINES
| RUB mln | Q1 2020 | Q1 2019 | YoY | Q4 2019 | QoQ |
|---|---|---|---|---|---|
| Equities Market | |||||
| Fee and commission income, RUB mln | 1,117.2 | 414.4 | 169.6% | 704.2 | 58.6% |
| Trading volumes, RUB bln | 6,263.3 | 2,267.4 | 176.2% | 3,861.1 | 62.2% |
| Bond Market | |||||
| Fee and commission income, RUB mln | 655.1 | 537.2 | 21.9% | 762.2 | -14.1% |
| Trading volumes (excl. overnight bonds), RUB bln | 6,278.7 | 4,610.3 | 36.2% | 6,834.6 | -8.1% |
| FX Market | |||||
| Fee and commission income, RUB mln | 1,070.4 | 871.6 | 22.8% | 857.5 | 24.8% |
| Trading volumes, RUB bln | 80,851.4 | 75,804.7 | 6.7% | 70,028.1 | 15.5% |
| Money Market | |||||
| Fee and commission income, RUB mln | 1,722.2 | 1,771.3 | -2.8% | 1,767.7 | -2.6% |
| Trading volumes, RUB bln | 95,185.8 | 79,139.8 | 20.3% | 95,153.3 | 0.0% |
| Derivatives Market | |||||
| Fee and commission income, RUB mln | 1,099.1 | 655.4 | 67.7% | 780.5 | 40.8% |
| Trading volumes, RUB bln | 33,561.6 | 18,689.7 | 79.6% | 20,378.1 | 64.7% |
| Depository and Settlement Services | |||||
| Fee and commission income, RUB mln | 1,393.6 | 1,186.5 | 17.5% | 1,426.0 | -2.3% |
| Average assets under custody, RUB bln | 51,281.8 | 45,495.5 | 12.7% | 50,582.5 | 1.4% |
| Other fee and commission income (IT Services, Listing and Other fee income) | 852.3 | 681.1 | 25.1% | 804.4 | 6.0% |
| Information services, RUB mln | 291.2 | 212.7 | 36.9% | 214.7 | 35.6% |
| Sale of software and tech. services, RUB mln | 210.9 | 197.6 | 6.7% | 305.1 | -30.9% |
| Listing and other services, RUB mln | 136.7 | 131.4 | 4.0% | 237.3 | -42.4% |
| Other fee income, RUB mln | 213.5 | 139.4 | 53.2% | 47.3 | 351.4% |
| Net interest and other finance income | |||||
| Net interest and other finance income, RUB mln | 3,992.7 | 3,910.9 | 2.1% | 4,070.6 | -1.9% |
| Investment portfolio, RUB bln | 746.8 | 746.2 | 0.1% | 777.3 | -3.9% |
- The total market capitalization of the Equities Market at the end of the first quarter was RUB 39.73 trln (USD 505.61 bln). Fee and commission income from the Equities Market grew by 169.6% on the back of higher trading volumes, reaching an all-time high of RUB 1,117.2 mln.
- Fees and commissions from the Bond Market were up 21.9%. Trading volumes excluding overnight bonds increased by 36.2%, mainly due to higher OFZ secondary market volumes. Effective fee trends in the Bond Market are due to the primary market accounting for a smaller share of trading volumes and the relatively modest amount of corporate placements.
- Money Market trading volumes increased by 20.3%, while fee income contracted by 2.8%. The discrepancy between volume and fee trends was attributable to shorter terms of value-added GCC repo and a smaller position size (open interest).
- FX Market trading volumes grew 6.7% on the back of increased volatility. The trading volume mix shifted towards the more profitable spot segment, which added 44.2%, while swap volumes declined by 4.1%.
- Derivatives trading volumes increased by 79.6%. FX and index derivatives trading volumes nearly doubled. This, together with an increase in commodity derivatives trading volumes of 49.5%, contributed to a less favorable effective fee structure, but also helped to achieve record quarterly fee income of RUB 1,099.1 mln (+67.7% YoY).
- The Other fee income line now contains an additional fee on EUR balances introduced on 1 January 2020 – 0.2% above the ECB rate.
- The cash position[2] at the end of Q1 2020 was RUB 97.81 bln. The company had no debt as of the end of the quarter.
- Capex for the quarter was RUB 0.58 bln, all of which was spent on purchases of equipment and software as well as software development.
Moscow Exchange’s consolidated IFRS financial statements for Q1 2020 are available in the Investor Relations section of the company's web site.
The Q1 2020 IFRS Financial Results webcast is scheduled for 15 May 2020 at 4:00 pm (Moscow time).
