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Moscow Exchange (MOEX) today announces its financial results in accordance with International Financial Reporting Standards (IFRS) for Q3 2018. Record high fee and commission income (F&C) from the Money Market and Depositary and Settlement Services were key highlights in the quarter, while all markets delivered positive YoY F&C growth.
Unless stated otherwise, all figures below refer to performance in Q3 2018 and all comparisons are with the corresponding period last year.
KEY FINANCIAL HIGHLIGHTS FOR Q3 2018
- Fee and commission income was up 8.4% to RUB 5,917.6 mln on the back of strong performance of Derivatives, Equity and Money Markets.
- Operating Expenses remained under control and increased by 6.1%, below the full-year guidance.
- EBITDA reached RUB 7,138.1 mln, up 0.6%
KEY BUSINESS & CORPORATE HIGHLIGHTS FOR Q3 2018
- MOEX continues to be the center for capital raising by Russian corporates, with over
RUB 1.70 trln in bond placements in 9M 2018. There were 153 bond issues by 86 corporates during the period. - The number of corporates with direct access to the FX and Money Markets exceeded 100 as of the end of the quarter.
- The Unified Collateral Pool continued to gain traction with 36 market participants using the service at the end of Q3 2018.
- MOEX reached a strategic partnership agreement with Kazakhstan Stock Exchange (KASE). MOEX will provide KASE its IT solutions for trading & clearing and acquire up to 20% in KASE.
EVENTS OCCURRING AFTER THE REPORTING PERIOD
- Growth of the domestic retail segment continues, with over 2.4 mln registered private brokerage accounts and approximately 480,000 Individual Investment Accounts as of the beginning of November.
- The Electronic OTC platform was launched in the Fixed Income Market to facilitate flow and transactions in less liquid instruments.
- MOEX significantly expanded the product offering of its Derivatives Market by launching deliverable futures on gold, cash-settled futures on four LME non-ferrous metal price benchmarks (nickel, copper, aluminum and zinc), and USD/INR futures.
- Fourteen commercial banks signed a memorandum of cooperation with MOEX to jointly develop a platform for private clients to choose and purchase on-line offerings of domestic financial institutions (banks, asset managers and insurance companies).
Alexander Afanasiev, Chief Executive Officer of Moscow Exchange, said:
"In the third quarter of 2018, fee and commission income increased across all markets, and the fees generated by the Money Market and Depository and Settlement Services set record highs. The Unified Collateral Pool project remains on track: client volumes are increasing and it’s clear that there is demand in the market for the new service. Increased trading by retail investors made an important contribution to volume growth and continues to represent a significant opportunity for our business. Finally, we are pleased to have concluded a strategic partnership agreement with KASE, which will bring our markets closer together."
Maxim Lapin, Chief Financial Officer of Moscow Exchange, said:
"Moscow Exchange’s fee and commission income continued to advance during the third quarter, largely on the back of higher fees from the Money Market, Derivatives Market and FX Market. We observed some stabilization in net interest income on a quarter-on-quarter basis. NII excluding the effect of the investment portfolio revaluation reached RUB 3.90 bln in Q3 2018. Operating expenses remained under control and grew by 6.1%, below the full-year guidance. Net of non-cash changes to amortization schedules, operating expenses added just 3.5%, in line with inflation. As a result, EBITDA was up 0.6% to RUB 7.14 bln."
FINANCIAL HIGHLIGHTS
| RUB mln | Q3 2018 | Q3 2017 | YoY | Q2 2018 | QoQ |
|---|---|---|---|---|---|
| Operating Income | 9,822.6 | 9,657.2 | 1.7% | 10,180.0 | -3.5% |
|
5,917.6 | 5,458.5 | 8.4% | 5,927.2 | -0.2% |
|
3,893.2 | 4,185.1 | -7.0% | 4,110.7 | -5.3% |
| NII less realized gains/losses on investment portfolio revaluation[1] | 3,896.0 | 4,169.1 | -6.6% | 4,142.2 | -5.9% |
|
11.8 | 13.6 | -13.2% | 142.1 | -91.7% |
| Operating Expenses | 3,508.8 | 3,306.2 | 6.1% | 3,502.6 | 0.2% |
|
1,555.3 | 1,475.5 | 5.4% | 1,526.3 | 1.9% |
|
1,121.3 | 1,001.3 | 12.0% | 1,123.1 | -0.2% |
|
159.0 | 133.6 | 19.0% | 147.6 | 7.7% |
|
673.2 | 695.8 | -3.2% | 705.6 | -4.6% |
| Profit before other operating expenses and tax | 6,313.8 | 6,351.0 | -0.6% | 6,677.4 | -5.4% |
| Other operating expenses (one-off provision) | 0.0 | 0.0 | NM | 873.5 | NM |
| Net Profit | 5,106.4 | 5,143.1 | -0.7% | 4,864.9 | 5.0% |
| Basic earnings per share. RUB | 2.27 | 2.29 | -1.0% | 2.16 | 5.0% |
| Net Profit | 5,106.4 | 5,143.1 | -0.7% | 4,864.9 | 5.0% |
|
0.0 | 0.0 | NM | 873.5 | NM |
|
0.0 | 0.0 | NM | -346.0 | NM |
|
66.2 | 0.0 | NM | -22.6 | NM |
| Adjusted Net Profit | 5,172.6 | 5,143.1 | 0.6% | 5,369.9 | -3.7% |
| EBITDA | 7,138.1 | 7,096.1 | 0.6% | 6,638.3 | 7.5% |
|
0.0 | 0.0 | NM | 873.5 | NM |
|
-2.8 | 0.0 | NM | -113.0 | NM |
| Adjusted EBITDA | 7,135.3 | 7,096.1 | 0.6% | 7,398.8 | -3.6% |
| Adjusted EBITDA margin | 72.6% | 73.5% | -0.9 p.p. | 72.7% | -0.1 p.p. |
| Operating Expenses net of non-cash changes in amortization schedules of 2018 | 3,423.2 | 3,306.2 | 3.5% | 3,417.8 | 0.2% |
PERFORMANCE OF KEY BUSINESS LINES
| RUB mln | Q3 2018 | Q3 2017 | YoY | Q2 2018 | QoQ |
|---|---|---|---|---|---|
| Equities Market | |||||
| Fee and commission income, RUB mln | 466.0 | 408.5 | 14.1% | 516.1 | -9.7% |
| Trading volumes, RUB bln | 2,588.7 | 2,290.3 | 13.0% | 2,888.7 | -10.4% |
| Bond Market | |||||
| Fee and commission income, RUB mln | 507.5 | 494.8 | 2.6% | 551.3 | -7.9% |
| Trading volumes (ex. overnights), RUB bln | 5,155.1 | 4,245.1 | 21.4% | 5,266.6 | -2.1% |
| FX Market | |||||
| Fee and commission income, RUB mln | 1,030.0 | 959.8 | 7.3% | 1,044.5 | -1.4% |
| Trading volumes, RUB bln | 91,035.4 | 83,689.4 | 8.8% | 90,379.0 | 0.7% |
| Money Market | |||||
| Fee and commission income, RUB mln | 1,639.7 | 1,560.1 | 5.1% | 1,561.6 | 5.0% |
| Trading volumes, RUB bln | 96,245.7 | 114,947.3 | -16.3% | 91,694.7 | 5.0% |
| Derivatives Market | |||||
| Fee and commission income, RUB mln | 564.8 | 494.5 | 14.2% | 612.8 | -7.8% |
| Trading volumes, RUB bln | 22,087.3 | 21,663.1 | 2.0% | 21,839.9 | 1.1% |
| Depository and Settlement Services | |||||
| Fee and commission income, RUB mln | 1,120.3 | 1,083.4 | 3.4% | 1,099.1 | 1.9% |
| Average assets under custody, RUB bln | 43,574.1 | 37,268.7 | 16.9% | 42,544.7 | 2.4% |
| Other fee and commission income (IT Services and Listing) | |||||
| Information services, RUB mln | 199.2 | 179.5 | 11.0% | 189.5 | 5.1% |
| Sale of software and tech. services, RUB mln | 168.1 | 158.7 | 5.9% | 175.6 | -4.3% |
| Listing and other services, RUB mln | 76.9 | 88.1 | -12.7% | 80.3 | -4.2% |
| Other fee income, RUB mln | 145.1 | 31.1 | 366.6% | 96.4 | 50.5% |
| Net interest and other finance income | |||||
| Net interest and other finance income, RUB mln | 3,893.2 | 4,185.1 | -7.0% | 4,110.7 | -5.3% |
| Investment portfolio, RUB bln | 627.9 | 695.6 | -9.7% | 731.6 | -14.2% |
- The effective fee in the Bond Market declined due to the increased share of placements with shorter maturities (both in the corporate and government bond segments), as well as by a higher proportion of primary placements accounted for by government and CBR bonds.
- Trading volumes in the Money Market decreased due to lower volumes of repo with the CBR (-98.9%) and inter-dealer repo (-33.2%). This was partly offset by continued growth of GCC repo volumes (up 9.5x). The shift towards types of repo with higher fees (i.e. CCP and GCC repo), coupled with favorable changes to GCC terms and lower market concentration resulted in 5.1% fee and commission income growth.
- Average assets under custody at NSD grew 16.9%, which supported growth in income from Depository and Settlement Services. At the same time, this income line was negatively affected by a decline in volumes of repo with CMS through NSD as well as a higher share of volumes accounted for by large market participants, who are subject to lower fee rates.
- The cash position[2] at the end of Q3 2018 was RUB 83.70 bln. The company had no debt as of the end of the quarter.
- CAPEX for the quarter was RUB 604.8 mln, all of which was spent on purchases of equipment and software as well as software development. CAPEX for 9M 2018 totaled RUB 1.36 bln.
Moscow Exchange’s consolidated IFRS financial statements for Q3 2018 are available on the Investor Relations section of the company's web site.
The Q3 2018 IFRS Financial Results webcast is scheduled for 7 November 2018 at 3:30 pm (Moscow time).
