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Moscow Exchange (MOEX) today announces its financial results based on summary financial statements prepared in accordance with International Financial Reporting Standards (IFRS) for Q3 2023.
Unless stated otherwise, all figures below refer to performance in Q3 2023 and all comparisons are with the corresponding period last year.
KEY FINANCIAL HIGHLIGHTS FOR Q3 2023
- Fee and commission (F&C) income increased by 60.9% to RUB 14.37 bln.
- Net interest income (NII) gained 21.8%. Core NII added 23.8%.
- Operating income grew 41.0%.
- OPEX was up 37.7%. Cost-to-income ratio improved by 0.7 p.p. and amounted to 29.0%.
- Adjusted net profit grew 29.3% to reach RUB 13.31 bln.
KEY BUSINESS & CORPORATE HIGHLIGHTS FOR Q3 2023
- Moscow Exchange approved new strategy and updated dividend policy.
- Softline (SOFL), IT solutions and services provider, listed its local shares on MOEX following the exchange of Noventiq GDRs for these local shares.
- On the Derivatives Market, deliverable futures on Russian equities of five issuers became available, providing new trading and hedging opportunities.
- Inaugural DFA issues took place on MOEX.
- The Bond Market welcomed 168 new bond issues by 80 corporates, including 12 newcomers, for a total of RUB 1.4 trn.
EVENTS OCCURRING AFTER THE REPORTING PERIOD
- Astra (ASTR), a Russian software developer, held its IPO on MOEX that featured a 20-fold oversubscription and raised a total of RUB 3.5 bln.
- Henderson (HNFG), a Russian fashion retail company, completed its IPO on MOEX, raising a total of RUB 3.8 bln. The resulting free-float amounted to 13.9%.
- 28.5 million clients held brokerage accounts on MOEX at the end of October.
- The range of soft commodity instruments expanded with the launch of cash-settled futures and options on sugar index and trading auctions for milk and milk products.
- The discrete auctions mechanism was updated along with the introduction of other measures that counter price destabilization.
FINANCIAL HIGHLIGHTS (RUB mln)
| Q3 2023 | Q3 2022 | YoY | Q2 2023 | QoQ | |
|---|---|---|---|---|---|
| Operating Income | 25 598.6 | 18 159.6 | 41.0% | 20 896.1 | 22.5% |
| · Fee and commission income | 14 365.1 | 8 927.9 | 60.9% | 11 933.0 | 20.4% |
| · Net interest and other finance income (NII) [1] | 11 211.0 | 9 205.8 | 21.8% | 8 958.3 | 25.1% |
| Core NII – NII less realized gains or losses on investment portfolio revaluation [2] | 11 467.2 | 9 264.7 | 23.8% | 9 272.7 | 23.7% |
| · Other operating income | 22.5 | 25.9 | -13.1% | 4.8 | 368.8% |
| Operating Expenses | 7 422.5 | 5 389.2 | 37.7% | 5 906.5 | 25.7% |
| · Personnel expenses | 4 275.9 | 2 894.8 | 47.7% | 2 902.4 | 47.3% |
| · D&A and IT maintenance | 1 603.6 | 1 504.4 | 6.6% | 1 606.6 | -0.2% |
| · Remaining general and administrative expenses | 1 543.0 | 990.0 | 55.9% | 1 397.5 | 10.4% |
| Profit before other operating expenses and tax | 18 176.1 | 12 770.4 | 42.3% | 14 989.6 | 21.3% |
| Movement in allowance for expected credit losses | 1 271.1 | - 1 722.9 | nm | 356.6 | nm |
| Other impairment and provisions | - 60.3 | - 252.3 | nm | - 232.9 | nm |
| Profit before tax | 19 386.9 | 10 795.2 | 79.6% | 15 113.3 | 28.3% |
| Income tax | - 5 107.2 | - 2 080.4 | 145.5% | - 3 003.0 | 70.1% |
| Net Profit | 14 279.7 | 8 714.8 | 63.9% | 12 110.3 | 17.9% |
| Basic earnings per share, RUB | 6.32 | 3.86 | 63.7% | 5.37 | 17.7% |
| Net Profit | 14 279.7 | 8 714.8 | 63.9% | 12 110.3 | 17.9% |
| · Movements in allowance for ECLs | - 1 271.1 | 1 722.9 | nm | - 356.6 | nm |
| · Other impairment and provisions | 60.3 | 252.3 | nm | 232.9 | nm |
| · Deferred taxes related to movements in allowance for ECLs and other impairment & provisions | 242.2 | - 395.0 | nm | 24.7 | nm |
| Adjusted Net Profit | 13 311.1 | 10 295.0 | 29.3% | 12 011.3 | 10.8% |
| EBITDA | 20 576.9 | 11 906.1 | 72.8% | 16 342.6 | 25.9% |
| · Movements in allowance for ECLs | - 1 271.1 | 1 722.9 | nm | - 356.6 | nm |
| · Other impairment and provisions | 60.3 | 252.3 | nm | 232.9 | nm |
| Adjusted EBITDA | 19 366.1 | 13 881.3 | 39.5% | 16 218.9 | 19.4% |
| Adjusted EBITDA margin | 75.7% | 76.4% | -0.7 p.p. | 77.6% | -1.9 p.p. |
OPEX BREAKDOWN (RUB mln)
| Q3 2023 | Q3 2022 | YoY | Q2 2023 | QoQ | |
|---|---|---|---|---|---|
| General and Administrative Expenses | 3 146.6 | 2 494.4 | 26.1% | 3 004.1 | 4.7% |
| · Amortisation of intangible assets | 966.5 | 814.6 | 18.6% | 973.3 | -0.7% |
| · Equipment and intangible assets maintenance | 413.6 | 393.5 | 5.1% | 377.3 | 9.6% |
| · Advertising and marketing costs | 332.3 | 161.3 | 106.0% | 300.7 | 10.5% |
| · Depreciation of property and equipment | 223.5 | 296.3 | -24.6% | 256.0 | -12.7% |
| · Agent fees | 189.8 | 93.6 | 102.8% | 162.9 | 16.5% |
| · Taxes, other than income tax | 173.2 | 206.8 | -16.2% | 165.8 | 4.5% |
| · Market makers fees | 171.9 | 97.3 | 76.7% | 173.6 | -1.0% |
| · Professional services | 158.3 | 187.3 | -15.5% | 213.0 | -25.7% |
| · Registrar and foreign depository services | 146.4 | 60.0 | 144.0% | 116.3 | 25.9% |
| · Information services | 127.4 | 38.1 | 234.4% | 85.3 | 49.4% |
| · Loss on disposal of subsidiaries | 84.0 | - | nm | - | nm |
| · Rent and office maintenance | 76.5 | 88.6 | -13.7% | 83.9 | -8.8% |
| · Communication services | 24.8 | 18.8 | 31.9% | 27.2 | -8.8% |
| · Security expenses | 8.4 | 7.6 | 10.5% | 9.9 | -15.2% |
| · Business trip expenses | 7.7 | 2.1 | 266.7% | 18.1 | -57.5% |
| · Transport expenses | 5.9 | 5.9 | 0.0% | 5.4 | 9.3% |
| · Charity | 2.1 | 2.5 | -16.0% | 3.3 | -36.4% |
| · Loss on disposal of property, equipment and intangible assets | 0.3 | 3.9 | -92.3% | 12.4 | -97.6% |
| · Other | 34.0 | 16.2 | 109.9% | 19.7 | 72.6% |
| Personnel expenses | 4 275.9 | 2 894.8 | 47.7% | 2 902.4 | 47.3% |
| · Employees benefits except for share-based payments | 3 579.9 | 2 384.7 | 50.1% | 2 330.1 | 53.6% |
| · Payroll related taxes | 642.5 | 434.1 | 48.0% | 488.4 | 31.6% |
| · Share-based payment expense on equity settled instruments | 15.0 | 67.3 | -77.7% | 71.9 | -79.1% |
| · Share-based payment expense on cash settled instruments | 38.5 | 8.7 | 342.5% | 12.0 | 220.8% |
| Total operating expenses | 7 422.5 | 5 389.2 | 37.7% | 5 906.5 | 25.7% |
| Headcount, employees e-o-p | 2 522 | 2 394 | 5.3% | 2 405 | 4.9% |
- OPEX for 3Q’23 increased by 37.7%. 9M’23 OPEX was up 5.4%.
- Personnel expenses growth of 47.7% decomposes into: [1] 31.5 p.p. additional bonus provisions following the review of compensation system, [2] 15.7 p.p. general wage revisions and new hires, [3] 0.5 p.p. other factors.
- The employee headcount was up 5.3%.
- Advertising and marketing costs doubled. The surge is explained by Finuslugi-related spending.
- Agent fees doubled, reflecting the performance of insurance sales at Finuslugi platform.
- The 3.3x increase in information services expense is reimbursed via corresponding F&C revenues of the Derivatives Market.
- D&A and IT maintenance grew 6.6%, and the D&A alone was up 7.1%. IT maintenance costs increased by 5.1%. The 9.6% QoQ rise in IT maintenance costs is due to the gradual implementation of the software & hardware renewal program.
- 3Q’23 CAPEX was RUB 0.68 bln. 9M’23 CAPEX amounted to RUB 2.16 bln.
PERFORMANCE OF KEY BUSINESS LINES
| Q3 2023 | Q3 2022 | YoY | Q2 2023 | QoQ | |
|---|---|---|---|---|---|
| Equities Market | |||||
| Fee and commission income, RUB mln | 2 395.2 | 559.4 | 328.2% | 1 617.5 | 48.1% |
| Trading volumes, RUB bln | 7 930.7 | 3 121.3 | 154.1% | 5 332.5 | 48.7% |
| Bond Market | |||||
| Fee and commission income, RUB mln | 845.5 | 486.2 | 73.9% | 712.2 | 18.7% |
| Trading volumes (ex. overnight bonds), RUB bln | 4 716.0 | 2 749.9 | 71.5% | 3 968.3 | 18.8% |
| FX Market | |||||
| Fee and commission income, RUB mln | 2 055.6 | 1 526.8 | 34.6% | 1 622.0 | 26.7% |
| Trading volumes, RUB bln | 93 720.1 | 57 718.4 | 62.4% | 66 713.0 | 40.5% |
| Money Market | |||||
| Fee and commission income, RUB mln | 3 187.1 | 2 071.4 | 53.9% | 2 767.0 | 15.2% |
| Trading volumes, RUB bln | 218 359.4 | 150 027.3 | 45.5% | 184 027.1 | 18.7% |
| Derivatives Market | |||||
| Fee and commission income, RUB mln | 1 839.1 | 1 055.9 | 74.2% | 1 464.4 | 25.6% |
| Trading volumes, RUB bln | 24 158.1 | 15 964.8 | 51.3% | 17 758.3 | 36.0% |
| Depository and Settlement Services | |||||
| Fee and commission income, RUB mln | 2 522.5 | 1 931.4 | 30.6% | 2 298.6 | 9.7% |
| Average assets under custody, RUB bln | 76 817.8 | 54 950.0 | 39.8% | 69 949.8 | 9.8% |
| Other fee and commission income (IT Services, Listing, Marketplace and other) | 1 520.1 | 1 296.8 | 17.2% | 1 451.3 | 4.7% |
| Information services, RUB mln | 365.3 | 248.8 | 46.8% | 340.5 | 7.3% |
| Sale of software and tech. services, RUB mln | 401.7 | 301.6 | 33.2% | 385.5 | 4.2% |
| Listing and other services, RUB mln | 175.6 | 154.7 | 13.5% | 178.7 | -1.7% |
| Financial marketplace services, RUB mln | 456.4 | 160.0 | 185.3% | 358.5 | 27.3% |
| Other fee income, RUB mln | 121.1 | 431.7 | -71.9% | 188.1 | -35.6% |
| Net interest and other finance income | |||||
| Net interest and other finance income, RUB mln | 11 211.0 | 9 205.8 | 21.8% | 8 958.3 | 25.1% |
| Investment portfolio, RUB bln | 2 500.3 | 2 384.3 | 4.9% | 2 166.5 | 15.4% |
- The total market capitalization of the Equities Market at the end of the third quarter was RUB 57.74 trln (USD 592.68 bln). Fee and commission income from the Equities Market quadrupled. Volumes increased by 2.5 times as trading velocity went up. Over 3 million clients were active every month during the quarter. The discrepancy between fees and volumes dynamics is due to the asymmetric tariff structure introduced in Nov’22.
- Fees and commissions from the Bond Market grew 73.9%. Trading volumes (excluding overnight bonds) were up 71.5%. Primary market was active despite volatile interest rate environment. Secondary trading volumes increased by 37.4%. Secondary trading of OFZ & OBR was up 30.2%; other bonds’ volumes were up 48.5%.
- Money Market fee income improved by 53.9% as trading volumes added 45.5%. The discrepancy between fees and volumes dynamics was mainly attributable to an increase of value-added GCC repo share in total trading volumes’ mix.
- Fee income from the FX Market grew 34.6% while trading volumes were up 62.4%. The effective fee dynamics is influenced by the 2 oppositely directed effects: [1] the tariff structure favoring liquidity makers on the spot market that came into effect on the 1st of August 2022, [2] a shift in the trading volumes’ mix towards less profitable swap segment. Spot trading volumes increased by 23.6%, while swap volumes gained 91.2%.
- Derivatives Market fee income grew by 74.2%, while trading volumes were up 51.3%. Volumes’ mix changed towards higher value-added derivative contracts based on commodities, single stocks and interest rates. Specifically, commodity derivatives’ volumes surged 3.4x while single-stock derivatives volumes increased by 85.3%. Volumes of interest rate contracts surged 5.3x YoY amidst volatile interest rate environment. The effective fee was also affected by the 5x decrease in options trading fee in April 2023.
- Other fee and commission income increased by 17.2%. Information sales were up 46.8%, largely due to RUB depreciation. Sales of software and technical services increased by 33.2%, driven by tariffs revision and the introduction of low-latency protocols for market data distribution – SIMBA ASTS and FIFO TWIME ASTS – to Equities and FX Markets. Sales of software and technical services were also supported by the elevated demand for colocation and advanced network access solutions. Listing and other services increased by 13.5% as activity on the primary bond market remained strong during the quarter. Finuslugi marketplace revenue nearly tripled to RUB 456.4 mln with deposit and loan segments performing particularly well. Other fee income decreased 71.9% since the base period included fees on FX client balances.
- The cash position[3] at the end of Q3 2023 was RUB 117.73 bln. The company had no debt as of the end of the quarter.
- Capex for the quarter was RUB 0.68 bln, mostly spent on purchases of software and equipment as well as software development.
Moscow Exchange’s summary consolidated IFRS financial statements for Q3 2023 are available in the Investor Relations section of the company's web site.
