Moscow Exchange (MOEX) today announces its financial results in accordance with International Financial Reporting Standards (IFRS) for Q1 2018. Higher trading volumes in the Bond Market and Equities Market supported by continued solid performance of the Money Market drove strong growth in fee and commission income.
Key financial highlights for Q1 2018
- Significant fee and commission (F&C) income (up 12.8% YoY to RUB 5.51 bln) on the back of strong volume growth on the Equities and Bond Market as well as good performance of new services.
- Net interest and other finance income was up 14.5% QoQ but down 5.4% YoY to RUB 4.33 bln as a result of declining interest rates in a low inflation environment.
- Operating costs excluding D&A expenses up only 4.7% YoY to RUB 2.69 bln.
- Adjusted EBITDA margin was 72.5%.
- Adjusted net income was RUB 5.19 bln, up 3.8% YoY.
Key business & corporate highlights for Q1 2018
- Strong primary bond market with 38 issuers raising over RUB 2.65 trln (excluding overnight bonds), an increase of 87% YoY.
- Significantly expanded Money Market product portfolio with the launch of two new GCC pools (Government bonds and GC Expanded). In addition, settlement of GCC repo trades in USD was introduced.
- Tenth currency pair on MOEX FX Market, TRY/RUB, was launched.
- The number of retail accounts opened at the Exchange reached 140,000 during the quarter, bringing the total to 2.0 mln by the end of Q1 2018. The number of IIAs reached 328,000 at the end of Q1 2018 (year-end 2017: 302,000).
- Nordea Bank AB became the sixth international financial institution to start using SMA to MOEX’s FX Market.
Events occurring after the reporting period
- AGM approved a FY2017 dividend of RUB 5.47 per share. Shareholders as of 15 of May will receive the dividend by 20 of June. An interim dividend of RUB 2.49 per share was paid last year.
- Independent director Oleg Vyugin was elected as the new Chairman of the Supervisory Board. 7 of the 12 directors of the new Board are independent.
- MOEX held its ninth annual Exchange Forum – Russia’s largest conference for the professional financial markets community – which attracted more than 2,200 Russian and international investors, financial market professionals and senior policymakers.
Alexander Afanasiev, MOEX
Alexander Afanasiev, Chief Executive Officer of Moscow Exchange, said:
The first quarter set new records for MOEX’s Bond Market in terms of both primary placements and total trading volumes, as we saw very strong demand among international and domestic investors for Russian government and corporate bonds. We are very happy with the performance of the Equities Market both in terms of growth of the indexes and trading volumes, which were up 17% year-on-year. Our new General Collateral Certificate instruments on the repo market were very well received by market participants and supported Money Market revenues.
New products and technologies, regulatory initiatives and our education and marketing efforts are helping to attract more individuals to investing: during the quarter, the number of retail accounts increased by 140,000, more than half of the total for the past year.
We are also pleased to note that international investors are not scaling back their operations on Moscow Exchange despite the geopolitical noise. Our strategy to diversify the product range and to attract new clients to the Exchange are yielding results.
Maxim Lapin, Moscow Exchange
Maxim Lapin, Chief Financial Officer of Moscow Exchange, added:
I am glad to report a significant growth in the company’s fee and commission income. It was driven by a solid performance of all our markets, most notably equities and bonds. We are also seeing a shift in trading volumes towards higher fee products on the Derivatives and Money Markets. Net interest income was strong as well and grew 14.5% compared to the previous quarter on the back of higher client balances, an increase in USD interest rates as well as realized gain on the redemption of part of our bond portfolio.
In the first quarter, the company recognized a one-off provision in the amount of RUB 856 mln to fully cover the unsecured portion of the position of a defaulted market participant. The defaulted market participant’s lack of sufficient collateral occurred due to an unprecedented operating error, and we have taken measures to ensure such an error can not occur in the future. The actual financial impact of this event will be determined upon expiration of the participant’s obligations and debt collection procedures.
Net income – adjusted for the abovementioned one-off provision, correction under IFRS 9 and changes in the amortization schedule – was up 3.8% YoY to RUB 5.19 billion.
Financial highlights
| RUB mln | Q1 2018 | Q1 2017 | YoY | Q4 2017 | QoQ |
|---|---|---|---|---|---|
| Operating Income | 9,870.8 | 9,469.6 | 4.2% | 9,591.4 | 2.9% |
|
5,505.7 | 4,881.4 | 12.8% | 5,790.8 | -4.9% |
|
4,333.6 | 4,578.9 | -5.4% | 3,785.4 | 14.5% |
|
31.5 | 9.3 | 238.7% | 15.2 | 107.2% |
| Operating Expenses | 3,527.9 | 3,281.4 | 7.5% | 3,630.1 | -2.8% |
| Operating Profit | 6,342.9 | 6,188.2 | 2.5% | 5,961.3 | 6.4% |
| Net Profit | 4,285.6 | 4,998.1 | -14.3% | 4 814.5 | -11.0% |
| Basic earnings per share. RUB | 1.91 | 2.23 | -14.3% | 2.15 | -11.2% |
| Net Profit | 4,285.6 | 4,998.1 | -14.3% | 4,814.5 | -11.0% |
|
856.4 | – | n. m. | – | n. m. |
|
45.4 | – | n. m. | – | n. m. |
| Adjusted Net Profit | 5,187.4 | 4,998.1 | 3.8% | 4,814.5 | 7.7% |
| EBITDA | 6,326.3 | 6,902.6 | -8.3% | 6,729.0 | -6.0% |
|
856.4 | – | n. m. | – | n. m. |
|
24.4 | – | n. m. | – | n. m. |
| Adjusted EBITDA | 7,158.3 | 6,902.6 | 3.7% | 6,729.0 | 6.4% |
| Adjusted EBITDA margin | 72.5% | 72.9% | -0.4 p.p. | 70.2% | 2.4 p.p. |