Hong Kong Exchanges and Clearing Limited (HKEX) just released its quarterly results for the three months ended March 31 2017. The highlights are:
- Revenue and other income for Q14 2017 was 11% higher than Q1 2016, which was attributable to:
– Increases in core revenue including Stock Exchange listing fees and depository, custody and nominee services
fees;
– Increases in net investment income arising from Corporate Funds and higher interest income from Margin Funds;
and
– One-off income of $55 million post-liquidation interest from the liquidators of Lehman Brothers Securities Asia
Limited. - Operating expenses were 2% lower than Q1 2016 due to a one-off insurance recovery of $23 million relating to
the warehouse litigation in the United States. Excluding this recovery, operating expenses were broadly flat compared
to Q1 2016. - EBITDA margin of 73 per cent was 4% higher than both Q1 2016 and the year ended 31 December 2016.
- Profit attributable to shareholders increased by 20% to $1,716 million.
Market sentiment in the Cash Market improved since January 2017 with headline ADT rising to $74.3 billion, 16 per cent above Q4 2016 and 2 per cent above Q1 2016. This was accompanied by increased fund flows through Stock Connects where both Northbound and Southbound Trading saw higher volumes and generated total revenue and other income of $75 million in Q1 2017. Improved overall sentiment was accompanied by reduced market volatility and HKFE contracts traded dropped by 4 per cent from Q4 2016 and were 18 per cent lower than Q1 2016 (which included exceptionally high derivatives volumes in January 2016).
Nevertheless, increased volumes in the Cash Market and stock options more than offset lower HKFE and LME volumes and Q1 2017 Revenue was 3 per cent higher than Q1 2016 and 4 per cent above Q4 2016.
Net investment income in Q1 2017 was $305 million higher than Q4 2016 and $220 million higher than Q1 2016. This arose primarily from fair value gains on collective investment schemes held as part of Corporate Funds. In addition, one-off interest of $55 million was received from the liquidators of Lehman Brothers Securities Asia Limited (Lehman). As a result, overall revenue and other income for Q1 2017 was 16 per cent higher than Q4 2016 and 11 per cent higher than Q1 2016.
Operating expenses decreased by 2 per cent against Q1 2016 due to a one-off insurance recovery of $23 million relating to the warehouse litigation in the United States (which for the LME and HKEX defendents has now been concluded). Excluding this recovery, operating expenses remained at a similar level to Q1 2016 and were 8 per cent lower than the prior quarter. Compared with Q1 2016, increases in staff costs attributable to higher headcount and increase in premises expenses for new offices, were more than offset by Information Technology (IT) cost savings. In light of the continued global economic and market uncertainties, the Group will maintain a prudent approach to expenditure control.
For the complete report, click here.