MOEX announces strong financial results for Q2 2019

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Moscow Exchange (MOEX) has today released its financial results for Q2 2019.

Highlights include:

  • Fee and commission income was up 10.7% to RUB 6,561.8 mln on the back of strong performance of nearly all markets.
  • Net interest income (NII) increased by 9.4%.
  • Net Income was RUB 5,902.6 mln, up 21.3%.
  • Exceptional performance of the Bond Market as well as strong growth of the Money Market and Depository & Settlement Services helped to deliver record high fee and commission income (F&C).

Key business & Corporate highlights:

  • Strong activity by Russian corporate issuers continued with over RUB 0.9 trln in bond placements in Q2 2019. 147 bond issues were placed by 71 corporates during the period.
  • MOEX launched trading in derivatives on Russian Secured Funding Average Rate (RUSFAR), the new money market benchmark. The Exchange began calculating USD-denominated RUSFAR from 19 August.
  • MOEX OTC bond platform users can now clear transactions through the CCP, expanding its reach to non-listed securities and using resilient and convenient on-exchange infrastructure as well as benefits of the central counterparty service.

Yury Denisov, CEO of Moscow Exchange:

In the second quarter, we posted record fee and commission income and a very strong net profit. I would like to highlight growth in volumes and fee and commission income on the Equity & Bond Market, notably the primary bond segment. This reaffirms MOEX’s status as the premier marketplace for raising capital for the Russian economy. We are also seeing retail investors’ rising contribution to trading volumes, with over 100,000 new clients opening brokerage accounts monthly. We think this trend will continue, underpinned by enhanced digital sales channels.

As MOEX seeks to become an investment hub for the region we are developing relationships with issuers and market participants in Belarus and other Eurasian Economic Union member countries. We hosted successful placements for sovereign and corporate bonds from Belarus in recent months.

We are working hard to advance ESG principles in Russia. Earlier this month we established a Sustainability Sector for bonds of companies investing in environmental and social projects. We believe that our initiatives in this area will increase the investment appeal of the domestic securities market.

Maxim Lapin, Chief Financial Officer of Moscow Exchange, commented:

We delivered double-digit fee and commission growth (+10.7% YoY) this quarter. This was in line with the trend of the last several years, despite headwinds in the form of stagnating volumes in some markets. Four fee and commission lines posted all-time quarterly highs: Equity Market, Bond Market, Money Market and Depository & Settlement Services. Effective fees were supported by a higher share of value added products such as CCP repos and commodity derivatives, the surge in primary bond placements and tariff revision linked to the launch of the unified collateral pool (UCP).

Net interest income (NII) improved versus recent quarters on the back of realized investment portfolio revaluation, adding 9.4% YoY and 15.0% QoQ. NII excluding this effect, or core NII, reached RUB 4.12 bln in Q2 2019, up 5.3% QoQ and virtually flat at -0.6% YoY. The resulting topline operating income expanded by 9.0% YoY to surpass the RUB 11 bln mark, coming in at RUB 11.10 bln.

OPEX growth was kept in line with our guidance. The calendar effect of the reversal of a RUB 112 mln bonus provision in Q1 2019 contributed to a higher Q2 2019 cost growth since a similar reversal happened in Q2 of the base year 2018. However, on a semiannual basis operating expenses added only 8.3% YoY. We therefore revise the full year 2019 OPEX growth guidance down to 8-10% (net of one-offs).

As a result, reported net income rose by 21.3% YoY and adjusted net income with provisions removed increased by 8.7% YoY. The EBITDA margin improved QoQ to 73.8%.

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