MOEX announces all-time high fee and commission income, up 15% YoY in Q3 2017


Moscow Exchange (MOEX) has announced its financial results in accordance with International Financial Reporting Standards (IFRS) for Q3 2017.

KEY FINANCIAL HIGHLIGHTS FOR Q3 2017

  • All-time high fee and commission income for the quarter of RUB 5.46 bln, up 14.9% YoY. Share of fees and commissions in operating income increased to 57%, up from 44.0% a year ago.
  • Interest income (excluding gain on financial assets available for sale) was up 1.4% QoQ but down 18.1% YoY mainly on the back of lower RUB interest rates in the broader economy.
  • EBITDA margin was at 73.5%, as operating costs remained contained.
  • Net profit amounted to RUB 5.14 bln, down 18.2% YoY and 3.0% QoQ on the back of lower interest income for the period.

KEY BUSINESS & CORPORATE HIGHLIGHTS FOR Q3 2017

  • Maxim Lapin joined MOEX as the company’s new CFO. His arrival will further strengthen MOEX’s financial function and the management team as a whole.
  • The Exchange established MOEX Innovations, a new wholly owned subsidiary company focused on innovative technologies and collaboration with fintech start-ups.
  • MOEX hosted its first large scale retail event in Moscow, FINFAIR, to educate private investors about opportunities on the markets.
  • MOEX paid a semi-annual dividend of RUB 2.49 per share (55.0% of H1 2017 net profit).
  • Russian corporates were granted direct access to MOEX’s Money Market. Today a total of 29 non-financial companies can operate directly on MOEX’s FX and Money Markets.
  • Weekly options on USD/RUB were introduced on the Derivatives Market, complementing the existing offering of maturities for USD/RUB options.

EVENTS OCCURRING AFTER THE REPORTING PERIOD

  • Moscow Exchange held its annual Forum in New York. The event attracted more than 300 investors and financial market professionals looking for opportunities in the Russian capital markets.
  • ACRA affirmed NCC’s credit rating at AAA (RU) with stable outlook. AAA is the highest rating on ACRA’s national scale. Earlier this year, Fitch upgraded NCC’s rating outlook to positive and affirmed its foreign currency rating at BBB-. NCC’s local currency rating is BBB, one notch higher than Russia’s sovereign rating.
  • Forbes ranked MOEX among the world’s top 500 employers, alongside only three other Russian companies.
  • MSCI, the global index provider, started using MOEX’s closing auction prices for Russian equities to calculate end-of-day values of its indices.
  • Options on GBP/USD and USD/JPY FX futures contracts began trading on the Derivatives Market.
  • The number of Individual Investments Accounts held by private investors reached 280,400 as of yesterday, up from 191,000 at the beginning of the year.
  • In the second half of the year eight Russian companies held public offerings on Moscow Exchange, raising a total of RUB 89.4 bln (USD 1.5 bln).
Alexander Afanasiev, MOEX

Alexander Afanasiev, Chief Executive Officer of Moscow Exchange, said:

In the third quarter Moscow Exchange posted record fee and commission income. Our efforts to develop the exchange infrastructure, simplify market access and diversify the product offering and client base have resulted in trading volume growth across a number of key instruments – equities, bonds, repos, FX swaps and commodity derivatives – while also growing income from depository and clearing services.

Russian companies are increasingly using the public markets to fund their businesses, which is visible in the significant growth of new bond issues this year. In the second half of the year we are also seeing increased activity in the primary equity market. A new and important trend is mid-sized companies coming to the Exchange to raise capital: in recent weeks there have been two successful IPOs, one of which took place on our new SME sector.

We have built out an effective risk management system: the recent volatility on financial markets has not impacted the reliability of the central counterparty.

And finally, we see international investors ramping up activity on our markets, we are working on increasing liquidity on the Money and FX Markets by adding new market participants – notably Russian corporates – and we continue to actively work to attract retail investors.

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

In the third quarter we achieved significant growth in fee and commission income thanks to successful implementation of our strategic initiatives as well as improving market conditions. We saw increases of fee income from the Money Market (+30.8% YoY), Fixed Income Market (+36.2% YoY), Equities Market (+19.8% YoY), Derivatives Market (+4.6% YoY) and Depository and Settlement Services (+21.1% YoY). The decline in net interest income was primarily attributable to lower interest rates on RUB balances. We continued to keep operating expenses under control as they grew 10.9% YoY, below our full-year guidance. Almost 50% of the increase was attributable to growth in D&A and equipment maintenance expenses, a result of last year’s CAPEX program. This helped us to deliver an EBITDA margin of 73.5%, attesting to the company’s high operational efficiency.

FINANCIAL HIGHLIGHTS

RUB mlnQ3 2017Q3 2016YoYQ2 2017QoQ
Operating Income9,657.210,784.4-10.5%9,820.7-1.7%
      Fee and commission income5,458.54,749.414.9%5,076.97.5%
      Net interest and other finance income4,185.16,028.9-30.6%4,735.9-11.6%
      Other operating income13.66.1123.0%7.972.2%
Operating Expenses3,306.22,980.410.9%3,214.12.9%
Operating Profit6,351.07,804.0-18.6%6,606.6-3.9%
Net Profit5,143.16,289.8-18.2%5,299.5-3.0%
Basic earnings per share. RUB2.292.80-18.2%2.35-2.6%
EBITDA7,096.18,399.2-15.5%7,331.9-3.2%
EBITDA margin73.5%77.9%-4.4 p.p.74.7%-1.2 p.p.

ANALYSIS OF Q3 2017 FINANCIALS

Total operating income. Operating income in Q3 2017 was RUB 9.66 bln, down 10.5% YoY. Fee and commission income was up 14.9% YoY and reached RUB 5.46 bln, MOEX’s highest quarterly fee income to date. The share of fee and commission income in operating income rose to 57% (44% in Q3 2016). Net interest and other finance income, excluding a net gain on financial assets available for sale, decreased 18.1% YoY because of a decline in prevailing RUB interest rates. In 3Q 2017, the company recorded a net gain of RUB 16.0 mln on financial assets available for sale.

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MOEX announces all-time high fee and commission income, up 15% YoY in Q3 2017

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