Moscow Exchange (MOEX) has just announced its financial results in accordance with International Financial Reporting Standards (IFRS) for Q2 2018. Higher trading volumes on all markets and a favorable change in the product mix helped achieve record high fee and commission (F&C) income.
Unless stated otherwise, all figures below refer to performance in Q2 2018 and all comparisons are with the corresponding period last year.
KEY FINANCIAL HIGHLIGHTS FOR Q2 2018
- Record quarterly fee and commission (F&C) income of RUB 5.93 bln (up 16.7%).
- Best performing markets in terms of fees and commissions were Equities (+34.0%), Derivatives (+27.4%), and Money Market (+24.6%).
- Adjusted net income was RUB 5.37 bln, up 1.3%.
KEY BUSINESS & CORPORATE HIGHLIGHTS FOR Q2 2018
- The Bond Market continues to be the center for capital raising by Russian corporates with over
- RUB 1.20 trln placed in H1 2018. There were 127 bond issues by 79 corporates during this period.
- More corporates sought direct access to the FX and Money Markets, with 50 corporate connecting year-to-date and bringing the total to 87 across the two markets.
- Unified Collateral Pool project rolled out, a major enhancement to the market infrastructure facilitating a single trading and clearing account with unified collateral requirements, settlement netting and cross-margining across all markets.
- Continued expansion of the product line, including the launch of new derivative contracts on Light Sweet Crude Oil and the US500 index – thus allowing domestic investors to access global benchmarks.
- Final 2017 dividend paid. The total dividend pay out for the year was RUB 18.12 bln (RUB 7.96 per share).
EVENTS OCCURRING AFTER THE REPORTING PERIOD
- Growth of the domestic retail segment accelerated, with the number of Individual Investment Accounts reaching 400,000 as of 20 August and the number of brokerage accounts surpassing 2.2 mln.
- The company signed a statement of commitment to the FX Global Code, joining more than 100 other signatories, whose ranks include central banks, international financial institutions and trading platforms.
Alexander Afanasiev, Chief Executive Officer of Moscow Exchange, said:
In the second quarter, we posted record fee and commission income on the back of increased client trading activity across all key markets. I would like to particularly highlight year-on-year growth in equity volumes and record quarterly fee and commission income from this market. In May, we completed the roll-out of our most significant market infrastructure initiative in recent years: clients can now enjoy a single trading and clearing account across our markets, unified collateral across all markets and cross margining. We expect these important enhancements will further boost client trading volumes. Russian retail investors continue to show strong interest in exchange-traded instruments; to date, 400,000 Individual Investment Accounts have been opened and over 2.2 million brokerage accounts registered. We are also working to create an online marketplace for financial services; we have built a prototype and plan to fully deploy the platform in the first quarter of 2019. This initiative will help MOEX to enter the new promising market of retail digital financial services.
Maxim Lapin, Chief Financial Officer of Moscow Exchange, added:
I am pleased to report continued increase in the company’s fee and commission income during the quarter. It was driven by healthy trading volumes growth across all our markets as well as a shift in volumes towards higher fee products. Our F&C income set a new record during the quarter, advancing by 16.7%. NII excluding realized gains/losses on investment portfolio revaluation was RUB 4.14 bln, an increase of 4.1% over the previous quarter. Operating expenses net for non-cash changes in amortization schedules for 2018 added 6.3%. Adjusted net income was up 1.3% to RUB 5.37 bln.
In the second quarter, the company recognized a one-off, non-cash provision in the amount of RUB 873 mln. The provision relates to a lawsuit filed by a bankruptcy manager of a defaulted market participant. The litigation continues and the Central Bank of Russia has joined the case on MOEX’s side. The provision covers 100% of the amount claimed by the plaintiff. Management is confident in MOEX’s legal position in this case.
The official announcement can be seen here.