MOEX releases Q2 2017 results, net profit up 6% QoQ

Moscow Exchange MOEX

Moscow Exchange (MOEX) today announced its financial results in accordance with International Financial Reporting Standards (IFRS) for Q2 2017.

Key financial highlights for Q2 2017

  • Fee and commission income increased by 4.2% YoY as strong performance of the Fixed Income Market (up 23.1% YoY), Money Market (up 8.8% YoY) and Depository and Settlement Services (up 12.4%) supported total fees.
  • Interest income was up 3.4% QoQ but down 20.1% YoY in line with funds available for investment.
  • Net profit was up 6.0% QoQ on the back of growth in fee and commission income and interest income but down 17.3% YoY.
  • EBITDA margin improved compared to the two previous quarters, coming in at 74.7%.

Key corporate highlights for Q2 2017

  • MOEX opened up the FX Market for direct trading by Russian corporates. Nine large companies have signed up to date.
  • Clients of China’s top four financial information vendors – Great Wisdom, Wind, East Money and Emoney – began receiving MOEX real-time market data.
  • Distribution of market data is part of an agreement between MOEX and Shanghai Stock Exchange (SSE).
  • The Supervisory Board recommended paying dividends for H1 2017, the first interim dividend for the company.

Events occurring after the reporting period

  • MOEX announced plans to create a subsidiary that will focus on developing innovative projects and working with fintech startups with potential investments of up to RUB 1.2 bln over the next four years.
  • A new segment of the Equity and Bond Market, Growth Sector, was launched to attract SMEs to raise capital via the exchange.
  • MOEX opened up its Money Market for corporates, enabling them to place deposits directly with the central counterparty at REPO market rates. Eleven Russian corporates have used the service to date.
  • The number of Individual Investments Accounts held by private investors reached 240,000 as of 8 August 2017, as compared to 191,000 at the beginning of the year.

Alexander Afanasiev, MOEX

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

We are pleased to note growth of our fee and commission income, representing the strongest result ever in the second quarter. This was primarily driven by record fee and commission income from the Fixed Income Market and the Money Market. We see that improvements to the infrastructure of our markets as well as new services and instruments are in demand by market participants. The success of these markets is also an indication of growing activity of domestic investors and issuers. An important step forward was the granting of Russian corporates direct access to the FX Market and Money Market, and we expect these new participants will bring additional liquidity to our markets. Our strategic priorities for the second half of the year are to deliver new products and services, expand the number of market participants and attract retail investors.

Evgeniya Abrukina, Deputy Chief Financial Officer of Moscow Exchange, added:

Despite continued relatively low market volatility, we managed to maintain growth in fee and commission income. The increase of fees from the Fixed Income Market (+23.1% YoY), Money Market (+8.8% YoY) and Depository and Settlement Services (+12.4% YoY) offset weaker performance of Equities (-8.8% YoY), the FX Market (-6.4% YoY) and Derivatives (-4.2% YoY). Cumulative interest income was up compared to the first quarter 2017 on the back of effective liquidity management, notwithstanding somewhat lower client balances and the continued trend of interest rate moderation. Rigorous control of administrative expenses helped to mitigate the expected increase in D&A and IT maintenance components and retain our best-in-class EBITDA margin, which came in at 74.7%.

Financial highlights can be seen below:

RUB mln Q2 2017 Q2 2016 YoY Q1 2017 QoQ
Operating Income 9,820.7 10,807.6 -9.1% 9,469.6 3.7%
      Fee and commission income 5,076.9 4,872.6 4.2% 4,881.4 4.0%
      Net interest and other finance income 4,735.9 5,928.2 -20.1% 4,578.9 3.4%
      Other operating income 7.9 6.8 16.2% 9.3 -15.1%
Operating Expenses 3,214.1 2,852.9 12.7% 3,281.4 -2.1%
Operating Profit 6,606.6 7,954.7 -16.9% 6,188.2 6.8%
Net Profit 5,299.5 6,409.0 -17.3% 4,998.1 6.0%
Basic earnings per share. RUB 2.35 2.86 -17.8% 2.23 5.4%
EBITDA 7,331.9 8,470.2 -13.4% 6,902.6 6.2%
EBITDA margin 74.7% 78.4% -3.7p.p. 72.9% 1.8 p.p.

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