Moscow Exchange announces results for the full year 2019
Moscow Exchange (MOEX) today announces its financial results in accordance with International Financial Reporting Standards (IFRS) for the year ended 31 December 2019. The Derivatives, Bond and Equities Markets posted substantial increases in fee and commission (F&C) income. Solid performance across other markets and a steady increase of assets under custody helped MOEX achieve another year of record F&C income, sustaining double-digit growth.
Unless stated otherwise, all figures below refer to performance in 2019 and all comparisons are with the previous year.
KEY FINANCIAL HIGHLIGHTS FOR 2019
- F&C income increased by 10.7% YoY to a record of RUB 26.2 bln, driven by the growth of the Derivatives Market and followed by the Bond and Equities Markets.
- Net interest income (NII) was up 4.1% YoY to RUB 16.7 bln, supported by realized revaluation gains on the investment portfolio.
- Operating expenses remained under control, adding 6.8% YoY.
- Net profit grew by 2.4% YoY to reach RUB 20.2 bln.
KEY BUSINESS & CORPORATE HIGHLIGHTS FOR 2019
- MOEX remains the main venue for capital raising by Russian corporates. Bond placements totaled RUB 3.17 trln in 2019. 634 bond issues were placed by 299 corporates during the period, including 83 newcomers to the market.
- MOEX presented a new Money Market benchmark that tracks the value of secured money: the Russian Secured Funding Average Rate (RUSFAR). The new gauge is calculated based on CCP-cleared repo transactions in general collateral certificates.
- MOEX introduced new products across its markets. These included the first structured bond and 18 new ETFs, on-exchange and OTC derivatives on RUSFAR, the USD/JPY currency pair and deliverable futures on silver. GCC repo with the Federal Treasury was introduced. In order to boost liquidity on the FX Market, a new service called Request for Stream (RFS), which facilitates large block FX trading by corporates and financial institutions, was launched.
- MOEX continued to develop services that facilitate access to trading. The Derivatives Market now offers International Clearing Membership (ICM) for international investors. The number of corporates with direct access to the FX Market increased to 40, while 121 corporates had direct access to the Money Market as of the year-end.
- Nearly two million new retail investors opened brokerage accounts in 2019, bringing the total number of retail clients to 3.9 mln. In February 2020, the number of retail clients surpassed 4.3 mln.
- The Supervisory Board approved a new strategy focused on striking a balance between reliability and growth. A new dividend policy was also adopted, under which the company will seek to distribute the entire free cash flow in the form of dividends. The policy raises the payout floor from 55% to 60% of net profit.
Yury Denisov, CEO of Moscow Exchange:
"In 2019 we delivered on our new strategic goals of rolling out new products and services that expand our client base and deepen relationships with existing clients. A new class of investor is emerging on the Russian financial market: over the last year a record number of retail investors opened brokerage accounts. We strengthened our position as the platform-of-choice for capital raising by Russian companies. The Derivatives, Equity and Bond Markets were the key drivers of double-digit growth in fee and commission income, which now accounts for nearly two-thirds of total operating income. The company’s strong financial results for the year allowed the Supervisory Board to recommend paying out to shareholders dividends that exceed those of the previous year.
"In my first year leading the company, I focused on strengthening the company’s risk management system, optimizing decision-making processes and automating internal processes. Our goal is to build a culture of trust and responsibility that will make MOEX an even more effective and sustainable company."
Max Lapin, CFO of Moscow Exchange:
"We continue to deliver double-digit F&C growth, which stood at 10.7% YoY for the full year 2019. Quarterly F&C income exceeded the RUB 7 bln mark for the first time, reaching RUB 7.1 bln. The three fastest growing markets in FY2019 were Derivatives (+23.0%), Bonds (+17.4%) and Equities (+17.2%), helping to strengthen the overall effective fee. The three largest contributors to the F&C line in absolute YoY terms were Depositary & Settlement Services (+RUB 696.1 mln), Money Market (+RUB 589.7 mln) and Derivatives Market (+RUB 533.7 mln). Realized revaluation gains on the investment portfolio supported NII performance for the year (+4.1%). Core NII slightly declined (-3.7%) due to expansionary monetary policy by the Russian Central Bank and the Federal Reserve.
"On the costs side, FY2019 OPEX added just 6.8% YoY, which is below our guidance range of 8.0-10.0%. Adjusted for pass-through grain expenses, OPEX expanded by 8.0% YoY. This allowed us to maintain positive operating jaws on the F&C level, excluding one-off provisions. FY2019 adjusted EBITDA increased 8.6% YoY for a margin of 72.0%. CAPEX came at RUB 2.2 bln, comfortably in the middle of the RUB 2.0 – 2.5 bln guidance range. Overall, reported net profit climbed above the RUB 20 bln mark for FY2019 – to RUB 20.2 bln."
FINANCIAL HIGHLIGHTS
| RUB mln | FY 2019 | FY 2018 | Change | Q4 2019 | Q4 2018 | Change |
|---|---|---|---|---|---|---|
| Operating income | 43,229.5 | 39,901.4 | 8.3% | 11,182.4 | 10,028.0 | 11.5% |
|
26,181.4 | 23,647.1 | 10.7% | 7,102.5 | 6,296.6 | 12.8% |
|
16,713.0 | 16,061.0 | 4.1% | 4,070.6 | 3,723.5 | 9.3% |
| Core NII - NII less realized gains or losses on investment portfolio revaluation[2] | 15,218.7 | 15,799.0 | -3.7% | 3,661.3 | 3,782.5 | -3.2% |
|
335.1 | 193.3 | 73.4% | 9.3 | 7.9 | 17.7% |
| Operating expenses | 15,435.3 | 14,453.7 | 6.8% | 4,048.8 | 3,914.4 | 3.4% |
|
7,113.9 | 6,512.3 | 9.2% | 1,784.4 | 1,723.6 | 3.5% |
|
4,928.7 | 4,545.0 | 8.4% | 1,302.7 | 1,185.7 | 9.9% |
|
538.4 | 572.6 | -6.0% | 163.8 | 164.9 | (0.7%) |
|
2,854.3 | 2,823.8 | 1.1% | 797.9 | 840.2 | (5.0%) |
| Profit before other operating expenses and tax | 27,794.2 | 25,447.7 | 9.2% | 7,133.6 | 6,113.6 | 16.7% |
| Other operating gains/(expenses) | (2,614.8) | (1,075.2) | nm | 63.1 | 654.7 | nm |
| Net profit | 20,200.6 | 19,720.3 | 2.4% | 5,749.1 | 5,463.4 | 5.2% |
| Basic earnings per share, RUB | 8.96 | 8.76 | 2.3% | 2.55 | 2.43 | 4.9% |
| Reconciliation of adjusted metrics | ||||||
| Net profit | 20,200.6 | 19,720.3 | 2.4% | 5,749.1 | 5,463.4 | 5.2% |
|
2,396.5 | 957.7 | nm | (63.1) | (632.0) | nm |
|
- | 267.0 | nm | - | 65.8 | nm |
|
(479.3) | (191.5) | nm | 12.6 | 126.4 | nm |
| Adjusted net profit | 22,117.8 | 20,753.5 | 6.6% | 5,698.6 | 5,023.6 | 13.4% |
| EBITDA | 28,726.7 | 27,712.0 | 3.70% | 8,136.9 | 7,609.3 | 6.9% |
|
2,396.5 | 957.7 | nm | (63.1) | (632.0) | nm |
| Adjusted EBITDA | 31,123.2 | 28,669.7 | 8.6% | 8,073.8 | 6,977.3 | 15.7% |
| Adjusted EBITDA margin | 72.0% | 71.9% | 0.6 pp | 72.2% | 69.6% | 2.6 pp |
PERFORMANCE OF KEY BUSINESS LINES
| RUB mln | FY 2019 | FY 2018 | Change | Q4 2019 | Q4 2018 | Change |
|---|---|---|---|---|---|---|
| Equities Market | ||||||
| Fee and commission income, RUB mln | 2,264.0 | 1,932.2 | 17.2% | 704.2 | 480.1 | 46.7% |
| Trading volumes, RUB bln | 12,443.1 | 10,829.6 | 14.9% | 3,861.1 | 2,730.8 | 41.4% |
| Bond Market | ||||||
| Fee and commission income, RUB mln | 2,551.4 | 2,173.5 | 17.4% | 762.2 | 493.1 | 54.6% |
| Trading volumes (ex. overnight bonds), RUB bln | 22,360.1 | 21,216.0 | 5.4% | 6,834.6 | 5,109.1 | 33.8% |
| FX Market | ||||||
| Fee and commission income, RUB mln | 3,547.4 | 3,990.0 | (11.1%) | 857.5 | 989.3 | (13.3%) |
| Trading volumes, RUB bln | 308,274.4 | 348,368.5 | (11.5%) | 70,028.1 | 83,694.2 | (16.3%) |
| Money Market | ||||||
| Fee and commission income, RUB mln | 6,979.5 | 6,389.8 | 9.2% | 1,767.7 | 1,750.3 | 1.0% |
| Trading volumes, RUB bln | 346,347.1 | 364,215.8 | (4.9%) | 95,153.3 | 96,173.7 | (1.1%) |
| Derivatives Market | ||||||
| Fee and commission income, RUB mln | 2,852.6 | 2,318.9 | 23.0% | 780.5 | 646.5 | 20.7% |
| Trading volumes, RUB bln | 82,370.2 | 89,263.1 | (7.7%) | 20,378.1 | 24,784.4 | (17.8%) |
| Depository and Settlement Services | ||||||
| Fee and commission income, RUB mln | 5,226.8 | 4,530.7 | 15.4% | 1,426.0 | 1,265.2 | 12.7% |
| Average assets under custody, RUB bln | 47,766.0 | 42,797.8 | 11.6% | 50,582.5 | 43,807.4 | 15.5% |
| Other fee and commission income (IT Services, Listing and other) | ||||||
| Information services, RUB mln | 859.6 | 792.4 | 8.5% | 214.7 | 227.4 | (5.6%) |
| Sale of software and tech. services, RUB mln | 901.8 | 695.9 | 29.6% | 305.1 | 183.0 | 66.7% |
| Listing and other services, RUB mln | 674.6 | 338.3 | 99.4% | 237.3 | 101.9 | 132.9% |
| Other fee income, RUB mln | 323.7 | 485.4 | (33.3%) | 47.3 | 159.8 | (70.4%) |
| Net interest and other finance income | ||||||
| Net interest and other finance income, RUB mln | 16,713.0 | 16,061.0 | 4.1% | 4,070.6 | 3,723.5 | 9.3% |
| Investment portfolio, RUB bln | 765.4 | 670.1 | 14.2% | 777.3 | 664.8 | 16.9% |
- The total market capitalization of the Equities Market at the end of 2019 was RUB 49.02 trln (USD 791.52 bln). Fee and commission income from the Equities Market grew by 17.2% YoY on the back of an increase in trading volumes of 14.9% YoY.
- Fee income from the Bond Market increased 17.4% YoY amid more modest growth (+5.4% YoY) of trading volumes (excluding overnight bonds). The effective fee in the Bond Market was supported by a higher proportion of corporate bonds in the primary market.
- Money Market trading volumes declined by 4.9% YoY, while fee income posted growth of 9.2% YoY. Trading volumes contracted due to a decrease in a lower valued-added segment – the interdealer repo market (-26.6% YoY) – and an overall decrease in CCP repo (not including GCC) market activity (-4.9% YoY). The increase of the effective fee is explained by a greater share of high value-added GCC repo, a UCP-linked fee rate change and an extension of repo terms on a full-year basis.
- Derivatives delivered 23.0% YoY growth of fee and commission income. However, trading volumes declined by 7.7% YoY with FX derivatives showing a visible contraction (-23.7% YoY). Commodity futures volumes (+31.6% YoY) helped to mitigate the effect of this decline. This mix improvement, together with the UCP-linked fee rate increase and a supportive YoY effect of IFRS adjustments, helped achieve record annual fee income of RUB 2.85 bln.
- Listing and other services grew two-fold thanks to higher market activity. Sale of software and technological services added 29.6% YoY. Information services increased by 8.5% YoY. Other fee income, a line that includes the contribution from the Grain Market, declined 33.3% YoY.
- The cash position[3] at the end of 2019 was RUB 92.96 bln. The company had no debt as of the end of the quarter.
- Capex for the year was RUB 2.20 bln, all of which was spent on purchases of equipment and software as well as software development.
Moscow Exchange’s consolidated IFRS financial statements for FY 2019 are available on the Investor Relations section of the company's web site.
The FY and Q4 2019 IFRS Financial Results webcast is scheduled for 6 March 2020 at 4:00 pm (Moscow time).
Contacts:
Investor Relations: Public Relations:
| Anton Terentiev +7 495 363 3232 ir@moex.com |
Lev Bystrov +7 495 363 3232 pr@moex.com |
NOTES TO EDITORS
About Moscow Exchange
Moscow Exchange Group operates Russia’s main trading platform for equities, bonds, derivative instruments, currencies, money market instruments and commodities. The Group includes the central securities depository (National Settlement Depository), and a clearing center (National Clearing Centre), performing the functions of central counterparty on the markets, which allows Moscow Exchange to offer its clients the full spectrum of trading and post-trading services. Moscow Exchange held the initial public offering of its shares on 15 February 2013 (ticker MOEX).
Disclaimers
Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could," "may" or "might" the negative of such terms or other similar expressions. The Company wishes to caution you that these statements are only predictions and that actual events or results may differ materially. The Company does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in the Russian Federation, rapid technological and market change in the industries the Company operates in, as well as many other risks specifically related to the Company and its operations.