Moscow Exchange announces results for the full year 2020
Moscow Exchange (MOEX) today announces its financial results in accordance with International Financial Reporting Standards (IFRS) for the year ended 31 December 2020. Fee and commission income (F&C) grew across every business line, driving another year of record F&C income. Overall, F&C rose by 30.9%, the largest increase in MOEX’s history as a public company, resulting in a 24.6% expansion of net income.
Unless stated otherwise, all figures below refer to performance in 2020 and all comparisons are with the previous year.
KEY FINANCIAL HIGHLIGHTS FOR 2020
- F&C income surged by 30.9% to a record of RUB 34.3 bln as all F&C business lines posted growth.
- F&C share of operating income reached an all-time high of nearly 76% in Q4’20 and 71% in FY’20.
- Net interest income (NII) decreased 15.3% to RUB 14.2 bln on the back of declining interest rates.
- Operating expenses added 8.5%, in line with guidance.
- Adjusted net profit grew 13.8% to reach RUB 25.2 bln.
KEY BUSINESS & CORPORATE HIGHLIGHTS FOR 2020
- MOEX hosted 3 IPOs and 4 SPOs as equity capital markets activity gained steam. Seven Russian companies incorporated abroad obtained a secondary listing on MOEX, further contributing to diversification of the domestic market.
- MOEX remains the main venue for debt capital raising by Russian corporates. 170 corporates, including 48 newcomers, placed 688 bond issues raising a total of nearly RUB 4 trillion in 2020.
- Nearly five million new retail investors opened brokerage accounts in 2020, bringing the total number of retail clients to 8.8 mln at year-end. As of today this number is over 10.3 mln clients.
- MOEX launched an evening trading session on the Equities Market. By year-end, it accounted for 8% of total daily equities trading and for 9% by February 2021.
- MOEX launched trading in international stocks. 87 foreign stocks are available as of today, with plans to grow that number to more than 250 names by the end of 2021.
- Personal finance platform Finuslugi – also known as the Marketplace project – launched in October. At this time all bank deposit products as well as compulsory car insurance (OSAGO) are available on Finuslugi. The product offering will continue to expand throughout 2021.
Yury Denisov, Chief Executive Officer of Moscow Exchange, said:
"Despite the pandemic, the last year was a very successful one for Moscow Exchange and the Russian financial market as a whole. Russian businesses raised in excess of RUB 4 trillion from institutional and private investors via the issuance of equities and bonds on MOEX. By expanding trading hours and rolling out new instruments such as international equities, Eurobonds and derivatives, we significantly broadened opportunities for investors to trade on the exchange. Major investments in IT, cybersecurity, risk management systems and compliance have resulted in the extremely high reliability of our systems. And the efforts of all market participants to promote the capital markets amongst the Russian population combined with the creation of interfaces that make accessing the market easy led to explosive growth in the number of retail investors. The arrival of new investors means we need to grow and develop educational programs. It's of critical importance that retail investors trade responsibly and invest to grow their capital for the long term. "
"More and more retail investors are not only trading on our platform, but also becoming our shareholders. As of today, their number exceeds 190,000. And I have good news for them and for our institutional investors: net profit growth made it possible for the Supervisory Board to recommend the highest ever dividend in MOEX's history -- RUB 9.45 per share, an increase of nearly 20% versus the prior year."
Max Lapin, Chief Financial Officer of Moscow Exchange, said:
"In the second half of the year, our fee and commission income growth accelerated. The key drivers were additional volumes generated by retail investors, an active primary bond market and increased corporate client activity across several markets. As a result, in the fourth quarter we posted a new F&C record for the fifth quarter in a row, surpassing the RUB 10 bln mark for the first time. For 2020 we delivered the strongest full year F&C income growth to date as well – an unprecedented increase of 30.9% – with every business line posting double-digit growth. Equities were the fastest-growing market in 2020, nearly doubling fees and commissions year-on-year, underlining the rise of retail investors."
"Net interest income (NII) in 2020 followed the dynamics of lower interest rates both in Russia and globally, contracting by 15.3% year-on-year as one would expect. This decline was more than offset by the growth in fees and commissions. As a result, operating income grew by 12.4% year-on-year. We also reached a strategic milestone with the share of operating income accounted for by fees and commissions surpassing the 70% mark in 2020. MOEX is well on track to deliver on strategic financial goals in terms of operating income growth and the split between F&C income and NII. On the cost side, OPEX growth came in at 8.5% YoY, which was the top end of our FY2020 guidance range of 7.5% – 8.5% YoY. Net profit was up by 24.6%. CAPEX for the year stood at RUB 3.2 bln, above the FY2020 guidance range of RUB 2.6 – 2.8 bln. The entire CAPEX overrun was the result of our conscious decision to front-load certain software expenses to capture price savings – a decision that we had previously discussed with the investment community. "
FINANCIAL HIGHLIGHTS
| RUB mln | FY 2020 | FY 2019 | Change | Q4 2020 | Q4 2019 | Change |
|---|---|---|---|---|---|---|
| Operating income | 48,591.0 | 43,229.5 | 12.4% | 13,266.8 | 11,182.4 | 18.6% |
|
34,268.2 | 26,181.4 | 30.9% | 10,046.5 | 7,102.5 | 41.5% |
|
14,158.7 | 16,713.0 | -15.3% | 3,168.9 | 4,070.6 | -22.2% |
| Core NII - Core NII - NII less realized gains or losses on investment portfolio revaluation [2] | 13,227.8 | 15,218.7 | -13.1% | 3,193.4 | 3,661.3 | -12.8% |
|
164.1 | 335.1 | -51.0% | 51.4 | 9.3 | 452.7% |
| Operating expenses | 16,750.0 | 15,435.3 | 8.5% | 4,710.8 | 4,048.8 | 16.4% |
|
8,459.3 | 7,113.9 | 18.9% | 2,389.2 | 1,784.4 | 33.9% |
|
4,938.5 | 4,928.7 | 0.2% | 1,347.8 | 1,302.7 | 3.5% |
|
465.6 | 538.4 | -13.5% | 152.5 | 163.8 | -6.9% |
|
2,886.6 | 2,854.3 | 1.1% | 821.3 | 797.9 | 2.9% |
| Profit before other operating expenses and tax | 31,841.0 | 27,794.2 | 14.6% | 8,556.0 | 7,133.6 | 19.9% |
| Other operating gains/(expenses) | -0.9 | -2,614.8 | nm | 321.5 | 63.1 | nm |
| Net profit | 25,170.5 | 20,200.6 | 24.6% | 6,847.8 | 5,749.1 | 19.1% |
| Basic earnings per share, RUB | 11.2 | 9.0 | 24.4% | 3.0 | 2.6 | 15.4% |
| Reconciliation of adjusted metrics | ||||||
| Net profit | 25,170.5 | 20,200.6 | 24.6% | 6,847.8 | 5,749.1 | 19.1% |
|
0.9 | 2,396.5 | nm | -321.5 | -63.1 | nm |
|
-0.2 | -479.3 | nm | 64.3 | 12.6 | nm |
| Adjusted net profit | 25,171.2 | 22,117.8 | 13.8% | 6,590.6 | 5,698.6 | 15.7% |
| EBITDA | 35,188.9 | 28,726.7 | 22.5% | 9,756.7 | 8,136.9 | 19.9% |
|
0.9 | 2,396.5 | nm | -321.5 | -63.1 | nm |
| Adjusted EBITDA | 35,189.8 | 31,123.2 | 13.1% | 9,435.2 | 8,073.8 | 16.9% |
| Adjusted EBITDA margin | 72.4% | 72.0% | 0.4 pp | 71.1% | 72.2% | -1.1 pp |
PERFORMANCE OF KEY BUSINESS LINES
| RUB mln | FY 2020 | FY 2019 | Change | Q4 2020 | Q4 2019 | Change |
|---|---|---|---|---|---|---|
| Equities Market | ||||||
| Fee and commission income, RUB mln | 4,227.4 | 2,264.0 | 86.7% | 1,178.6 | 704.2 | 67.4% |
| Trading volumes, RUB bln | 23,904.7 | 12,443.1 | 92.1% | 6,700.9 | 3,861.1 | 73.5% |
| Bond Market | ||||||
| Fee and commission income, RUB mln | 2,942.5 | 2,551.4 | 15.3% | 989.0 | 762.2 | 29.8% |
| Trading volumes (ex. overnight bonds), RUB bln | 26,157.0 | 22,360.1 | 17.0% | 7,899.2 | 6,834.6 | 15.6% |
| FX Market | ||||||
| Fee and commission income, RUB mln | 4,276.1 | 3,547.4 | 20.5% | 1,142.6 | 857.5 | 33.2% |
| Trading volumes, RUB bln | 328,945.9 | 308,274.4 | 6.7% | 88,492.6 | 70,028.1 | 26.4% |
| Money Market | ||||||
| Fee and commission income, RUB mln | 8,612.0 | 6,979.5 | 23.4% | 2,578.5 | 1,767.7 | 45.9% |
| Trading volumes, RUB bln | 426,781.5 | 346,347.1 | 23.2% | 117,135.8 | 95,153.3 | 23.1% |
| Derivatives Market | ||||||
| Fee and commission income, RUB mln | 3,939.8 | 2,852.6 | 38.1% | 1,097.0 | 780.5 | 40.6% |
| Trading volumes, RUB bln | 129,863.8 | 82,370.2 | 57.7% | 37,190.7 | 20,378.1 | 82.5% |
| Depository and Settlement Services | ||||||
| Fee and commission income, RUB mln | 6,524.9 | 5,226.8 | 24.8% | 2,023.5 | 1,426.0 | 41.9% |
| Average assets under custody, RUB bln | 53,802.0 | 47,766.0 | 12.6% | 58,802.7 | 50,582.5 | 16.3% |
| Other fee and commission income (IT Services, Listing and other fee income) | ||||||
| Information services, RUB mln | 1110.6 | 859.6 | 29.2% | 272.6 | 214.7 | 27.0% |
| Sale of software and tech. services, RUB mln | 956.7 | 901.8 | 6.1% | 287.8 | 305.1 | -5.7% |
| Listing and other services, RUB mln | 811.2 | 674.6 | 20.2% | 269.3 | 237.3 | 13.5% |
| Other fee income, RUB mln | 867.0 | 323.7 | 167.8% | 207.6 | 47.3 | 338.9% |
| Net interest and other finance income | ||||||
| Net interest and other finance income, RUB mln | 14,158.7 | 16,713.0 | -15.3% | 3,168.9 | 4,070.6 | -22.2% |
| Investment portfolio, RUB bln | 843.9 | 765.4 | 10.3% | 924.9 | 777.3 | 19.0% |
- The total market capitalization of the Equities Market at the end of 2020 was RUB 51.43 trln (USD 694.74 bln). Fee and commission income from the Equities Market was up 86.7% on the back of a corresponding increase in trading volumes. A modest divergence between fee and volume dynamics is the result of the tariff structure that incentivizes higher volumes traded.
- Fee income from the Bond Market increased 15.3% with a corresponding increase in trading volumes of 17.0%. Primary market volumes (excluding placements of overnight bonds) increased 28.5%, driven by corporate placements.
- Fee income from the FX Market was up 20.5%. Trading volumes added 6.7%. Spot volumes expanded by 43.9%, while swap volumes declined by 3.7%. The trading volume mix shifted towards the more profitable spot segment following higher volatility and the demand for CCP-based, on-exchange services rather than OTC in the current economic conditions.
- Money Market fee income increased by 23.4% following a nearly identical expansion in trading volumes of 23.2%. GCC-repo volumes increased 38.9% to RUB 75.1 trln in. Non-CCP repo with the Federal Treasury rose to RUB 22.3 trln for 2020 versus only RUB 22.6 bln in 2019 following a migration to the on-exchange interface. The resulting effective fee remained virtually flat due to the compensating effects of GCC-repo and Non-CCP repo with the Federal Treasury.
- The Derivatives Market generated a 38.1% growth of F&C income. The trading volume growth of 57.7% was mainly driven by a twofold expansion of FX derivatives volumes (+113.4%) and a sharp rise in index derivatives trading (+69.1%). Together with the contraction of commodity derivatives, these two factors explain the discrepancy between fees and volumes.
- The Other fee income line includes an additional fee on EUR balances of 0.2% above the ECB rate that was introduced at the beginning of the year. The additional fee explains the 167.8% surge in the Other fee income line. Listing and other services grew 20.2%, while information services added 29.2%.
- The cash position[3] at the end of 2020 was RUB 103.90 bln. The company had no debt as of the end of the reporting period.
- Capex for the year was RUB 3.24 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 2020 are available on the Investor Relations section of the company's web site.
The FY and Q4 2020 IFRS Financial Results webcast is scheduled for 5 March 2021 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.