23.08.2023 09:53
Moscow Exchange announces results for the second quarter of 2023
Moscow Exchange (MOEX) today announces its financial results based on summary financial statements prepared in accordance with International Financial Reporting Standards (IFRS) for Q2 2023.
Unless stated otherwise, all figures below refer to performance in Q2 2023 and all comparisons are with the corresponding period last year.
KEY FINANCIAL HIGHLIGHTS FOR Q2 2023
- Fee and commission (F&C) income increased by 48.1% to RUB 11.93 bln.
- Net interest income (NII) decreased by 23.8%. Core NII was down 23.4%.
- Operating income added 5.0%.
- OPEX was up 1.7%. Cost-to-income ratio improved by 0.9 p.p. and amounted to 28.3%.
- Adjusted net profit grew 6.1% to reach RUB 12.01 bln.
KEY BUSINESS & CORPORATE HIGHLIGHTS FOR Q2 2023
- MOEX presented the information and trading terminal – Trade Radar. It provides access to the news feed, real-time and historical quotes for assets traded on MOEX and reference data on securities issues. It also allows negotiating terms to conclude OTC transactions in secure chats, view transaction history and supply indicative prices to market makers.
- Cash-settled European-type options on USD-RUB, EUR-RUB, CNY-RUB were launched on Derivatives Market. Combined with FX spot market instruments, these options open up additional hedge and arbitrage strategies for all client categories.
- The Bond Market welcomed 152 new bond issues by 84 corporates, including 8 newcomers, for a total of RUB 880 bln.
- Discrete auction mechanism now applies to all equities and DRs traded on MOEX, smoothing out rapid price fluctuations. Previously, discrete auctions were in place for IMOEX constituents only.
EVENTS OCCURRING AFTER THE REPORTING PERIOD
- CarMoney, a fintech microfinance company, completed its IPO on MOEX, raising a total of RUB 600 mln.
- 26.4 million clients held brokerage accounts on MOEX at the end of July. Over 3 million joined since the beginning of the year.
- The CBR added MOEX to the register of exchange operators for digital financial assets (DFA), and NSD to the register of information systems operators issuing DFAs. Therefore, MOEX became the first DFA exchange operator in Russia and now holds both types of licenses for DFA business in Russia.
- Russia’s first-of-a-kind warehouse real estate index was introduced, enabling further development of derivative and other instruments.
- MOEX became a partner of an investment platform Zorko. The platform provides access to shares of high-growth and technology companies at the pre-IPO stage. It might become an effective mechanism to facilitate companies' transition to initial public offerings.
- Equities and Bond Market have switched to T+1 settlement cycle. This change to T+1 will increase the convenience of operating on the MOEX markets, allowing to reduce time to transact on MOEX markets, synchronize securities’ settlement with FX TOM instruments and optimize liquidity management via alignment with Money Market.
FINANCIAL HIGHLIGHTS
| RUB mln | Q2 2023 | Q2 2022 | YoY | Q1 2023 | QoQ |
|---|---|---|---|---|---|
| Operating Income | 20 896.1 | 19 907.6 | 5.0% | 23 211.1 | -10.0% |
| · Fee and commission income | 11 933.0 | 8 056.3 | 48.1% | 9 960.0 | 19.8% |
| · Net interest and other finance income (NII) [1] | 8 958.3 | 11 761.9 | -23.8% | 13 185.1 | -32.1% |
| Core NII – NII less realized gains or losses on investment portfolio revaluation [2] | 9 272.7 | 12 109.7 | -23.4% | 13 176.7 | -29.6% |
| · Other operating income | 4.8 | 89.4 | -94.6% | 66.0 | -92.7% |
| Operating Expenses | 5 906.5 | 5 805.0 | 1.7% | 5 423.5 | 8.9% |
| · Personnel expenses | 2 902.4 | 2 873.4 | 1.0% | 2 712.1 | 7.0% |
| · D&A and IT maintenance | 1 606.6 | 1 556.1 | 3.2% | 1 570.1 | 2.3% |
| · Remaining general and administrative expenses | 1 397.5 | 1 375.5 | 1.6% | 1 141.3 | 22.4% |
| Profit before other operating expenses and tax | 14 989.6 | 14 102.6 | 6.3% | 17 787.6 | -15.7% |
| Movement in allowance for expected credit losses | 356.6 | - 3 797.2 | nm | 46.1 | nm |
| Other impairment and provisions | - 232.9 | - | nm | - 0.8 | nm |
| Profit before tax | 15 113.3 | 10 305.4 | 46.7% | 17 832.9 | -15.3% |
| Income tax | - 3 003.0 | - 2 019.9 | 48.7% | - 3 498.4 | -14.2% |
| Net Profit | 12 110.3 | 8 285.5 | 46.2% | 14 334.5 | -15.5% |
| Basic earnings per share, RUB | 5.37 | 3.67 | 46.3% | 6.35 | -15.4% |
| Net Profit | 12 110.3 | 8 285.5 | 46.2% | 14 334.5 | -15.5% |
| · Movements in allowance for ECLs | - 356.6 | 3 797.2 | nm | - 46.1 | nm |
| · Other impairment and provisions | 232.9 | - | nm | 0.8 | nm |
| · Deferred taxes related to movements in allowance for ECLs and other impairment & provisions | 24.7 | - 759.4 | nm | 9.1 | nm |
| Adjusted Net Profit | 12 011.3 | 11 323.3 | 6.1% | 14 298.3 | -16.0% |
| EBITDA | 16 342.6 | 11 382.1 | 43.6% | 19 069.7 | -14.3% |
| · Movements in allowance for ECLs | - 356.6 | 3 797.2 | nm | - 46.1 | nm |
| · Other impairment and provisions | 232.9 | - | nm | 0.8 | nm |
| Adjusted EBITDA | 16 218.9 | 15 179.3 | 6.8% | 19 024.4 | -14.7% |
| Adjusted EBITDA margin | 77.6% | 76.2% | 1.4 p.p. | 82.0% | -4.4 p.p. |
OPEX BREAKDOWN
| RUB mln | Q2 2023 | Q2 2022 | YoY | Q1 2023 | QoQ |
|---|---|---|---|---|---|
| General and Administrative Expenses | 3 004.1 | 2 931.6 | 2.5% | 2 711.4 | 10.8% |
| · Amortisation of intangible assets | 973.3 | 770.4 | 26.3% | 962.8 | 1.1% |
| · Equipment and intangible assets maintenance | 377.3 | 479.4 | -21.3% | 333.3 | 13.2% |
| · Advertising and marketing costs | 300.7 | 451.4 | -33.4% | 123.8 | 142.9% |
| · Depreciation of property and equipment | 256.0 | 306.3 | -16.4% | 274.0 | -6.6% |
| · Professional services | 213.0 | 152.9 | 39.3% | 239.1 | -10.9% |
| · Market makers fees | 173.6 | 71.3 | 143.5% | 153.2 | 13.3% |
| · Taxes, other than income tax | 165.8 | 277.4 | -40.2% | 182.6 | -9.2% |
| · Agent fees | 162.9 | 126.3 | 29.0% | 115.8 | 40.7% |
| · Registrar and foreign depository services | 116.3 | 62.6 | 85.8% | 88.9 | 30.8% |
| · Information services | 85.3 | 9.5 | 797.9% | 77.3 | 10.3% |
| · Rent and office maintenance | 83.9 | 78.7 | 6.6% | 88.5 | -5.2% |
| · Communication services | 27.2 | 33.9 | -19.8% | 22.3 | 22.0% |
| · Business trip expenses | 18.1 | 11.4 | 58.8% | 6.0 | 201.7% |
| · Loss on disposal of property, equipment and intangible assets | 12.4 | 4.3 | 188.4% | 5.7 | 117.5% |
| · Security expenses | 9.9 | 7.3 | 35.6% | 7.2 | 37.5% |
| · Transport expenses | 5.4 | 5.9 | -8.5% | 3.9 | 38.5% |
| · Charity | 3.3 | - | nm | 11.5 | -71.3% |
| · Other | 19.7 | 82.6 | -76.2% | 15.5 | 27.1% |
| Personnel expenses | 2 902.4 | 2 873.4 | 1.0% | 2 712.1 | 7.0% |
| · Employees benefits except for share-based payments | 2 330.1 | 2 431.9 | -4.2% | 1 947.2 | 19.7% |
| · Payroll related taxes | 488.4 | 433.2 | 12.7% | 665.3 | -26.6% |
| · Share-based payment expense on equity settled instruments | 71.9 | 0.2 | 35850.0% | 84.5 | -14.9% |
| · Share-based payment expense on cash settled instruments | 12.0 | 8.1 | 48.1% | 15.1 | -20.5% |
| Total operating expenses | 5 906.5 | 5 805.0 | 1.7% | 5 423.5 | 8.9% |
| Headcount, employees e-o-p | 2 405 | 2 377 | 1.2% | 2 379 | 1.1% |
- OPEX for 2Q’23 increased by 1.7%. 6M’23 OPEX was down 8.7%.
- Personnel expenses added 1.0%. The 7.0% QoQ increase is due to the low base effect: 1Q’23 figure included some unwinding of extra bonus provisions accumulated during FY 2022.
- Headcount measured by the number of employees was up 1.2%.
- Advertising and marketing costs decreased 33.4% YoY, but surged 2.4x QoQ. The quarterly dynamics is explained by Finuslugi-related spending.
- Market makers’ fees expanded 2.4x as trading activity across markets recovered.
- Taxes other than income tax declined by 40.2% following a reduction in taxable (VAT) spend on marketing and IT maintenance.
- D&A and IT maintenance grew 3.2%, D&A alone was up 14.2%. The latter is explained by the higher CAPEX of 4Q’22. IT maintenance costs decreased 21.3% as foreign vendors discontinued their service. Quarterly dynamics of a 13.2% increase in IT maintenance costs is due to gradual implementation of software & hardware renewal program.
- 2Q’23 CAPEX was RUB 0.92 bln. 6M’23 CAPEX amounted to RUB 1.49 bln. The updated FY’23 CAPEX guidance is RUB 4 – 6 bln. Actual spend will depend on the implementation of software & hardware renewal program.
- Updated FY’23 OPEX growth guidance is 6 – 10% YoY.
PERFORMANCE OF KEY BUSINESS LINES
| RUB mln | Q2 2023 | Q2 2022 | YoY | Q1 2023 | QoQ |
|---|---|---|---|---|---|
| Equities Market | |||||
| Fee and commission income, RUB mln | 1 617.5 | 466.7 | 246.6% | 998.3 | 62.0% |
| Trading volumes, RUB bln | 5 332.5 | 2 522.3 | 111.4% | 3 304.1 | 61.4% |
| Bond Market | |||||
| Fee and commission income, RUB mln | 712.2 | 244.1 | 191.8% | 693.6 | 2.7% |
| Trading volumes (ex. overnight bonds), RUB bln | 3 968.3 | 1 450.1 | 173.7% | 3 969.6 | 0.0% |
| FX Market | |||||
| Fee and commission income, RUB mln | 1 622.0 | 1 160.0 | 39.8% | 1 475.0 | 10.0% |
| Trading volumes, RUB bln | 66 713.0 | 55 875.6 | 19.4% | 60 939.0 | 9.5% |
| Money Market | |||||
| Fee and commission income, RUB mln | 2 767.0 | 2 246.0 | 23.2% | 2 249.0 | 23.0% |
| Trading volumes, RUB bln | 184 027.1 | 164 075.1 | 12.2% | 186 928.6 | -1.6% |
| Derivatives Market | |||||
| Fee and commission income, RUB mln | 1 464.4 | 555.6 | 163.6% | 1 178.1 | 24.3% |
| Trading volumes, RUB bln | 17 758.3 | 15 032.5 | 18.1% | 13 771.4 | 29.0% |
| Depository and Settlement Services | |||||
| Fee and commission income, RUB mln | 2 298.6 | 1 747.8 | 31.5% | 2 157.0 | 6.6% |
| Average assets under custody, RUB bln | 69 949.8 | 59 072.4 | 18.4% | 62 566.4 | 11.8% |
| Other fee and commission income (IT Services, Listing, Marketplace and other) | 1 451.3 | 1 636.1 | -11.3% | 1 209.0 | 20.0% |
| Information services, RUB mln | 340.5 | 263.6 | 29.2% | 281.0 | 21.2% |
| Sale of software and tech. services, RUB mln | 385.5 | 270.2 | 42.7% | 400.1 | -3.6% |
| Listing and other services, RUB mln | 178.7 | 108.2 | 65.2% | 158.4 | 12.8% |
| Financial marketplace services, RUB mln | 358.5 | 183.1 | 95.8% | 235.6 | 52.2% |
| Other fee income, RUB mln | 188.1 | 811.0 | -76.8% | 133.9 | 40.5% |
| Net interest and other finance income | |||||
| Net interest and other finance income, RUB mln | 8 958.3 | 11 761.9 | -23.8% | 13 185.1 | -32.1% |
| Investment portfolio, RUB bln | 2 166.5 | 3 554.3 | -39.0% | 2 249.2 | -3.7% |
- The total market capitalization of the Equities Market at the end of the second quarter was RUB 49.13 trln (USD 564.55 bln). Fee and commission income from the Equities Market surged by nearly 3.5x. Trading volumes expanded 111.4% as trading velocity accelerated. More than 2.6 million clients were active every month during the quarter. The discrepancy between fees and volumes dynamics is due to the new asymmetric tariff structure introduced in Nov’22.
- Fees and commissions from the Bond Market nearly tripled. Trading volumes (excluding overnight bonds) were up 173.7%. Primary market was active ahead of anticipated monetary policy decisions. The effective fee in the Bond Market improved thanks to the updated tariffs that went live at the beginning of the year and migration of volumes to value-added CCP-based trading modes.
- Money Market fee income improved by 23.2% as trading volumes added 12.2%. The discrepancy between fees and volumes dynamics was mainly attributable to an increase in both average on-exchange repo terms and average GCC repo terms.
- Fee income from the FX Market grew 39.8% while trading volumes were up 19.4%. The effective fee dynamics is explained by the new tariff structure that went live in Aug’22. Also, the trading volumes’ mix slightly shifted towards a less profitable swap segment: spot volumes increased by 8.1% and swap volumes improved 26.8%.
- Derivatives Market fee income surged 2.6x, while trading volumes grew 18.1%. Volumes’ mix changed towards higher value-added futures contracts based on commodities and single stocks. Index derivatives’ volumes grew by 22.0%, FX derivatives’ volumes decreased 10.1% and commodity derivatives’ volumes surged 3.6x. Single-stock derivatives trading volumes increased by 33.0%. The effective fee was largely driven by the launch of asymmetric tariff structure in Jun’22.
- Other fee and commission income declined by 11.3%. Information sales were up 29.2%, largely due to RUB depreciation. Sales of software and technical services increased by 42.7%, driven by tariffs revision and the introduction of low-latency protocols for market data distribution – SIMBA ASTS and FIFO TWIME ASTS – to Equities and FX Markets. Listing and other services increased by 65.2% as activity on the primary bond market remained strong during the quarter. Finuslugi marketplace revenue improved by 95.8% to RUB 358.5 mln. Other fee income decreased 76.8% as base period revenues included additional fees on EUR balances of 0.2 p.p. above the non-positive ECB rate.
- The cash position[1] at the end of Q2 2023 was RUB 116.97 bln. The company had no debt as of the end of the quarter.
- Capex for the quarter was RUB 0.92 bln, mostly spent on purchases and development of software.
Moscow Exchange’s summary consolidated IFRS financial statements for Q2 2023 are available in the Investor Relations section of the company's web site.
Contacts:
| Investor Relations: | Public Relations: |
|---|---|
| Anton Terentiev, CFA +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.
[1] Cash position is calculated as the sum of Cash and cash equivalents, Financial assets at fair value through profit and loss, Due from financial institutions, Financial assets at fair value though other comprehensive income, Current tax prepayments and Other financial assets less Balances of market participants, Overnight bank loans, Distributions payable to holders of securities, Margin account, Liabilities related to assets held for sale, Current tax payables and Other financial liabilities.
[1] Calculated as the sum of interest income calculated using the effective interest method, other interest income, gains/losses on FVTPL, gains/losses on FVTOCI, foreign currencies & precious metals gains less losses minus interest expense.
[2] Calculated as the sum of interest income calculated using the effective interest method, other interest income, gains/losses on FVTPL, foreign currencies & precious metals gains less losses less interest expense (compared to net interest and other finance income, excludes gains/losses on FVTOCI).