The Russian market operator Moscow Exchange Group (MOEX) reported its results for the third quarter of 2020. Record fee income from the Money Market and Depository & Settlement Services as well as strong performance by the Equities Market helped MOEX achieve all-time high F&C income for the third quarter in a row.
Highlights include:
- Fee and commission (F&C) income advanced 30.0% to RUB 8,320.9 million.
- Operating income added 6.0% despite a 29.8% contraction in Net Interest Income (NII) amid declining domestic and global interest rates.
- Operating expenses increased 11.8% on the back of higher personnel costs.
- Net profit grew 2.7% to reach RUB 5,598.6 million. Adjusted net profit was up 1.8%.
Max Lapin, Chief Financial Officer of Moscow Exchange, commented:
We remain focused on deepening our main markets by expanding the range of instruments available for trading and offering new services. As a result, we see strong trading volume growth across all MOEX markets year-on-year, and are reporting record-high quarterly fee and commission income. We are pleased to see new companies’ stock listings on our platform, including two recent IPOs and listings by a number of companies with Russian roots that historically only had listings abroad. In order to offer more investment opportunities for retail investors and respond to growing demand for diversification, MOEX commenced trading in foreign stocks. We plan to expand the list of available international stocks to several hundred names by the end of next year.
The number of retail brokerage accounts is increasing impressively: in October an average of about 48,000 accounts were opened per business day. Together with asset management companies, we continue to develop the market for exchange-traded funds. ETFs are increasingly popular and more than half a million Russian investors now hold them in their investment portfolios.
Max Lapin, Chief Financial Officer of Moscow Exchange noted:
We’ve hit the new F&C high for the fourth quarter in a row, which clearly is a positive development. This quarter, F&C income surpassed the RUB 8 bln mark to arrive at RUB 8.3 bln. Importantly, its growth rate accelerated further compared with the two preceding quarters, reaching 30.0% year-on-year. In fact, it is the strongest growth in five years and every F&C business line posted a double-digit growth. Two fee and commission business lines delivered record highs in absolute terms: the Money Market and Depositary & Settlement Services.”
We continue to implement strategic initiatives that become a backbone for our future growth with particular emphasis on base assets such as equities and bonds. Specifically, in 2020YTD we’ve had two IPOs, brough five Russian companies listed abroad on to MOEX via secondary listings and launched trading in 20 foreign stocks. A bit more than 30 are coming up till the year end. ETFs are also on the rise. We keep adding Eurobonds and listing newly issued domestic bonds.
| RUB mln |
Q3 2020 |
Q3 2019 |
YoY |
Q2 2020 |
QoQ |
| Operating income |
11,308.2 |
10,664.0 |
6.0% |
12,027.6 |
-6.0% |
- Fee and commission income
|
8,320.9 |
6,399.6 |
30.0% |
7,990.9 |
4.1% |
- Net interest and other finance income (NII)
|
2,970.1 |
4,233.5 |
-29.8% |
4,027.0 |
-26.2% |
| NII less realized gains on investment portfolio revaluation (core NII) |
2,926.6 |
3,528.4 |
-17.1% |
3,816.9 |
-23.3% |
|
|
17.2 |
30.9 |
-44.3% |
9.7 |
77.3% |
| Operating expenses |
4,222.6 |
3,775.8 |
11.8% |
4,138.4 |
2.0% |
|
|
2,174.1 |
1,776.0 |
22.4% |
2,101.3 |
3.5% |
|
|
1,238.0 |
1,183.1 |
4.6% |
1,183.6 |
4.6% |
- Remaining general and administrative expenses
|
810.5 |
816.7 |
-0.8% |
853.5 |
-5.0% |
| Profit before other operating expenses and tax |
7,085.6 |
6,888.2 |
2.9% |
7,889.2 |
-10.2% |
| Other operating gains/(expenses) |
-51.2 |
-107.9 |
nm |
599.8 |
nm |
| Net profit |
5,598.6 |
5,453.4 |
2.7% |
6,820.1 |
-17.9% |
| Basic earnings per share, RUB |
2.48 |
2.42 |
2.5% |
3.02 |
-17.9% |
|
|
|
|
|
|
| Net Profit |
5,598.6 |
5,453.4 |
2.7% |
6,820.1 |
-17.9% |
- Other operating expenses / (income)
(one-off provisions and movements in allowance for ECLs under IFRS 9) |
51.2 |
107.9 |
nm |
-599.8 |
nm |
- Deferred taxes related to one-off provisions and movements in IFRS 9 allowance
|
-10.2 |
-21.6 |
nm |
120.0 |
nm |
| Adjusted net profit |
5,639.6 |
5,539.7 |
1.8% |
6,340.3 |
-11.1% |
|
|
|
|
|
|
| EBITDA |
7,887.2 |
7,628.3 |
3.4% |
9,310.1 |
-15.3% |
- Other operating expenses / (income)
(one-off provisions and movements in IFRS 9 allowance) |
51.2 |
107.9 |
nm |
-599.8 |
nm |
| Adjusted EBITDA |
7,938.4 |
7,736.2 |
2.6% |
8,710.3 |
-8.9% |
| Adjusted EBITDA margin |
70.2% |
72.5% |
-2.3 p.p. |
72.4% |
-2.2 p.p. |
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