Moscow Exchange announces results for the second quarter of 2020
Source: MOEX
Unless stated otherwise, all figures below refer to performance in Q2 2020 and all comparisons are with the corresponding period last year.
KEY FINANCIAL HIGHLIGHTS FOR Q2 2020
- Fee and commission (F&C) income grew 21.8% to RUB 7,990.9 mln, mainly driven by the performance of Equities, Money, and Derivatives Markets.
- Net interest income (NII) declined 10.5% due to declining domestic and global interest rates, despite the larger investment portfolio.
- Operating expenses remained under control, increasing by 6.8%, which is within the FY2020 guidance range.
- Adjusted net profit was up by 8.6% to RUB 6,340.3 mln.
- The Bond Market reported 155 new bond issues by 66 corporates (including eight newcomers) for a total of RUB 702 bln.
- The Equities Market is now open for trading nearly 14 hours a day following the launch of an evening trading session. The evening session is convenient for the growing retail investor base as well as for many western international traders.
- ETFs are an increasingly popular on-exchange product with five new Russian-law ETFs listed during the quarter, bringing the total number of ETFs traded on MOEX to 41 with a total NAV of approximately RUB 70 bln.
- A major Bond Market infrastructure upgrade was completed with all corporate bonds migrated from T0 to T+ settlement. The new settlement regime allows for partial pre-funding of trades.
- Non-state pension funds were admitted to deposit operations on the Money Market.
EVENTS OCCURRING AFTER THE REPORTING PERIOD
- The number of retail investors reached 5.9 mln as of mid-August. The number of Individual Investment Accounts now exceeds 2.5 mln.
- The trend of Russian companies incorporated abroad seeking a second listing in Moscow continued as Mail.ru Group GDRs began trading on MOEX.
- MOEX completed an acquisition of a minority stake in an operator of OTC FX trading platform NTPro. MOEX plans to consolidate a 100% ownership of the business within three years.
Max Lapin, Chief Financial Officer of Moscow Exchange, said:
"Other operating expenses resulted in a gain largely due to the partial release of IFRS 9 provisions, which were created in the first quarter because of the impact of Russia’s CDS rate increases on FVTOCI bond portfolio. As market conditions normalized in the second quarter, we were able to unwind these provisions.
| RUB mln | Q2 2020 | Q2 2019 | YoY | Q1 2020 | QoQ |
|---|---|---|---|---|---|
| Operating income | 12,027.6 | 11,100.0 | 8.4% | 11,988.4 | 0.3% |
|
7,990.9 | 6,561.8 | 21.8% | 7,909.9 | 1.0% |
|
4,027.0 | 4,498.0 | -10.5% | 3,992.7 | 0.9% |
| NII less realized gains on investment portfolio revaluation (core NII) | 3,816.9 | 4,118.8 | -7.3% | 3,290.9 | 16.0% |
|
9.7 | 40.2 | -75.9% | 85.8 | -88.7% |
| Operating expenses | 4,138.4 | 3,873.8 | 6.8% | 3,678.2 | 12.5% |
|
2,101.3 | 1,797.6 | 16.9% | 1,794.7 | 17.1% |
|
1,183.6 | 1,238.0 | -4.4% | 1,169.1 | 1.2% |
|
853.5 | 838.2 | 1.8% | 714.4 | 19.5% |
| Profit before other operating expenses and tax | 7,889.2 | 7,226.2 | 9.2% | 8,310.2 | -5.1% |
| Other operating gains/(expenses) | 599.8 | 83.5 | nm | -871.0 | nm |
| Net profit | 6,820.1 | 5,902.6 | 15.5% | 5,904.0 | 15.5% |
| Basic earnings per share, RUB | 3.02 | 2.62 | 15.3% | 2.62 | 15.3% |
| Net Profit | 6,820.1 | 5,902.6 | 15.5% | 5,904.0 | 15.5% |
|
-599.8 | -83.5 | nm | 871.0 | nm |
|
120.0 | 16.7 | nm | -174.2 | nm |
| Adjusted net profit | 6,340.3 | 5,835.8 | 8.6% | 6,600.8 | -3.9% |
| EBITDA | 9,310.1 | 8,196.0 | 13.6% | 8,234.9 | 13.1% |
|
-599.8 | -83.5 | nm | 871.0 | nm |
| Adjusted EBITDA | 8,710.3 | 8,112.5 | 7.4% | 9,105.9 | -4.3% |
| Adjusted EBITDA margin | 72.4% | 73.1% | -0.7 p.p. | 76.0% | -3.5 p.p. |
| RUB mln | Q2 2020 | Q2 2019 | YoY | Q1 2020 | QoQ |
|---|---|---|---|---|---|
| Equities Market | |||||
| Fee and commission income, RUB mln | 975.9 | 540.6 | 80.5% | 1,117.2 | -12.6% |
| Trading volumes, RUB bln | 5,527.0 | 2,994.2 | 84.6% | 6,263.3 | -11.8% |
| Bond Market | |||||
| Fee and commission income, RUB mln | 707.2 | 751.6 | -5.9% | 655.1 | 8.0% |
| Trading volumes (excl. overnight bonds), RUB bln | 6,337.2 | 6,337.6 | 0.0% | 6,278.7 | 0.9% |
| FX Market | |||||
| Fee and commission income, RUB mln | 1,013.3 | 885.7 | 14.4% | 1,070.4 | -5.3% |
| Trading volumes, RUB bln | 75,193.8 | 79,996.4 | -6.0% | 80,851.4 | -7.0% |
| Money Market | |||||
| Fee and commission income, RUB mln | 2,032.5 | 1,788.6 | 13.6% | 1,722.2 | 18.0% |
| Trading volumes, RUB bln | 102,659.9 | 84,473.5 | 21.5% | 95,185.8 | 7.9% |
| Derivatives Market | |||||
| Fee and commission income, RUB mln | 834.0 | 642.7 | 29.8% | 1,099.1 | -24.1% |
| Trading volumes, RUB bln | 27,214.6 | 19,221.8 | 41.6% | 33,561.6 | -18.9% |
| Depository and Settlement Services | |||||
| Fee and commission income, RUB mln | 1,473.5 | 1,313.2 | 12.2% | 1,393.6 | 5.7% |
| Average assets under custody, RUB bln | 51,370.9 | 47,020.9 | 9.3% | 51,281.8 | 0.2% |
| Other fee and commission income (IT Services, Listing and Other fee income) | 954.5 | 639.4 | 49.3% | 852.3 | 12.0% |
| Information services, RUB mln | 249.1 | 217.6 | 14.5% | 291.2 | -14.5% |
| Sale of software and tech. services, RUB mln | 216.6 | 199.8 | 8.4% | 210.9 | 2.7% |
| Listing and other services, RUB mln | 200.2 | 153.1 | 30.8% | 136.7 | 46.5% |
| Other fee income, RUB mln | 288.6 | 68.9 | 318.9% | 213.5 | 35.2% |
| Net interest and other finance income | |||||
| Net interest and other finance income, RUB mln | 4,027.0 | 4,498.0 | -10.5% | 3,992.7 | 0.9% |
| Investment portfolio, RUB bln | 938.1 | 767.1 | 22.3% | 756.0 | 24.1% |
- The total market capitalization of the Equities Market at the end of the second quarter was RUB 43.67 trln (USD 613.71 bln). Fee and commission income from the Equities Market grew by 80.5% on the back of the corresponding increase in trading volumes.
- Fees and commissions from the Bond Market were down 5.9%. Trading volumes excluding overnight bonds remained flat due to offsetting effects of the increase in secondary trading by 17.5% and the decrease in primary market activity by 13.7%. The effective fee in the Bond Market declined due to the smaller share of primary market volumes and the relatively modest amount of corporate placements amid the pandemic.
- Money Market fee income added 13.6%, reaching an all-time high of RUB 2 bln. Trading volumes were up 21.5%. The discrepancy between volume and fee trends was attributable to subdued performance of the Сredit Market and IFRS adjustments.
- Fee income from the FX Market grew 14.4%. Trading volumes declined 6.0% as volatility began to normalize compared to the first quarter. The trading volume mix shifted towards the more profitable spot segment, which added 31.5%, while swap volumes declined by 15.5%.
- Derivatives trading volumes increased by 41.6%, primarily on the back of very strong growth in FX and index derivatives trading volumes (77.1% and 63.7%, respectively). An equities derivatives trading volumes decline of 37.9% and modest commodity derivatives trading volumes growth of 4.5% resulted in a change in the Derivatives Market product mix and a less favorable effective fee structure. All in all, Derivatives Market fee income ended up adding 29.8%.
- The Other fee income line now includes an additional fee on EUR balances of 0.2% above the ECB rate that was introduced at the beginning of the year.
- The cash position at the end of Q2 2020 was RUB 88.35 bln. The company had no debt as of the end of the quarter.
- Capex for the quarter was RUB 0.85 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 Q2 2020 are available in the Investor Relations section of the company's web site.
The Q2 2020 IFRS Financial Results webcast is scheduled for 21 August 2020 at 4:00 pm (Moscow time).
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