SGX reports 3Q FY2017 net profit of $83 million
3Q FY2017 Financial Summary
– Revenue: $203 million, down 2% from a year earlier
– Operating profit: $103 million, unchanged
– Net profit: $83 million, down 7%
– Earnings per share: 7.8 cents, down 7%
– Interim dividend per share: 5 cents, unchanged
All figures are for the year except for figures in brackets, which are for the year earlier, unless otherwise stated. Some figures may be subject to rounding.
Singapore Exchange (SGX) today reported 3Q FY2017 net profit of $83.1 million ($89.2 million) on the back of revenues of $202.7 million ($205.8 million). Excluding a one-off loss of $4.0 million from the disposal of its investment in the Bombay Stock Exchange, net profit would have been $87.0 million, 2% lower than a year ago.
Operating profit remained stable at $102.9 million ($102.6 million), with earnings per share at 7.8 cents (8.3 cents). In line with SGX’s dividend policy, the Board of Directors has declared an interim dividend of 5 cents (5 cents) per share, payable on 8 May 2017.
Commenting on the financial results, Loh Boon Chye, Chief Executive Officer of SGX, said, “In the past quarter, we saw continued momentum in the equities market following the US Presidential Election, with increased participation seen from both retail and institutional customers. While sentiments have improved, positive outcomes on US economic policies will be important to sustain trading activities.”
Equities and Fixed Income, which comprises Issuer Services, Securities Trading & Clearing and Post Trade Services, contributed a revenue of $103.1 million ($102.0 million) or 51% (50%) of total revenue.
Issuer Services revenue rose 2% to $19.0 million ($18.7 million), accounting for 9% (9%) of total revenue.
– Listing revenue: $12.6 million, up 10% from $11.4 million
– Corporate actions and other revenue: $6.5 million, down 11% from $7.3 million
The growth in listing revenue was mainly due to a higher number of new bond listings. There were 189 bond listings raising $101.2 billion, compared to 78 listings raising $38.0 billion a year earlier. There were also five new equity listings which raised $250.5 million, compared to four new listings raising $48.7 million a year earlier. Secondary equity funds raised amounted to $1.9 billion ($0.3 billion).
Securities Trading and Clearing revenue increased 1% to $55.3 million ($54.8 million) and accounted for 27% (27%) of total revenue.
– Securities Clearing revenue: $42.6 million, up 1% from $42.2 million
– Access revenue: $10.4 million, up 1% from $10.3 million
– Collateral management, membership and other revenue: $2.3 million, unchanged from last year
Securities daily average traded value (SDAV) increased 1% to $1.24 billion ($1.22 billion). Total traded value grew 5% to $78.3 billion ($74.7 billion), while total traded volume grew 59% to 156 billion shares (98 billion shares). The higher level of trading activity was due to continued positive momentum following the US Presidential Election. There were 63 (61) trading days this reporting quarter.
Average clearing fee was 2.80 basis points, down from 2.90 basis points a year earlier. Turnover velocity for the quarter was 41% (46%).
Post Trade Services revenue rose 1% to $28.7 million ($28.5 million), accounting for 14% (14%) of total revenue.
– Securities settlement revenue: $23.7 million, up 7% from $22.1 million
– Contract processing revenue: $2.9 million, down 29% from $4.0 million
– Depository management revenue: $2.1 million, down 9% from $2.3 million
Securities settlement revenue increased 7%, following an increase in the number and change in the mix of securities settlement instructions.
Contract processing revenue declined 29% to $2.9 million ($4.0 million) due to a lower number of contracts processed and the move from paper to electronic contract statements. As highlighted previously, contract processing will be performed by brokers as they progressively migrate to their own back office systems.
Derivatives revenue declined 9% to $75.2 million ($82.2 million), contributing to 37% (40%) of total revenue.
– Equity and Commodities revenue: $54.0 million, down 13% from $61.9 million
– Collateral management, licence, membership and other revenue: $21.2 million, up 4% from $20.4 million
Equity and Commodities revenue declined 13% as total volumes decreased 18% to 39.9 million contracts (48.7 million contracts). Average fee per contract increased to $1.20 ($1.15) mainly due to a change in the mix of derivatives contracts.
Collateral management, licence, membership and other revenue increased 4% mainly due to consolidation of revenues from the Baltic Exchange. Collateral management income was comparable due to an increase in yield despite lower margin balances.
Market Data and Connectivity revenue increased 13% to $24.4 million ($21.6 million), accounting for 12% (11%) of total revenue.
– Market data revenue: $10.8 million, up 16% from $9.4 million
– Connectivity revenue: $13.6 million, up 11% from $12.3 million
Market data revenue rose 16%, due to higher reported data usage.
Connectivity revenue rose 11%, following continued growth of its colocation services business.
Expenses declined by 3% to $99.7 million ($103.2 million), primarily due to lower volume related processing and royalties and professional fees. Expenses this quarter included expenses of the Baltic Exchange following its acquisition in November 2016, and the recognition of SGX’s $1.5 million contribution to co-fund brokerage firms’ implementation of measures recommended by the Securities Industry Working Group.
During the quarter, SGX invested $19.2 million ($13.4 million) in capital expenditure to migrate to a new secondary data centre, enhance its securities post-trade system and improve operational resiliency.
Mr Loh added, “We remain focused on executing our strategy to diversify our business mix across geography and asset classes. Besides looking at ways to improve Singapore’s equities market structure and ecosystem, we will continue to widen and deepen our suite of products and services, to enhance our position as an offshore investment, trading and risk management centre.”
SGX will continue to exercise cost discipline while investing in growing its business. As previously guided, operating expenses for FY2017 are expected to be between $405 million and $415 million, while technology-related capital expenditure is expected to be between $65 million and $70 million.
|$ million, except where indicated||3Q FY2017||3Q FY2016||Change
3Q FY2017 vs
|YTD FY2017||YTD FY2016||Change
YTD FY2017 vs
|Key income statement figures|
|Equities and Fixed Income||103.1||102.0||1%||302.5||304.4||(1%)|
|Market Data and Connectivity||24.4||21.6||13%||69.7||64.8||8%|
|Other gains / (losses)||(1.9)||3.1||NM||3.0||7.8||(61%)|
|Profit before tax and share of results of associated company||101.0||105.7||(4%)||305.5||325.3
|Profit attributable to equity holders
|Earnings per share (in cents)||7.8||8.3||(7%)||23.8||25.4||(6%)|
|Dividend per share (in cents)||5.00||5.00||–||15.00||15.00||–|
|Key financial indicators|
|Cost to income ratio||49%||50%||49%||49%|
|Operating profit margin||51%||50%||51%||51%|
|Net profit margin||41%||43%||43%||43%|
|Return on shareholders’ equity||36%||41%||36%||41%|