Singapore Exchange reports fiscal full year net profit hit 11-year high

Signage at the SGX building on Shenton Way in Singapore; taken October 2018.Signage at the SGX building on Shenton Way in Singapore; taken October 2018.

Singapore Exchange reported Wednesday its net profit for the full fiscal year rose 7.7 percent on-year to S$391.10 million, its highest in 11 years, mainly due to a strong derivatives business performance.

Operating revenue for the fiscal year ended 30 June was S$909.81 million, up 7.7 percent on-year, and the highest level since SGX was listed the exchange operator said in a filing.

“We set all-time records in our derivatives volumes and open interest, driven by strong global institutional demand for Asian risk  management and investment solutions,” Loh Boon Chye, CEO of SGX, said in the statement. “The second half of the year also saw an improvement in our securities business as trading activity picked up.”

SGX proposed a final dividend of 7.5 Singapore cents a share, down from 15 Singapore cents in the year-ago period, for a total dividend of 30 Singapore cents a share for the year, unchanged on-year.

Derivatives

Derivatives revenue rose 35 percent on-year to S$459.7 million, contributing 51 percent of total revenue for the fiscal year, SGX said.

Equities and commodities derivatives revenue rose 23 percent on-year to S$292.1 million as total volumes increased 21 percent to 240.3 million contracts, mainly on increased volume in SGX FTSE China A50, MSCI Taiwan, and iron ore derivatives contracts, the filing said

Collateral management, licence, membership and other revenue jumped 63 percent on-year to S$167.7 million, SGX said.

“This is the result of higher margin balances on the back of record open interest, demonstrating increased usage of our derivatives contracts for portfolio risk management,” SGX said.

Equities and fixed income

Equities and fixed income revenue fell 15 percent on-year to S$347.5 million, as issuer services revenue fell 7 percent on-year for the year to S$79.7 million on lower listing revenue and lower revenue from corporate actions, SGX said.

For the fiscal year, there were a total of 1,066 bond listings raising S$451.7 billion, down from 1,154 listings raising S$481.9 billion in the previous year, SGX said. Twenty new equity listings raising S$1.7 billion were registered for the year, down from 22 new listings raising S$6.2 billion in the previous year, SGX said.

Securities trading and clearing revenue fell 18 percent on-year to S$182.1 million, as securities daily average traded value dropped 17 percent to S$1.04 billion, the filing said.

Post-trade services revenue fell 14 percent on-year to S$85.7 million for the year amid lower securities settlement revenue and the absence of contract-processing revenue as all brokers migrated to their own back-office systems since February 2018, SGX said.

Market data and connectivity

Market data and connectivity revenue rose 4 percent on-year to S$102.5 million, mainly on higher reported data usage and on growth in co-location services and higher derivatives connectivity subscriptions, SGX said.

For the fiscal fourth quarter, SGX reported net profit increased 24.1 percent on-year to S$103.85 million as operating revenue rose 16.5 percent on-year to S$248.03 million.

In the outlook CEO Loh pointed to continued momentum.

“The macro trends we anticipated, such as Asia being at the forefront of economic growth, the internationalisation of Asian markets as well as the increasing convergence of OTC and listed markets, continue to support our business growth,” Loh said.

Loh also pointed to the exchange’s plans to reorganize into four units: Fixed Income, Currencies and Commodities; Equities; Data, Connectivity and Indices; and Global Sales and Origination.

“This will sharpen our focus on building scale, enabling us to not only capture the opportunities across multiple asset classes but also serve our clients’ needs more holistically,” he said.

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