UPDATE: SGX reports fiscal year net profit fell 6 percent as expenses rose

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.

This article was originally published on Thursday, 5 August 2021 at 9:00 a.m. SGT; it has since been updated to include more details.

Singapore Exchange reported Thursday its fiscal full year net profit fell 6 percent on-year to S$445 million as expenses increased and treasury income declined amid a low interest rate environment.

Total expenses increased 8 percent on-year to S$525.2 million, largely due to consolidating expenses from Scientific Beta and BidFX, SGX said in a filing to the exchange.

SGX announced in June 2020 it would acquire the 80 percent of BidFX, a multi-asset exchange and foreign exchange derivatives marketplace, it didn’t already own for around US$128 million. In January 2020, SGX said it would acquire a 93 percent stake in Scientific Beta, an independent index provider specialising in smart beta strategies, for 186 million euros, or S$280 million at the time.

Revenue was nearly flat on-year, coming in at S$1.056 billion, compared with S$1.503 billion in the previous year, SGX said, adding Scientific Beta and BidFX contributed 7 percent of revenue during the fiscal year.

FICC

For the FICC (fixed income, currencies and commodities) segment, revenue increased 24 percent on-year to S$211.8 million, accounting for 20 percent of total revenue, SGX said.

Under the segment, fixed income revenue rose 17 percent on-year to S$14.9 million, with 795 bond listings for the fiscal year, down from 1,032 a year earlier, SGX said.

The currency and commodities derivative segment revenue rose 24 percent on-year to S$196.9 million, accounting for 19 percent of total revenue, as trading and clearing revenue got a bump up from consolidating BidFX’s results, SGX said.

Equities

Revenue from equities for the 12-month period fell 8 percent on-year to S$701.1 million, accounting for 66 percent of total revenue, compared with 72 percent in the year-ago period, SGX said. The exchange had 11 new equity listings for the year, up from 10 a year earlier.

The data, connectivity and indices segment posted revenue increased 18 percent on-year to S$143.1 million, accounting for 14 percent of total revenue, after getting a boost from Scientific Beta.

SGX proposed a final quarterly dividend of 8 Singapore cents a share, unchanged on-year, bringing total dividends for the year to 32 Singapore cents, up from 30.5 Singapore cents a year earlier.

Loh Boon Chye, CEO of SGX, was upbeat on the results.

“We achieved a strong performance as we invested in growing our business, delivering similar record revenues compared to last year amidst a challenging environment. Notwithstanding the lower treasury income, our core business segments remained robust, with our fast-growing subsidiaries, Scientific Beta and BidFX, providing an added boost,” Loh said in the statement.

“While the low interest rate environment will continue to impact our treasury income, we believe it will also spur demand for our multi-asset offerings as investors seek enhanced returns,” he added.

Looking ahead, Loh said SGX would focus on its recent FICC investments and partnerships, including TrumidXT, Marketnode, Climate Impact X and the upcoming FX Electronic Communication Network (ECN).

SGX estimated the current fiscal year’s total expenses would come in between S$565 million and S$575 million, with the rise due to near-term investments in Scientific Beta, BidFX and other growth initiatives, such as setting up an ECN and climate-related initiatives. The acquisition of MaxxTrader could also boost total expenses by around S$25 million, SGX said.