BRUSSELS, April 30,
2024 /PRNewswire/ -- Results for the first quarter
ending 31 March 2024
Financial highlights (excluding impacts from Russian
sanctions)
- On an underlying basis, business income reached €423
million, an increase of 2% year-on-year. When excluding an
exceptional billing adjustment, underlying business income would
have increased by 3% compared to last year.
- Quarterly underlying interest income increased by 19% to
€283 million driven by prevailing interest rates.
- Underlying operating expenses increased by 5% to €321
million. Following a step-up in investment in 2023 to support our
strategic ambition to enhance digital capabilities and IT
infrastructure, expenses growth is trending back towards the
'through-the-cycle' target of 4-6% on a full-year basis.
- Underlying operating profit increased by 12% to €385 million
and underlying net profit increased by 13% to €289 million,
supported by a very robust business performance and helped by
sustained high interest rates.
- Underlying earnings per share rose by 13% to €91.8 per
share, reflecting the continued increase in net profit.
- Underlying EBITDA margin increased by 1.7 percentage points
to 58.7% on year-on-year basis.
- The impacts of Russian sanctions are highlighted in a dedicated
section at the end of this press release.
Euroclear
Holding
|
|
|
|
|
|
|
|
|
(€ m)
|
Q1
2023
|
Russian
sanctions impacts
|
Q1 2023
Underlying
|
Q1 2024
|
Russian
sanctions impacts
|
Q1 2024
Underlying
|
Underlying vs
2023
|
Operating
income
|
1,380
|
729
|
651
|
2,289
|
1,583
|
706
|
55
|
8 %
|
Business
income
|
409
|
-5
|
414
|
416
|
-6
|
423
|
9
|
2 %
|
Interest, banking &
other income
|
971
|
734
|
237
|
1,872
|
1,589
|
283
|
46
|
19 %
|
Operating
expenses
|
-315
|
-9
|
-307
|
-338
|
-17
|
-321
|
-14
|
-5 %
|
Operating profit
before Impairment
|
1,065
|
720
|
344
|
1,951
|
1,566
|
385
|
41
|
12 %
|
Impairment
|
-2
|
-1
|
-1
|
-2
|
0
|
-2
|
-1
|
|
Pre-tax
profit
|
1,063
|
720
|
343
|
1,949
|
1,566
|
383
|
39
|
11 %
|
Tax
|
-267
|
-180
|
-87
|
-485
|
-391
|
-94
|
-7
|
-8 %
|
Net
profit
|
796
|
540
|
256
|
1,463
|
1,174
|
289
|
33
|
13 %
|
|
|
|
|
|
|
|
|
|
EPS
|
|
|
81.4
|
|
|
91.8
|
|
|
Business income
operating margin
|
|
|
25.9 %
|
|
|
24.1 %
|
|
|
EBITDA
margin
|
|
|
57 %
|
|
|
58.7 %
|
|
|
Lieve Mostrey, Chief Executive Officer of Euroclear Group,
commented:
"Euroclear continues to perform extremely well, as we
achieved another very strong quarter and delivered on our strategy,
particularly in the funds business. We made significant progress in
developing Euroclear FundsPlace by teaming up with new partners
such as iCapital or Spuerkeess and making a strategic investment in
blockchain-based funds marketplace IZNES. Providing access to a
wide range of funds services, Euroclear FundsPlace delivers
risk-mitigation, automation and efficiency at scale to a growing
number of clients.
In this first quarter of 2024, the Russian sanctions and
countermeasures continued to have a material impact on our
operations. We are closely following the discussions at EU level
about the use of profits generated by the Russian immobilised
assets. Our teams continue to respond well to this unprecedented
situation and remain focused on minimising the legal, operational,
financial and reputational risks for our company and our clients
while maintaining normal business operations.
As Valérie Urbain is now taking over as CEO of Euroclear, I
feel proud and honoured to have been able to lead Euroclear's
growth journey and further reinforce our position as trusted
financial market infrastructure. The dedication of our colleagues
across all locations, the support of all Euroclear stakeholders –
including the Board, our shareholders, customers and partners –
have been critical to our success. I am very grateful to everyone
involved and will keep Euroclear close to my heart. I know that I
leave the company in safe and capable hands."
Business performance
The key operating metrics (end of period unless stated
otherwise) demonstrate a strong business performance during the
period.
|
Q1
2023
|
Q1
2024
|
YoY
evolution
|
3-year
CAGR
|
Assets under
custody
|
€36.6 trillion
|
€39.1
trillion
|
+7 %
|
+4.6 %
|
Number of
transactions
|
79.1
million
|
80.6
million
|
+2 %
|
1.9 %
|
Turnover
|
€281
trillion
|
€274
trillion
|
-3 %
|
+4.7 %
|
Fund assets under
custody
|
€2.9
trillion
|
€3.3
trillion
|
+13 %
|
+6.5 %
|
Collateral
Highway
|
€1.75
trillion
|
€1.8
trillion
|
+3 %
|
+2.6 %
|
Underlying cash
deposits (average)
|
€25.1
billion
|
€22.3
billion
|
-11 %
|
+2.3 %
|
With the continued increase in equity market valuations coupled
with robust results in fixed income, assets under custody have
reached a new record at €39.1 trillion (+7%), growing for the sixth
quarter in a row.
Funds assets under custody were boosted by ETF growth and higher
stock markets valuations and reached an all-time record level.
The Collateral Highway outstanding progressively recovered
thanks to favourable market conditions characterised by the
stabilisation of monetary policy and the prospect of lower interest
rates in the coming
quarters.
Milestones in global funds strategy
The first quarter of 2024 was marked by a number of achievements in
developing Euroclear's funds business, a key pilar in the company's
strategy. Euroclear FundsPlace offers fund management companies,
banks, institutional investors and custodians a single point of
access to more than 250,000 funds.
In Q1 2024, Euroclear acquired a stake in IZNES, a pan-European
funds marketplace based on blockchain technology[1].
Through this strategic partnership, Euroclear will complement its
funds services on the French market and beyond and continue to
support the development of innovative funds distribution
models.
Banque et Caisse d'Epargne de l'Etat Luxembourg (Spuerkeess) has
announced in February 2024 that it
will be moving the majority of its fund portfolio to Euroclear
FundsPlace in order to centralise the distribution and execution
services of its funds. Euroclear's funds platform will manage the
lion's share of Spuerkeess' portfolio from now on and collect
trailer fees on external custodians as well.
Euroclear also announced a partnership with global fintech
platform iCapital. Euroclear's clients will gain enhanced
access to a broader range of alternative investments, including
private equity, private credit, real estate, infrastructure, and
hedge funds. The iCapital funds available on iCapital Marketplace
will complement and expand Euroclear FundsPlace's current
offerings.
Euroclear hosted its first major funds-dedicated conference
– Euroclear FundsCo – in London on 26 March. This inaugural Euroclear
funds event brought together more than 200 senior representatives
from across the funds industry to discuss future global trends.
Euroclear's open architecture helps streamline collateral
management Euroclear's international Central
Securities Depository, Euroclear Bank, has become an eligible
securities collateral location of Eurex Clearing AG. Through this
partnership, clients of Euroclear Bank and Eurex Clearing will be
able to post collateral directly to Eurex Clearing with the ability
to further optimise the pool of collateral held in Euroclear Bank.
The service offering increases operational efficiency for market
participants and streamlines the collateral management process.
Eurex Clearing already uses Euroclear Bank as an eligible
securities settlement location.
Russian sanctions
Financial impacts of the Russian assets in Q1
2024
- The Russian sanctions and countermeasures continue to have a
significant impact on Euroclear's earnings, as €1.6 billion of the
€1.9 billion interest income relate to Russian sanctioned
assets.
- The sanctions and Russian countermeasures resulted in direct
costs of €17 million and a loss of business income of €6
million.
- Euroclear's net profit related to the Central Bank of
Russia's (CBR) immobilised assets
as from 15 February amounts to €557 million and will be reported
and retained separately.
Euroclear
Holding
|
|
|
|
|
|
(€ m)
|
Q1
2023
|
o/w Russian
sanctions
impacts
|
Q1 2024
|
o/w Russian
sanctions
impacts
|
o/w
CBR as
from 15 Feb
|
Operating
income
|
1,380
|
729
|
2,289
|
1,583
|
746
|
Business
income
|
409
|
-5
|
416
|
-6
|
0
|
Interest, banking &
other income
|
971
|
734
|
1,872
|
1,589
|
746
|
Operating
expenses
|
-315
|
-9
|
-338
|
-17
|
-3
|
Operating profit
before Impairment
|
1,065
|
720
|
1,951
|
1,566
|
742
|
Impairment
|
-2
|
-1
|
-2
|
0
|
0
|
Pre-tax
profit
|
1,063
|
720
|
1,949
|
1,566
|
742
|
Tax
|
-267
|
-180
|
-485
|
-391
|
-186
|
Net
profit
|
796
|
540
|
1,463
|
1,174
|
557
|
|
|
|
|
|
|
Update on Russian sanctions and
countermeasures
Russia's invasion of
Ukraine resulted in market-wide
application of international sanctions. Euroclear considers the
application of international sanctions as a key priority.
Therefore, well established processes are in place which have
allowed the group to implement the sanctions while maintaining our
normal course of business.
As a result of the sanctions, blocked coupon payments and
redemptions owed to sanctioned entities continue to accumulate on
Euroclear Bank's balance sheet. At the end of Q1 2024, Euroclear
Bank's balance sheet totalled €199 billion, of which €159 billion
relate to sanctioned Russian assets.
In line with Euroclear's Risk Appetite and Policies and as
expected by the EU Capital Requirements Regulation, Euroclear's
cash balances are re-invested to minimise risk and capital
requirements. In the first quarter of 2024, interest arising on
cash balances from Russian-sanctioned assets was approximately €1.6
billion. Such interest earnings are driven by the prevailing
interest rates and the amount of cash balances that Euroclear is
required to invest. Subject to Belgian corporate tax, these
earnings generated almost €400 million tax revenue for the Belgian
State. As such, future earnings will be influenced by the evolving
interest rate environment.
Effective 15 February 2024,
the EU Council adopted a
Regulation[2] providing for an obligation for
Central Securities Depositories holding reserves and assets of the
Central Bank of Russia[3] to apply specific
rules in relation to the cash balances accumulating due to
restrictive measures. These central securities depositories,
including Euroclear, should account for and manage such
extraordinary cash balances separately from their other activities,
should keep separate the net profit generated and should not
dispose of these ensuing net profits (e.g. in the form of dividends
to shareholders). Euroclear has since the imposition of sanctions
reported the profitability separately and now, in addition,
Euroclear is reporting separately the profitability related to the
Central Bank of Russia's
immobilised assets as from 15 February
2024 – as disclosed in the table above.
Euroclear continues to act prudently and to further strengthen
its capital by retaining Russian sanction related profits as a
buffer against current and future risks. There are still many
unknown risks given the current external climate and how it could
evolve.
Various parties in Russia
contest the consequences of the application of sanctions, with a
significant number of legal proceedings ongoing, almost exclusively
in Russian courts. The impact of the lawsuits on Euroclear is
uncertain but the probability of unfavourable rulings is high since
Russia does not recognise the
international sanctions. Euroclear will continue to defend itself
against all legal claims.
Euroclear notes that various options to use profits generated by
sanctioned amounts held by financial institutions, including
Euroclear, for the financing of Ukraine are being considered. Euroclear is
focused on minimising potential legal, financial and operational
risks that may arise for itself and its clients from the
implementation of any proposals made or measures taken, while
complying with its obligations.
Annexes
Infographic -
https://mma.prnewswire.com/media/2401629/Euroclear1_Infographic.jpg
Euroclear Bank and Euroclear Investments are the two group
issuing entities. The summary income statements and financial
positions at Q1 2024 for both entities are shown below.
Figures in Million
of EUR
|
Q1
2024
|
|
Q1
2023
|
|
Variance
|
|
|
|
|
|
|
|
Euroclear Bank
Income Statement (BE GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
1,875.3
|
|
970.0
|
|
905.3
|
|
Net fee and commission
income
|
271.4
|
|
270.5
|
|
0.9
|
|
Other income
|
-3.6
|
|
5.8
|
|
-9.4
|
|
|
|
|
|
|
|
|
Total operating
income
|
2,143.1
|
|
1,246.3
|
|
896.8
|
|
|
|
|
|
|
|
|
Administrative
expenses
|
-234.5
|
|
-200.5
|
|
-34.0
|
|
|
|
|
|
|
|
|
Operating profit
before impairment and taxation
|
1,908.6
|
|
1,045.8
|
|
862.8
|
|
|
|
|
|
|
|
|
Result for the
period
|
1,430.9
|
|
782.1
|
|
648.7
|
|
|
|
|
|
|
|
|
Euroclear Bank
Statement of Financial Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
7,466.7
|
|
3,384.2
|
|
4,082.4
|
|
Debt securities issued
and funds borrowed (incl. subordinated debt)
|
4,474.1
|
|
5,503.2
|
|
-1,029.1
|
|
Total assets
|
198,758.0
|
|
140,460.8
|
|
58,297.2
|
|
|
|
|
|
|
|
|
|
|
Euroclear
Investments Income Statement (BE GAAP)
|
Q1
2024
|
|
Q1
2023
|
|
Variance
|
|
|
|
|
|
|
|
|
|
|
Dividend
|
0.0
|
|
0.0
|
|
0.0
|
|
|
Net gains/(losses) on
financial assets & liabilities
|
2.0
|
|
2.5
|
|
-0.5
|
|
|
Other income
|
-0.2
|
|
-0.1
|
|
-0.1
|
|
|
Total operating
income
|
1.9
|
|
2.5
|
|
-0.6
|
|
|
|
|
|
|
|
|
|
|
Administrative
expenses
|
-0.3
|
|
-0.1
|
|
-0.2
|
|
|
|
|
|
|
|
|
|
|
Operating profit
before impairment and taxation
|
1.6
|
|
2.4
|
|
-0.8
|
|
|
|
|
|
|
|
|
|
|
Result for the
period
|
1.1
|
|
1.8
|
|
-0.7
|
|
|
|
|
|
|
|
|
|
Euroclear
Investments Statement of Financial Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
700.5
|
|
668.2
|
|
32.4
|
|
|
Debt securities issued
and funds borrowed
|
1,663.5
|
|
1,664.5
|
|
-1.0
|
|
|
Total assets
|
2,364.7
|
|
2,333.5
|
|
31.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
These figures are unaudited. The computation of application of
article 1.8 of EU n°2024/576 is pending implementation of the final
text and procedures which could still change the figures.
About Euroclear
Euroclear group is the financial industry's trusted provider of
post trade services. Guided by its purpose, Euroclear innovates to
bring safety, efficiency, and connections to financial markets for
sustainable economic growth. Euroclear provides settlement and
custody of domestic and cross-border securities for bonds, equities
and derivatives, and investment funds. As a proven, resilient
capital market infrastructure, Euroclear is committed to delivering
risk-mitigation, automation, and efficiency at scale for its global
client franchise. The Euroclear group comprises Euroclear Bank, the
International CSD, as well as Euroclear Belgium, Euroclear Finland,
Euroclear France, Euroclear Nederland, Euroclear Sweden and
Euroclear UK & International.
[1] The transaction is subject to customary closing
conditions and regulatory approvals.
[2] Council Regulation (EU) 2024/576 of
12 February 2024 amending Regulation
(EU) 833/2014
[3] With a total value of more than € 1 million
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