BRUSSELS, July 19, 2024 /PRNewswire/ -- Results for the
first half year ended 30 June
2024
Highlights
Euroclear achieves strong results driven by solid operating and
interest income
- Underlying operating income increased by 5% to reach a record
€1.45 billion.
- Business income increased by 3% to €865 million1,
reflecting continued solid performance of Euroclear's core
business as settlement and safe keeping activities reached new
record levels.
- H1 2024 underlying interest income increased by 9% to €586
million in the context of a sustained high interest rates
environment and gradual policy rate cuts.
Pace of cost growth is slowing progressively
- After a step-up in investment in digital capabilities,
workforce and IT infrastructure in 2023, the growth of underlying
operating expenses slowed to 5% in H1 2024. Euroclear remains
focused on cost mitigation while making the necessary investments
in its strategy, including the improvement of operational
resilience, the modernisation of CSDs' core platforms and the
reinforcement of non-IT resources.
Growing shareholder returns and strong capital position
- Underlying earnings per share increased by 7% to €191.4, in
line with continued increase in net profit.
- On 19 July 2024, Euroclear paid the previously announced
dividend relating to the 2023 underlying business results of €210
per share, representing an 82% increase compared to the prior year
dividend.
- Euroclear's group underlying capitalisation remains very strong
and comfortably above capital requirements with an underlying
Common Equity Tier 1 capital ratio above 50%2.
Euroclear acquires strategic stake in Inversis
- Euroclear today announced it has acquired a stake of 49% in
Inversis, a Spanish provider of global investment technology
solutions and outsourced financial services, with a committed plan
to full ownership by end 2027.
- The acquisition aligns with Euroclear's long-term growth
objectives and strengthens Euroclear's presence in Spain.
- The full press release is available in the press section of
Euroclear's website.
Russian sanctioned assets
- In July 2024, Euroclear will make
a first payment of €1.55 billion to the European Fund for
Ukraine following the recent
implementation of the EU regulation on the windfall contribution.
This adds to the €836 million of corporate taxes to be paid to the
Belgian State on the profits related to the Russian assets in H1
2024.
- The impacts of Russian sanctions are detailed at the end of
this press release.
Euroclear
Holding
|
|
|
(€ m)
|
H1 23
|
Russian
sanctions
impacts
|
H1 23
underlying
|
H1 24
|
Russian
sanctions
impacts after
Windfall
Contribution
|
H1 24
underlying
|
Underlying
vs 2023
|
|
Operating
income
|
3,107
|
1,730
|
1,377
|
3,095
|
1,644
|
1,451
|
75
|
5 %
|
|
Business
income
|
827
|
-11
|
838
|
852
|
-13
|
865
|
27
|
3 %
|
|
Interest, banking &
other
income
|
2,280
|
1,742
|
539
|
3,963
|
3,376
|
586
|
48
|
9 %
|
|
Windfall
contribution
|
|
|
|
-1,719
|
-1,719
|
0
|
0
|
|
|
Operating
expenses
|
-649
|
-21
|
-628
|
-705
|
-48
|
-657
|
-29
|
-5 %
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
before
Impairment
|
2,458
|
1,710
|
748
|
2,390
|
1,596
|
794
|
46
|
6 %
|
|
Impairment
|
0
|
0
|
0
|
-3
|
0
|
-3
|
-3
|
|
|
Pre tax
profit
|
2,458
|
1,710
|
749
|
2,387
|
1,596
|
791
|
42
|
6 %
|
|
Tax
|
-614
|
-427
|
-187
|
-1,024
|
-836
|
-189
|
-2
|
-1 %
|
|
Net
profit
|
1,844
|
1,282
|
562
|
1,363
|
760
|
602
|
41
|
7 %
|
|
|
|
|
|
|
|
|
|
|
|
EPS
|
585.9
|
|
178.5
|
432.9
|
|
191.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business income
operating margin
|
21.5 %
|
|
25.1 %
|
|
|
24.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA margin
(EBITDA/oper.income)
|
80.9 %
|
|
58.3 %
|
|
|
58.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valerie Urbain, Chief
Executive Officer of Euroclear, commented:
"This is my first set of results as CEO of Euroclear and I am
proud to announce continued strong results as clients entrusted us
with record levels of safekeeping and settlement volumes. Our
commitment to client satisfaction, operational excellence and
innovation has driven this excellent performance.
With an ambitious strategy and a committed team, Euroclear
aims to extend its position as a European leader with a global
footprint. Already in 2024, we have taken steps to further support
the financing of the real economy by making capital markets more
integrated, liquid, and efficient. Not only have we connected
global investors to the world's tenth largest economy, South Korea, but we have also put in place a
renewed focus on contributing to Europe's strategic autonomy and Capital
Markets Union. Such efforts are of critical importance given
the pressing need to finance the green and digital transition
around the globe.
In addition to delivering a robust underlying business
performance, Euroclear continues to diligently implement the
international sanctions on Russian assets. Euroclear is also
complying with its important obligations to put the windfall
contribution into effect and will soon make a first payment of
€1.55 billion to the European Fund for Ukraine."
Business performance
The key operating metrics (end of period unless stated
otherwise) demonstrate an excellent business performance during the
period.
|
H1
2023
|
H1
2024
|
YoY
evolution
|
3-year
CAGR
|
Assets under
custody
|
€36.8
trillion
|
€39.6
trillion
|
+8 %
|
+4 %
|
Number of
transactions
|
152
million
|
165
million
|
+8 %
|
+3 %
|
Turnover
|
€546
trillion
|
€565
trillion
|
+3 %
|
+6 %
|
Fund assets
under
custody
|
€3
trillion
|
€3.3
trillion
|
+12 %
|
+6 %
|
Collateral
Highway
|
€1.68
trillion
|
€1.87
trillion
|
+12 %
|
+3 %
|
Underlying cash
deposits
(average)
|
€25.4
billion
|
€22.5
billion
|
-12 %
|
+3 %
|
Assets under custody reached a new record at €39.6 trillion,
growing for the seventh quarter in a row, thanks to solid stock
exchange performances coupled with robust results in fixed
income.
Settlement volumes have also reached new record levels driven by
sustained activity throughout 2024.
Funds depot is boosted by the success of ETFs, combined with the
higher stock valuations, and reaches an all-time record level of
€3.3 trillion.
Collateral Highway outstanding continues to recover following a
strong decline in 2023 due to the Liability Driven Investment (LDI)
crisis in the United Kingdom.
Q2 strategic milestones
Leveraging Euroclear's network to ease capital
flows
As a financial market infrastructure, Euroclear aims to
bring markets together through its open, flexible architecture and
connect local issuers with international investors. In the first
half, Euroclear Bank has successfully opened the market's first
omnibus account for Korean Treasury Bonds (KTB) and Monetary
Stabilisation Bonds (MSB), making South Korean local government
debt Euroclearable.
Euroclear has also been working with the Liquidity and
Sustainability Facility (LSF) to create a repo solution for African
Sovereign Eurobonds to sit within our triparty platform. The
triparty basket could provide a new avenue for international
investment in Africa, creating
market efficiencies and increasing liquidity.
Data and innovation milestones
Euroclear aspires to become a digital and data-enabled financial
market infrastructure. By building an open platform providing a
variety of services to all market participants, Euroclear continues
to evolve its core service offering, while developing new services
– particularly in the data, sustainability and innovation
space.
We continued to make progress against this ambition in Q2 as
Euroclear and Mosaic Smart Data joined forces to launch a new
initiative to transform data into valuable insights. Mosaic Smart
Data has launched a new data intelligence service, Smart Markets,
powered by Euroclear's fixed income data, including government and
corporate bonds. This service will transform Euroclear's data into
insights that participants can easily interpret and use to detect
market movements, enhance trading models and build informed
strategies.
The second quarter of 2024 was marked by another achievement in
developing Euroclear's innovation blueprint. Euroclear has
collaborated with ARTEX Global Markets, an innovator in the art
investment space to make art public via equity shares. With this
first issuance of single equity shares, via Euroclear Bank as
issuer CSD, Euroclear expands the range of asset classes available
under its international model, building on the success of Eurobonds
or ETFs.
Senior management and shareholder updates
A new, expanded Executive Committee
To accelerate strategy execution, Euroclear redesigned the
structure and composition of its top management team). This new
Executive Committee composed of eight members will ensure that all
the group's constituents are represented in all key strategic
decisions and will have a stronger focus on business operations,
people and clients – both Europe
and Internationally.
As recently announced, Sébastien Danloy will join this expanded
Executive Committee in mid-September as Euroclear's new Chief
Business Officer (appointment subject to regulatory approval)
to lead the business initiatives. Joining Euroclear from BNP
Paribas Securities Services, Sébastien brings over 25 years'
experience within the banking, asset management and securities
services industry.
Euroclear also announced the appointment of Guillaume Eliet as successor to Paul Hurd in the role of Chief Risk Officer.
Guillaume will lead the group's Risk function, a core
responsibility of a financial market infrastructure, which is
embedded in Euroclear's corporate purpose. Guillaume joined
Euroclear in 2017 as the Head of Regulatory, Compliance &
Public Affairs, before taking the reins as CEO of Euroclear ESES
CSDs in 2021. Guillaume will join the Euroclear Board as Executive
Director and the Executive Committee.
NZ Super Fund increases stake in Euroclear
Last year, several high-quality, long-term investors decided to
join Euroclear's group of shareholders. Their commitment is a
confirmation of the strategic course and long-term potential of the
company. After having acquired 4.99% of Euroclear's shares in
September 2023, NZ Super Fund,
New Zealand's sovereign wealth
fund, recently increased its stake to 8.7%. With this investment,
NZ Super Fund becomes the fourth largest individual shareholder of
Euroclear and has been invited to propose a non-executive director
(subject to the National Bank of Belgium's and shareholders' approvals), and
will be the sixth non-executive shareholder's representative on
Euroclear's Board. This increased investment further evidences the
transition of Euroclear's shareholder base from its traditional
"user-owned" model to include a greater proportion of long-term
institutional investors.
Russian sanctions
Financial impacts of the Russian assets in H1 2024
- The Russian sanctions continue to have a significant impact
on Euroclear's earnings. €3.4 billion of the €4 billion
interest income generated relate to Russian sanctioned
assets.
- Applicable to CBR assets dating from 15
February 2024 onwards, the newly introduced EU windfall
contribution after tax amounts to €1.7 billion. Euroclear will make
a first payment of €1.55 billion3 to the European Fund
for Ukraine.
- The remainder of the profits related to sanctioned assets are
being put aside as an important buffer against current and future
risks.
- The sanctions and Russian countermeasures resulted in direct
costs of €48 million and a loss of business income of €13
million.
|
|
|
|
|
|
|
Russian
sanctions
impacts after
Windfall
Contribution
|
...of which CBR
after 15 Feb. after
Windfall
Contribution
|
...of which other
Russian assets +
CBR before 15 Feb.
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
1,644
|
604
|
1,040
|
|
|
Business
income
|
-13
|
0
|
-13
|
|
|
Interest, banking &
other income
|
3,376
|
2,323
|
1,053
|
|
|
Windfall contribution
provision
|
-1,719
|
-1,719
|
|
|
|
of which
contribution payable in July
|
1,547
|
-1,547
|
|
|
|
of which delayed
contribution
|
-172
|
-172
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
-48
|
-11
|
-37
|
|
|
|
|
|
|
|
|
Operating profit
before Impairment
|
1,596
|
593
|
1,003
|
|
|
|
|
|
|
|
|
Tax
|
-836
|
-584
|
-252
|
|
|
Net
profit
|
760
|
9
|
751
|
|
|
Update on Russian sanctions and countermeasures
Russia's invasion of
Ukraine in February 2022 resulted in market-wide application
of international sanctions. Euroclear considers the application of
international sanctions as a key obligation. 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 June 2024, Euroclear Bank's balance sheet
totalled €207 billion, of which €173 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 semester of 2024, interest arising on
cash balances from Russian-sanctioned assets was approximately €3.4
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 €836 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 (Council Regulation (EU) 2024/576 of
12 February 2024 amending Regulation
(EU) 833/2014) providing for an obligation for Central Securities
Depositories (CSDs) holding reserves and assets of the Central Bank
of Russia with a total value of
more than €1 million to apply specific rules in relation to the
cash balances accumulating due to restrictive measures. These CSDs,
such as Euroclear Bank, 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).
In May 2024, the European
Commission has adopted a new regulation about a windfall
contribution applicable to CSDs holding Russian Central Bank assets
with a total value of more than €1 million4. The profits
generated by the reinvestment of these sanctioned amounts dating
from 15 February 2024 onwards are
required to be contributed to the European Fund for
Ukraine.
Euroclear will comply with the EU regulation on the windfall
contribution and make a first payment of approx. €1.55 billion to
the European Fund for Ukraine in
July 2024.
Euroclear continues to act prudently and is further
strengthening its capital by retaining the remainder of the
Russian sanction related profits as a buffer against current
and future risks. Euroclear is focused on minimising potential
legal, financial, and operational risks that may arise for itself
and its clients, while complying with its obligations.
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 and Euroclear has received a number of unfavourable
rulings since Russia does not
recognise the international sanctions. Euroclear will continue to
defend itself against all legal claims.
Annexes
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
|
Q2
2024
|
|
Q2
2023
|
|
Variance
|
|
|
|
|
|
|
|
|
|
Euroclear Bank
Income Statement (BE GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
*
|
2,238.8
|
|
2,261.5
|
|
-22.6
|
|
|
Net fee and commission
income
|
556.7
|
|
550.0
|
|
6.7
|
|
|
Other income
|
-5.4
|
|
17.0
|
|
-22.4
|
|
|
|
|
|
|
|
|
|
|
Total operating
income
|
2,790.2
|
|
2,828.5
|
|
-38.3
|
|
|
|
|
|
|
|
|
|
|
Administrative
expenses
|
-476.8
|
|
-404.7
|
|
-72.1
|
|
|
|
|
|
|
|
|
|
|
Operating profit
before impairment and taxation
|
2,313.3
|
|
2,423.8
|
|
-110.4
|
|
|
|
|
|
|
|
|
|
|
Result for the
period
|
1,297.6
|
|
1,814.1
|
|
-516.4
|
|
|
|
|
|
|
|
|
|
Euroclear Bank
Statement of Financial Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
7,333.4
|
|
4,416.2
|
|
2,917.2
|
|
|
Debt securities issued
and funds borrowed
(incl.subordinated debt)
|
4,775.8
|
|
5,822.7
|
|
-1,046.8
|
|
|
Total assets
|
207,397.4
|
|
150,376.0
|
|
57,021.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Euroclear
Investments Income Statement (BE GAAP)
|
Q2
2024
|
|
Q2
2023
|
|
Variance
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend
|
706.7
|
|
395.5
|
|
311.3
|
|
|
|
Net gains/(losses) on
financial assets & liabilities
|
4.1
|
|
5.5
|
|
-1.4
|
|
|
|
Other income
|
-0.1
|
|
-0.2
|
|
0.1
|
|
|
|
Total operating
income
|
710.8
|
|
400.7
|
|
310.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative
expenses
|
-1.1
|
|
-0.5
|
|
-0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
before impairment and taxation
|
709.7
|
|
400.2
|
|
309.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Result for the
period
|
708.7
|
|
399.0
|
|
309.7
|
|
|
|
|
|
|
|
|
|
|
|
Euroclear
Investments Statement of Financial Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
738.4
|
|
693.4
|
|
45.1
|
|
|
|
Debt securities issued
and funds borrowed
|
1,649.8
|
|
1,651.7
|
|
-1.9
|
|
|
|
Total assets
|
2,388.9
|
|
2,345.7
|
|
43.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) Total net interest
income offset by the impact of the windfall contribution under
Belgian presentation.
|
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 and Irish CSD, as well as Euroclear Belgium,
Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear
Sweden and Euroclear UK & International.
Media Contact:
Thomas Churchill,
thomas.churchill@euroclear.com, +32 471 63 65 35
Pascal Brabant,
pascal.brabant@euroclear.com, +32 475 78 36 62
1 When excluding an exceptional billing adjustment,
underlying business income would have increased by 4% compared to
last year.
2 Post deduction of dividend relating to 2023,
including H1 2024 profit and based on estimated underlying RWA of
around EUR 7.7bn
3 After retention of a 10% share of the windfall
contribution to comply with capital and risk management
requirements
4 European Commission Statement of 21 May
2024: Use of proceeds from immobilised Russian assets for
Ukraine (europa.eu)
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