Euroclear H1 2020 - Resilient Performance Against COVID-19 Backdrop

BRUSSELS, July 17, 2020 /PRNewswire/ --

Financial Highlights


-- Operating income increased 1% to EUR 730 million (H1 2019: EUR 725
million) as a result of:- Business Income rose 13% to EUR 639 million
(H1 2019: EUR 565 million), driven by favourable market conditions and
implementation of strategic initiatives- Banking and Other Income
decreased 43% to EUR 91 million (H1 2019: EUR 160 million), as a result
of interest rate cuts
-- Operating costs increased 3% to EUR 428 million (H1 2019: EUR 413
million):- Sustained focus on our customer proposition, modernising
technology and regulatory-driven initiatives
-- Net profit rose 5% to EUR 227 million (H1 2019: EUR 217 million), helped
by lower tax rate
-- EPS also increased 5% to EUR 72.0 (H1 2019: EUR 68.8 per share)
-- Strong balance sheet and capital position. Financial strength ensured by
disciplined risk management, limited leverage and prudent liquidity
position
-- As previously announced, the Board intends to approve the payment of an
interim dividend in Q4 2020, unless it receives new guidance from
regulators in the context of the COVID-19 crisis
Key Operating Metrics


-- Assets under custody reached EUR 31.1 trillion at the end June (H1 2019:
EUR 30.0 trillion), an increase of 3.7% year-on year
-- Record number of netted transactions settled in the Euroclear group of
141 million, an increase of 20% compared to the first half 2019 for a
total value of EUR 461 trillion (12% above H1 2019)
-- Euroclear's Collateral Highway mobilised a record EUR 1.5 trillion (H1
2019: EUR 1.3 trillion)
Business Update


-- In line with its reputation as a robust financial market infrastructure,
Euroclear responded to the immediate impact of the COVID-19 crisis,
implementing its business continuity plans to protect the health and
safety of its people, while delivering systems performance that ensured
record volumes were processed seamlessly
-- From a business continuity standpoint, we are able to operate
successfully in our current mode of extensive teleworking, which will
continue in accordance with local government guidelines
-- Created the Euroclear Solidarity Fund which made a donation of EUR 1
million to charities in support of people impacted by the COVID-19
crisis. The donation will be allocated to local charitable causes, such
as hospitals and vaccination research, in each of the main countries
where Euroclear operates
-- Global financial markets continue to be shaped by the response of
companies, governments and other participants to the wide-ranging
implications of COVID-19:- Settlement volumes returning to more normal
levels after the exceptional volatility recorded in March and April due
to the pandemic, albeit the entire period saw higher volumes compared to
2019- By facilitating primary issuance of government debt, required in
response to the crisis, fixed income assets under custody increased-
Lower equity market valuations have impacted fees across several
business lines- Business income growth offset the financial impact of
lower interest rates, which policymakers implemented in their immediate
crisis response
-- Continued progress in implementing its strategy to strengthen, expand
and reshape the global Euroclear network Despite challenging
conditions, the industry is working together to rapidly and safely
implement new technical requirements that support market-wide compliance
related to incoming European regulations- Continued progress on
providing CSD services for Ireland in the context of Brexit. Euroclear
Bank received passporting authorisation in March and is entering next
phase of migration project of Irish securities from Euroclear UK &
Ireland- Further expansion of the international ETF issuance model to
include Exchange Traded Commodities (ETCs) and Exchange Traded Notes
(ETNs), as well as an increasing traction amongst global issuers for the
international model over domestic equivalents- Partnered with
authorities in Turkey to create a Euroclearable link, giving
international investors unprecedented access to local government bond
market- Cooperated with Clearstream Banking S.A. in the appointment of
China Construction Bank (Asia) Corporation Limited as common depository,
safekeeper and service provider for their international debt securities-
Announced the launch of a multi-currency settlement service for Japanese
domestic bonds dominated in foreign currencies, further expanding Asia
presence
Outlook


-- Exceptionally strong first half business income growth expected to
subside, with growth rates trending back towards historic
through-the-cycle growth trajectory- Increased debt issuance by
corporates and governments in response to the impacts of the pandemic is
expected to be a driver of safekeeping fees- However, a number of
business lines are anticipated to be adversely impacted by lower equity
market valuations- Settlement volume expected to stabilise as market
volatility subsides
-- Interest-related income severely impacted by rate cuts as well as lower
customer balances. We expect that ongoing lower interest rate
environment will result in yearly decline of approximately 60% in
Banking and Other Income in 2020, compared to 2019 results
-- While we expect to meet target of business income operating margin of
low to mid 30% range this year, the material impact of lower
interest-related income will result in lower profitability in 2020,
compared to 2019
Commenting on the results, Lieve Mostrey, Chief Executive Officer said:

"Euroclear delivered a resilient financial and business performance in the first half. Our strategy is proving successful even in the context of an unprecedented global crisis.

"Our robust operating performance and business continuity in such unparalleled circumstances has cemented our reputation as a safe and reliable infrastructure partner for global financial market participants. I would like to thank the whole Euroclear team for their hard work and commitment during this challenging time."

Abridged Financial Statements




1st

Var

1st

2nd
half year 2020-2019 half year half-year Full Year
2020 2019 2019 2019





(in EUR million)








Consolidated Income Statement

---




Business income 638.6 73.5 565.2 580.2 1,145.4



interest & banking income 83.1 -68.2 151.3 136.5 287.8



Other income 7.9 -0.4 8.3 -6.1 2.3


0.0




Total operating income 729.6 4.8 724.8 710.7 1,435.5

---

0.0



Administrative expenses (427.7) (14.4) (413.3) (406.8) (820.1)



o/w Depreciation and amortisation (35.5) (1.6) (33.9) (35.8) (69.7)



Share of result in joint venture 0.0 2.6 (2.6) 3.34 (0.7)






Operating profit before impairment and 301.9 -7.0 308.9 307.2 616.1
taxation







Result for the period 226.7 10.2 216.6 214.2 430.8

---






Consolidated Balance Sheet

---




Shareholders' equity 4,550.4 399.1 4,151.3 4,229.6 4,229.6



Debt 6,447.5 637.3 5,810.1 6,107.1 6,107.1



Total assets 32,590.3 568.1 32,022.1 27,568.6 27,568.6









Per share information (in EUR)

---




Net earnings per share 72.0 3.2 68.8 68.0 136.9



Net asset value per share 1,445.7 126.8 1,318.9 1,343.8 1,343.8



Adjusted net asset value per share* 1,165.8 126.6 1,039.2 1,063.3 1,063.3



* Adjusted net asset value per share excludes the amount of goodwill as well as the amounts
for contractual relationships and is based on the number of shares at the end of the period







Key performance ratios

---




Assets Under Custody (EUR Trn) 31.1 1.1 30.0 31.4 31.4



Netted Transactions (million) 141 23 118 121 239



Collateral Outstanding (EUR billion end of 1483 198 1285 1316 1316
period)







EBITDA (in EUR million) 350.0 -5 355 355 709



Business Income Operating Margin (%) 33% 6% 27% 30% 28%



CET1 ratio (%)* 40% 3% 36% 40% 40%





* Figures for first half 2020 are based on
estimation







Euroclear Bank Income Statement

---




Net interest income 99.2 -75.3 174.5 156.2 330.7



Net fee and commission income 398.9 56.0 342.9 361.2 704.1



Other income -0.6 1.1 -1.7 -7.8 -9.5






Total operating income 497.5 -18.2 515.7 509.6 1,025.3

---




Administrative expenses (282.5) (0) (275.9) (259.6) (535.5)






Operating profit before impairment and 215.0 -24.8 239.8 250.0 489.8
taxation







Result for the period 157.8 -8.4 166.2 175.9 342.2

---






Euroclear Bank Balance Sheet

---




Shareholders' equity 1,909.4 43.7 1,865.7 1,881.6 1,881.6



Long term debt 5,953.1 636.0 5,317.0 5,615.7 5,615.7



Total assets 29,163.6 344.2 28,819.3 24,324.0 24,324.0









Key performance ratios

---




Business Income Operating Margin (%) 29% 2% 27% 31% 29%



CET1 ratio (%)* 40% 1% 39% 40% 40%




* Figures for first half 2020 are based on
estimation







Euroclear Investments Income Statement

---






Dividend 0.0 0.4 -0.4 216.5 216.1

---


Net gains/(losses) on non trading -128.8 -294.6 165.8 49.4 215.2
financial assets at FVPL

---


Other income 2.0 -0.9 2.9 1.8 4.8

---



Total operating income -126.8 -295.0 168.3 267.8 436.1

---


Administrative expenses (0.5) (0.1) (0.4) (0.4) (0.9)






Operating profit before impairment and -127.3 -295.1 167.9 267.4 435.2
taxation







Result for the period -95.6 -226.0 130.5 249.8 380.2

---






Euroclear Investments Balance Sheet

---




Shareholders' equity 669.8 -32.0 701.8 766.3 766.3



Long term debt 1,298.2 1.1 1,297.1 1,301.9 1,301.9



Total assets of which 1,985.1 -44.8 2,029.9 2,117.3 2,117.3




Loans and advances 129.7 -9.7 139.4 129.0 129.0




Available-for-sale financial assets 249.7 42.5 207.2 246.6 246.6




Intercompany loans 904.0 -142.5 1,046.5 1,103.9 1,103.9


Note to editors

Euroclear group is the financial industry's trusted provider of post trade services. At the core, the group provides settlement, safe-keeping and servicing of domestic and cross-border securities for bonds, equities and derivatives to investment funds. Euroclear is a proven, resilient capital market infrastructure committed to delivering risk-mitigation, automation and efficiency at scale for its global client franchise.

The Euroclear group includes Euroclear Bank - which is rated AA+ by Fitch Ratings and AA by Standard & Poor's - as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & Ireland. The Euroclear group settled the equivalent of EUR 837 trillion in securities transactions in 2019, representing 239 million domestic and cross-border transactions and held an average of EUR 30.1 trillion in assets for clients.

For more information about Euroclear, please visit www.euroclear.com [http://www.euroclear.com/].

Logo - https://mma.prnewswire.com/media/832898/Euroclear_Logo.jpg [https://mma.prnewswire.com/media/832898/Euroclear_Logo.jpg]

CONTACT: Thomas Churchill, +32 2 326 7944, Thomas.Churchill@euroclear.com, Craig MacDonald, Tel: +44 207 849 0315, Craig.MacDonald@euroclear.com, Sabine Leclercq, Tel: +32 2 326 3564, Sabine.Leclercq@euroclear.com

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