SGX Q3 profits up 21% to $100.5m

The exchange's profits hit a 10-year high.

The Singapore Exchange (SGX) popped the champagne as its net profit jumped 21% YoY from $83.1m to $100.5m in the third quarter of 2018. According to its financial statement, profits grew in line with its revenue growth of 10% to $222.7m.

SGX CEO Loh Boon Chye said, “We achieved a strong set of results this quarter, with our net profit reaching a new 10-year record high and our revenues hitting their highest levels since we listed in 2000. We actively engaged liquidity providers and focused on outreach to investors, which contributed to increased activity in the securities market. Our marketing efforts, together with longer trading hours enabled by our new derivatives trading and clearing platform, added to an increase in global participation across products and trading sessions.”

SGX said its Equities and Fixed Income – comprising Issuer Services, Securities Trading & Clearing and Post Trade Services – increased 5% to $107.9m, accounting for 49% of total revenue. Meanwhile, Issuer Services revenue increased 8% to $20.5m, contributing to 9% of total revenue.

Its listing revenue leapt 10% to $13.8m, whilst revenue from corporate actions and other revenue jumped 5% to $6.8m. "Listing revenue increased 10% following a higher number of new bond listings. There were a total of 291 bond listings raising $126.2b. We registered a total of five new equity listings which raised $1.8b, whilst secondary equity funds raised amounted to $1b," it added.

SGX's Securities Trading and Clearing revenue jumped 12% to $61.7m and comprised 28% of total revenue. Securities clearing revenue jumped 12% to $47.7m, access revenue rose 13% to $11.8m, whilst revenue from collateral management and membership slightly rose by 1% to $2.3m.

SGX noted that its securities daily average traded value (SDAV) increased 17% to $1.45b, with total traded value rising 15% to $89.9b. "This was made up of Equities where traded value grew by 13% to $83.7b, and other products where traded value increased 37% to $6.2b," it added.

Meanwhile, post trade services revenue declined 11% to $25.6m, accounting for 12% of total revenue. This was weighed down by lower securities settlement revenue, contract processing revenue, and a flat depository management revenue. "The dip in securities settlement revenue was mainly due to a change in the mix of subsequent settlement activities. Contract processing revenue decreased 77% to $0.7m as all brokers had migrated to their own back office systems by February 2018," SGX added.

Derivatives revenue rose 20% to $90.5m, contributing to 41% of total revenue, thanks to higher equity and commodities revenue and collateral management, licence, membership and other revenue.

Equity and Commodities revenue grew 16% as total volumes increased 34% to 53.5 million contracts (39.9 million contracts). "This was mainly due to higher volumes in SGX FTSE China A50 futures, Nikkei 225 futures, and SGX Nifty 50 index futures, reflecting higher volatility and increasing activity in the underlying markets. This was offset by lower volumes in Iron Ore due to lower volatility. Average fee per contract decreased to $1.07 due to a change in the mix of contracts traded," SGX said.

Collateral management, licence, membership and other revenue increased 31% mainly due to increases in licence fee from higher derivatives trading volume and an increase in collateral management income.

Market data and connectivity revenue dipped 2% to $23.9m, accounting for 11% of total revenue. "The lower market data revenue was mainly due to a decline in one-off fees recovered from data audits in the same period last year. Meanwhile, the continued growth of our colocation services business led to an increase in connectivity revenue," SGX said.

Meanwhile, expenses increased by 5% to $104.4m, mainly due to higher staff costs and processing and royalties costs. Headcount for the quarter fell from 794 to 789.

On the company’s outlook, Loh said, “Market activity is expected to improve as investors seek avenues to manage their portfolio risk. We will continue to build on our multi-asset offering and increase our servicing and marketing efforts across our domestic and international client base. We will also strengthen our global network through strategic partnerships and alliances.”

SGX declared an interim dividend of 5 cents per share, payable on 8 May 2018.