MARKETS & INVESTING | Staff Reporter, Singapore

SGX's net profit slips 6.8% to $83.1m

Blame it on weak results from the derivatives segment.

It was a disappointing quarter for Singapore Exchange (SGX) after it recorded a 6.8% slump in net profit to $83.1m.

According to OCBC Investment Research, this brings SGX's 9-month profits to $254.5m, down 6.5% from the same period last year.

The group also reported a decline in overall revenues, down 1.5% to $202.7m.

The decline in yields was due to the weak numbers from the derivatives segment, which registered an 8.6% decline to $75.2m. This was mainly attributed to lower volume, especially of the A50 contracts, which fell 30% YoY.

The group’s equities and fixed income revenue rose a modest 1.1% to $103.1m, whilst market data and connectivity revenue rose 13% to S$24.4m (or 12% of group revenue). The equity rally in 1Q 2017 helped to mitigate the decline in revenue from its Derivatives segment

Here's more from OCBC Investment Research:

While global equity markets have done relatively well this year, buoyed by optimism of US fiscal stimulus and tax reform plans, which could result in better corporate earnings, on the local front, we expect volatility and uncertainty to remain as corporate earnings outlook is still fairly muted for this year.

Overall, we expect 4QFY17 to be fairly flat versus 3QFY17 (before one-off), resulting in FY17 net earnings of S$342.6m. Management is maintaining its guidance for FY17, that is, operating expenses of S$405m-S$415m with technology-related capital expenses at S$65mS$70m, and indicated that these expenses could possibly come in at the lower end of the range.

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