Performance review
Financial results review
2020 was a very successful year for the Exchange. MOEX delivered record fee and commission income, reporting the highest growth since the company’s IPO. Fee and commission (F&C) income exceeded 70% of total operating income in annual terms for the first time since the company went public. The Equities Market, Money Market and Depository and Settlement Services posted the largest increases in F&C income.
Operating income grew by 12.4%, and operating expenses added 8.5%, exactly in line with the top end of the guidance range of
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | Change 2020/2019 | |
|---|---|---|---|---|---|---|---|---|
Operating income | 30,394.0 | 45,990.0 | 43,567.2 | 38,538.9 | 39,901.4 | 43,229.5 | 48,591.0 | 12.4% |
Fee and commission income | 15,586.0 | 17,784.0 | 19,797.6 | 21,207.6 | 23,647.1 | 26,181.4 | 34,268.2 | 30.9% |
Net interest and other finance income | 14,279.4 | 28,084.9 | 23,695.0 | 17,285.3 | 16,061.0 | 16,713.0 | 14,158.7 | -15.3% |
Other operating income | 528.7 | 121.1 | 74.6 | 46.0 | 193.3 | 335.1 | 164.1 | -51.0% |
Operating expenses (exlc. other operating expenses) | (10,373.3) | (11,271.9) | (12,259.4) | (13,431.8) | (14,453.7) | (15,435.3) | (16,750.0) | 8.5% |
Operating profit (before other operating expenses) | 20,020.8 | 34,718.1 | 31,307.8 | 25,107.1 | 25,447.7 | 27,794.2 | 31,841.0 | 14.6% |
EBITDA (before other operating expenses) | 21,616.1 | 36,519.0 | 33,602.1 | 28,059.6 | 27,712.0 | 28,726.7 | 35,188.9 | 22.5% |
EBITDA margin, % | 71.1 | 79.4 | 77.1 | 72.8 | 69.5 | 66.5 | 72.4 | 5.9 p.p. |
Other operating expenses | - | - | - | - | (1,075.2) | (2,396.5) | (0.9) | - |
Net profit | 15,993.2 | 27,852.1 | 25,182.6 | 20,255.2 | 19,720.3 | 20,200.6 | 25,170.5 | 24.6% |
Basic earnings per share | 7.21 | 12.51 | 11.22 | 9.02 | 8.76 | 8.96 | 11.16 | 24.6% |
FEE AND COMMISSION INCOME
In 2020, all major fee and commission income lines increased. Fee and commission income remained well diversified, with MOEX’s largest market, the Money Market, accounting for 25% of the total. The fastest growing businesses in 2020 were Equities and Derivatives Markets as well as Depository and Settlement Services.
The largest contributors to the F&C line in absolute terms YoY were Equities Market (+RUB 1,963.4 mln), Money Market (+RUB 1,632.5 mln) and Depositary & Settlement Services (+RUB 1,298.1 mln).
2019 | 2020 | Change 2020/2019 (RUB mln) | Change 2020/2019 (%) | |
|---|---|---|---|---|
Money Market | 6,979.5 | 8,612.0 | 1,632.5 | 23.4% |
Depository and Settlement Services | 5,226.8 | 6,524.9 | 1,298.1 | 24.8% |
FX Market | 3,547.4 | 4,276.1 | 728.7 | 20.5% |
Equities Market | 2,264.0 | 4,227.4 | 1,963.4 | 86.7% |
Derivatives Market | 2,852.6 | 3,939.8 | 1,087.2 | 38.1% |
IT services, listing fees and other fees and commissionsThe amount of fees and commissions for the sale of software and technical services, information services, listing services and other fee income. | 2,759.7 | 3,745.5 | 985.8 | 35.7% |
Bond Market | 2,551.4 | 2,942.5 | 391.1 | 15.3% |
Money Market
Money Market fee income increased by 23.4% following a nearly identical expansion in trading volumes of 23.2%. GCC-repo volumes increased 38.9% to RUB 75.1 trln. Non-CCP repo with the Federal Treasury rose to RUB 22.3 trln for 2020 versus RUB 22.6 bln in 2019 following a migration to the on-exchange interface. The resulting effective fee remained virtually flat due to the compensating effects of GCC-repo and non-CCP repo with the Federal Treasury.
Derivatives Market
The Derivatives Market generated a 38.1% growth of F&C income. The trading volume growth of 57.7% was mainly driven by a twofold expansion of FX derivatives volumes (+113.4%) and a sharp rise in index derivatives trading (+69.1%). Together with the contraction of commodity derivatives, these two factors explain the discrepancy between fees and volumes.
FX Market
Fee income from the FX Market was up 20.5%. Trading volumes added 6.7%. Spot volumes expanded by 43.9%, while swap volumes declined by 3.7%. The trading volume mix shifted towards the more profitable spot segment following higher volatility and the demand for CCP-based, on-exchange services rather than OTC in the current economic conditions.
Equities Market
The total market capitalization of the Equities Market at the end of 2020 was RUB 51.43 trln (USD 694.74 bln). Fee and commission income from the Equities Market was up 86.7% on the back of a corresponding increase in trading volumes, underlining the rise of retail investors. A modest divergence between fee and volume dynamics is the result of the tariff structure that incentivizes higher volumes traded.
Bond Market
Fee income from the Bond Market increased 15.3% with a corresponding increase in trading volumes of 17.0%. Primary market volumes (excluding placements of overnight bonds) increased 28.5%, driven by almost equal growth of OFZ and corporate placements.
IT services, listing fees and other fees and commissions
The Other fee income line includes an additional fee on EUR balances of 0.2% above the ECB rate that was introduced at the beginning of the year. The additional fee explains the 167.8% surge in the Other fee income line. Listing and other services grew 20.2%, while information services added 29.2%.
NET INTEREST AND OTHER FINANCE INCOME
Net interest income (NII) decreased 15.3% YoY on the back of declining interest rates both in Russia and globally. Excluding realized revaluation gains on the investment portfolio, NII was down 13.1% YoY.
2019 | 2020 | Change 2020/2019 (RUB mln) | Change 2020/2019 (%) | |
|---|---|---|---|---|
General and administrative expenses | 8,321.4 | 8,290.7 | -30.7 | -0.4% |
Depreciation of property and equipment | 1,200.5 | 876.5 | -324.0 | -27.0% |
Amortization of intangible assets | 2,346.8 | 2,472.3 | 125.5 | 5.3% |
Equipment and intangible assets maintenance | 1,381.4 | 1,589.7 | 208.3 | 15.1% |
Professional services | 538.4 | 465.6 | -72.8 | -13.5% |
Taxes (other than income tax) | 603.9 | 647.5 | 43.6 | 7.2% |
Market maker fees | 674.6 | 572.1 | -102.5 | -15.2% |
Other general and administrative expenses | 224.7 | 213.9 | -10.8 | -4.8% |
Registrar and foreign depository services | 312.6 | 454.4 | 141.8 | 45.4% |
Rent and office maintenance | 318.4 | 329.3 | 10.9 | 3.4% |
Communication services | 82.8 | 86.4 | 3.6 | 4.3% |
Information services | 307.3 | 380.3 | 73.0 | 23.8% |
Advertising costs | 330.0 | 202.7 | -127.3 | -38.6% |
Personnel expenses | 7,113.9 | 8,459.3 | 1,345.4 | 18.9% |
Employees benefits except for share-based payments | 5,890.1 | 6,865.9 | 975.8 | 16.6% |
Payroll related taxes | 1,128.8 | 1,381.4 | 252.6 | 22.4% |
Share-based payment expense on equity settled instruments | 71.0 | 198.2 | 127.2 | 179.2% |
Share-based payment expense on cash settled instruments | 24.0 | 13.8 | -10.2 | -42.5% |
Operating expenses grew by 8.5% year-on-year. The increase was mainly driven by a rise of personnel expenses following an increase in the number of employees, accounting of increased annual bonuses and the introduction of the long-term incentive programme for employees. At the same time, general and administrative expenses slightly decreased.
CAPITAL EXPENDITURES
Capex for the year was RUB 3.24 bln, all of which was spent on purchases of equipment and software as well as software development.
CASH AND CASH EQUIVALENTS
The cash position Cash position is calculated as the sum of Cash and cash equivalents, Financial assets at fair value through profit and loss, Due from financial institutions, Financial assets at fair value though other comprehensive income, Current tax prepayments and Other financial assets less Balances of market participants, Overnight bank loans, Distributions payable to holders of securities, Margin account, Liabilities related to assets held for sale, Current tax payables and Other financial liabilities. at the end of 2020 was RUB 103.90 bln. The company had no debt as of the end of the reporting period.