Singapore Exchange yesterday announced that their second quarter profit was 16.7% higher than the previous year, bolstered by the performance of its securities and derivatives business. In the three months ending December 31, SGX’s net profit increased from SGD65.4 million ($53 million) to SGD76.3 million ($62.6 million), with revenue growing 9.2 per cent on-year to SGD161.8 million ($132.6 million).
The increase in profitability was primarily due to a 9 per cent increase in securities revenue which reached SGD57.8 million, and a 21 per cent increase in derivatives revenue, to SGD45.7 million.
Speaking at Singapore Exchange’s quarterly earnings briefing in Singapore yesterday, CEO Magnus Bocker explained “The successes in the derivative market will help us to grow our clearing business, and the standards which are needed for our clearing houses. If you look back 3 years, we talked a lot about the implementation of the secure clearing system. This implementation is now bearing fruit. It has taken time but we are now seeing the successes. We are very much an infrastructure company.”
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It is worthy of note that as a concequence of this growth, collateral management increased 25% to S$15 million driven by improved yields in collateral balance.
In terms of expenses, there was an increase of 4 per cent year-on-year to SGD71.7 million, with staff costs rising 16.1 per cent year-on-year to hit SGD29.6 million due to higher employee compensation payments in line with improved performance.
Mr Bocker reported a strong balance sheet with no gearing, and a dividend of 4 cents per share. He announced that contrary to the overall trend of decreasing volumes in the international market, Singapore Exchange’s average volume was up 30% year-on-year, and an increase of 8% in trading volumes for shares, in line with Forex Magnates report earlier this month.
Looking ahead, Magnus Bocker explained the importance of reinvestment to further improve the exchange’s international presence and abilities; “The priority for the coming year is to concentrate a lot of time and effort to create clarity in readiness for the new regulations. We are running a trust business, we are continuing to build the trust so that we can become the Asian gateway as a clearing house. We wish to gain recognition in the US and Europe as a clearing house and exchange. This is important for us in our international focus.”