Euroclear achieves robust third quarter results
BRUSSELS, Oct. 31, 2024 /PRNewswire/ -- Results for the first nine months of 2024
Highlights
Euroclear's business income and interest earnings reached record levels
Underlying operating income increased by 6% to reach €2.18 billion. Net profit increased by 8% to €890 million.
Underlying business income is up by 5% to €1,302 million, driven by record levels in settlement and safe keeping activities, with assets under custody crossing the €40 trillion mark for the first time ever. In Q3 2024, business income increased by 8% compared to Q3 2023, driven by strong performance especially in the Eurobonds & European assets and funds business.
Underlying interest income continues to increase, up 9% to €882 million in the context of sustained high interest rates environment and gradual policy rate cuts.
Pace of cost growth continues to slow
After a step-up in investment in digital capabilities, workforce and IT infrastructure in 2023, the growth of underlying operating expenses slowed to 3% for the first nine months of 2024.
In Q3 2024, underlying costs decreased by 1.5% compared to Q3 2023, reflecting Euroclear's continued focus on cost mitigation and non-recurrence of specific items.
As a result, the business income operating margin improved to 24.7% for the first nine months of 2024.
Strong shareholder return and capital position
Underlying earnings per share increased by 8% to €283 in line with continued increase in net profit.
Euroclear group retains a very strong capital position, comfortably above regulatory requirements with an underlying Common Equity Tier 1 capital ratio slightly below 60%[1].
Russian sanctioned assets
Following the implementation of the EU windfall contribution regulation, Euroclear provisioned €2.9 billion as windfall contribution for the first nine months of 2024, of which a first tranche of €1.55 billion for H1 2024 was paid to the European Fund for Ukraine in July 2024.
Gradual rate cuts have led to a decline in interest income related to the Central Bank of Russia's assets in Q3 2024 with the outlook for future interest earnings dependent on policymaking decisions.
The impacts of the Russian sanctions are detailed in the last section of this press release.
Euroclear Holding
(€ m)
YTD Q3 23
Russian sanctions impacts
YTD Q3 23 underlying
YTD Q3 24
Russian sanctions impacts after Windfall Contribution
YTD Q3 24 underlying
Underlying vs 2023
Operating income
5,052
2,996
2,056
4,424
2,240
2,184
128
6 %
Business income
1,226
-18
1,243
1,282
-20
1,302
59
5 %
Interest, banking & other income
3,826
3,013
813
6,030
5,148
882
69
9 %
Windfall contribution
-2,888
-2,888
0
0
Operating expenses
-991
-34
-956
-1,049
-68
-981
-24
-3 %
Operating profit before Impairment
4,061
2,961
1,100
3,375
2,172
1,203
103
9 %
Impairment
0
0
0
-5
0
-5
-5
Pre tax profit
4,061
2,961
1,100
3,370
2,172
1,198
98
9 %
Tax
-1,018
-740
-278
-1,573
-1,265
-308
-30
-11 %
Net profit
3,043
2,221
822
1,797
907
890
68
8 %
EPS
966.8
261.2
570.9
282.9
Business income operating margin
19.2 %
23.1 %
24.7 %
EBITDA margin (EBITDA/oper.income)
82.0 %
57.5 %
59.1 %
Valerie Urbain, Chief Executive Officer of Euroclear, commented:
"We are maintaining our trajectory of strong financial results and excellent performance, with our settlement and safe keeping activities reaching once again record levels. We remain focused on the execution of our strategy and delivering outstanding service to our customers, while continuing to invest to support our long-term growth.
We believe digital assets offer significant benefits and our teams have continued to innovate to advance their adoption across geographies and asset classes. After two successful issuances, Euroclear now welcomed the first issuance in USD by an Asia-based issuer on its Digital Securities Issuance (D-SI) platform. Euroclear took part in a groundbreaking pilot project to tokenise gold, Gilts and Eurobonds for collateral management and completed the dress rehearsal of its trial for Eurosystem wholesale Central Bank Digital Currency (CBDC) exploratory work. Finally, Euroclear joined forces with Singapore-based Marketnode to help establish a key market infrastructure in Asia-Pacific designed to simplify the management of fund flows and reduce settlement times by using Distributed Ledger Technology (DLT).
As a group with European roots, Euroclear reiterated its commitment to supporting the European Capital Markets Union. With Europe entering a new political cycle, Euroclear presented a detailed memorandum on the competitiveness in Europe's markets and engaged with key stakeholders to chart the course for enhanced market development and integration in Europe. I firmly believe that by attracting more issuers and investors, by removing barriers to efficiency, competition and integration and by supporting innovation, European capital markets can become more liquid, resilient and competitive."
