Country for PR: United Kingdom
Contributor: PR Newswire Europe
Friday, July 17 2020 - 23:05
AsiaNet
Euroclear H1 2020 – Resilient Performance Against COVID-19 Backdrop
BRUSSELS, July 17, 2020 /PRNewswire-AsiaNet/ --

Financial Highlights 

•	Operating income increased 1% to EUR 730 million (H1 2019: EUR 725 million) 
as a result of:
o	Business Income rose 13% to EUR 639 million (H1 2019: EUR 565 million), 
driven by favourable market conditions and implementation of strategic 
initiatives
o	Banking and Other Income decreased 43% to EUR 91 million (H1 2019: EUR 160 
million), as a result of interest rate cuts
•	Operating costs increased 3% to EUR 428 million (H1 2019: EUR 413 million):
o	Sustained focus on our customer proposition, modernising technology and 
regulatory-driven initiatives
•	Net profit rose 5% to EUR 227 million (H1 2019: EUR 217 million), helped by 
lower tax rate
•	EPS also increased 5% to EUR 72.0 (H1 2019: EUR 68.8 per share)
•	Strong balance sheet and capital position. Financial strength ensured by 
disciplined risk management, limited leverage and prudent liquidity position
•	As previously announced, the Board intends to approve the payment of an 
interim dividend in Q4 2020, unless it receives new guidance from regulators in 
the context of the COVID-19 crisis

Key Operating Metrics
•	Assets under custody reached EUR 31.1 trillion at the end June (H1 2019: EUR 
30.0 trillion), an increase of 3.7% year-on year
•	Record number of netted transactions settled in the Euroclear group of 141 
million, an increase of 20% compared to the first half 2019 for a total value 
of EUR 461 trillion (12% above H1 2019)
•	Euroclear’s Collateral Highway mobilised a record EUR 1.5 trillion (H1 2019: 
EUR 1.3 trillion)

Business Update

•	In line with its reputation as a robust financial market infrastructure, 
Euroclear responded to the immediate impact of the COVID-19 crisis, 
implementing its business continuity plans to protect the health and safety of 
its people, while delivering systems performance that ensured record volumes 
were processed seamlessly
•	From a business continuity standpoint, we are able to operate successfully in 
our current mode of extensive teleworking, which will continue in accordance 
with local government guidelines
•	Created the Euroclear Solidarity Fund which made a donation of EUR 1 million 
to charities in support of people impacted by the COVID-19 crisis. The donation 
will be allocated to local charitable causes, such as hospitals and vaccination 
research, in each of the main countries where Euroclear operates
•	Global financial markets continue to be shaped by the response of companies, 
governments and other participants to the wide-ranging implications of COVID-19:
o   Settlement volumes returning to more normal levels after the exceptional 
volatility recorded in March and April due to the pandemic, albeit the entire 
period saw higher volumes compared to 2019
o     By facilitating primary issuance of government debt, required in response 
to the crisis, fixed income assets under custody increased
o     Lower equity market valuations have impacted fees across several business 
lines
o    Business income growth offset the financial impact of lower interest 
rates, which policymakers implemented in their immediate crisis response 
•	Continued progress in implementing its strategy to strengthen, expand and 
reshape the global Euroclear network 
o	Despite challenging conditions, the industry is working together to rapidly 
and safely implement new technical requirements that support market-wide 
compliance related to incoming European regulations
o	Continued progress on providing CSD services for Ireland in the context of 
Brexit. Euroclear Bank received passporting authorisation in March and entering 
next phase of migration project of Irish securities from Euroclear UK & Ireland
o	Further expansion of the international ETF issuance model to include Exchange 
Traded Commodities (ETCs) and Exchange Traded Notes (ETNs), as well as an 
increasing traction amongst global issuers for the international model over 
domestic equivalents
o	Partnered with authorities in Turkey to create a Euroclearable link, giving 
international investors unprecedented access to local government bond market
o	Cooperated with Clearstream Banking S.A. in the appointment of China 
Construction Bank (Asia) Corporation Limited as common depository, safekeeper 
and service provider for their international debt securities
o	Announced the launch of a multi-currency settlement service for Japanese 
domestic bonds dominated in foreign currencies, further expanding Asia presence

Outlook
•	Exceptionally strong first half business income growth expected to subside, 
with growth rates trending back towards historic through-the-cycle growth 
trajectory
o	Increased debt issuance by corporates and governments in response to the 
impacts of the pandemic is expected to be a driver of safekeeping fees
o	However, a number of business lines are anticipated to be adversely impacted 
by lower equity market valuations
o	Settlement volume expected to stabilise as market volatility subsides
•	Interest-related income severely impacted by rate cuts as well as lower 
customer balances. We expect that ongoing lower interest rate environment will 
result in yearly decline of approximately 60% in Banking and Other Income in 
2020, compared to 2019 results
•	While we expect to meet target of business income operating margin of low to 
mid 30% range this year, the material impact of lower interest-related income 
will result in lower profitability in 2020, compared to 2019 

Commenting on the results, Lieve Mostrey, Chief Executive Officer said:

“Euroclear delivered a resilient financial and business performance in the 
first half. Our strategy is proving successful even in the context of an 
unprecedented global crisis.

Our robust operating performance and business continuity in such unparalleled 
circumstances has cemented our reputation as a safe and reliable infrastructure 
partner for global financial market participants. I would like to thank the 
whole Euroclear team for their hard work and commitment during this challenging 
time.”

Abridged Financial Statements

		                      1st	 Var	     1st        2nd	
		                  half year   2020-2019	  half year  half-year  Full Year
(in € million)		             2020		    2019       2019       2019
						
Consolidated Income Statement						
Business income		              638.6	 73.5	   565.2       580.2	1,145.40
interest & banking income	       83.1	-68.2	   151.3       136.5	   287.8
Other income		                7.9	 -0.4        8.3	-6.1	     2.3
			                            0			
Total operating income		      729.6	  4.8	   724.8       710.7	1,435.50
			                            0			
Administrative expenses		     -427.7	-14.4	  -413.3      -406.8	  -820.1
o/w Depreciation and amortisation     -35.5	 -1.6	   -33.9       -35.8	   -69.7
Share of result in joint venture          0	  2.6	    -2.6	3.34	    -0.7
						
Operating profit before 
impairment and		              301.9	   -7	   308.9       307.2	   616.1
taxation						
						
Result for the period		      226.7	 10.2	   216.6       214.2	   430.8
						
Consolidated Balance Sheet 	
Shareholders' equity		   4,550.40	399.1	4,151.30    4,229.60	4,229.60
Debt		                   6,447.50	637.3	5,810.10    6,107.10	6,107.10
Total assets		          32,590.30	568.1  32,022.10   27,568.60   27,568.60
						
Per share information (in €)					
						
Net earnings per share		         72	  3.2	    68.8	  68	   136.9
Net asset value per share 	   1,445.70	126.8	1,318.90    1,343.80	1,343.80
Adjusted net asset value per share*1,165.80	126.6	1,039.20    1,063.30	1,063.30

 * Adjusted net asset value per share excludes the amount of goodwill as well 
as the amounts						
for contractual relationships and is based on the number of shares at the end 
of the period						
	
Key performance ratios					
						
Assets Under Custody (€ Trn)	       31.1	  1.1	     30	        31.4	    31.4
Netted Transactions (million)		141	   23	    118	         121	     239
Collateral Outstanding 
(€ billion end of                      1483	  198	   1285	        1316	    1316
period)						
						
						
EBITDA (in € million)		       350	   -5	    355	         355	     709
Business Income Operating Margin (%)   33%	   6%	    27%	         30%	     28%
CET1 ratio (%)*		               40%	   3%	    36%	         40%	     40%
						
* Figures for first half 2020 are based on estimation						
						
Euroclear Bank Income Statement						
Net interest income		       99.2	-75.3	  174.5	       156.2	   330.7
Net fee and commission income	      398.9	   56	  342.9	       361.2	   704.1
Other income		               -0.6	  1.1	   -1.7	        -7.8	    -9.5
						
Total operating income		      497.5	-18.2	  515.7	       509.6	1,025.30
						
Administrative expenses		      -282.5	    0	 -275.9	      -259.6	  -535.5
						
Operating profit before impairment and	 215	-24.8	  239.8	         250	   489.8
taxation						
						
Result for the period		       157.8	 -8.4	  166.2	       175.9	   342.2
						
Euroclear Bank Balance Sheet 						
Shareholders' equity		    1,909.40	 43.7	1,865.70    1,881.60	1,881.60
Long term debt		            5,953.10	  636	5,317.00    5,615.70	5,615.70
Total assets		           29,163.60	344.2	28,819.30  24,324.00	24,324.00
						
Key performance ratios						
						
Business Income Operating Margin (%)	29%	   2%	     27%	31%	     29%
CET1 ratio (%)*		                40%	   1%	     39%	40%	     40%
* Figures for first half 2020 are based on						
estimation						
						
						
Euroclear Investments Income Statement						
						
Dividend		                     0	   0.4	    -0.4     216.5	216.1
Net gains/(losses) on non trading       -128.8	-294.6	   165.8      49.4	215.2
financial assets at FVPL						
Other income		                     2	  -0.9	     2.9       1.8	  4.8
Total operating income		        -126.8	  -295	   168.3     267.8	436.1
Administrative expenses		          -0.5	  -0.1	    -0.4      -0.4	 -0.9
						
Operating profit before impairment and	-127.3	-295.1	   167.9     267.4	435.2
taxation						
						
Result for the period		         -95.6 	  -226	   130.5     249.8	380.2
						
Euroclear Investments Balance Sheet 						
Shareholders' equity		         669.8	   -32     701.8     766.3	766.3
Long term debt		              1,298.20	   1.1	1,297.10   1,301.90	1,301.90
Total assets of which		      1,985.10	 -44.8	2,029.90   2,117.30	2,117.30
Loans and advances		         129.7	  -9.7	   139.4        129	129
Available-for-sale financial assets	 249.7	  42.5	   207.2      246.6	246.6
Intercompany loans		           904	-142.5	1,046.50   1,103.90	1,103.90




Note to editors 

Euroclear group is the financial industry’s trusted provider of post trade 
services. At the core, the group provides settlement, safe-keeping and 
servicing of domestic and cross-border securities for bonds, equities and 
derivatives to investment funds. Euroclear is a proven, resilient capital 
market infrastructure committed to delivering risk-mitigation, automation and 
efficiency at scale for its global client franchise.

The Euroclear group includes Euroclear Bank - which is rated AA+ by Fitch 
Ratings and AA by Standard & Poor’s - as well as Euroclear Belgium, Euroclear 
Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear 
UK & Ireland. The Euroclear group settled the equivalent of EUR 837 trillion in 
securities transactions in 2019, representing 239 million domestic and 
cross-border transactions and held an average of EUR 30.1 trillion in assets 
for clients.

For more information about Euroclear, please visit www.euroclear.com.

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Source:  Euroclear Holding, Euroclear Investments, Euroclear SA/NV