(Información remitida por la empresa firmante)
Continued strategic progress while navigating an exceptional operating environment
BRUSSELS, Feb. 8, 2023 /PRNewswire/ — Results for the Year Ending 31 December 2022
Highlights
Record performance in an exceptional operating environment
Euroclear delivered a record business and financial performance in 2022, demonstrating its resilience against a challenging backdrop.
In 2022, both equity and fixed-income valuations declined for the first time since 1969, with high levels of volatility, lower equity volumes, and lower funds market performance.
High levels of inflation led to rising interest rates across major international markets and increased expense levels.
New strategic vision with ambitious targets to grow stakeholder value
Euroclear defined its corporate purpose as: “Weinnovate to bring safety, efficiency, and connections to financial markets for sustainable economic growth.”
Set out a long-term vision to become a digital and data-enabled financial market infrastructure: an open, shared platform providing services to all market players.
Launched a new strategy with core client focus, while further developing ESG, data and digital capabilities, as well as expanding global business.
Strategy is expected to further diversify the business model and generate value for clients, employees, shareholders, and society.
Strong underlying business and financial performance
Business income (which is the income generated by fees) grew by 5% to EUR 1,607 million reflecting the resilience of the subscription-like model. Rising interest rates enhanced revenues generated through interest income, adding to the resilience of the model. Excluding earnings related to Russia sanctions, interest income rose by 289% to EUR 348 million.
Total operating income grew by 21% underlying to EUR 1,955 million.
Underlying operating expenses increased by 15% to EUR 1,133 million, reflecting inflationary pressures and increased investment to both implement the strategy and increase further business resilience.
Implications of sanctions related to Russian invasion of Ukraine
Resulted in market-wide application of international sanctions related to Russia, and as a financial market infrastructure Euroclear complied with those sanctions.
Co–operating with clients and other involved stakeholders to address market challenges that Russian countermeasures continue to impose.
Despite a material growth in Euroclear Bank’s balance sheet and additional interest income, normal business operations have been maintained.
Euroclear remains prudent in its management of the sanctions and their implications. Russia sanction-related earnings are segregated from underlying performance and are not distributed while uncertainties persist.
Growing shareholder returns through underlying business performance
Underlying EPS increased by 30% to EUR 191.7 per share, reflecting growth in net profit after adjusting for results related to the implementation of international sanctions.
Proposed dividend per share of EUR 115.5, increased by 31%, maintaining the payout ratio at 60% of the underlying earnings, in line with last year.
Financial summary
Euroclear delivered a record financial performance in 2022. The underlying results benefited from continued delivery on the group’s strategy and its diversified, resilient business model.
The group also reported higher interest earnings due to rising interest rates on cash balances. Cash balances increased materially as a consequence of the international sanctions on Russia.
Full year 2022 net profit increased 162% to EUR 1,201 million, of which EUR 603 million resulted from the underlying business performance.
Year-to-date operating income was up 71% year-on-year to EUR 2,769 million, of which EUR 1,955 million related to the underlying business performance.
An increase of 159% in earnings per share to EUR 381.4 per share, reflected the increase in net profit. On an underlying basis, earnings per share grew to EUR 191.7.
The group maintains a strong capital position and a low-risk profile, which are critical as a financial market infrastructure and create headroom for further growth.
2022 Operating Environment
In 2022 financial markets experienced negative returns from both equities and fixed income for the first time in over 50 years. Equity markets were characterised by higher levels of volatility and lower traded volumes. The funds industry was also affected by the fall in value of the underlying assets.
The fragile external context, already impacted by the pandemic over the previous two years, was further impacted by rising geopolitical tensions. Most notably, the invasion of Ukraine by Russia led to a raft of international sanctions being imposed on capital market entities and individuals.
Inflation increased across international economies, with central banks responding by raising interest rates throughout the year.
The consequence of the operating environment is shown below in the group’s key operating metrics.
Progressing on our new strategic vision to grow stakeholder value
In 2022, management and the Board defined Euroclear’s corporate purpose, an ambitious long-term vision and a five-year business strategy. Euroclear’s purpose to innovate to bring safety, efficiency, and connections to financial markets for sustainable economic growth, combined with its culture and values, underpins the long-term aspiration to become a digital and data-enabled financial market infrastructure.
To realise this vision, Euroclear will continue to build an open, shared platform providing a catalogue of services to all market stakeholders and complemented by third parties. Euroclear’s aim is to evolve the current market model to provide efficiencies that deliver more client value, building on previous successes in collateral and funds.
Through its strategy, the group will continue to focus on meeting the evolving needs of all financial market participants from issuers to investors. In addition, Euroclear will increase its focus on ESG, data-driven and digital innovations and expanding its global reach.
The strategy will be enabled by Euroclear’s people and its technology, with increased investments ongoing to extend the group’s capabilities, with a particular focus on strengthening and modernising the group’s technology.
In addition, greater emphasis is placed on M&A to accelerate the strategy and to provide enhanced capabilities to the group’s service offering. Several steps have been taken through the course of 2022 to rollout the M&A strategy, including the investments in Greenomy, Impact Cubed, Fnality and Goji as well as the ongoing integration of MFEX. The Goji acquisition is novel, as it is the first time Euroclear will be operating in the digitalisation of private assets space, in effect a new asset class in its books.
The integration of MFEX remains on track despite the challenging external context for the funds industry given lower equity, fixed-income and fund valuations. The combination of MFEX with the existing Euroclear funds business, and alternative investments through Goji, provides a compelling vision for a comprehensive end-to-end funds offering.
Ambitious metrics have been outlined to measure the implementation of the strategy over the next five years. The strategy is expected to further diversify the business model and generate value for clients, employees, shareholders, and society, in line with Euroclear’s corporate purpose.
Underlying Business Performance
Excluding the impact of the Russian sanctions, Euroclear’s underlying business continues to perform strongly. Adjusted net profit rose by 32% to EUR 603 million.
Business income was up 5% to EUR 1,607 million, reflecting continued growth of Euroclear’s business lines.
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