SGX posts 6.8% drop in Q3 earnings

Slide is due to derivatives volume falling 18%, while dividend per share remains at five cents

A weaker showing in the derivatives business sent third-quarter earnings sliding at bourse operator Singapore Exchange (SGX).

Net profit dropped 6.8 per cent to $83.1 million for the three months to March 31, compared with the $89.2 million racked up in the same period a year earlier.

SGX said in a statement yesterday that its net profit would have been $87 million if a one-off loss of $4 million from the disposal of its investment in the Bombay Stock Exchange was excluded. This is still 2 per cent lower than the earnings figure posted last year.

Operating revenue dipped 1.5 per cent to $202.7 million, while operating profit was little changed, inching up 0.3 per cent to $102.9 million.

Equities and fixed income - comprising issuer services, securities trading and clearing, and post-trade services - made up 51 per cent of total revenue.

Within this, turnover from issuer services climbed 2 per cent to $19 million, helped largely by a 10 per cent increase in listing revenue to $12.6 million backed by a higher number of new bond listings.


SGX said in a statement yesterday that its Q3 net profit would have been $87 million if a one-off loss of $4 million from the disposal of its investment in the Bombay Stock Exchange was excluded. TNP FILE PHOTO

There were 189 bond listings raising $101.2 billion during the quarter, compared with 78 listings raising $38 billion previously.

Revenue from securities trading and clearing inched up 1 per cent to $55.3 million. SGX said its securities daily average traded value increased 1 per cent to $1.24 billion, while total traded value grew 5 per cent to $78.3 billion and total traded volume swelled 59 per cent to 156 billion shares.

"The higher level of trading activity was due to continued positive momentum following the US presidential election," it said.

Meanwhile, turnover from derivatives, which contributed to 37 per cent of total revenue, dropped 9 per cent to $75.2 million, dragged down by a 13 per cent decrease in equity and commodities turnover as volumes fell 18 per cent.

Sales from market data and connectivity, which accounted for 12 per cent of overall revenue, rose 13 per cent to $24.4 million.

Expenses slid 3 per cent to $99.7 million due to lower volume-related processing and royalties, and professional fees. Earnings per share shrank 7 per cent to 7.8 cents, compared with 8.3 cents previously. Net asset value per share was 88.1 cents as at March 31, down from 92.5 cents as at June 30 last year.

  • AT A GLANCE

  • NET PROFIT: $83.1 million (-6.8%)

    REVENUE: $202.7 million (-1.5%)

    DIVIDEND PER SHARE: 5 cents

Net profit came in at $254.5 million for the nine months, 6.5 per cent lower than the same period the year earlier, while operating revenue was down by 4.3 per cent at $593.1 million.

SGX has proposed a quarterly dividend of five cents per share, unchanged from the same quarter last year. "In the past quarter, we saw continued momentum in the equities market following the US presidential election, with increased participation seen from both retail and institutional customers," said chief executive Loh Boon Chye.

"While sentiments have improved, positive outcomes on US economic policies will be important to sustain trading activities."

SGX said operating expenses this year are expected to be between $405 million and $415 million, while technology-related capital expenditure is likely to be between $65 million and $70 million.

SGX shares closed three cents or 0.4 per cent lower at $7.45 yesterday, before the results were announced.

A version of this article appeared in the print edition of The Straits Times on April 21, 2017, with the headline 'SGX posts 6.8% drop in Q3 earnings'. Print Edition | Subscribe