Euroclear marks 3% Y/Y rise in income YTD FY23
Euroclear today posted its financial results for the first nine months of 2023.
With an underlying business income of EUR 1.24 billion (+3% year-on-year), Euroclear continues to perform well thanks to its resilient business model.
The high interest rates environment led to a sharp increase of net interest earnings, reaching over EUR 3.8 billion for the nine first months of the year, of which approx. EUR 3 billion relate to interests linked to Russian sanctions and countermeasures.
Underlying net profit of EUR 822 million almost doubled, reflecting a strong business performance and continued growth of Euroclear’s core business.
Underlying operating expenses increased by 18% to EUR 956 million, of which EUR 25 million related to increased investment in Euroclear’s growth strategy and business resilience. The impact of inflation on the group’s workforce and technology costs accounted for an increase of EUR 49 million compared to 2022.
By further strengthening its cost discipline, Euroclear expects its operating expenses will trend towards its ‘through-the-cycle’ target of 4-6% p.a. From 2024.
Direct costs relating to the management of the implications of the Russian sanctions amounted to EUR 34 million (versus EUR 12 million in Q3 2022) due to the increasing complexity of the situation for Euroclear and its clients, as well an increase in legal expenses. Additionally, international sanctions and Russian countermeasures have resulted in a loss of business income of EUR 18 million.
Euroclear achieved an underlying EBITDA margin of 57.5%, an increase of 10.3 percentage points compared to the 47.2% reported in Q3 2022.
On an underlying basis, earnings per share rose by 96% to EUR 261.2 per share, reflecting the continued increase in net profit.
Lieve Mostrey, Chief Executive Officer of Euroclear group, commented:
“Euroclear continues its growth trajectory, delivering a solid business performance in Q3 2023 supported by higher interest rate conditions. Despite the complexity of the management of the international sanctions on Russian assets, our diversified business model allows us to focus on supporting clients through these uncertain times, providing robust infrastructure, and fulfilling our duties as trusted Financial Market Infrastructure.
During the third quarter, we reached a significant milestone with the successful completion of the connections of Euroclear Bank and Euroclear Finland to the European Central Bank’s Target2-Securities (T2S) settlement system. By offering users delivery-versus-payment settlement of securities and cash in euro and Danish krone central bank money, the connections to T2S will contribute to strengthening Europe’s settlement landscape, in line with the EU Capital Market Union’s objectives and Euroclear’s purpose: connecting financial markets for sustainable economic growth.”