Euroclear today provides an update on its financial and operational performance in the first quarter of 2022.
Financial Summary
Euroclear delivered a strong financial and operational performance in Q1 2022. Net profit increased +11% to EUR 134 million.
Operating income was up +10% year-on-year to EUR 438 million driven by strong business income growth, up +9% to EUR 405 million and Interest, Banking and Other income up 39% to EUR 32 million.
We increased our investments in technology in line with our strategy. Operating expenses increased to EUR 260 million, up 11% compared to Q1 2021.
Sanctions related to the invasion of Ukraine have led to increased cash held on our balance sheet, which are explained further below.
Note: 2021 figures have been restated to include MFEX pro forma, in order to allow for like-for-like comparison.
Operational highlights
Throughout the first quarter, Euroclear continued to make strategic progress, while remaining focused on our responsibilities as a critical financial market infrastructure. This is reflected in the key operating metrics shown below:
Q1 total
% change vs Q1 2021
Assets under Custody
EUR 37 trillion
+8%
Number of Transactions
80 million
+5%
Turnover
EUR 270 trillion
+13%
Fund assets under custody
EUR 3 trillion
+12%
Collateral Highway
EUR 2 trillion
+18%
The integration of MFEX is progressing to plan as we combine MFEX’s established fund distribution platforms with Euroclear’s post-trade expertise to create a new end-to-end funds offering.
We have also made two strategic investments during the first quarter.
Firstly, we have further advanced Euroclear’s digital strategy through our investment in Fnality, an international consortium of global banks and financial market infrastructures focused on building regulated payment systems to support the adoption of tokenised assets and marketplaces.
Secondly, we have progressed our sustainable finance and ESG strategy through an investment in Greenomy, a Belgium based sustainable finance technology platform. Greenomy helps corporates, credit institutions and asset managers comply with new European Union sustainable finance legislation by digitalising the data capturing and reporting processes.
As part of our commitment to ESG, we are pleased to announce that Euroclear has taken the important step to reduce its global carbon footprint by committing to the Science Based Targets initiative (SBTi). We will now set CO2 reduction actions with the commitment to achieve net-zero value chain Green House Gas (GHG) emissions by no later than 2050.
Implications from the invasion of Ukraine and Sanctions
Our thoughts are with those affected by the humanitarian crisis resulting from the invasion of Ukraine. We have focused on supporting our staff, especially those of Ukrainian and Russian origin, as well as those in bordering countries.
Euroclear is complying with the international sanctions imposed in response to the invasion of Ukraine and has suspended all transactions with sanctioned entities since 28 February. In addition to ensuring all the sanctions are applied immediately and completely, our teams are supporting clients diligently in managing the exceptional situation. We are working closely with clients to apply all new rules fully and according to the spirit of the sanctions.
A consequence of the sanctions is that assets owned by sanctioned parties are blocked in the respective financial market infrastructures, including Euroclear. As the assets mature through their lifecycle, cashflows (e.g. coupons and redemptions) that are normally transferred to the underlying parties accumulate on our balance sheet for as long as the sanctions remain in place. We do not expect these sanctions to affect our financial performance. During the first quarter, Euroclear Bank’s balance sheet increased by €23 billion year-on-year, for which the company is working on the mitigation of potential regulatory capital requirements.
In light of these circumstances, the Board of Euroclear considers it to be prudent to wait until the second half of 2022 to formally decide on the dividend payment of EUR 88.5 per share (equating to a total of EUR 279 million) as announced in its full year results.
Commenting on the results, Lieve Mostrey, Chief Executive Officer, said:
“The invasion of Ukraine is deeply troubling and our thoughts are with all who are impacted. As a financial market infrastructure, we have an important role to play in a turbulent world. I am proud of the staff response as our people mobilised swiftly to apply the sanctions; to support clients during the exceptional circumstances; and to contribute to relief efforts for those affected. From a financial and operational perspective, Euroclear continues to perform very well, achieving another strong quarter as we continue to deliver on our strategy.”
About Euroclear
Euroclear Group is the financial industry’s trusted provider of post trade services. Euroclear provides settlement and custody 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 comprises Euroclear Bank, the International CSD, as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & International. The Euroclear Group settled the equivalent of EUR 992 trillion in securities transactions in 2021, representing 295 million domestic and cross-border transactions, and held EUR 37.6 trillion in assets for clients by end 2021. For more information about Euroclear,