PERFORMING OUR ROLE IN AN EXCEPTIONAL YEAR

For the first time in decades, we saw the devastating return of war on the European continent with the Russian invasion of Ukraine. Inflationary pressures were rampant in a world already recovering from the disruption of the previous years’ pandemic, and central banks reacted through interest rate rises. Financial markets responded in extraordinary ways too, with bond and equity valuations both declining for the first time in more than fifty years.

Despite these challenges and thanks to the dedication of the Euroclear teams, our clients and our resilient business model, the group has continued to perform well, with underlying net profit increasing by 32% year on year. The strong underlying financial performance excludes the additional results coming from the implementation of market-wide sanctions on Russia.

Throughout 2022, Euroclear fulfilled its role as a critical financial market infrastructure in ensuring compliance with the incoming sanctions. Implementing sanctions required the intense efforts of more than 100 specialists across the company on a full-time basis. Our teams analysed the sanctions packages and countermeasures; undertook actions to implement the group’s procedures; managed the financial impacts; interacted closely with clients and other stakeholders; and conducted a broad range of oversight activities.

In addition, together with our employees, our company responded to the war in Ukraine from a humanitarian perspective, both through volunteering and financial donations, and we are proud of these efforts to support victims of the conflict.

Further information on the implementation of sanctions on Russia and the financial implications on the Euroclear group are outlined on page 10.

DEFINING OUR LONG-TERM VISION

Having achieved our financial targets ahead of time, in 2022, my management team, supported by the board, defined a long-term vision to build a digital and data-enabled financial market infrastructure and outlined our strategy for the next five years.

I have spoken before of the opportunity from digitalisation and data to provide both a greater range of services, efficiencies and client benefits. Our new strategy will enable us to realise that vision. The strategy, which is explained in detail from page 14 onwards is accompanied by clear targets that will continue to grow shareholder value.

I am confident that Euroclear has the right strategy, one which builds on our track record of strong growth and our diversified business model. Over the past five years, underlying net profit has grown by 21% CAGR, and the proposed 2022 dividend of €115.5 per share is almost three times higher than in 2017.

As part of this strategic review, we made the company’s purpose explicit, which is: “we innovate to bring safety, efficiency and connections to financial markets for sustainable economic growth”.

I firmly believe that delivering on this purpose has been the foundation of the company’s success over the past 55 years and is the appropriate guide to where we will create future value.

I would like to thank my team in defining our revised business strategy. In particular, I would like to take this opportunity to remember Jo Van De Velde, who was the principal architect of our vision and strategy.

FOCUS ON DELIVERY

As a management team, we are intensely focused on delivering against the strategy and have continued to make progress throughout 2022. 

In addition to developing our business organically, we have increasingly used selective and value-accretive M&A to bring additional scale and capabilities in key areas of our business.

For example, having acquired MFEX we further enhance the group’s investment funds proposition. Moreover, we invested in Greenomy and Impact Cubed in the ESG data space; and most recently purchased, Goji (subject to regulatory approval) as we enter the private assets marketplace. We welcome these new, highly valued partners to the Euroclear family, and we will continue to seek further opportunities to acquire businesses to complement our strategy.

As with any strategy, it will be enabled by investments in our people and our technology. To facilitate, measure and monitor changes brought about by our strategy we have put in place a group transformation office to ensure coordination, and value for money, across the group.

CONTRIBUTING TO SUSTAINABILITY

Euroclear, as a financial market infrastructure group, takes a long-term perspective. As we look to the future, our planet needs funding if our society is to meet the climate challenges ahead. 

We believe that Euroclear can contribute to making a sustainable transition possible by continuing to play its role as a financial market infrastructure. By bringing efficiency, transparency, and risk reduction to global financial markets, Euroclear can facilitate the considerable funding challenge ahead.

Of course, we can only credibly play our role if we are also ambitious in reducing our own corporate impact on the planet. Euroclear has now set out a clear pathway to reach its net zero commitments by 2050.

SEIZING OUR OPPORTUNITIES TOGETHER

Looking forward, whilst macroeconomic uncertainties persist, I remain optimistic about the future for Euroclear. Our new strategy will allow us to capture benefits from the key trends shaping financial markets, as we further integrate and harness data, digital innovation and ESG across our business and product suites.

Let me now finish this letter by thanking all of Euroclear’s stakeholders for their continued engagement throughout the year.

I extend my sincere thanks to all of our customers for entrusting their business to us; to all the Euroclear teams and our supplier partners for their ongoing dedication to our business under unprecedented circumstances; and to you, our shareholders, for your confidence in us.

I look forward to working with you to deliver on our commitments in 2023 and beyond.

Thank you,

Lieve Mostrey
CEO of Euroclear group