Welcome to the 24th edition of your Company’s shareholder newsletter. In this edition, we provide an update on the highlights of Euroclear’s financial performance, along with abridged financial statements for the first half 2019.
After a record year in 2018, your Company’s first half performance remains ahead of our expectations with first half net profit increasing 13% to €217 million.
The ongoing robust performance resulted from better-than-anticipated operating income of €725 million, up 8% compared to the prior year period.
Business income rose 4% to €565 million, in line with our strategic plans, driven by continued growth in assets under custody combined with strong market conditions. Indeed, assets under custody broke a new high of €30 trillion at the end of June, with positive evolutions across business lines, especially in our targeted growth areas.
Banking and other income bolstered the revenue performance further. Following last year’s USD interest rate hikes, interest income rose 25% to €160 million.
Operating costs increased to €413 million in the period, an increase of 6% compared to the previous year. Lower capitalisation following the launch of our Finnish IT platform last year accentuates the cost increase despite similar investment levels, and we have also continued to accelerate investment in strategic priorities, including business resilience and efficiency programmes.
Looking at the full year, we anticipate a more stable sequential evolution in the group’s cost base. As such, the Board continues to expect the business income operating margin to expand in 2019.
The excellent financial performance in the first half 2019 means that shareholder metrics continue to improve, with earnings per share up 13% to €68.8 per share. NAV per share also increased, up to €1319 from €1190 per share in the comparable period, although this metric is affected by the decision to postpone distribution of the normal 2018 dividend to the anticipated interim dividend in the fourth quarter this year.
Your Company’s financial performance is testament to the focus on delivering the group’s proven strategic vision. The Board has thanked management and expresses its gratitude to employees for their contribution to these results as well as to clients, regulators and other stakeholders for their trust.
As always, we welcome any feedback that you may have regarding this newsletter.