Euroclear group results for the first half ending 30 June 2018

Financial Highlights

• Operating income increased 8% to EUR 670 million compared to H1 2017
  • Business Income rose 3% to EUR 542 million on positive performance of business drivers
  • Banking and Other Income increased by 39% to EUR 128 million, led by higher interest rates
• Operating costs are stable at EUR 390 million, despite ongoing investments in regulatory initiatives, cyber security and corporate evolutions. Expectations unchanged of full year costs slightly lower than the prior year
• Net profit up 29% to EUR 192 million, benefiting from operating performance and a slightly lower tax rate in Belgium following recent reforms. There were no adjusting items in the period
• First half net EPS up 32% to EUR 61.1 per share. This compares to full year 2017 EPS of EUR 84.6 per share
• Successful issuances by Euroclear Investments SA and Euroclear Bank further strengthen group’s financial position, providing additional recovery capacity ahead of new upcoming regulations

Business Highlights

• Value of securities held on behalf of Euroclear clients, increased by 3% to EUR 29.2 trillion
• Turnover, the value of securities transactions processed, up by 7% to EUR 394 trillion
• The number of netted transactions settled in the Euroclear group rose by 8% to 115 million
• The number of daily collateralised transactions mobilised by Euroclear’s Collateral Highway was up 11% to EUR 1277 billion
• Fund assets under custody increased 10%

Strategic Update

Remain focused on the implementation of our three strategic priorities: strengthening European core, expanding growth initiatives and exploring innovation

1. Making headway for CSDR authorisation process for each group (I)CSD, as well as investments to enhance cyber resilience
2. Further evidence of success in our growth initiatives:
   • Notable progress made in collateral management, including client traction for solutions from our joint venture, DTCC-Euroclear Global Collateral, as evidenced by winning the Financial News Post Trade Initiative of the Year award
   • Achieving first place in the Global Custodian Tri-Party Securities Financing survey
   • Looking forward to the next important milestone in Initial Margin OTC derivatives migrations with the next wave scheduled in September
3. Continue to explore data-driven services as well as opportunities to leverage new technologies. Strategic investment in Algomi secures partnership as we develop a first concept in fixed income inventory trading
   

Corporate Evolutions

• Proposed relocation of the group parent holding company from the UK to Belgium is on track. The new holding company will be named Euroclear Holding SA
• As part of our modernisation of corporate governance structures, we will propose raising the shareholder voting cap from 5% to 25%. More details will be provided to shareholders ahead of a General Meeting in September
• We remain committed to an active, open dialogue with our shareholders. The Board is currently analysing the findings of the consultation conducted by our independent advisor, and has committed to study initiatives that increase liquidity in the shares
• We will organise a dedicated investor day in the coming weeks to provide further information to shareholders
  

Commenting on the results, Lieve Mostrey, Chief Executive Officer said:

"Euroclear has delivered another strong set of financial results. Business drivers, helped by market conditions and combined with our focus on managing costs, have driven an excellent first half performance.

Euroclear is fully committed to delivering long-term performance and sustainable value for the benefit of all our stakeholders. As a network business at the heart of the capital markets ecosystem, we have a strong core franchise that we continue to evolve and innovate in line with the changing needs of our clients, and we are confident that we will deliver our strategy."