SGX H2 profit up 13.2% to S$232.7m, sees higher derivatives volume in FY22

THE Singapore Exchange (SGX)‘s net profit for the half year ended Jun 30 was up 13.2 per cent to S$232.7 million from S$205.6 million last year, said the exchange in a regulatory filing on Thursday (Aug 18).

Operating revenue for the group also gained 7.9 per cent to S$577.4 million in H2 2022, from S$535.1 million previously. Full year revenue reached S$1.10 billion, a 4 per cent increase as compared with last year’s S$1.06 billion.

“Our record-high revenue was driven by higher derivatives volumes across equities, currencies and commodities, as our global customers increasingly used our multi-asset platform to navigate market uncertainties,” said Loh Boon Chye, chief executive officer of SGX.

The exchange also posted a higher earnings per share in H2 at S$0.218 versus S$0.192 a year ago.

Notably, SGX saw revenue in its fixed income, currencies and commodities (FICC) segment for the latest half-year grow by 23.3 per cent to S$138.8 million, while its equities as well as its data, connectivity and indices segments remained largely stable.

At the bourse’s results briefing, chief financial officer Ng Yao Loong said that he expects the FICC segment to continue growing in the mid-teens percentage in the medium term as the company executes its growth plans in the foreign exchange (FX) space. This includes both over-the-counter (OTC) FX trading and exchange-traded FX futures.

“The acquisition of MaxxTrader has further scaled our currencies business, so OTC FX now contributes 5 per cent of total revenue and I think this is a meaningful number,” he added.

The group proposed a final quarterly dividend of S$0.08 per share, the same as last year, payable on Oct 21 after books closure on Oct 14. If approved, SGX’s total dividend for the year will stand at S$0.32 per share.

In response to a query on why dividends had not increased beyond S$0.08 per share since the fourth quarter of its FY2020, Loh said that SGX would steadily increase its dividends in line with sustainable performance.

“We are still investing for growth and we look towards rewarding our shareholders as our performance sustains at a higher level,” he said.

For the full year ended Jun 30, net profit stood at S$451.4 million, rising 1.3 per cent from last year’s S$445.4 million.

Adjusted net profit, which excludes certain non-cash and non-recurring items that have less bearing on SGX’s operating performance, was S$456.4 million for FY2022.

In the financial year 2022, the exchange recorded 17 new equity listings, which raised S$1.9 billion, compared with last year’s 11 new equity listings with a total of S$1 billion raised. Still, this came in lower than the S$2.3 billion raised by 10 new equity listings in FY2020.

Loh said that he expects equity and bond listings to grow as the bourse’s capital markets ecosystem deepens and South-east Asian growth companies mature.

In addition, head of global sales and origination Pol de Win said that Chinese companies with American depository receipts (ADRs) continue to consider their options due to US regulatory and political pressures.

“This is also driven by the momentum bolstered around the Nio listing, clearly there is strong pickup in discussions around that,” he said, referencing the secondary listing of Chinese electric vehicle maker Nio on the SGX mainboard in May this year.

“Our focus is on those issuers that continue to value overseas listings because they have overseas presence or ambitions, and that’s where a Singapore secondary listing can add value for these issuers,” he added.

Commenting on its outlook for the coming year, SGX said its portfolio risk management activity is expected to rise in tandem with the increasing risks in the global economy.

“Notwithstanding these risks, SGX Group maintains its medium-term revenue growth expectation of a high single-digit percentage range. Treasury income has bottomed out following interest rate hikes by major central banks and is poised to recover in FY2023,” the group wrote.

Furthermore, Loh said the company would look to sharpen its equities product suite to stay at the forefront of global investing trends. Aside from executing its current plans, the company also sees opportunities for further mergers and acquisition deals.

“We can add to some of the global strengths that we’re building up...it doesn’t necessarily need to be in trading platforms,” he said.

SGX shares rose 0.6 per cent or S$0.06 to close at S$10 on Thursday.