THE Singapore Exchange’s : S68 0% (SGX) net profit for the second half ended Jun 30 was up 23.1 per cent to S$286.3 million from S$232.7 million in the corresponding period the year before, the bourse said on Thursday (Aug 17).

This lifted its earnings per share for the half year to S$0.268, versus S$0.218 the year before.

SGX’s board has proposed a final quarterly dividend of S$0.085 per share, S$0.005 higher than the S$0.08 per share the previous year. The dividend is expected to be paid out to shareholders on Oct 20, after the record date of Oct 13. If approved, the total dividend payout for FY2023 will stand at S$0.325 per share, higher than the S$0.32 per share in FY2022.

Operating revenue for the group increased 7.9 per cent year on year to S$623 million from S$577.4 million. 

At a briefing to discuss the company’s latest financial results, SGX chief executive Loh Boon Chye said the group’s “multi-asset strategy” continues to provide market participants with the diverse investment and risk-management tools required in the current challenging macroeconomic environment.

The group has also set some targets – including medium-term revenue growth in the high single-digit percentage, as well as an increment to its dividend payouts by a mid-single-digit percentage of its compound annual growth rate. Loh was, however, quick to stress that the dividend targets do not necessarily mean a change in the group’s payouts every quarter.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

In FY2024, SGX is looking to keep its expenses to a year-on-year percentage growth in the mid-single digit range. Capital expenditure, which stood at S$59 million for FY2023, is expected to be in the range of S$75 million to S$80 million in FY2024. This includes an S$8 million deferment from FY2023.

Meanwhile, the group expects to hit its target of US$100 billion average daily volume by FY2025 or earlier, amid the “positive momentum” it is currently seeing.

Loh said SGX’s currencies and commodities franchises have grown substantially. Both units attained record volumes in the period under review, he said.

He cited iron ore as a key example of a bright spot in the commodities area. The proportion of screen trading in iron ore climbed to 46 per cent in FY2023 from 29 per cent in FY2022.

SGX’s revenue growth in H2 was primarily attributable to a strong showing from the group’s fixed income, currencies and commodities segment. Revenue from fixed income fell 27.7 per cent in H2 to S$4 million, but this was more than offset by a 35 per cent growth in currencies and commodities revenue to S$179.8 million.

On the flip side, revenue contributions from the cash equities segment fell 11.5 per cent to S$175 million from S$197.7 million.

SGX’s chief financial officer Ng Yao Loong said the decline was unsurprising, due to the “unprecedented” pace of monetary policy tightening by major central banks, which has in turn crimped trading and public listing activity regionally and globally.

Regarding the pipeline of initial public offerings, SGX’s senior managing director Pol de Win said it is still a “hazy crystal ball” with the near-term outlook a difficult one.

“But we are seeing some early signs of global activity resuming,” he said, noting that the “highest-quality issuers” in the more developed markets are likely to take the lead.

In the medium term, however, he is more optimistic. He said many companies have been privately capitalised for a long period of time, and they are likely to need liquidity.

For the full year, SGX’s net profit rose 26.5 per cent to S$570.9 million, while there was an uptick in revenue of 8.7 per cent to just shy of S$1.2 billion, which the group attributed chiefly to derivatives.

Adjusted net profit, which excludes certain non-cash and non-recurring items that have less bearing on SGX’s operating performance, stood at S$503.2 million for FY2023, up 10.3 per cent from S$456.4 million in the previous financial year.

SGX is looking to maintain and solidify its position as the preferred venue for Asian equity derivatives.

Loh said the group is “at the heart of international capital flows”, and will grow its presence through scaling its multi-asset offerings globally through its network, partnerships and geographical expansion of client coverage.

Shares of SGX fell 1 per cent or S$0.10 on Thursday to close at S$9.57 on a cum-dividend basis.